Court Opinion

ID: 9757294
Source: CourtListenerOpinion
Date Created: 2023-08-28 22:29:45.834437+00
Date Added: 2024-06-11T07:28:37.776180
License: Public Domain

DISSENTING OPINION BY
Judge PELLEGRINI.
I respectfully dissent from the majority’s decision because the Pennsylvania Prevailing Wage Act (Act)1 does not intend that the prime contractor on a public work project receive a final payment that includes wages that should have been paid to the subcontractor’s employees.
The Lower Merion School District (School District) awarded a contract to Worth & Company, Inc. (Worth) to perform plumbing work at the Welsh Valley Middle School. Worth subcontracted sprinkler work totaling $323,000 to First Choice Fire Protection, Inc. (First Choice). During the course of the project, the Department of Labor and Industry (Department) found that First Choice failed to pay at least 11 of its workers any wages or fringe benefits for approximately three weeks of work performed on the project. By letter dated September 7, 1999, the Department requested that Worth withhold $41,324.46 in contractual payments on the project to First Choice. As of September 1999, Worth had paid First Choice $116,437.50 for its work, with a remaining balance of $206,562.50 on First Choice’s contract.
After initially retaining a larger amount, the School District withheld $32,890.28, the estimated unpaid wages owed to First Choice workers. Although the School District agreed to disburse the “retainage” to the First Choice workers if the Department was able to legally substantiate its claims, Worth objected to the disbursement of the money. Worth claimed that because it had to incur expenses to hire a substitute subcontractor due to First Choice’s default on its contract, Worth had a set-off against the unclaimed balance on the contract with First Choice of $210,067.65.2 By letter dated January 31, 2001, the School District advised the Department that it and Worth agreed that it was no longer necessary to withhold any funds from Worth. The Department disagreed and stated that money was still owed on the contract between Worth and *736First Choice, and the funds were to be held in trust for the workers who had not yet been paid. On April 25, 2003, the Prevailing Wage Appeals Board issued a final determination affirming the Department’s September 7, 1999 decision, and Worth filed an appeal with this Court.
On appeal, Worth argues that the Department misapplied the Act by authorizing the withholding of funds based on First Choice’s violations of the Act. The majority agrees, relying on the language in Section 10(a) of the Act, 43 P.S. § 165-10(a),3 which provides that: “because this request [for the withholding of contract payments] is directed toward a subcontractor, nothing in this request shall be deemed to impair the right of the prime contractor to receive final payment due to the failure of any of the subcontractors to comply with the provisions of the Act.” The majority also finds that because none of the unpaid 11 employees filed a complaint under Section 10(b), which provides a private remedy to the Act, and Worth has a negative balance owed First Choice, the Department is without power to order the retained funds to be paid to those employees.
I disagree with the majority because none of those reasons foreclose those funds from being turned over to the Commonwealth. First, as to the ability of the Commonwealth to seek those funds, Section 11(f) of the Act provides that:
Whenever it shall be determined by the secretary, after notice and hearing as required by this section, that any person or firm has failed to pay the prevailing wages and that such failure was intentional, such persons or firm shall be liable to the Commonwealth of Pennsylvania for liquidated damages, in addition to damages for any other breach of the contract in the amount of the underpayment of wages due any workman engaged in the performance of such contract.
Clearly, then, the Commonwealth in its own right can seek payment of those wages not paid in accordance with the Act.
While that provision is by no means a model in legislative drafting, I also disagree that a prime contractor can receive final payment under Section 10(a) of the Act. The first part of the provision provides that before final payment is made, a subcontractor has to file a statement that it has paid all its workers all wages due on account of the public work performed. To give some meaning to the first part of Section 10(a), I would hold that the failure of the subcontractor to provide such a statement means that the general contractor receives final payment for the work, less any funds retained for work performed by one its subcontractors. In this *737case, First Choice not only failed to provide a statement that all work was performed, but it conceded that it owed its employees wages totaling $25,797.19. If any of the amounts withheld by the School District are for work performed by First Choice, for which it was not paid before it defaulted on the project, then that amount is available to satisfy the amount of any unpaid wages. However, in this case, because we do not know if any of the retain-age involved work performed by First Choice to which it would have been otherwise entitled if it had finished the job, I would remand for that determination.4
Judge SIMPSON joins in this dissent.

. Act of August 15, 1961, P.L. 987, as amended, 43 P.S. §§ 165-1 — 165-17.

. First Choice had entered into an agreement with the Department to settle the matter before the Secretary of the Department without a formal hearing. It accepted a three-year debarment from public work projects as an intentional violator of the Act and stipulated that it had not paid $25,797.19 in prevailing wages to 11 of its workers, but would agree to restitution of underpayments to its workers from the funds withheld by the School District. A final order was issued adopting the agreement. On June 2, 2000, First Choice filed for bankruptcy in the Eastern District of Pennsylvania. The case was later converted to a Chapter 7, no-asset case in May 2001. No issue is raised in this case that any funds that may be owed to First Choice’s employees are now subject to the bankruptcy proceeding.

. Section 10(a) of the Act provides:
Before final payment is made by, or on behalf of any public body of any sum or sums due on public work, it shall be the duty of the treasurer of the public body or other officer or person charged with the custody and disbursement of the funds of the public body to require the contractor and subcontractor to file statements, in writing, in form satisfactory to the secretary, certifying to the amounts then due and owing from such contractor and subcontractor, filing such statement to any and all workmen for wages due on account of pub-lie work, setting forth therein the names of the persons whose wages are unpaid and the amount due to each respectively, which statement so to be filed shall be verified by the oath of the contractor and subcontractor, as the case may be, that he has read such statement subscribed by him, knows the contents thereof and that the same is true of his own knowledge: Provided, nevertheless, That nothing herein shall impair the right of a contractor to receive final payment because of the failure of any subcontractor to comply with provisions of this act.

. Just because the prime contractor incurred additional costs, i.e., a “negative balance” to complete the job over the contracted amount with First Choice, does not give it a right superior to that of the Commonwealth or unpaid workers. The whole purpose of the Act is to ensure that workers receive their wages, especially when it was Worth that engaged First Choice. Otherwise, a subcontractor’s employees could go without ever being paid, and the prime contractor could receive payment in full, leaving the Commonwealth and employees without recourse when the subcontractor goes bankrupt.