Beckley sues state over wage law

By Cara Bailey | Sep 19, 2007

CHARLESTON - The City of Beckley is seeking declaratory judgment against the West Virginia Division of Labor, according to a suit filed by attorney Ricklin Brown on Aug. 30 in Kanawha Circuit Court.

The suit also names Commissioner David Mullins and Attorney General Darrell McGraw as defendants.

The suit claims that in June 2004 and July 2005, Beckley, through Mayor Emmett S. Pugh III, applied for federal Economic Development Initiative (EDI) grants from the U.S. Department of Housing and Urban Development, in order to fund plans in the "Beckley Uptown Revitalization, Neville Street" project.

HUD awarded the city $1,491,150 in 2004 and another $744,000 in 2005, for exterior renovations for two buildings, and interior renovations for one.

"According to federal law and its interpretation by HUD, the EDI grant funds are not subject to the federal prevailing wage law," the suit says.

Forward Southern West Virginia was hired to oversee the construction projects. They bid for the project, but no successful bid occurred. The bidding process is currently ongoing.

The Affiliated Construction Trades Foundation (ACT) wrote to Larry A. Walker, director of the Wage and Hour Division of the W.Va. Division of Labor on Jan. 9, 2007, requesting a determination whether the construction project was subject to W.Va. prevailing wages.

Walker responded Jan. 18, 2007, "finding, without specifics, that the construction project is subject to prevailing wages, as set forth in West Virginia Code," the suit says.

Because the phase of construction project being bid out is wholly federally funded and not subject to federal prevailing wage law, Thomas Acker, the executive director of FSWV, wrote a letter to Director Walker, informing him that he disagreed with the application of West Virginia prevailing wages, the suit says.

Walker responded again Feb. 1, without specifying his rationale, provided written documentation to the plaintiff stating the Division of Labor's position that West Virginia Prevailing Wage laws apply and further, that "failure to pay such wages would result in the Division imposing penalties for willful violation of state law,"

Beckley submitted a written objection Feb. 5, to the Division of Labor's determination that W.Va. prevailing wages apply to the construction project.

The city provided that the phase of construction project that deals with HUD funds does not require the expenditure of any "public funds of the State of West Virginia, in whole or in part," the suit says.

The city asked for a hearing on the matter, claiming that, "the application of state prevailing wage law to the phase of the project that is wholly federally funded is unlawful."

The grant was awarded based in part on both the costs of the activities being reasonable and determinations that the activities are financially feasible. The defendants' improper imposition of state prevailing wage as it relates to these funds diminishes the value of the EDI grant funds and frustrates the ability to accomplish the full purpose of the Housing and Community Development Act under which they are awarded, the suit says.

"Resolution of this controversy is of particular importance because the City expects to receive similar federal funds for future projects and without a declaration from the Court, this controversy and its resulting injury to the plaintiff will be recurrent," the suit says.

Therefore, the city seeks that the court deems the application of West Virginia prevailing wage laws to federally funded projects unlawful.

The case has been assigned to Judge Jennifer Bailey Walker.

Kanawha Circuit Court case number 07-C-1844

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