Are Suppliers Subject to Prevailing Wage Rates When Supplying Materials to a Public Project in Washington State?

There are no specific wage rate classifications for most fabricators of materials that would make a company's employees subject to the prevailing wage rates. Based on Washington state 1) case law and 2) statutory and regulatory framework, however, both laid out in detail below, a company may nevertheless be required to pay prevailing wage rates in Washington state.

The prudent course of action for a company is to seek a wage rate determination before it submits its Intent to Pay Prevailing Wage for the project to ensure that it is not subject to any prevailing wage rates for public projects.

Analysis

When is payment of a prevailing wage required?

1. When the work falls under a specific job classification, as determined by Washington State Department of Labor & Industries ("L&I").
   
   • Verify that "fabricator" is not currently a job classification listed by L&I.
     
2. RCW 39.12.020 identifies a type of worker who is paid prevailing wages on public works:
   • The laborer, worker, or mechanic. This prevailing wage requirement applies to work "upon all public works by the laborers, workers, or mechanics."
   • That requirement in RCW 39.12.020 does not require that the laborer, worker, or mechanic be "employed" on the public work, only that they be "upon" the public work.
     
3. However, note that RCW 39.12.030 states that:
   • Work performed by laborers, workers, or mechanics for a "contractor, subcontractor or other person doing, or contracting to do the whole or any part of the work contemplated by the contract" is subject to the prevailing wage specifications.

Does that apply to "off-site" work?

Washington state courts have held the following:

1. RCW 39.12.020 does not specifically state whether prevailing wages must be paid to workers employed in the performance of a public works project who are not working on the actual project site. Everett Concrete Products, Inc. v. Department of Labor & Industries, 109 Wash.2d 819, 822, 748 P.2d 1112, 1114.
2. According to this and related decisions, as well as relevant regulations (discussed further below), the prevailing wage requirement would only be imposed on off-site manufacturers having a sufficient nexus to the public works project. Relevant factors in determining whether such nexus exists include:
   • physical location of the project site;
   • the nature of the relationship between the parties performing the work; and
   • the characteristics of the product itself. Id. at 1113-1114.
3. RCW 39.12 is remedial and should be construed liberally. Id. at 1114

When is a "fabricator" subject to prevailing wage rates under Washington state law?

1. Precedent:
   • A 1967 Washington Attorney General's opinion interpreting RCW 39.12 stated that the phrase "upon all public works" should not limit the application of the prevailing wage requirement to employees working at the actual public works project site. 1967 AGO 15, at 6. This opinion responded to an inquiry concerning whether RCW 39.12 applies to subcontractors and the extent to which RCW 39.12 was applicable to prefabricated items construed to become part of a public works project.
   • A Washington state court held that, "Because of the inclusion of the phrase 'or other person doing or contracting to do the whole or any part of the work contemplated by the contract' in RCW 39.12.030, Washington's prevailing wage law should not be limited in application to employees of contractors and subcontractors, but can be extended to include employees of materialmen in certain situations." Everett at 1117.
   • WAC 296–127–020 states that "[s]tandard items for sale on the general market are not subject to the requirements of chapter 39.12 RCW", leading to the conclusion that nonstandard items are covered under RCW 39.12. Everett at 1117-1118.
     
     
2. Regulatory Guidance: The following analysis has been provided by L&I. Generally:
   1. Is the item fabricated for a public works project? If not, it is not subject to RCW 39.12. If it is, go to question 2.
   2. Is the item fabricated on the public works jobsite? If it is, the work is covered under RCW 39.12. If not, go to question 3.
   3. Is the item fabricated in an assembly/fabrication plant set up for, and dedicated primarily to, the public works project? If it is, the work is covered by RCW 39.12. If not, go to question 4.
   4. Does the item require any assembly, cutting, modification or other fabrication by the supplier? If not, the work is not covered by RCW 39.12. If yes, go to question 5.
   5. Is the prefabricated item intended for the public works project typically an inventory item which could reasonably be sold on the general market? If not, the work is covered by RCW 39.12. If yes, go to question 6.
   6. Does the specific prefabricated item, generally defined as standard, have any unusual characteristics such as shape, type of material, strength requirements, finish, etc.? If yes, the work is covered under RCW 39.12.

When is a delivery driver subject to prevailing wage rates under Washington state law?

1. If a delivery driver is delivering items fabricated for a public works project that is subject to RCW 39.12, then that driver must be paid the prevailing wage.
2. However, if the driver is a) delivering "standard" materials that are not subject to RCW 39.12 to a public works project and b) simply drops the fabricated materials and departs without performing any work on the public works project, then there are no prevailing wage requirements.

Potential Penalties

Under RCW 39.12.065(3), if a company is found to be in violation of prevailing wage rates, it may be subject to the following penalties.

1. A civil penalty of not less than $5,000 or an amount equal to 50% of the total prevailing wage violation found on the contract, whichever is greater.
2. Interest on all wages owed at 1% per month.
3. Not permitted to bid, or have a bid considered, on any public works contract until such civil penalty has been paid in full.
   

Companies uncertain of whether they are subject to prevailing wage rates as a supplier should consult counsel familiar with construction matters in Washington state to determine how this issue may affect your work.