Court Opinion

ID: 5486246
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:14:01.997636+00
Date Added: 2024-06-11T08:33:41.264430
License: Public Domain

Chief Judge Lippman (dissenting).
Charter schools provide alternative educational opportunities in our communities. With the use of innovative teaching techniques and environments, these schools are designed to improve the quality of our children’s education. However, charter schools are, in essence, public schools performing a vital public service and should be treated as such for purposes of the prevailing wage rate requirement. Accordingly, I respectfully dissent.
The State Constitution provides that the ££[l]abor of human beings is not a commodity nor an article of commerce and shall never be so considered or construed” (NY Const, art I, § 17). To that end, the Constitution states that
££[n]o laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work . . . [shall] be paid less than the rate of wages prevailing in the same trade or occupation in the locality within the state where such public work is to be situated, erected or used” (NY Const, art I, § 17).
These requirements are implemented by article 8 of the Labor Law. Labor Law § 220 sets limitations on the number of hours and the length of the work week for workers on public works contracts, and requires payment of the prevailing wage rate for
££[e]ach contract to which the state or a public benefit corporation or a municipal corporation or a commission appointed pursuant to law is a party, and any contract for public work entered into by a third party acting in place of, on behalf of and for the benefit of such public entity pursuant to any lease, permit or other agreement between such third party and the public entity, and which may involve the employment of laborers, workers or mechanics” (Labor Law § 220 [2], [3] [a]).
This Court has held that Labor Law § 220
“must be construed with the liberality needed to carry out its beneficent purposes . . . [The] statute is an attempt by the State to hold its territorial subdivisions to a standard of social justice in their dealings with laborers, workmen and mechanics. It is to be interpreted with the degree of liberality essential to the attainment of the end in view” (Bucci v Village of Port Chester, 22 NY2d 195, 201 [1968] [internal quotation marks omitted]).
*413The long-standing test for determining whether the prevailing wage rate is applicable to a given project is found in Matter of Erie County Indus. Dev. Agency v Roberts (94 AD2d 532 [4th Dept 1983], affd 63 NY2d 810 [1984]). The Court developed a two-part test that needed to be satisfied before the prevailing wage rate requirement had to be observed: “(1) the public agency must be a party to a contract involving the employment of laborers, workmen, or mechanics, and (2) the contract must concern a public works project” (Erie County, 94 AD2d at 537). The Appellate Division based its determination that the prevailing wage rate does not apply to charter schools only on the first prong—the contract prong—of the Erie County test.
As noted above, Labor Law § 220 (2) contains a clause allowing a contract entered into by a third party on behalf of a public entity to qualify as a “contract” within the meaning of the statute. That provision was added in 2007, in response to the decision in Matter of Pyramid Co. of Onondaga v New York State Dept. of Labor (223 AD2d 285 [3d Dept 1996]). In Pyramid, the owner of a mall obtained highway work permits from the Department of Transportation (DOT), allowing roads to be constructed on state land, connecting the mall to the nearby interstate highway. The mall owner then contracted with a third party to perform the work. The Court found it clear that the project would qualify as a “public works project,” but found that the contract requirement was not satisfied, in part because DOT was not a party to any contract—the sole contract being between the mall owner and the third party (see Pyramid, 223 AD2d at 287-288). The Court therefore found that the project was not subject to the prevailing wage law.
The legislative history demonstrates that the 2007 amendments were intended to overrule the holding in Pyramid. “The narrow court interpretations of the term ‘agreement’ created an unwarranted loophole that has prevented the application of prevailing wage rules to public work projects that should be subject to those rules, and this bill properly closes that loophole in the law” (Governor’s Approval Mem, Bill Jacket, L 2007, ch 678, at 5, 2007 NY Legis Ann, at 426). In addition, the amendment was intended to enforce the prevailing wage rate “where the involvement of a third party obviates the existence of a direct contractual relationship between the public owner and the contractor performing the work” (Senate Introducer’s Mem in Support, Bill Jacket, L 2007, ch 678, at 27, 2007 NY Legis Ann, at 27, 2007 McKinney’s Session Laws of NY, at 2162). The legislative history does not explicitly mention charter schools.
*414In order to determine whether charter schools are subject to prevailing wage rates, some background information is helpful. An application to establish a charter school must be submitted to a “charter entity” for approval (see Education Law § 2851 [3]). Charter entities include the board of regents, the board of trustees of SUNY or the board of education of the local school district (or chancellor of the city school district) (see Education Law § 2851 [3]). The charter application must contain a variety of information, including “[information regarding the facilities to be used by the school, including the location of the school, if known” (Education Law § 2851 [2] [j]). The schools can be located in existing public school buildings or other public buildings, private work sites or other suitable locations (see Education Law § 2853 [3] [a]). Upon closure or dissolution, the assets of the charter school are given either to the local school district or to another charter school within the district (Education Law § 2851 [2] [t]).
Once the board of regents approves the charter school, it is incorporated as an education corporation. “A charter school shall be deemed an independent and autonomous public school, except as otherwise provided in this article. The charter entity and the board of regents shall be deemed to be the public agents authorized to supervise and oversee the charter school” (Education Law § 2853 [1] [cl). Moreover, “[t]he powers granted to a charter school under this article constitute the performance of essential public purposes and governmental purposes of this state” (Education Law § 2853 [1] [d]).*
Given the role that charter schools play, it is apparent that the present situation is precisely the type of scenario the third party amendment to section 220 was designed to address. It is clear that if a private school were constructing its own facility, the public wage rate would not, and should not, apply. If, on the other hand, the chartering entity had contracted for such work on its own, that work would undoubtedly be subject to the prevailing wage requirement (see e.g. Brian Hoxie’s Painting Co. v Cato-Meridian Cent. School Dist., 76 NY2d 207 [1990]). *415The charter school, performing an essential public and governmental service pursuant to Education Law § 2853 (1) (d), as authorized by the chartering entity, should be subject to the prevailing wage rate. In this context, the charter school essentially acts as a stand-in for the chartering entity.
The majority opinion rejects the applicability of the third party amendment, in part, on the basis of a statutory debt provision (see majority op at 411). That provision makes clear that only a charter school will be liable for its financial obligations, but has nothing to do with the issue of whether prevailing wages must be paid to workers. Where the money comes from for a construction or renovation project—whether that source be public or private—is not dispositive of the prevailing wage question. The statute makes clear that it pertains to third parties “acting in place of . . . and for the benefit of’ public entities (Labor Law § 220 [2]). Finally, it is simply not the case that a contract for the renovation of a charter school inures solely to the benefit of the charter school itself. Such facilities provide benefits for students and the public similar to those provided by public school facilities. Given the State’s strong public policy in favor of adequate wages on public works projects and that Labor Law § 220 is subject to liberal construction, the Department of Labor’s interpretation of the statute finding charter schools subject to the prevailing wage rate should be upheld.
In addition, the charter agreement itself can be considered the contract to which a public entity is a party, without resort to the third party amendment. The majority finds that the charter is not a contract involving the employment of laborers because the charter determines “nothing more” than that the applicant can be licensed as an education corporation (majority op at 409). However, the language of the statute itself requires only that the contract “may involve the employment of laborers” (Labor Law § 220 [2]). The Erie County test likewise characterizes the contract as “involving” such employment (94 AD2d at 537). Since the contract itself does not need to be strictly a construction contract, the charter, having the chartering entity as a party and contemplating that construction or renovation work will be necessary in order to obtain adequate facilities, would satisfy this contract requirement.
Although making charter schools adhere to prevailing wage requirements may impose additional costs in providing their valuable public service, the State’s public policy and statutory framework, as well as the essentially public nature of charter *416schools make clear that the prevailing wage rate applies to the construction and renovation of charter schools. Accordingly, I would reverse the order of the Appellate Division.
Judges Graffeo, Read, Smith and Jones concur with Judge Pigott; Chief Judge Lippman dissents and votes to reverse in a separate opinion in which Judge Cipabick concurs.
Order affirmed, with costs.

 Charter schools are treated as public schools for certain purposes, but not for others. For example, charter schools are required to “meet the same health and safety, civil rights, and student assessment requirements applicable to other public schools, except as otherwise specifically provided in this article” (Education Law § 2854 [1] [b]). However, they are generally exempt from other state and local laws pertaining to public and private schools (see Education Law § 2854 [1] [b]).