Keystone Chapter, Associated Builders and Contractors, Inc. v. Foley
| Decision Date | 19 October 1994 |
| Docket Number | 93-7573 and 93-7548,No. 93-7573,D,No. 93-7547,AFL-CI,Nos. 93-7547,AFL-CIO,93-7547,93-7573,s. 93-7547 |
| Citation | 37 F.3d 945 |
| Court | U.S. Court of Appeals — Third Circuit |
| Parties | , 63 USLW 2260, 18 Employee Benefits Cas. 2161, 2 Wage & Hour Cas.2d (BNA) 495, 2 Wage & Hour Cas.2d (BNA) 640 KEYSTONE CHAPTER, ASSOCIATED BUILDERS AND CONTRACTORS, INC., in representation of its members, v. Thomas P. FOLEY, in his official capacity as the Secretary of Labor and Industry for the Commonwealth of Pennsylvania. Pennsylvania State Building and Construction Trades Council (Amicus in District Court). Thomas P. Foley, Appellant inKeystone Chapter, Associated Builders and Contractors, Inc., in representation of its members, Appellant inBELL TELEPHONE COMPANY OF PENNSYLVANIA; Communications Workers of America,istrict 13 v. Thomas P. FOLEY; in his official capacity as Secretary of Labor and Industry for the Commonwealth of Pennsylvania; James R. Davis; Frayda Kamber; Richard W. Martz; John H. Mickens. Pennsylvania State Building and Construction Trades Council,(Amicus in District Court). Thomas P. Foley; James R. Davis; Frayda Kamber; Richard W. Martz; John H. Mickens, Appellants. |
Susan J. Forney (Argued), Office of Atty. Gen. of PA, Dept. of Justice, Harrisburg, PA, for appellant/cross-appellee, Thomas P. Foley, and appellants, Thomas P. Foley, James R. Davis, Frayda Kamber, Richard W. Martz and John H. Mickens.
Thomas R. Davies (Argued), Harmon & Davies, Lancaster, PA, for appellee/cross-appellant, Keystone Chapter, Associated Builders and Contractors, Inc., in representation of its members, and amicus curiae appellee/cross-appellant, PA Utility Contractors Ass'n Mary M. McKenzie (Argued), Bell Atlantic Network Services, Inc., Marie L. Martino, Dechert, Price & Rhoads, Philadelphia, PA, for appellee, The Bell Telephone Co. of PA.
Irwin W. Aronson (Argued), Handler, Gerber, Johnston & Aronson, Camp Hill, PA, for amicus curiae appellant, cross-appellee, PA State Building and Const. Trades Council.
John H. Widman, McAleese, McGoldrick & Susanin, King of Prussia, PA, for amicus curiae appellants, The Roofing Contractors Ass'n Industry Fund, Contractors Ass'n of Eastern PA, Mechanical Contractors Ass'n of Eastern PA, Mechanical Contractors of Western PA, Laurel Mechanical Contractors, Inc., Plumbing & Heating Contractors Ass'n of Philadelphia & Vicinity, Inc., Pen-Jer-Del Chapter of the Nat. Elec. Contractors Ass'n, Del. Valley Insulation and Abatement Contractors Ass'n, Inc.
Thomas A. Beckley, Beckley & Madden, Harrisburg, PA, for amicus curiae appellants, SMACNA of PA, Sheet Metal Contractors Ass'n of Cent. PA, Sheet Metal Contractors Ass'n of Philadelphia and Vicinity, SMACNA of Western PA, Nat. Elec. Contractors Ass'n, Inc., Western PA Chapter, Laurel Mechanical Contractors Ass'n, Inc., Mechanical Contractors of Northwest PA, Painting and Decorating Contractors of America, Harrisburg Chapter, Masonry Contractors Ass'n of Cent. PA.
Richard B. Sigmond, Richard C. McNeill, Jr., Sagot, Jennings & Sigmond, Philadelphia, PA, for amicus curiae appellant, Steamfitters Local Union No. 420, United Ass'n of Journeymen and Apprentices of the Plumbing and Pipefitting Industry.
Deborah J. Nathan, Cleckner & Fearen, Willow Grove, PA, for amicus curiae appellee, cross-appellant, PA School Boards Ass'n, Inc.
Maurice Baskin, Venable, Baetjer, Howard & Civiletti, Washington, DC, for amicus curiae appellee, cross-appellant, Central PA Chapter, Lehigh Valley Chapter, Southeast PA Chapter, and Western PA Chapter of Associated Builders and Contractors, Inc. and Associated Builders and Contractors, Inc.
Loudon L. Campbell, Calkins & Campbell, Harrisburg, PA, for amicus curiae appellee, PA Builders Ass'n.
Robin S. Conrad, Washington, DC for amicus curiae appellee, Chamber of Commerce of the U.S. of America.
Before: BECKER, MANSMANN and SCIRICA, Circuit Judges.
In this appeal, we must decide whether the Employee Retirement Income Security Act of 1974 (ERISA) 1 preempts a Pennsylvania minimum wage law applying to public works projects. We hold that such a law may not refer to ERISA plans or accord them special treatment, but may set minimum wages and give employers the option of satisfying a portion of the wage through contributions for employee benefits.
An employer, an employers' association, and a labor union 2 sued Pennsylvania's Secretary of Labor and Industry and the members of the state Prevailing Wage Appeals Board (collectively, the Secretary) in federal district court, claiming Pennsylvania's Prevailing Wage Act (the Act), 3 its accompanying regulations, and an administrative Declaratory Order interpreting the Act are preempted by ERISA. The district court agreed and overturned the Act, regulations, and order. 837 F.Supp. 654. The Secretary of Labor and Industry appeals, and the employers' association cross-appeals.
We agree the Declaratory Order implements the Act in a manner preempted by ERISA. But we find the Act and its regulations are not preempted because they confer broad authority that may be implemented in a manner consistent with ERISA. Therefore we will affirm the judgment of the district court striking the Declaratory Order, but reverse its judgment striking the Act and accompanying regulations.
The purpose of the Prevailing Wage Act "is to protect workers employed on public projects from substandard wages by insuring that they receive the prevailing minimum wage." Lycoming County Nursing Home v. Pennsylvania, 156 Pa.Cmwlth. 280, 627 A.2d 238, 242 (1993). The statute provides, "Not less than the prevailing minimum wages as determined hereunder shall be paid to all workmen on public work," 43 P.S.A. Sec. 165-5, and sets forth general rules for determining prevailing minimum wages. Before public contracts are put out to bid, the Secretary of Labor and Industry, in consultation with an Advisory Board, determines the prevailing minimum wage for each locality and for each "craft or classification" of worker to be employed. 43 P.S.A. Sec. 165-7. In making this determination, "employer and employe contributions for employe benefits pursuant to a bona fide collective bargaining agreement shall be considered an integral part of the wage rate." Id. The statute does not define "prevailing minimum wage rate," nor specify how contributions for benefits are to be integrated into the wage rate. 4
The seven-member Prevailing Wage Appeals Board hears "any grievance or appeal arising out of the administration of this act" "[p]romulgate[s] rules and regulations necessary to carry out [its] duties." 43 P.S.A. Sec. 165-2.2(e). Contractors and subcontractors must "keep an accurate record showing the name, craft and the actual hourly rate of wage paid to each workman employed by him in connection with public work" for two years following payment, subject to inspection by the Secretary and the public body awarding the contract. Id. Sec. 165-6.
The Pennsylvania Code, Title 34 Secs. 9.101-9.112, provides additional rules for calculating and enforcing the prevailing minimum wage in public works contracts. The regulations make clear that a prevailing minimum wage will state a cash wage and a level of benefits contributions as separate components. Contractors and subcontractors must pay "[n]ot less than the general prevailing minimum wage rates determined by the Secretary." If a contract does not provide for employee benefits contributions "which the Secretary has determined to be included in the general prevailing minimum wage rate," the employer may pay "the monetary equivalent thereof." Id. Sec. 9.106.
Contributions for employee benefits are defined as " '[f]ringe benefits' paid or to be paid, including payment made whether directly or indirectly, to the workmen for sick, disability, death, other than Workmen's Compensation, medical, surgical, hospital, vacation, travel expense, retirement and pension benefits." Id. Sec. 9.102. Contractors may pay their workers above the prevailing rate. Id.
To determine the prevailing minimum wages and benefits in a locality, the Secretary considers local collective bargaining agreements between established bargaining representatives and employers and other information. Id. Sec. 9.105. The regulations specify additional records and reporting requirements for employers. Id. Secs. 9.109, 9.110. The Secretary may investigate and hold hearings on allegations of underpayment, and may bar public contracts with a violating firm and request the Attorney General to recover penalties. Id. Sec. 9.111.
Although the Act and regulations specify the prevailing minimum wage will have separate cash and benefits components, they do not state whether the benefits component should merely state the total level of benefits contributions an employer must make (through benefits contributions or their cash equivalent), or whether it should specify which types and levels of benefits must be given. That issue has been resolved by the Secretary and Board in different ways at different times.
For several years prior to April 13, 1992, the Secretary used a "line-item" approach in determining compliance with a prevailing wage's benefits component. 5 The Secretary made a "predetermination" of the prevailing wage for each category of worker in a given locality, specifying the prevailing levels of benefits in a number of categories, such as "health-and-welfare," "pension," and "apprenticeship-and-training". An employer had to meet the prevailing level of each category of benefit, or pay the shortfall in cash to the worker. An employer was not given credit toward the benefits component for...
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