Goodley McCarthy Scores Initial Victory in Pennsylvania Class Action Prevailing Wage Lawsuit

electric lineman cutting wire

On December 7, 2023, Judge Paula A. Patrick, of the Court of Common Pleas for Philadelphia County, issued an order holding that construction worker employees of a subcontractor may sue a higher-level general contractor for unpaid prevailing wages on Pennsylvania public works projects, because the subcontractors’ employees were “third-party beneficiaries” to the public works construction contracts between the state agency and the general contractor.

On publicly-funded construction projects in Pennsylvania, the Pennsylvania Prevailing Wage Act (PPWA) requires that each construction worker on the project be paid the “prevailing minimum wage” for each hour worked on the project, in accordance with the type or classification of work they perform (e.g., operating engineer, cement mason, electric lineman). Important to this case, the PPWA further requires that the construction contracts between the state agency awarding the contract and the general contractor, as well as the subcontracts between general contractor and its subcontractors, include stipulations stating that all workers on the project will be classified and paid the prevailing wage rate for each hour worked on the project, in accordance with the type of work they perform.

In this case, the Pennsylvania Turnpike Commission (PTC) awarded over $100 Million in public construction contracts to Black & Veatch Construction, the general contractor on the project, to reinstall fiber-optic cable along several hundred miles of the Pennsylvania Turnpike. Black & Veatch, in turn, subcontracted much of the electric line construction work to subcontractors. As required by the PPWA, the PTC contracts mandated payment of prevailing wages to the workers performing construction work on the project, and these terms were part of how contractors bid on the project.

Goodley McCarthy represents the plaintiff-worker who performed electrical line construction work for a subcontractor on the PTC project. The plaintiff alleges that although he performed electrical line construction work on the project, which was required to be paid at the higher “Lineman” prevailing wage rate, he was paid the lower “Laborer” rate for his hours worked. This case was brought as a class action against Black & Veatch on behalf of all the workers who performed work for line construction subcontractors pursuant to the legal theory that the workers were “third-party beneficiaries” of the PTC contracts.

Black & Veatch filed “preliminary objections” (the Pennsylvania state court equivalent to a motion to dismiss) to the plaintiff’s class action complaint, arguing that the plaintiff and class of workers he sought to represent may not recover unpaid prevailing wages against a higher-tiered general contractor such as Black & Veatch. Black & Veatch argued that the plaintiff was not a third-party beneficiary of the PTC contracts, and therefore, the complaint should be dismissed.

The court disagreed with Black & Veatch’s arguments and issued an order holding that the plaintiff and other workers on the project satisfied the test for third-party beneficiary status under Pennsylvania contract law. The court wrote: “The parties expressly agreed that the PPWA would apply, i.e., workers would be paid the prevailing minimum wage. Therefore Plaintiff and the proposed class members are third-party beneficiaries under the contract.”

As a result of the court’s decision, Black & Veatch filed a joinder complaint against nine (9) of its subcontractors, asserting that if Black & Veatch is ultimately held to be responsible for the unpaid prevailing wages to plaintiff and the class, the subcontractors will be legally required to “indemnify” Black & Veatch for all or a portion of the wage damages found to be due and owing.

The Black & Veatch decision is important in several respects. This decision holds general contractors ultimately responsible for payment of Pennsylvania prevailing wages to everyone on the project. In other words, deep pocketed general contractors cannot avoid responsibility (and increase their profits) by choosing to do business by low-road (and often underfunded) subcontractors whom they have reason to believe will not pay their workers correctly. If such subcontractors are utilized and they break the law, the general contractor will be held responsible to pay all underpaid prevailing wages, even if their subcontractors do not have the assets to pay their direct workers. This decision encourages more responsible bidding by contractors, as well as more responsible subcontracting and monitoring of subcontractor practices.

This case is still ongoing and Goodley McCarthy is in the midst of discovery with Defendants.

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