New Jersey Gives Sharp Teeth to Prevailing Wage Act

This summer, contractors with business in New Jersey scrambled to figure out what the state’s new employment statutes would mean for their projects. The changes give sweeping new powers to the Commissioner of Labor and Workforce Development in dealing with suspected violations of the Prevailing Wage Act (PWA).

The new rules raise or revive many challenging questions. If contractors do not stop to get answers, they might have to stop anyway until New Jersey gets answers.

The gist of the new law

The law applies to all projects in New Jersey that are subject to the state’s Prevailing Wage Act.

Employers not paying the state’s prevailing wage (judging from an initial determination) are now subject to actions newly available to the Commissioner. Probably the most severe is a complete work stoppage until the Commissioner is satisfied.

Projects subject to Prevailing Wage Act

What makes a project subject to the PWA is closely defined in New Jersey law, but all must have contracts valued above certain value thresholds. Below are very brief summaries:

  • Projects involving mostly public property or property leased by a public entity
  • Projects, public or not, located on public property
  • Projects involving a partnership with a public entity

What is the prevailing wage?

Prevailing wages are determined by the state’s Department of Labor. They include wages and benefits and vary with the kind of work the worker performs and where they perform it. The Department recalculates these prevailing wages every two years if not earlier.

What new powers does the Commissioner have?

It may be enough to say the new powers will probably inspire compliance in most contractors. The Commissioner can do the following:

  • Immediately issue a stop-work order after an initial finding that the employer is paying less than the prevailing wage or violating other wage, workers’ comp or unemployment comp laws
  • Keep the stop-work order in effect until the Commissioner lifts it
  • Compel the employer to issue regular reports for as long as two years
  • Enter a workplace to interview workers and examine records
  • Subpoena witnesses and records, and fine employers $1,000 a day for noncompliance

In addition, New Jersey now empowers general contractors to promptly fire subcontractors who have received a stop-work order.