​On February 21, 2024, the Pennsylvania Supreme Court (the "PA Supreme Court") issued its decision in Ursinus College v. Prevailing Wage Appeals Board. The Pa Supreme Court unanimously affirmed the Pennsylvania Commonwealth Court's decision that a construction project financed with tax-exempt bonds issued by a municipal authority for the benefit of Ursinus College (the "College") does not constitute a "public work" within the meaning of the Pennsylvania Prevailing Wage Act (the "Act") based upon a plain reading of the Act and the economic reality of the specific transaction.

What You Need to Know:

• This alert provides an update to our alert published on August 18, 2022 discussing the Pennsylvania Commonwealth Court's decision in Ursinus College v. Prevailing Wage Appeals Board.
• The Pa Supreme Court held that a private project funded with tax-exempt bonds is not governed by the Act solely by virtue of the Authority's role in issuing the tax-exempt bonds.

Following the Commonwealth Court's decision on August 4, 2022, the PA Supreme Court granted discretionary review to decide the issue brought by the International Brotherhood of Electrical Works, Local No. 98 ("IBEW") of whether the Commonwealth Court's decision that a construction project funded by tax-exempt bonds issued by a public authority was not a "public work" undermines the purposes of the Act and will allow employers to avoid the requirements of the Act.

The PA Supreme Court concluded that the project was not paid for with funds of the Montgomery County Higher Education and Health Authority (the "Authority") by virtue of the Authority's role as a conduit for the financing. The PA Supreme Court found that "at no point did either the monies used to pay the Project costs or the monies used to service the bond debt ever enter, rest in, or otherwise flow through the Authority's coffers." The economic reality of the transaction was that the Project was paid for by private bond proceeds.

The PA Supreme Court agreed with the Commonwealth Court in rejecting the IBEW's argument that a "but for" standard should be utilized whenever an authority is involved in project financing and that such standard is not supported by the plain meaning of the statute. The PA Supreme Court also rejected IBEW's policy argument that the tax-exempt financing through an Authority is meant to avoid the payment of prevailing wage. The PA Supreme Court further rejected IBEW'S contention that the Commonwealth Court misconstrued prior caselaw.

To read the PA Supreme Court's decision in full, please find it here.