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New York Charter School Association v. Smith

October 19, 2010

IN THE MATTER OF NEW YORK CHARTER SCHOOL ASSOCIATION ET AL., RESPONDENTS,
v.
M. PATRICIA SMITH, AS COMMISSIONER OF LABOR, APPELLANT.
IN THE MATTER OF FOUNDATION FOR A GREATER OPPORTUNITY ET AL., RESPONDENTS,
v.
M. PATRICIA SMITH, AS COMMISSIONER OF LABOR ET AL., APPELLANTS.



The opinion of the court was delivered by: Pigott, J.

This opinion is uncorrected and subject to revision before publication in the New York Reports.

Our State Constitution provides that laborers, workmen and mechanics engaged in "any public work" cannot "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). Labor Law § 220 implements this constitutional requirement, providing in pertinent part:

"Each 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 shall contain a stipulation that no laborer, worker or mechanic in the employ of the contractor, subcontractor or other person doing or contracting to do the whole or a part of the work contemplated by the contract shall be permitted or required to work more than eight hours in any one calendar day or more than five days in any one week except in cases of extraordinary emergency including fire, flood or danger to life or property . . . "

This litigation was sparked by an opinion letter dated August 31, 2007, wherein the New York State Department of Labor declared that the prevailing wage law mandate of Labor Law § 220 applied to all charter school projects. Two weeks later, on September 11, 2007, the Commissioner notified the Charter Schools Institute and the Commissioner of the State Education Department that it would begin to enforce prevailing wage laws on all charter school projects for which the advertising of bids occurred on or after September 20, 2007.

This determination was in stark contrast to the position taken by the Department in the previous seven years. In an opinion letter dated June 29, 2000, the Department then reasoned that,

"generally speaking, a Charter School is not a public entity. Therefore, Charter Schools cannot, as a class, be deemed to be Departments of Jurisdiction as defined under Labor Law Article 8, Section 220. And, in the absence of a contract with a public entity, the requirement to pay prevailing hourly wages and supplements to workers, laborers, and mechanics employed on a project does not arise."

In response to this change of opinion, petitioners, two foundations that support the creation of New York charter schools, the New York Charter School Association and three charter schools, commenced the instant proceedings, seeking a judgment declaring that the Commissioner's new position was taken in excess of her jurisdiction, that the prevailing wage laws do not apply to charter schools and an order enjoining the Commissioner from imposing the prevailing wage laws on them.

Supreme Court dismissed the petitions holding that the charter agreement between the school and the chartering entity is itself a contract between a public entity and a third party that may involve the employment of laborers, workers or mechanics (Foundation for a Greater Opportunity v Smith, 20 Misc 3d 453, 464 [Sup Ct, Albany County 2008]). Therefore, the court reasoned, the construction, renovation, repair and maintenance of charter schools facilities constitute projects for public works (id. at 467).

The Appellate Division reversed, granted the petitions and declared that "petitioners are not subject to the prevailing wage laws of Labor Law article 8" (New York Charter School Assn v Smith, 61 AD3d 1091 [3d Dept 2009]). The court found that charter schools are not public entities and, further, that charter agreements are not contracts involving the employment of laborers, workers or mechanics (id. at 1094).

This Court granted leave and we now affirm.

I.

In Matter of Erie County Indus. Develop. Agency v Roberts (94 AD2d 532 [1983] affd 63 NY2d 810 for reasons stated below), we held that two conditions must be met for the prevailing wage law to apply:

"(1) the public agency must be a party to a contract involving the employment of laborers, ...


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