In a victory for the (always bustling) New York City moving industry, the Appellate Division, First Judicial Department has upheld a May 2011 trial court victory won by an industry association challenging the City Comptroller’s prevailing wage determination for the industry. Matter of Metropolitan Movers Assn., Inc. v. Liu, 95 A.D.3d 596 (1st Dep’t 2012).
This new decision concerns the successful challenge of the movers’ industry association, the Metropolitan Movers Association, to a prevailing wage schedule for furniture movers issued by the Comptroller on July 1, 2010. New York law requires certain public contractors to pay “a service employee under a contract for building service work a wage of not less than the prevailing wage in the locality for the craft, trade or occupation of the service employee.” NY Labor Law § 231. The association brought an Article 78 administrative proceeding to challenge the Comptroller’s action in New York state court, and in May 2011 Justice Alice Schlesinger of New York County Supreme Court agreed with the Association’s position that the Comptroller acted arbitrarily and capriciously when he disregarded industry wage survey information (which reflected lower wage rates) and issued the schedule based solely on “the [substantially higher] wages earned by workers covered under the collective bargaining agreement of Local 814 of the International Brotherhood of Teamsters.
The First Department affirmed the decision, finding that “[b]y ignoring the data from his own survey and instead blindly adopting Local 814’s rates, the Comptroller failed to comply with the statutory mandate to determine the wage “to be prevailing" meaning the actual prevailing wage.” (Internal citation omitted). Thus, the “Comptroller’s exclusive reliance on a labor union agreement that does not reflect wages that are actually prevailing” was an “arbitrary and capricious” action, the applicable standard for invalidating such an agency action under New York law.
Prevailing wage obligations place a heavy burden on employers. Employers doing business with New York City or other public sector entities requiring for the payment of prevailing wage or prevailing wage-type benefits (such as the federal Service Contract Act) must monitor their attendant obligations closely to ensure that payments are made appropriately and reported appropriately, and that labor costs are managed to the extent possible within the boundaries of applicable law.