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at least the ones that we have talked about today. So we might start with the appeals procedure or the problem of the time element in making a decision and carrying it forward. All right. It is all yours.

DISCUSSION Commissioner ROBISON. In my State I am interested, for instance, in municipalities. In order to evade provisions of the prevailing wage law, more and more are doing their own work. Our law specifically states that it applies only to contractors. Has that come up in your discussions! ?

CONFEREE. Some laws have a provision that, where a special appropriation has been made, the rates will apply, whether it be awarded to a contractor or whether it be done with their own employees and help. The rate would apply regardless.

Mr. CABE. What about some others ?

Commissioner OTERO. May I point out that one way to get away from the subdivision doing its own work would be to pass a statute or law requiring all contract or construction work over a certain amount be let out to contractors. Of course, this won't be easy, because right away your counties will fight you full force. We have had that experience. We tried to pass a law that required all work -I think the last bill was $25,000—be let out to contractors. This is not easy. But it is one way to eliminate it.

Commissioner BACHMAN. I am sure that all public authorities, municipalities included, must of necessity work on a budget which must be approved by some other authority, usually the tax commissioner. I think the answer to Commissioner Robison's question is that if a municipality desires to do its own work, then within the framework of its budget, it must put down that it is going to have so many electricians, so many plumbers, so many carpenters, and a set sum be put there for the specific work that it is going to do. This is usually authorized by the commissioning authority within the State Government, as to who okays this budget. Then if that municipality, that school, or whoever it might be tries to go outside of the framework of the budget, it is in trouble with the authority that regulates the budget within the State Government.

President CATHERWOOD. The New York laws are written for public works protection. There has been a long line of court decisions which are currently interpreted as providing the prevailing rate of wage protection for State and municipal employees engaged in work coming within the definition of public works. One collateral proposal is that employees in a graded civil service system not be covered by the prevailing wage law, which is enforced by the Labor Department. There was this case against the village of Port Chester, in West Chester County, which dragged along for 16 years. We found against the village with respect to certain provailing wage rates due their employees. The case went all the way to the Supreme Court. We won the case. But the lawyer for the employees did not apply for a court order in timely fashion, according to the court, so the issue is being litigated. But, theoretically at least, and increasingly from a practical standpoint, our law applies to municipal employees and State employees doing public works, irrespective of whether the money is in the budget or not.

Commissioner CABE. In other words, even if the State or municipality is doing its own contracting, those workers would be covered by your public works law?

President CATHERWOOD. Yes, whether or not it is handled through a contractor.

Director CULLERTON. Illinois is dealing with the same problem the Commissioner from Idaho has; namely, that the doctrine of the prevailing wage law, until a recent State supreme court decision, applied to all political subdivisions, whether they contracted in the private sector or used their own employees in the construction of public works. The State supreme court has held in Illinois that the prevailing wage law doctrine does not apply to political subdivisions using their own employees. The case has not been appealed and will not be appealed by the trade unions, so we are today finding political subdivisions that use their own employees and circumvent the prevailing wage doctrine.

I am sure that some of you may be contending with this very shortly.

Commissioner CABE. I wonder how widespread this may be? This depends on how low you are in terms of monetary amounts that your law goes. For instance, the ones I am acquainted with have very, very few. This is true with our own, because in most construction they simply would not have the employees to do it.

Is this rather widespread in other States? Well, the point Mr. Robison and Mr. Cullerton brought up was that they have found that a large number of the municipalities are doing their own contracting. Are you finding this very widespread in your State ?

Chairman BUTLER. I think that this has occurred mostly when it was in the nature of maintenance work—streets, sewers, and sidewalks. We find that our State universities also do their own public works. The University of Missouri, for example, being a land grant school, does almost all of its work. It builds sidewalks as well as some small buildings. The contractors and laborers have not complained too much because, in most cases, these public works involve such a small amount. Anything over $2,500 has to be let by contract. But there is no restriction on municipalities. Most of these cases where public works are being done by municipalities are very small, relatively, because they just do not have the personnel nor the equipment.

Commissioner CABE. Now, what about the time element in making your determination? Does this create a problem in your area? In other words, are you accused of holding up production or construction

Chairman BUTLER. We had a situation recently which you might be on guard against. In Missouri we issued a wage determination, and there was an appeal. We must have a hearing within 30 days; and within 10 days, must make a finding. We found that the first wage determination was erroneous and thereafter set up a new one. The attorney for the public body filed a petition for a judicial review, which the judge in that community held to operate as an automatic stay. Not only did it reinstate the old determination, it stayed the new one, so the construction is proceeding. So we have a situation where the construction very well might be completed under the old, erroneous wage determination. When the court goes through the procedure and determines that the new wage is the correct one, and I am sure it will be, the contractor will have left the jurisdiction. So the workmen, having no remedy, will have no way to pursue it because the contractor in this instance left the jurisdiction. I would suggest to all of you to try to get something in your statute to the effect that a petition for judicial review shall not operate as an automatic stay, unless the commission would so order. You will find that in most employment security laws. But this operating as an automatic stay-ties everybody's hands, and it will be a year before it gets through the courts. In the meantime, the construction will be finished, the contractor will be paid, and no doubt, the surety on the contractor's bond released. In some instances it is almost $1.50 or $2 less than the new wage that we set. So we have that situation. It is the first time it has ever come up, but it is going to happen again.

CONFEREE. There is no provision to withhold part of the funds!

Chairman BUTLER. No sir, not now. There may be proposed legislation but at the present time there is none. Only the bond is in effect.

CONFEREE. I find that most engineering and architectural firms will request rates on behalf of the awarding agency well in advance of bidding dates. The only thing you have to watch is, should they not request bids as they intended to, that you may want to update the wage rates within, say, a 3-month span.

CONFEREE. Did I understand you to say that the original standard was erroneous ?

Chairman BUTLER. Yes.

CONFEREE. Tell me this. If the bid is let to a contractor based on this, what you are saying is: The contractor bids on what he thinks is the prevailing rate. How do you increase those rates after the contractor has left? Can the contractor absorb this additional expense and still come out ahead!

Chairman BUTLER. In most cases that would be true. The contractor was aware of the appeal, because it was appealed from what they felt was an erroneous determination. Thereafter the bid was let. This contractor received the bid. As a matter of fact, he was the only person who testified on behalf of the old determination at the hearing; whereas, they had almost 30 or 40 witnesses who sustained their position that the wage determination should be higher.

CONFEREE. Do you set your prevailing rates in Missouri?

Chairman BUTLER. Usually it is set by the only information we have. We have such a small staff-only two people. When our law was passed in 1957, it was not until July 1958 that the legislature appropriated any funds whatsoever for it. So, as has occurred in many States, the only information we have received in our files has been from union personnel. They send in their contracts and also all projects which they observe in their jurisdiction, depending upon the craft. Then they write to us and get contractors' affidavits as to what is being paid in each craft. We are receiving more and more each day. We look at the determination when it comes in, and from that we determine what the prevailing wage rate will be on a particular craft in a particular works as designated by the engineers or the architects. As I say, we have no one going out in the field, no one to make our own investigation. As a result, the only information we receive is from union personnel, business agents, and such.

I might point out, in July 1958, when we first received the money for prevailing wage, there were 18 union counties out of 124. Today we have 78. So you see which way it is moving.

CONFEREE. Do they submit their payrolls?

Chairman BUTLER. If they are under investigation. We very seldom initiate investigation. We have a right to examine his books or subpena him; but we do not have the time.

CONFEREE. We submit for every job.

Commissioner CABE. Do you have to ask or do they send this in automatically, and is this all kinds of construction, including schools, etc.)

CONFEREE. Schools and highway construction.

Commissioner CABE. Do you ask or do they send them in?

CONFEREE. We ask. We asked in the beginning, but now they send them in voluntarily.

Commissioner CABE. Your law does require that they do so?

CONFEREE. They cooperate with the State agency. They in turn send us the payroll.

Commissioner CABE. Do you have the form on which these reports are made?

CONFEREE. Not on the payroll. We should, but we don't.

Commissioner CABE. Do you get copies of their own records, whatever they happen to get?

CONFEREE. Employees' payroll, which is required by the State agencies under a separate statute.

Commissioner CABE. Are there any other States that have this! This is a question that comes up frequently on the advisability of submission of contractual payrolls.

CONFEREE. On Federal and District certification projects, certified payrolls must be submitted. If they are not submitted, the payments are held up. I have often wondered what happened to those payrolls, because I have seen them stacked up a mile high.

Commissioner CABE. Only on District or Federal construction? CONFEREE. Yes; schools and so on.

Director Fant. We have a unique situation, I think, in our State. The Governor issued an executive order that the minimum prevailing wage must be used in all State construction, and highway and road work. Of course, we furnish the rates—the union's minimum

to the architects. They, in turn, put these rules in the specifications when they send out the bid notices to the contractors. We do require that they file a copy of their payroll with us. This does entail quite a bit of work for our department. As the gentleman said here, we have no appropriation for handling this matter. Five union contractors have entered suits against the State on two buildings in Montgomery County, Ala. Of course, these are pending, as of now. But we are in the process of working up a law that we will present to the new legislature.

Commissioner CABE. So far, you are covering only State and highway construction?

Director Fant. State and highway construction entails quite a bit. But we are taking in the schools, libraries, and colleges.

Commissioner CABE. Does that include the public schools?
Director FANT. Public schools, yes sir.
Commissioner CABE. They are usually built by municipalities.

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