Kentucky Repeals Prevailing Wage Law

Within the first week of the 2017 session of the Kentucky General Assembly, the Legislature passed a law repealing the prevailing wage law in Kentucky. The legislation was passed on an emergency basis and signed by Governor Bevin on January 7, 2017. Therefore, the repeal of the prevailing wage law became effective on that date. Any construction contract that was bid and awarded prior to January 7, 2017 must pay prevailing wages. Contracts bid but not awarded until on or after January 7, 2017 do not have to pay prevailing wages. If a contract was bid but not awarded before January 7, 2017, the pubic authority may elect to request a resubmission of bids without the requirement for prevailing wages.

Kentucky’s prevailing wage law required wages and fringe benefits established by the Kentucky Labor Cabinet to be paid to workers on public construction projects. Prevailing wages are theoretically designed to reflect the wages paid to particular trades in particular locales. Critics of prevailing wage laws say that prevailing wages are intended to reflect local union wages in order to allow unions to be competitive on public projects.

The repeal of the Kentucky prevailing wage law not only applies to state projects, but specifically prohibits any city, county or local government from requiring an employer to pay a certain wage or fringe benefit.

The repeal of the prevailing wage requirement in Kentucky only applies prospectively. The law specifically states that the repeal of prevailing wage requirements applies to any public works project or portion thereof for which bids have not yet been awarded as of January 7, 2017. The Act further provides that if bids have been requested but not awarded prior to January 7, 2017, the public authority may request a resubmission of bids to eliminate the requirement for prevailing wages. Therefore, prevailing wages must be paid on any project that was bid and awarded prior to January 7, 2017 but are not required to be paid on any project that has not been awarded prior to January 7, 2017 even if bids had been submitted for that project.

It is important to note that Kentucky’s repeal of its prevailing wage law has no effect on the Federal Davis Bacon Act prevailing wage requirements. The Federal Davis Bacon Act requires prevailing wages and fringe benefits to be paid to all mechanics or laborers working on the construction, alteration or repair of public buildings and public works of the federal government. The Davis Bacon Act requirements have also been extended to require the payment of prevailing wages and fringe benefits on other projects which are provided federal assistance for construction through grants, loans, loan guarantees or insurance, even though the federal government is not a party to the contract. Hence, the reach of the Federal Davis Bacon Act is in no way altered by Kentucky’s repeal of its prevailing wage law. The repeal of Kentucky’s prevailing wage law is limited to Kentucky state and local public construction projects.