New York City’s Prevailing Wage Law Struck Down by Judge

A New York City requirement that landlords and companies receiving economic aid from the city pay workers prevailing wages was struck down by a judge who said it was preempted by the state’s minimum-wage law.

Justice Geoffrey D. Wright of state Supreme Court in Manhattan said the measure in effect would have raised the minimum wage for some private employees. Wright, saying he recognized the potential benefits of the ordinance, said he made the decision “with great compunction” in the lawsuit filed by Mayor Michael Bloomberg.

“This court believes that the Prevailing Wage Law could benefit the people of New York and does not see wisdom in the mayor’s zeal for the possibility of welcoming to New York City a business that would pay its building service employees less than the prevailing wage,” Wright said in the ruling dated Aug. 2 and posted yesterday on the court’s docket.

The bill, passed by the 51-member City Council over the mayor’s veto, mandated prevailing wages for service workers in commercial and residential buildings whose employers receive at least $1 million in city economic development.

Employers would have been required to maintain records and to report hours and wage-and-benefit information for the workers. The requirement would have applied to all buildings in which the city leases space, which the mayor said would increase its costs.

Law’s Requirements

Prevailing wages are calculated annually by the city comptroller. The city gives economic aid to businesses in the form of tax abatements and low-interest financing. The law exempted small and nonprofit businesses, manufacturing plants and facilities of the city Health and Hospitals Corp.

It was adopted by the council 44-4 in May 2012 and took effect in November. The mayor, the founder and majority owner of Bloomberg LP, the parent of Bloomberg News, sued the council in July 2012.

“This ill-conceived legislation threatened some of the most important job-creating projects in the city,” Julie Wood, a spokeswoman for the mayor, said yesterday in a statement. “Legislation like this makes it harder for companies to invest in New York City at a time when we need to be making it easier.”

City Council Speaker Christine Quinn, a Democrat who is running for mayor, said the council will seek to appeal the decision.

“We will never stop fighting for middle class New Yorkers, using every possible legal tool at our disposal,” Quinn said in a statement. “This legislation is not about modifying the minimum wage -- instead it is about setting standards for those who lease space to the city or accept economic development subsidies.”

The case is Mayor of the City of New York v. New York City Council, 451369/2012, New York State Supreme Court, New York County (Manhattan).

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