Youngwood v. Pa Prevailing Wage Appeals Bd.

• Decision Date: 04 June 2008
• Docket Number: No. 8 WAP 2008.,8 WAP 2008.
• Citation: 947 A.2d 724
• Parties: BOROUGH OF YOUNGWOOD, Appellant v. PENNSYLVANIA PREVAILING WAGE APPEALS BOARD, Appellee.
• Court: Pennsylvania Supreme Court

947 A.2d 724

BOROUGH OF YOUNGWOOD, Appellant v. PENNSYLVANIA PREVAILING WAGE APPEALS BOARD, Appellee.

No. 8 WAP 2008.

Supreme Court of Pennsylvania.

Argued April 16, 2008.

Decided June 4, 2008.

Gerald William Yanity, Gerald Joseph Yanity, Yanity Law Offices, Latrobe, for Borough of Youngwood, appellant.

Stanley J.A. Laskowski, Caldwell & Kearns, P.C.; Peter Grayson Howland, Wix, Wenger & Weidner, P.C., Harrisburg, for PA State Ass'n of Tp. Sup'rs, appellant amicus curiae.

Gina S. Mekley, for Prevailing Wage Appeals Bd., appellee.

James A. Holzman, PA Dept. of Labor & Industry, Harrisburg, for Bureau Labor Law Compliance, appellee.

Joshua Martin Bloom, Pittsburgh; Irwin William Aronson, Willig, Williams & Davidson, Philadelphia, for PA State Bldg. & Trades Council, AFL-CIO, et al., appellee amici curiae.

BEFORE CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD and McCAFFERY, JJ.

OPINION

Justice McCAFFERY.

In this appeal by the Borough of Youngwood (Appellant), we are asked to determine whether Appellant's public works project, which in substantial part consisted of resurfacing portions of five borough streets in addition to other street-related work, is subject to the prevailing minimum wage requirements of the Prevailing Wage Act (Act).¹ We conclude that it is and therefore affirm the order of the Commonwealth Court.

Section 5 of the Act, 43 P.S. § 165-5, requires payment of the prevailing minimum wage² for "public work." "Public work" is defined as:

construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body where the estimated cost of the total project is in excess of twenty-five thousand dollars ($25,000), but shall not include work performed under a rehabilitation or manpower training program.

43 P.S. § 165-2(5) (emphasis added). "Maintenance work" is defined as "the repair of existing facilities when the size, type or extent of such facilities is not thereby changed or increased." 43 P.S. § 165-2(3). "Facility" or "facilities" is not defined in the Act. However, what is abundantly clear is that the primary purpose of the Act is to protect workers employed on public work projects from receiving substandard pay by ensuring that they receive prevailing minimum wages. Pennsylvania National Mutual Casualty Insurance Co. v. Department of Labor & Industry, Pennsylvania Prevailing Wage Appeals Board, 552 Pa. 385, 394, 715 A.2d 1068, 1072 (1998).

In 2005, Appellant solicited bids for a contract to perform work on several roads in its jurisdiction. The bid proposal for the project bore the title "Youngwood Borough 2005-3 Street Resurfacing and Improvement Project" (the Project). The Project had an estimated cost of $183,209, with $71,000 of the cost coming from PennDOT's Liquid Fuels Tax Funds, and the remainder coming from Appellant's general fund.³ As advertised by Appellant, the Project consisted of (1) resurfacing portions of five streets by milling approximately 11,000 square yards of cartway and paving with 1270 tons of ID#2 binder or wearing course and approximately 11,600 square yards of surface material; (2) the surface treatment of 9800 square yards of two streets; (3) minor drainage of one street; (4) patching approximately 1300 square yards of one street; (5) constructing six catch basins; (6) replacing approximately 570 linear feet of existing piping and approximately 650 linear feet of French drains; (7) raising a manhole cover with a one-inch spacer ring; and (8) additional labor to treat and finish the work. The resurfacing work involves a process called "milling," whereby between 1½" and 3½" of the existing street is "cut" or ground down prior to application of the new surface. The new surface consists of a ½" leveling course and a final course of 1½" of blacktop. However, where the existing roadway has deteriorated more significantly, as much as 2" of binder can be applied under the new surface. Milling was eventually performed on seven blocks of Appellant's streets, and a substance designed to improve the binding of layers of the new road surface, called "Petromat," was applied to particularly damaged roadways. See Final Decision and Order of the Pennsylvania Prevailing Wage Appeals Board, dated January 19, 2007 (hereinafter Board's Final Decision and Order), at 2-4, Findings of Fact Nos. 2-7.

Appellant designated the milling and repaving of the five streets as "maintenance" and not "public work" as defined by the Act. Additionally, Appellant estimated that the milling and repaving of the five streets constituted 40% of the total estimated Project cost. Appellant determined that only 11.3% of the estimated Project cost was for non-maintenance work, and that the remaining 88.7% was for maintenance work as defined by the Act. For this reason, Appellant determined that the Project did not require the payment of prevailing minimum wages, and solicited bids for the Project as a "maintenance" project not subject to the Act. A contract for the Project was awarded to the lowest responsible bidder, Pompei & Sons, on July 13, 2005.

After completion of the Project, the Bureau of Labor Law Compliance of the Department of Labor and Industry (Bureau) contacted Appellant to investigate whether Appellant had complied with the Act by accurately characterizing the nature of the Project as "maintenance work." After its investigation, the Bureau determined that the Project was principally a reconstruction project, not a maintenance one, and therefore, prevailing minimum wages should have been paid pursuant to the Act. In arriving at its determination, the Bureau specifically rejected Appellant's reliance on a publication issued by the Pennsylvania Department of Transportation (PennDOT) entitled "Policies and Procedures for the Administration of the County Liquid Fuels Tax Act of 1931 and The Liquid Fuels Tax Act 655" (Publication 9), effective January 2003. Publication 9 included the information contained in an unsigned and undated Memorandum of Understanding (MOU) prepared by PennDOT and the Department of Labor and Industry (DLI) that incorporated PennDOT's interpretation of the term "maintenance" under the Act. Significant to the instant case, the MOU provided that replacement in kind of guide rail, curb, and pipes was maintenance, as was "black top paving (laid on asphalt pavement, cement concrete, or other hard surface) [u]p to three and a half inches thickness or up to 420 pounds per sq. yd." MOU at 1, submitted as Exhibit BLLC-1 at the Board hearing. The MOU further provided that if nonmaintenance items exceeded 15% of the total project cost, the project was to be treated as a non-maintenance contract.

The Bureau informed Appellant that the MOU "is no longer in use and does not reflect the prevailing wage requirements under the Act. Additionally, [Appellant] is not a party to the [MOU]." Letter from the Bureau to Appellant, dated December 30, 2005, at 3. The Bureau further noted that DLI had stopped using the MOU in January 2005, although DLI did not inform PennDOT of this fact until September or October 2005, which was after the Project had been completed. Board's Final Decision and Order at 6, Findings of Fact Nos. 20-21.

Appellant filed a grievance with the Pennsylvania Prevailing Wage Appeals Board (Board) on February 17, 2006, challenging the Bureau's determination. Following an evidentiary hearing and oral argument, the Board denied Appellant's grievance on January 19, 2007, after determining that the Project consisted principally of "alteration work," not "maintenance work," and was accordingly subject to the Act "even though some of the work, standing alone, would qualify as maintenance work." Board's Final Decision and Order at 14, Conclusions of Law Nos. 1 and 3.

Upon appeal from that decision, in an en banc opinion authored by Judge McGinley, the Commonwealth Court affirmed, determining that the "milling" and repaving of road surfaces, which constituted 40% of the Project, was activity that went well beyond "maintenance" and was, in fact, repair or construction. The court had not previously ruled on whether the milling of a roadway in anticipation of repaving is maintenance or construction, and therefore whether the activity is subject to prevailing minimum wages. Accordingly, the court began its analysis with a review of analogous case law, principally, Kulzer Roofing, Inc. v. Department of Labor & Industry, 68 Pa.Cmwlth. 642, 450 A.2d 259 (1982). In Kulzer Roofing, the court held that the re-roofing of eight buildings was repair rather than maintenance, subject to prevailing minimum wages, because the entire roof of each building was replaced, rather than simply being partially overhauled or patched. In the present matter, the court observed that under Kulzer Roofing, the replacement of an old roof with a new roof constituted a change in type, and therefore constituted "repair work," not "maintenance work" under the Act. Accordingly, the court concluded that the replacement of an old road top with a new road top is in similar manner a change in type, and therefore it was "repair work," not "maintenance work" under the Act. Borough of Youngwood v. Pennsylvania Prevailing Wage Appeals Board, 938 A.2d 1198, 1201 (Pa.Cmwlth.2007) (en banc).

The court also rejected Appellant's argument that it had justifiably relied upon the MOU, citing Borough of Ebensburg v. Prevailing Wage Appeals Board, 893 A.2d 181 (Pa.Cmwlth.2006). In that case, the borough had initiated a project to demolish and reconstruct sidewalk and curbing along a street at an estimated cost in excess of the statutory maximum exclusion of $25,000, using public funds. The MOU at issue in that controversy defined "maintenance under the Act as replacement of the curb in kind but also define[d] [installation of] new curb as not maintenance." Id. at 184 (emphasis added). The MOU did not address...