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Memo questions legality of living wage mandate for City CIP projects

Monday, September 22, 2014 by Michael Kanin

A memo from Austin Public Works director Howard Lazarus to City Council members and Mayor Lee Leffingwell suggests that a theoretical Council policy that “would require contractors and subcontractors working on (City of Austin) Capital Improvement Program projects to pay workers the city’s living wage” could run into legal issues.

In this case, Capital Improvement Projects refer to city public works programs. The memo does not appear to attempt to expand the notion to other wage requirements set by the city.

According to the memo, the city’s legal department suggests a 1999 opinion from then-Texas Attorney General John Cornyn neither “prohibit(s) the payment to a worker employed on a public works project greater that the general prevailing wage rate of per diem wages, (nor does) it … authorize requiring a contractor to pay a wage rate greater that the local prevailing wage.” Further, the memo reads Cornyn’s opinion as prohibition on a municipality requiring “its outside contractors to pay their workers not less than a “living wage” in the performance of contracts subject to Chapter 2258 (public works contracts).”

City legal adds a note here, saying, “The AG’s office still considers this opinion a valid interpretation of the law.” Legal is also careful to point out that a June 2014 Dallas County request for opinion could have bearing on current interpretation.

“Dallas County has asked the AG’s office for an opinion on whether … (regulations) would allow the payment of a living wage ‘on contracts subject to public bidding,’ (which would include public works contracts), and if the promise to pay a living wage may be used as an evaluation factor in a competitive proposal process (which could also include public works contracts),” reads the memo. “It appears that the AG will have to address this present ambiguity in the law in an opinion that it should issue in the coming months.”

City legal did not respond to a request for comment on the issue.

Cornyn’s 1999 opinion related to a request for interpretation from Rep. Rene Oliveira’s House Committee on Ways and Means over whether the McAllen Independent School District was prevented from “requiring outside contractors with the district to pay their workers a minimum ‘poverty level wage’ in the performance of contracts subject” to the code in question. The opinion notes, “Because you ask about the validity of the poverty level wage requirement in light of the provisions of Chapter 2258, we will confine our analysis to contracts covered by that chapter.”

The chapter specifically refers to “the construction of a public work, including a building, highway, road, excavation and repair work or other project development or improvement, paid for in whole or in part from public funds.”

The Dallas request for opinion “seeks to consider making the payment of a living wage (a wage higher than state-mandated minimum wage) a condition contractors must meet for certain contracts entered into under the County Purchasing Act.” It asks two specific questions: “Is Dallas County expressly authorized to require a living wage be paid on contracts awarded pursuant to the County Purchasing Act? In the alternative, does Dallas County have the implied authority under the County Purchasing Act to include payment of living wages as a factor in a request for competitive proposals?”

Update: A spokesperson with the Workers Defense Project reached out to us after the publication of this story. The group offered this statement via email: “Our reading is that the 1999 Cornyn opinion only applies to school districts and other political subdivisions of the state. It does not apply to home-rule cities like Austin. As stated in the opinion ‘School districts, like other political subdivisions of the state, other than home-rule cities, have only those powers expressly conferred on them by the constitution or by statute or those necessarily implied from the powers conferred.’ (emphasis added).

“As a home rule city, Austin, unlike school districts or counties, is not limited to act solely within the confines of state law. It has the authority to act above and beyond what is expressly written in state statute or the state constitution. Therefore, the fact that section 2258 ‘does not authorize’ a political subdivision ‘to require a contractor pay a wage greater than the local prevailing wage’ would not prohibit the City of Austin from establishing a living wage floor for contracted construction workers.

“The pending Dallas County opinion may of course flesh out the authority of political subdivisions to supplement prevailing wages with a living wage floor on public projects, but the authority of counties to take such action ought not be conflated with the authority of home rule cities to do so.”

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