May 4, 2016
When a governmental entity contracts with a general contractor to build a community center on government-owned land, the question of whether prevailing wages are required for workers on that project is easily answered. If federal funds are used to pay for that project, the Davis Bacon Act applies. If the source of funding is from the state or local government coffers, then state prevailing wage laws would apply. 

But what about private development, where there is some tangential governmental involvement? Modern mixed-use projects often employ three-party relationships where a governmental agency, a developer and a construction contractor are involved. Do prevailing wage laws apply to these types of projects?

In the CityCenterDC case, the back wage exposure if the District of Columbia was wrong in its assessment of a “private” versus “public” project was well in excess of $20 million. Because of the potential risk involved, contractors and developers alike should take great care to ensure, at the outset, that governmental involvement does not transform what is intended to be a private development into “public works” with all of its attendant obligations.

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