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New York workers have a common law right to sue for breach of contract to recover payments they are denied by the nonpayment of prevailing wages on federal public works projects, the Court of Appeals determined on June 5. The prevailing wage issue reached the court in the form of two conflicting decisions by different panels of the Appellate Division, First Department. Cox v. NAP Construction Company, Inc., 84, and Araujo v. Tiano’s Construction Corp., 85, reflected the uncertainty by courts over whether the federal Davis-Bacon Act precludes actions under state law for prevailing wage violations. Both cases involved claims by construction workers that they were not paid prevailing wages by contractors on 10 federally funded projects for the New York City Housing Authority between 1997 and 2002. The authority was not a defendant in either case. The workers contended that NAP Construction and Tiano’s Construction agreed in their contracts with the authority to pay prevailing wages and provide other benefits according to the Davis-Bacon Act, and that it was the contractors, not the authority, that allegedly failed to deliver on those obligations. Complaints by the workers to the housing agency were unavailing, according to the ruling. The defendant contractors argued that the federal act requires administrative remedies for prevailing wage violations at the government agencies receiving federal funding for projects. They also relied on a First Department ruling, Gonzalez v. D&S Zaffuto Joint Venture, 271 AD2d 356 (2000), which held that “no private right of action exists to enforce contracts requiring payment of federal Davis-Bacon Act . . . prevailing wages.” The Court of Appeals, in a ruling combining the Cox and Araujo cases, determined that Davis-Bacon does not preempt the workers’ state claims. Writing for the court, Judge Robert S. Smith declared that it would be unfair to require employees to exhaust administrative remedies because “plaintiffs do not have any administrative remedies they can exhaust.” “The only way for workers to get the benefit of the regulations is to call violations of law to an agency’s attention and hope for the best — a course plaintiffs have already pursued, with very little success,” Judge Smith wrote. “Since plaintiffs have no remedy under the federal regulations, defendants’ ‘exhaustion’ argument boils down to a claim that they have no remedy at all — that they must wait, perhaps forever, for an agency to act.” Judge Smith’s ruling harkened back to Strong v. American Fence Constr. Co., 245 NY 48 (1927), and Fata v. S.A. Healy Co., 289 NY 401 (1943), two cases in which the court found that the existence of government agency enforcement regulations did not preclude lawsuits by private litigants. “In those cases, a government agency might have sought to enforce the contractor’s obligations to provide a bond, or to pay the statutorily-required minimum wage, and a private lawsuit might have made those tasks more complicated, but in both cases we upheld the existence of a common-law remedy,” the court decided. “We uphold it again here.” The June 5th ruling overturned a 3-2 First Department determination in Araujo v. Tiano’s Construction Corp., 40 AD3d 458 (2007), that found no right to common-law claims by the workers based on Gonzalez. But it affirmed a 4-1 ruling in Cox v. NAP Construction Company, Inc., 40 AD3d 459 (2007), in which a different First Department panel upheld workers’ claims “because we believe that Gonzalez was not correctly decided and we respectfully decline to follow it.” Lloyd R. Ambinder of Barnes, Iaccarino, Virginia, Ambinder & Shepherd represented the workers in both cases. He said the alleged underpayment of wages was “incredible” in some instances, with workers getting as little as $200 for a week’s work that would have earned them $1,600 to $2,000 had they worked on private projects in New York City. The ruling should apply to workers on all federally assisted projects in New York state, not just those involving the housing authority, Mr. Ambinder said. “There are hundreds and hundreds of workers in existing lawsuits who will also benefit from this decision,” he said in an interview. Mario Biaggi Jr. of Biaggi & Biaggi represented NAP Construction. He said he had not had a chance to read the decision closely and declined to comment. Mayer, Ross & Hagan in Patchogue argued for Tiano’s Construction. Christopher R. Ross said the firm “will take action that’s in the best interests of our client” after reviewing the decision.

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