• The New York Court of Appeals clarified that, pursuant to New York Labor Law § 220, contractors on public projects in New York must pay prevailing wages even if the contract does not promise to pay prevailing wages.
• The court found that any agreement in a public works contract to shorten the statute of limitations governing third-party claims for prevailing wages is not enforceable.
• Prevailing wages may apply to work performed on state-funded projects and federally funded projects.

Background on the Case

In this case, a company employed technicians who install, maintain, inspect, test, repair, and replace fire alarms, fire sprinklers, and security system equipment. The company entered contracts for fire alarm testing and inspection services with various New York public works projects. The contracts included a clause stipulating that no lawsuits could be brought against the company more than one year after accrual of the cause of action. Some contracts indicated that prevailing wages were not required, and some contracts indicated that a revised agreement would be needed if prevailing wages applied. Other contracts were silent on the matter of prevailing wages.

A group of technicians brought a class action against the company, claiming failure to pay prevailing wages and required overtime pay under the Fair Labor Standards Act (FLSA) and New York law. This included a third-party beneficiary breach of contract claim.

The company argued that the contracts did not...

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