Burgio and Campofelice, Inc. v. New York State Dept. of Labor
| Decision Date | 04 March 1997 |
| Docket Number | No. 233,D,233 |
| Citation | 107 F.3d 1000 |
| Parties | , 134 Lab.Cas. P 58,305, 20 Employee Benefits Cas. 2593, 3 Wage & Hour Cas.2d (BNA) 1405, Pens. Plan Guide (CCH) P 23932B BURGIO AND CAMPOFELICE, INC., Plaintiff-Appellee, v. NYS DEP'T OF LABOR; Thomas P. Hartnett, Industrial Commissioner of the State of New York; Charles C. Drobner, Director of Bureau of Public Work, New York State Department of Labor and Robert Abrams, Attorney General of the State of New York, Defendants-Appellants. ocket 96-7210. |
| Court | U.S. Court of Appeals — Second Circuit |
Pico Paul Ben-Amotz, Assistant Attorney General of the State of New York, New York City (Dennis C. Vacco, Attorney General of the State of New York, Peter H. Schiff, Deputy Solicitor General, Daniel F. DeVita, Assistant Attorney General in Charge of Labor Bureau, M. Patricia Smith, Assistant Attorney General, of counsel), for Defendants-Appellants.
Guy J. Agostinelli, Buffalo, NY (Zdarsky, Sawicki & Agostinelli, Gerald T. Walsh, of counsel) for Plaintiff-Appellee.
Colleran, O'Hara & Mills, Garden City, NY, (Denis A. Engel, of counsel) for New York State AFL-CIO, Amicus Curiae.
Gary S. Tell, Trial Attorney, U.S. Department of Labor, Washington, DC, J. Davitt McAteer, Acting Solicitor of Labor, Marc I. Machiz, Associate Solicitor, Plan Benefits Security Division, Karen L. Handorf, Counsel for Special Litigation, Plan Benefits Security Division, for Secretary of Labor, Amicus Curiae.
Terry R. Yellig, Sherman, Dunn, Cohen, Leifer & Yellig, Washington, DC, for Building and Construction Trades Department, AFL-CIO, Amicus Curiae.
Patrick E. Brown, Justin E. Driscoll, II, Plunkett & Jaffe, P.C., Albany, NY, for New York State Building and Construction Trades Council, AFL-CIO, Amicus Curiae.
Blitman & King, LLP, Syracuse, NY (Jennifer A. Clark, of counsel), for Rochester Laborers' Pension, Welfare-S.U.B., Annuity Funds, et al., Amicus Curiae.
Before: LUMBARD, FEINBERG and WALKER, Circuit Judges.
Defendants New York State officials (collectively defendants or the State), responsible for enforcing the state labor statute under challenge here, appeal from a judgment of the United States District Court for the Western District of New York, John T. Curtin, J., granting the motion of plaintiff-appellee Burgio and Campofelice, Inc. (Burgio) for summary judgment. Burgio and Campofelice, Inc. v. New York Dep't of Labor, 914 F.Supp. 931 (W.D.N.Y.1996). Burgio, a general contractor, brought this action (1) to enjoin the State from enforcing New York Labor Law §§ 220, 223 (McKinney 1986 ed. and Supp.1997) (the prevailing wage law), against Burgio for wage supplements that Burgio's subcontractor allegedly failed to pay its employees; and (2) to declare the prevailing wage law preempted by federal law. Relying on our decision in General Electric Co. v. New York State Dep't of Labor, 891 F.2d 25 (2d Cir.1989) (GE I ), the district court held that the state law was preempted under the Supremacy Clause of the United States Constitution, art. VI, cl. 2, and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The State unsuccessfully argued that it had substantially revised those aspects of its enforcement strategy that, according to GE I, subjected the prevailing wage law to ERISA preemption. The judge rejected this assertion. Because we disagree with the district court's treatment of the State's claims regarding its enforcement strategy, we vacate and remand for further proceedings consistent with this opinion.
Section 220 of the New York Labor Law was originally designed to insure that employees on public works projects were paid wages equivalent to the prevailing rate of similarly employed workers in the locality. Because the statute made no reference to fringe benefits, bidders on public works contracts who provided no such benefits were in a position to underbid those who did. Accordingly, section 220 was amended in 1956 to require that all bidders on public works contracts assume the cost of prevailing wage supplements in the locality, N.Y.Lab. Law § 220(3), thus presumably putting all bidders on an even footing. GE I, 891 F.2d at 28.
Wage supplements are defined to include "all remuneration for employment paid in any medium other than cash, or reimbursement for expenses, or any payments which are not 'wages' within the meaning of the law, including, but not limited to, health, welfare, non-occupational disability, retirement, vacation benefits, holiday pay, life insurance, and apprenticeship training." N.Y.Lab. Law § 220(5)(b). A fiscal officer, who in most cases is the Commissioner of Labor, is authorized to ascertain and determine the prevailing rates of wages and wage supplements for all public works. N.Y.Lab. Law § 220(3) (third undesignated paragraph). Those prevailing rates are determined by reference to collective bargaining agreements between labor organizations and employers, provided such agreements cover at least 30 percent of the workers in the same trade or occupation in the locality where the work is to be performed. N.Y.Lab. Law §§ 220(5)(a), 220(3) (second undesignated paragraph), 220(5)(c).
The statute makes the prime contractor on a public works project financially responsible for a subcontractor's failure to comply with the requirements of § 220, and authorizes the fiscal officer to bring an action to enforce its provisions. N.Y.Lab. Law § 223.
Exactly how the wage supplements requirement is applied is a crucial matter in dispute between the parties. When we decided GE I, it appears that the State followed a "line-item" approach whereby the Commissioner of Labor prescribed prevailing benefits levels for each individual type of wage supplement. In each instance where the cost of a supplement provided for in an employment contract did not correspond with the cost of a similar prevailing local benefit, section 220 required the employer either to bring the cost of its prescribed benefit into equivalence with the cost of the local prevailing one or to pay the additional cost directly to the employee-beneficiaries. The employer was not permitted to substitute one form of supplement for another, and received no credit under the statute for the cost of providing benefits not deemed to be "prevailing benefits" by the Commissioner. 891 F.2d at 27. The Commissioner's position was in accord with the New York Supreme Court, Appellate Division, which held that "the statute indicates that the Legislature intended that the Commissioner of Labor, not the contractor, determine the supplements to be provided and that the employee receive either the listed benefits or equivalent cash (or a combination of both)." A.L. Blades & Sons, Inc. v. Roberts, 136 A.D.2d 926, 927, 524 N.Y.S.2d 912 (4th Dept.1988) (mem.) The court in GE I concluded that the prevailing wage law applied in this manner was preempted by ERISA.
Burgio argues that the State's enforcement procedure during 1992-93, the time-frame relevant here, did not differ from the enforcement procedure used in GE I. The State counters that it abandoned its "line-item" policy in response to GE I, and adopted what it calls a "total package" policy. 1 Under this "new" approach, the State claims that it Thus, according to the State, the total package approach avoids those requirements that led the GE I court to find preemption. The State claims that it used this "total package" approach in conducting its investigations in this case.
The district court did not make an explicit finding on whether the approach claimed by the State was in fact used during the relevant period, believing that the point, even if established, would not sufficiently distinguish this case from GE I. Burgio & Campofelice, 914 F.Supp. at 936.
In February 1992, Burgio entered into a public works construction contract with the Williamsville Central School District in the amount of $8,130,273 to construct a new middle school. The following month, Burgio subcontracted with another company (the subcontractor) to perform the masonry on the project, at a cost of $2,398,000. Masonry work commenced shortly thereafter and continued through mid-December 1992, when the subcontractor informed Burgio that certain union-related benefits had not been paid. Burgio was subsequently served with a notice of levy by the Internal Revenue Service listing the subcontractor and another company. In early January 1993, Burgio discovered that the subcontractor had subcontracted its portion of the contract to that other company (the sub-subcontractor), which had entered into collective bargaining agreements with the unions representing bricklayers, laborers and operating engineers working on the project. Those collective bargaining agreements contemplated contributions to benefit plans covered by ERISA. These contributions are part of the "wage supplements" taken into account by the State in administering the prevailing wage law. Burgio never entered into any kind of agreement with the sub-subcontractor, nor did it employ any of the workers hired under the sub-subcontract.
In January 1993, the subcontractor stopped work on the project. Burgio was forced to find another subcontractor to complete the masonry work. That same month, the sub-subcontractor filed a Chapter 11 petition in bankruptcy, which has since been dismissed.
In February 1993, defendant New York State Department of Labor (DOL) issued a notice pursuant to § 220 of the New York Labor Law directing the Williamsville School District to withhold $350,900.00 in payments to Burgio. ...
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