In a long-awaited decision, the Ohio Supreme Court recently ruled that the penalty provisions of Ohio's prevailing wage laws are mandatory in nature, and thus, must be imposed whenever a prevailing wage violation is proven to have taken place (Bergman v. Monarch Construction Co.). The decision has enormous effects for construction employers who work on, or subcontract work on public improvement projects.
In the case before the court, the general contractor subcontracted masonry work for a student housing building on the campus of Miami University in Oxford, Ohio. When faced with a prevailing-wage claim of $368,266.34, the masonry subcontractor defaulted, and employees then turned their complaint against Monarch Construction. Both a trial court and an appellate court found Monarch Construction liable for the whole amount of underpaid prevailing wages, but set aside a duplicating of the $368,266.34 as penalties. Under Ohio's prevailing wage statute, 25% of assessed prevailing wage underpayments "may" be provided to the employees, and 75% to the Department of Commerce.
In overruling the decisions of the lower courts, the Supreme Court held that the penalties in essence, a doubling of the unpaid prevailing-wages - is mandatory in nature, and not discretionary with the court. According to the Court, the penalties serve as "statutory deterrents" to violations of the law, and that the General Assembly intended for them to be mandatory in nature. As a result, those construction employers who perform work on public improvement projects are now subject to significantly increased liability in the event of prevailing wage violations.
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