Charter Schools are Not Subject to Prevailing Wage Requirements

In a reversal of Judge Lynch's (Albany County Supreme Court) declaratory judgments both entered May 30, 2008, the Appellate Division, Third Department issued a decision yesterday that held New York's charter schools are not "public entities" as that term is defined and used in Article 8 of the New York Labor Law.

As such, in New York, charter schools are not required to pay prevailing wages on its improvement projects. It's no surprise that the Charter School Association sought declaratory judgment on this matter as it became confused after receiving two opposing opinion letters from the Department of Labor on this very issue. Originally, DOL issued an opinion letter in June, 2000, which set forth that charter schools were not subject to the prevailing wage statute. In August, 2007, DOL completely changed its opinion to state that charter schools are subject to Article 8 of the Labor Law and that it would begin enforcing prevailing wage requirements for bids advertised after September 20, 2007. The change opinion is assumed to have occured as a result of the amendment to the Labor Law statute that set forth prevailing wage must be paid not only when a public entity is the direct party to the contract (pre-2007 amendment), but to "any contract for public work entered into by a third party acting in place of, on account of and for the benefit of such public entity pursuant to any lease, permit or other agreement between such third party and the public entity." Labor Law §220 L. 2007, ch 678, §5.

While arguments were made that the charter schools entered into an agreement with a public entity (i.e., the charter agreement). The appellate division (after reviewing the legislative history of the 2007 amendment) threw out this argument. The Appellate Division specifically held that, "the prevailing wage provisions of Labor Law article 8 are inapplicable to the projects undertaken by the [charter schools]...."

Click the link for the complete decision at the Appellate Division's official website: In the Matter of New York Charter School Assoc. v. M. Patricia Smith, ___ A.D.3d ___ (3d. Dep't 2009).