7217)

This item provides information and background regarding prevailing wage ordinances,
provides a draft prevailing wage ordinance for City Council consideration, and requests
approval for additional City staff and related equipment necessary, if a prevailing wage
ordinance is adopted.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

Summary
On March 22, 2023, by a vote of 5-4, the Phoenix City Council passed a prevailing
wage ordinance. This ordinance was subsequently repealed by City Council action on
April 19, 2023. The Council also authorized use of the eight-hour rule to research the
legality of a prevailing wage ordinance. Council directed staff to draft an ordinance
that:

1. Has had legal review.
2. Incorporated stakeholder input.
3. Included a phased approach to limit negative impact on the Fiscal Year (FY) 2023-
24 operating budget, FY 2023-24 capital budget, and planned 2023 General
Obligation Bond Program.
4. Could be considered by the end of the calendar year.

The attached report (Attachment A) updates Council on action taken by staff
subsequent to the April 19, 2023, Council meeting, and provides a modified prevailing
wage ordinance for City Council consideration.

Responsible Department
This item is submitted by City Manager Jeffrey Barton, the Budget and Research
Department, and the City Engineer's Office.




Page 5
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CITY MANAGER’S OFFICE REPORT
DATE ISSUED
11/30/2023
TO: FROM:
SUBJECT
Draft Prevailing Wage Ordinance

This report provides information and background regarding prevailing wage
ordinances, provides a draft prevailing wage ordinance for City Council
consideration, and requests approval for additional city staff and related
equipment necessary if a prevailing wage ordinance is adopted.

Summary

On March 22, 2023, by a vote of 5-4, the Phoenix City Council passed a prevailing
wage ordinance. This ordinance was subsequently repealed by Council action on
April 19, 2023, with Council authorizing use of the eight-hour rule to research the
ordinance’s legality. Council directed staff to draft an ordinance that:

1) Might better withstand a legal challenge.
2) Incorporates stakeholder input.
3) Is phased to limit negative impact on the proposed 2023-24 operating budget,
2023-24 capital budget, and planned 2023 General Obligation Bond Program.
4) Could be considered by the end of the calendar year.

This report updates Council on action taken by staff subsequent to the April 19,
2023, Council meeting, and provides a modified prevailing wage ordinance for City
Council consideration.

Background

Prevailing wage refers to a minimum wage by trade, that must be paid to workers
to ensure workers’ wages are consistent with local standards for a given type of
work. Federally funded construction projects are subject to prevailing wage
requirements under the Davis-Bacon Act, which additionally mandates certain
compliance reporting. A wage determination under the Davis-Bacon Act specifies
the set of wage rates, fringe benefit rates, and work rules that the U.S.

Page 6
Department of Labor has ruled to be prevailing for a given labor category in a
given locality. Wage determinations are based on market surveys. The last survey
in Phoenix’s market was conducted in 2008 for roadway construction trades, and
in 2012 for building construction trades. Prevailing wage regulations typically only
apply to physical labor, and the Department of Labor’s wage determinations
provide a standard reference point of prevailing wage for construction trades –
carpenters, equipment operators, and plumbers, for example. Trades such as
engineers and architects that may perform technical or managerial functions on
construction projects are generally not covered by prevailing wages. The Davis-
Bacon Act was intended to prevent federal and federally assisted construction
(where contracts are often awarded to the lowest-priced qualified bidder) from
depressing local wage standards.

Several states and cities outside of Arizona have state/city-specific laws similar in
nature to the Davis-Bacon Act but applying to state/city-funded construction
projects, with varying scopes, wage determination methods, and requirements.

Prevailing wage ordinances are a hotly debated topic with varying viewpoints from
labor and contractors regarding the intended, perceived, and actual impact of such
ordinances. From the labor perspective, prevailing wage ordinances ensure fair
pay, benefits, and safer working conditions to employees. Labor contends that
increased pay and benefits for employees enhance the overall economy and
provide for a happier workforce. They further argue that any increased costs for
labor on individual construction projects are oftentimes offset with reduced time on
the job as worker productivity, safety and job waste greatly improve. On the other
side of the debate, employers and contractors argue that such ordinances
increase construction project costs between six and 30 percent and require
additional layers of administrative burden to ensure full compliance, particularly
impacting small and minority-owned businesses that typically perform work as
subcontractors. In the current labor environment, contractors assert that workers
are already paid at or above prevailing wage rates, making a local prevailing wage
ordinance unnecessary.

Countless studies have been conducted over the years and much of the data has
been determined to be flawed or inconclusive at best. Many of the earlier studies
also contained clear bias on behalf of both labor and industry. This bias was
largely dependent on who commissioned and/or paid for the study. However,
recent evidence from municipalities across the country does seem to show, at
least anecdotally, that there is a correlation between prevailing wage ordinances
and increased costs. It is important to note that many of these same studies also
recognize the positive impact such ordinances have on workers and the overall
economy.



Page 7
Here is a summary of a few recent independent and municipal studies regarding
the impact of prevailing wage and Davis-Bacon impact on the economy and
construction costs:

1) A February 2023 study conducted on the impact of Montana’s prevailing wage
laws by the Illinois Economic Policy Institute found that the law “keeps
construction costs stable and supported local contractors; ensures that the next
generation of workers is trained for in-demand careers, which combats labor
shortages and protects worksite safety; and promotes labor market
competitiveness.” The study also found that Montana’s prevailing wage law
“increases construction worker incomes by eight percent and expands employer-
provided health insurance coverage for construction workers by eight percent.”
The study contends that increases in labor costs are beneficial to the overall
economy and that these increases can be generally offset through savings
elsewhere on large construction projects.

2) According to Nooshin Mahalia of the Economic Policy Institute “even if
prevailing wage laws do force wages to rise, that increase doesn’t have much
effect on the total cost of a project. On average, 25 percent of a project’s cost will
go to laborers, including payroll taxes (which necessarily increase the more you
pay your workers) and benefits. Increasing wages by as much as 10 percent
would only increase the total of a contract by around 2.5 percent.”

3) The Congressional Budget Office (CBO) periodically issues a compendium of
policy options (called Options for Reducing the Deficit) covering a broad range of
issues. In the Options for Reducing the Deficit, 2023-2032 Volume II: Smaller
Reductions Report, CBO determines that “repealing Davis-Bacon would save the
federal government $24.3 billion”.

4) According to a May 2022 report by the Beacon Hill Institute, “the 91-year-old
Davis-Bacon Act adds at least 7.2 percent to the cost of federal and federally
assisted construction projects and inflates wages by 20.2 percent compared to
local market averages.”

5) A January 2021 Fiscal Note from the Missouri Committee on Legislative
Research Oversight Division determined that a repeal on prevailing wage
provisions would reduce construction costs by approximately $6.3 million.

6) An April 2021 Fiscal Note from the Maryland Department of Legislative
Services states, “the total costs of projects required to pay prevailing wages under
the bill likely increase by between two and five percent overall, although individual
projects may experience greater or lesser increases. These increases do not
affect overall State capital funding, which is established annually by the Governor


Page 8
and General Assembly through the capital budget process. However, it may result
in fewer projects being funded each year.”

7) A March 2020 report from the Termer Center for Housing Innovation at the
University of California, Berkley found that prevailing wage requirements are
associated with higher hard costs and raised the cost per square-foot on
affordable housing by approximately $30 per square-foot. The report did note that
“prevailing wage requirements are a policy choice designed to provide public
benefit by stabilizing employment and benefits in a high-risk field, those broader
benefits would not be captured in an analysis of hard construction data.”

8) A 2015 Fiscal Note from the Legislative Research of Kentucky determined that
exempting education buildings and facilities from prevailing wage laws would
decrease construction costs on elementary and secondary education projects by
7.6 percent.

9) A 2016 study from the Illinois Economic Policy Institute concluded that, “Even
after accounting for all other factors, a strong/average prevailing wage increases a
blue-collar construction worker’s earnings by between 15.7% and 17.2% per
year.”

10) The University of Kentucky’s Center for Business and Economic Research
examined costs of school construction in West Virginia before and after West
Virginia repealed its prevailing wage law and determined that costs per square
foot were 7.3 percent lower following repeal.

Arizona Attorney General Opinion

On April 17, 2023, Senator Miranda submitted a request to the Arizona Attorney
General for an opinion on the legality of the prevailing wage ordinance originally
passed by the City Council on March 22.

The Attorney General's Office opined that a city may regulate the minimum wage
paid within its geographic boundaries under Arizona Revised Statutes Section 23-
364(I) so long as those wages are not less than the statewide minimum wage.
This authority includes the ability to require that employees of contractors on local
public works projects be paid not less than the prevailing wage. Accordingly, the
Attorney General concluded that the City Council’s originally adopted ordinance
was not preempted by state law.





Page 9
Stakeholder Input

Staff utilized outside counsel with expertise in local prevailing wage laws and
mediation services to lead six stakeholder meetings that occurred in August,
October, and November 2023. Three meetings were held with representatives of
the labor community, and three with representatives of the contractor community.

Labor representatives asserted:
1) A prevailing wage ordinance is necessary to ensure laborers are paid wages
approaching livable wages.
2) Although a worker may currently be paid at or above the prevailing wage, that is
dependent upon the current labor market persisting.
3) Certain contractors utilize labor brokers who hire independent contractors (1099
employees) in place of W-2 employees, avoiding payroll recordkeeping and
benefits, and potentially committing wage theft, worker misclassification, and tax
fraud. This can be prevented by requiring and auditing certified payrolls.
4) Skilled labor is diminishing and is critical to the construction of complex
projects.
5) Skilled labor depends on robust apprenticeship programs that graduate
apprentices. In-house apprenticeship programs provided by contractors are not
equivalent to state approved apprenticeship programs, and do not have equivalent
graduation rates (i.e., apprentices are often paid as apprentices for the duration of
their employment, without graduating to earn journeyman rates).
6) Non-compliance must result in repercussions, such as suspending a
contractor’s construction permit until the contractor regains compliance.
7) Applying the existing Davis Bacon Act requirements to all City construction
projects would meet labor’s expectations; new terms do not need to be created.
8) The Attorney General’s issued opinion is correct, and there is no legal obstacle
to the City adopting a prevailing wage ordinance.

Contractor representatives (excluding one dissenting representative) asserted:
1) Contractors pay at or above prevailing wages even without a prevailing wage
ordinance and would not be able to attract and retain employees at lower rates.
2) Requiring certified payroll submissions for all projects adds unnecessary
regulatory burden.
3) Additional regulatory burden creates obstacles for small, minority- and women-
owned, and disadvantaged businesses.
4) Labor broker concerns have been mitigated through standard terms now
incorporated in the City’s Title 34 solicitations; the contracting community opposes
bid and payroll fraud.
5) In-house apprenticeship programs provided by contractors meet or exceed
state approved apprenticeship programs.



Page 10
6) A prevailing wage ordinance would increase costs to the City for its own
administrative staff.
7) The Attorney General’s issued opinion is flawed, has no force of law, adoption
of a prevailing wage ordinance is preempted by State Statute, and a prevailing
wage ordinance would be found illegal by the courts.

Potential Ordinance

In recognition of impacts to small and disadvantaged businesses, budgetary
impacts, and administrative cost, staff recommend prevailing wage requirements
be implemented only through a phased approach. Staff would assess impacts to
stakeholders as incremental changes are adopted, and report to City Council prior
to recommending any expanded program. Additionally, staff recognize that some
contractors may choose not to bid on City contracts due to inability to comply with
prevailing wage requirements, and this may in individual cases prohibitively limit
competition, requiring an exception process.

In an initial phase, staff recommend that prevailing wage requirements:

1) Only apply to construction solicitations initiated by the City of Phoenix under
Title 34 of the Arizona Revised Statutes.
2) Take effect in new construction contracts advertised beginning on July 1, 2024.
3) Only apply to solicitations having an engineer’s estimate of $4,000,000 or more.
4) Exclude Job Order Contracts.
5) Utilize existing wage determinations prepared by the U.S. Department of Labor.
6) Only apply to trades that are subject to federal Davis-Bacon Act requirements.
7) Exclude procurements for projects funded in whole or part by the City Council
and voter approved 2023 General Obligation Bond Program and any Affordable
Housing construction project.
8) Not apply to solicitations where a contract is being re-advertised due to the
initial solicitation receiving less than three responsive qualifying bids.
9) Not apply to public infrastructure reimbursement agreements between the City
and private developers.
10) Not apply to construction by private developers that are, or are intended to be,
constructed in City rights-of-way or on other property dedicated, or intended to be
dedicated, to the City.

Staff’s recommendation seeks to balance administrative feasibility with impact.
The recommended exclusion of Job Order Contracts in an initial phase is critical to
internal administrative feasibility and controlling administrative cost. During the
period from 1998-99 through 2021-22, nearly 9,000 construction projects (66%)
were implemented through Job Order Contracts. These projects are typically small
in scope though – the contracts represented only 17% of construction contract


Page 11
value during that same period. Further the original impetus for federal prevailing
wage requirements was a concern that federal Design-Bid-Build (“low bid”)
construction methods would depress local wages due to price competition. Unlike
low-bid contracts, Job Order Contracts are awarded through a qualifications-
based selection process, which includes an evaluation of subcontractor selection
plans and reduces the risk of bidders undercutting competition by reducing wages.

Contracts within the scope of this ordinance shall adhere to applicable prevailing
wage rate determinations made by the U.S. Secretary of Labor under the
provisions of the Davis-Bacon Act, 40 U.S.C. §§ 3142 et seq., as amended, and
observe similar investigative, reporting and enforcement requirements.

Budget Impact

Staff evaluated fiscal years 2024-25 through 2027-28 of the City Council adopted
2023-28 Five-Year Capital Improvement Program to estimate the budgetary
impact of a prevailing wage ordinance. This analysis is based on the listed
assumptions for a first phase implementation only. Changes to the threshold or
scope would invalidate these estimates.

Construction labor costs typically account for 25-35% of capital project costs. For
estimating purposes, 25% has been used.

A net labor cost increase assumption of 10% has been used for estimating
purposes, accounting for higher wages, partially offset by increased skill and
efficiency of more qualified workers.

After isolating CIP components that would likely be impacted by this prevailing
wage ordinance, staff have estimated an average annual cost impact to the CIP at
$17.0 million (Attachment B). This estimate is highly dependent upon the applied
assumptions, and the actual annual impact may vary substantially. Should Council
enact a prevailing wage ordinance, it will not be possible to report the true
financial impact, as staff would not have a comparison point (i.e., what the project
would have cost but for prevailing wage). Staff have reviewed the findings of
dozens of academic analyses on prevailing wage impacts, whose conclusions
range from no impact, to impacts as high as 37% on total construction contract
cost.

Additionally, the City Engineer’s Office has determined that 12 additional positions
would be required to support training, auditing, and enforcement of this local
prevailing wage ordinance: one Management Assistant II, one Labor Compliance
Supervisor, and 10 Labor Compliance Specialists. The estimated annual cost for
the positions is approximately $1.4 million plus one-time equipment costs of


Page 12
$110,000. The costs of these positions are not budgeted and would be
incorporated into the General Fund Status and allocated to capital projects if the
prevailing wage ordinance is approved. Office space for these added staff has not
yet been identified, and additional costs are anticipated for re-configurations.

Finally, staff asserts that implementation of a prevailing wage ordinance would
likely be challenged through litigation, resulting in additional indeterminate costs.

This financial impact could require a combination of increases to user fees and
taxes, or delays or cancellation of scheduled projects.

Concurrence/Previous Council Action

• On March 22, 2023, City Council enacted a prevailing wage ordinance.
• On April 19, 2023, City Council repealed the enacted prevailing wage ordinance,
and authorized the use of the eight-hour rule for staff research pursuant to Rule 15
of the Rules of Council Proceedings.

Responsible Department

This item is submitted by City Manager Jeffrey Barton, the Budget and Research
Department, and the City Engineer.





Page 13
Attachment B

Estimated Annual Impact of Local Prevailing Wage Ordinance



Total Adopted CIP 2024-25 through 2027-28 5,633,666,000
less Projects that Do Not Include Construction - 746,999,000
less Estimated Amount Already Subject to Davis Bacon - 1,063,030,000
less Estimated Amount Under $4,000,000 Threshold - 1,109,652,000
Estimated 4-Year Amount Within Scope 2,713,985,000

Estimated Average Annual Amount (Above ÷ 4) 678,496,000

Estimated Labor Component (Above x 25%) 169,624,000 2

Estimated Annual Prevailing Wage Impact (Above x 10%) 16,962,000

Remove projects such as information technology, debt service, land or equipment acquisition,
and projects that only involve consultant services.
Assumes 75% of project costs are materials, engineering/architectural services, and other
costs not subject to prevailing wage.




Page 14
THIS IS A DRAFT COPY ONLY AND IS NOT AN OFFICIAL COPY OF THE FINAL
ADOPTED ORDINANCE




ORDINANCE G-7217


AN ORDINANCE AMENDING CHAPTER 43 OF THE
PHOENIX CITY CODE ENACTING THE FOLLOWING
PREVAILING WAGE ORDINANCE FOR CITY
CONSTRUCTION PROJECTS TO BE CODIFIED AS
ARTICLE XIV OF CHAPTER 43 OF THE PHOENIX CITY
CODE.

_______________



WHEREAS, the City Council for the City of Phoenix hereby declares that it

is in the best interests of the City to have a uniform determination of the prevailing wages

to be paid to the various classes of mechanics, laborer or other workers on City

construction projects which will be required in the performance of work covered by this

Ordinance.


BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PHOENIX as

follows:

SECTION 1. That Chapter 43 of the Phoenix City Code is amended and a

new Article XIV is adopted as follows:

Chapter 43 –Article XIV.
Payment of Prevailing Wage for Work Performed on City Construction Projects.


Sec. 43-51. Definitions.

In this Article, unless the context otherwise requires:




11/28/23 COP Law Draft Page 15
Affordable Housing means residential or mixed-use development, excluding

any projects that are subject to the Davis-Bacon Act, that provides low-to-moderate-

income housing to at least 50% of the dwelling units at a site committed for a minimum

term through covenants or restrictions to households with incomes at 80% or less of

the area median income as defined by the United States Department of Housing and

Urban Development.

City means the City of Phoenix and any related City agency, department or

authority.

Construction in the context of Construction Contracting has the meaning as set

forth in Section 34-101(3) of Title 34, Chapter 1, Article 1 of the Arizona Revised

Statutes. For the purposes of this Article, Construction Contracting is limited to

construction conducted on City-owned or leased property and does not include work

performed by employees of the City.

City Construction Contract means a contract for construction on City-owned or

City-leased property and to which the City is the contracting party financially obligated

to pay the contract sum and which is solicited in accordance with the City

Procurement Code.

Covered Employer means any employer obligated to pay employees a

prevailing wage under this Article.

Prevailing Wage Rate means the rate, amount, or level of wages, salaries,

benefits, and other remuneration prevailing for the corresponding class of mechanics,

laborers, or workers employed for the same work in the same trade or occupation in

the locality in which the construction takes place, as determined by the City Engineer



2 Ordinance G-7217

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on the basis of applicable prevailing wage rate determinations made by the U.S.

Secretary of Labor under the provisions of the Davis-Bacon Act, 40 U.S.C. § 3142 et

seq., as amended.

Willfully means any act which is intentional, deliberate, conscious or voluntary

and designed to achieve a particular result.

Sec. 43-52. Payment of Prevailing Wages.

(A) Required. Every mechanic, laborer or other worker employed by any

contractor or subcontractor under any applicable City Construction Contract to

perform Construction Contracting shall be paid not less than the Prevailing Wage

Rate for the same class and kind of work in the Phoenix metropolitan area. This

section shall not apply to: (i) any participant in a youth employment program

where the participant is employed in non-construction work; (ii) situations where

there is no contract directly requiring or permitting construction work; or (iii)

contracts that are neither a revenue nor expenditure contract contemplating

construction work, such as licenses or permits to use city-owned land.

(B) Apprenticeship Programs. Every Covered Employer may support

employee apprenticeship participation by contributing an amount to an

apprenticeship program approved by the U.S. Department of Labor that is

equivalent to and consistent with the appropriate Prevailing Wage Rate as

determined by the U.S. Department of Labor and registered with the State of

Arizona, Western Maricopa Education Center, East Valley Institute of Technology,

or an equivalent career training program.




3 Ordinance G-7217

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(C) Contract Specifications. Every City Construction Contract with an

aggregate value of four million dollars ($4,000,000) or greater at the time the City

Construction Contract is entered into shall contain a provision: (i) stating that the

minimum wages to be paid for every class of mechanic, laborer and worker shall be

not less than the Prevailing Wage Rate for each class of worker; (ii) requiring a

Covered Employer to pay every mechanic, laborer or other worker at least once a

week the full amount of wages accrued at the time of payment at the applicable

Prevailing Wage Rate; (iii) mandating that every Covered Employer comply with the

recordkeeping and notice posting requirements in Section 43-53 of this Article. No

Covered Employer shall misclassify any mechanic, laborer or other worker as an

independent contractor, as defined in CFR 541. A mechanic, laborer or other worker

shall be classified as an independent contractor only if their work relationship satisfies

the legal definition of an independent contractor under the Fair Labor Standards Act,

29 U.S.C. § 201 et seq., as amended.

Sec. 43-53. Required Recordkeeping and Notice Posting.

(A) Every Covered Employer shall keep certified payroll records

showing the name, address, job classification, wages and benefits paid or

provided, and the number of hours worked for each employee. These records

shall be preserved for four (4) years from the date of an employee’s final payment

and shall be considered public records under Arizona Public Records Law. A.R.S.

§ 39-101 et seq.

(B) Every Covered Employer shall file weekly Federal Form WH-347 or

its equivalent which shall specify for each employee the employee’s name,



4 Ordinance G-7217

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address, employee ID#/last four digits of the Social Security Number, job

classification, hourly wage rate paid, the number of hours worked each week, all

deductions made from gross pay, and net weekly pay, with the City Engineer.

Every Covered Employer shall file a statement weekly with the City Engineer

certifying that all workers have been paid no less than the wage required by their

contract, if any wages remain unpaid to set forth the amount of wages due and

owing to each worker respectively, and that the job classification for each

employee conforms with the work performed. Social Security Numbers and other

personal identifying information shall be kept confidential by the City, unless

otherwise required by law.

(C) The City Engineer must notify in writing all Covered Employers at

least once every twelve (12) months of their obligation to file weekly the Federal

Form WH-347 or its equivalent. The notification must include a copy of the

Federal Form WH-347 with instructions for completing the form, the dates that

the completed form is due throughout the proceeding twelve (12) months, contact

information for an employee within the City Engineer’s office where questions can

be referred, a notice of the penalties that can be assessed if the Covered

Employer becomes non-compliant. In addition, the notice shall include a letter

that provides the name, address and telephone number of the City Engineer, the

applicable prevailing wages for the job classifications at the Covered Employer,

and a statement advising workers that if they have been paid less than the

Prevailing Wage Rate they may notify the City Engineer and request an

investigation. The City’s failure to provide the previously described written



5 Ordinance G-7217

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notification to covered employers does not relieve Covered Employers of their

obligations under this Article.

(D) Every Covered Employer shall post the letter with the related

information referenced in Subsection C above at the job site in an area easily

accessible by all employees.

Sec. 43-54. Enforcement.

(A) Complaint Procedure. The City Engineer shall provide a complaint

form on the official City website. Any affected individual or organization

representing such individual(s) may file a complaint with the City Engineer for any

violation of this Article.

(B) Review and Investigation. The City Engineer shall review and

investigate the complaint and shall make a finding of compliance or

noncompliance within sixty (60) days of the complaint being filed, including a

determination of whether an employer is covered by this Article. The Covered

Employer shall permit authorized agents of the City Engineer to observe the work

being performed on the work site, to interview employees, and examine the books

and records relating to the payrolls being investigated to determine whether or

not the Covered Employer is in compliance with this Article. Failure of the City

Engineer to issue a finding of compliance or noncompliance does not relieve the

Covered Employer of their obligations under this Article.

(C) Finding of Noncompliance. If at any time the City Engineer, upon

investigation of a complaint or upon independent investigation, finds that a



6 Ordinance G-7217

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violation of this Article has occurred, it shall issue a finding of noncompliance and

notice of corrective action to the Covered Employer. The finding of

noncompliance shall specify the areas of noncompliance, indicate such

corrective action as may be necessary to achieve compliance, and impose

deadlines for achieving compliance.

(D) Dispute of Finding of Noncompliance. A Covered Employer may

dispute a finding of noncompliance and notice of corrective action by requesting

a review within thirty (30) days of the date of the finding. The City Engineer shall

appoint a hearing officer, who shall affirm or reverse the finding of noncompliance

based upon evidence presented by the applicable City department and the

Covered Employer. Where the finding of noncompliance and notice of corrective

action requires wage restitution, the Covered Employer must, as a precondition

to a request for review, provide evidence that such wages have either been paid

or placed into an escrow account for the satisfaction of the judgment of the

hearing officer. A Covered Employer who does not request review or appeal, or

who fails to pay or escrow wages as provided herein, waives the right to dispute

a finding of noncompliance. A finding of noncompliance and notice of corrective

action shall become final if either the Covered Employer fails to request review

within thirty (30) days as provided in this paragraph, or the hearing officer affirms

such finding after a review.

(E) A violation by a subcontractor of a Covered Employer shall be

deemed a violation by the Covered Employer.




7 Ordinance G-7217

Page 21
Sec. 43-55. Sanctions.

(A) In the event the City Engineer or hearing officer determines that a

Covered Employer has failed to comply for more than sixty (60) days after a notice of

corrective action has become final, or in the event the hearing officer determines that

any portion of a Covered Employer’s dispute of a finding of noncompliance is frivolous

or was brought for the purpose of delaying compliance, the City Engineer shall order

any or all of the following penalties: (1) wage restitution for the affected employee(s);

(2) liquidated damages in the amount of three (3) times the wages owed; (3) a

directive to the applicable City department to withhold any payments due the Covered

Employer, and to apply such payments to the payment of fines or the restitution of

wages; or (4) rescission of the City Construction Contract in violation.

(B) In the event that the City Engineer or hearing officer determines that a

Covered Employer has willfully or more than twice in a three-year period failed to

comply with this Article, the City Engineer or hearing officer, in addition to the

sanctions that may be imposed pursuant to subsection A above, may (1) order

debarment of the contractor pursuant to Section 43-28 of the Phoenix City Code; and

(2) in the case of a project receiving a city subsidy, order the payment of a fine in the

amount of no less than 3% of the total cost of construction.

Sec. 43-56. Regulation.

The City Engineer may issue regulations to implement the provisions of this

Article.

Sec. 43-57. Exclusions.

The provisions of this Article do not apply to City Construction Contracts:


8 Ordinance G-7217

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1. valued at less than $4,000,000;

2. subject to Federal prevailing wage law;

3. solicited before July 1, 2024, including any renewals; or

4. excluded from the City of Phoenix Procurement Code.

In addition, none of the provisions of this Article apply to any of the following:

5. Procurements for any projects funded in whole or in part by the proposed

2023 General Obligation Bond Program.

6. Any Job Order Contracts (JOCs).

7. Any Affordable Housing construction project.

8. Any solicitation where a City Construction Contract is being re-advertised

because the initial solicitation received less than three (3) responsive qualifying bids.

9. Public infrastructure reimbursement agreements between the City and

private developers.

10. Construction by private developers of improvements that are, or are

intended to be, constructed in City rights-of-way or on other property dedicated, or

intended to be dedicated, to the City.

SECTION 2. That the provisions of this Ordinance are severable, and if

any provision of this Ordinance or any application thereof is held invalid, that invalidity

shall not affect the other provisions or applications of this Ordinance that can be given

effect without the invalid provision or application.



SECTION 3. That this Ordinance shall become effective on July 1, 2024.




9 Ordinance G-7217

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PASSED by the City Council of the City of Phoenix this 9th day of

January, 2024.

______________________________
MAYOR


______________________________
Date


ATTEST:



_____________________________
Denise Archibald, City Clerk




APPROVED AS TO FORM:
Julie M. Kriegh, City Attorney

By:

_____________________________

_____________________________


REVIEWED BY:


_____________________________
Jeffrey Barton, City Manager




10 Ordinance G-7217

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