Action Electrical Contractors Co. v. Goldin, 64 N.Y.2d 213 (1984)
Under New York Labor Law § 220, a contractor on a public works project can satisfy its obligation to provide supplemental fringe benefits to employees by providing the cash equivalent of the cost of obtaining the prevailing benefits, rather than exclusively through in-kind benefits.
Summary
Action Electrical Contractors Co. was found to have violated Labor Law § 220 by failing to provide prevailing supplemental benefits to its employees on public works projects. The Comptroller determined Action Electrical had not provided equivalent benefit plans, and paying laborers additional cash equal to the cost of benefits was deemed insufficient. The Court of Appeals reversed, holding that the statute does not prohibit contractors from providing supplements via cash payments equal to the cost of the benefits, a combination of cash and benefits, or an equivalent benefits plan. The legislative intent behind the law was to equalize labor costs, and this goal is achieved when a contractor pays the cost of prevailing supplemental benefits, regardless of the form of payment.
Facts
Action Electrical Contractors Co. primarily worked on public contracts. They had a collective bargaining agreement with Local 363 of the Allied and Industrial Trade Workers, which required contributions to a benefit fund. In April 1980, Action Electrical was awarded contracts to perform electrical work for the New York City Housing Authority. The Comptroller received a complaint that Action Electrical was paying less than the prevailing wage and providing insufficient supplemental benefits.
Procedural History
The Comptroller determined Action Electrical failed to provide prevailing supplemental benefits or an equivalent plan. After a hearing, damages and penalties were assessed. Action Electrical appealed, but the Appellate Division confirmed the Comptroller’s determination. Action Electrical then appealed to the New York Court of Appeals.
Issue(s)
Whether an employer can fulfill its duty to provide prevailing supplements under New York Labor Law § 220 by paying cash directly to employees in the amount of the cost of those benefits, or whether the employer is limited to contributing to an in-kind benefits package equivalent to the prevailing supplements plan.
Holding
Yes, because the legislative history and purpose of Labor Law § 220 indicate that the primary goal is to equalize contractors’ labor costs, which is achieved when the contractor pays the cost of the prevailing benefits, regardless of whether that payment is in cash or in-kind benefits.
Court’s Reasoning
The Court found the statute ambiguous as to whether compliance should be determined by expenditures on benefits or the qualitative nature of the benefits. The Court examined the legislative history, noting that the amendment adding “supplements” to Labor Law § 220 aimed to equalize competition between union and non-union contractors by ensuring all contractors bore the cost of prevailing fringe benefits. The Court found the legislative history reflected a concern to equalize contractors’ minimum labor costs, and this purpose is fulfilled when a contractor pays in cash the cost of prevailing supplemental benefits to employees. According to the court, “The available documentary background to this amendment reflects only a concern to equalize contractors’ minimum labor costs. This apparent purpose is fulfilled when a contractor pays in cash, totally or partially, the cost of prevailing supplemental benefits to his employees.” The Court rejected the Comptroller’s argument that the statute requires qualitative equivalency with no cash substitutes, finding such an interpretation arbitrary and irrational. The Court noted, “Supplements may be provided by cash payments equal to the cost of providing the prevailing supplements, a combination of cash and benefits, or by an equivalent benefits plan.” Because the Comptroller’s damages assessment recognized Action Electrical had paid the full cost of providing the prevailing supplements, the Court found Action Electrical complied with Labor Law § 220.