The Massachusetts Appeals Court has held that where a trash collection company entered into a five-year contract with a Massachusetts municipality, the company was obligated to pay the employees the higher prevailing wage for the final three years of the contract even though the original prevailing wage schedule did not contain rates for those years.

United States District Court District of Massachusetts

SUMMARY: (court decision – opens in PDF)

“The plaintiffs, all former employees of the defendant, Allied Waste Services of Massachusetts, LLC (Allied), brought the underlying action against Allied alleging violations of the Prevailing Wage Act (act), G.L.c. 149, section27F; the Overtime Act, G.L.c. 151, section1A; and the Wage Act, G.L.c. 149, section148. On cross motions, a Superior Court judge granted summary judgment to the plaintiffs on their prevailing wage and overtime claims, and to Allied on the wage act claim. As to the prevailing wage claim, the judge reasoned that Allied’s payment to the plaintiffs at the 2015-2016 prevailing wage rate for all five years of a contract (contract) between Allied and the town of Marshfield (town) despite a prevailing wage increase in 2017 ‘subvert[ed] the purpose of the [act].’ On appeal Allied principally argues that the plaintiffs should have been paid at the 2015-2016 prevailing wage in each year of the five-year contract as set forth in the prevailing wage schedule attached to the contract. For the reasons that follow, we affirm the judgment, but for a different reason than that relied on by the Superior Court judge in his consideration of the prevailing wage claim. …

“… Appendix G to the contract is a two-page prevailing wage schedule issued by the Department of Labor Standards (department) that includes a schedule of wages for laborers and drivers for 2015 and 2016. The schedule does not include the prevailing wages for 2017- 2020. …

“The department stated in an amicus letter filed in response to our postargument request ‘that prevailing wage [rate] sheets issued pursuant to [section]27F at the outset of a contract govern for the full contract term.’ However, the department further stated that ‘such wage [rate] sheets do not set just one prevailing wage rate for each position for the duration of a multi-year contract; rather, wage [rate] sheets include rates for each year of the contract, with the rates typically increasing every six to twelve months.’ This is because the commissioner is required to set wages based on collective bargaining agreements, ‘which themselves typically contain pre-set automatic wage increases over the course of the contract.’ …

“Here, the prevailing wage schedules supplied to the town and forwarded to Allied before execution of the contract were limited to 2015 and 2016, even though the contract had a five-year term. Those prevailing wage schedules, which were attached to the contract, did not reflect the increased prevailing wages for 2017-2020. The department acknowledged in its amicus letter that the contract in this case did not reflect increased prevailing wages for 2017-2020, but concluded that this was an anomalous situation, and based on ‘the unusual circumstances of this case, the plaintiff-employees here were entitled to the prevailing wage rates set forth in the wage [rate] sheet issued in 2017.’ This interpretation is consistent with the act’s purpose of achieving parity between workers on public projects and workers in the private sector. … We note, however, that it is inconsistent with the language of the department’s prevailing wage schedule incorporated in the contract as Appendix G, and the department’s notice to awarding authorities dated December 2009, both of which stated that the listed wage rates would remain in effect for the duration of the contract term. While this may be an anomalous situation, the department should clarify its position so that awarding authorities and contractors are on notice that the prevailing wage rates may increase over the term of a contract, and contractors are required to pay those increased rates, even if the rates are not referenced in the contract.

“Allied principally argues that it paid the plaintiffs pursuant to the prevailing wage schedule in Appendix G of the contract, which states specifically that ‘wage rates will remain in effect for the duration of the project, except in cases of multi-year public construction projects.’ According to Allied, it was entitled to rely on this language in Appendix G, particularly where G.L.c. 149, section27F, does not explicitly require annual updates to the prevailing wage schedule. Moreover, Allied argues, the department’s opinion regarding the merits of a case, as opposed to its interpretation of a statute, is owed no deference. We are not persuaded. … It is undisputed that Allied agreed to pay its workers the prevailing wage at rates established by the commissioner, and that, for 2017-2020, the workers were paid at a rate below the prevailing wage established for those workers by the commissioner. The employees should not be penalized because the town and Allied failed to ensure that the contract included prevailing wage schedules for each contract year. … Where the department agrees that the plaintiffs should have been paid the higher prevailing wage for the years 2017-2020, and payment of that higher prevailing wage is consistent with the legislative purpose of the act, we discern no error in the judgment in favor of the plaintiffs on their prevailing wage claim.”