[co-author: Skylar Arakawa-Pamphilon]

Last month, Governor Sisolak took to Twitter to celebrate signing two construction-related bills that he claims will “right anti-worker wrongs”: Assembly Bill 136 and Senate Bill 231. While Sisolak predicts that the bills will “strengthen our working families,” his tweet does not address the effect such legislative changes may have on those who employ construction workers. The following article recognizes that Assembly Bill 136 may have offsetting implications for Nevada contractors with public works contracts: the bill will increase their wage labor costs, but could also generate financial benefits for them. Further, the article predicts that SB 231 will negatively impact Nevada contractors by limiting who can bid on public works contracts in the state.

Assembly Bill 136

On May 28, 2019, Governor Sisolak signed Assembly Bill 136, which makes two important changes to Nevada’s prevailing wage laws for public works projects. First, the bill changes the minimum wage for laborers on any Nevada school district or Nevada System of Higher Education (NSHE) public works project. Existing Nevada law requires contractors with school district or NSHE public works contracts to pay their labor force 90 percent of the prevailing wage in the project’s county. Now, section 2 of Assembly Bill 136 eliminates that wage discount. To comply, contractors with school district or NSHE public works contracts will have to pay employees 100 percent of the applicable county’s prevailing wage. Second, the bill lowers the threshold for requiring a contractor to pay his or her employees the applicable prevailing wage. Under existing Nevada law, any contractor whose public works project costs less than $250,000 does not owe his or her workers the applicable prevailing wage. Now, to comply with Section 4 of the bill, any contractor, whose public works project costs more than $100,000, will have to pay workers the applicable prevailing wage.

One upside to these pro-employee provisions, which become law on July 1, is that they should positively impact the skill level of Nevada’s public construction workforce. Foremost, higher wages attract more skilled applicants. Additionally, when more public construction projects are subject to prevailing wage laws, more construction workers have the opportunity to develop their skills through apprenticeships. Contractors who must meet prevailing wage requirements are more likely to offer employees apprenticeships, because contractors lawfully may pay apprentices less than the prevailing wage. Therefore, expanding employee coverage under prevailing wage laws could lead to a more skilled public construction labor force in Nevada.

Although more expensive, a more skilled labor force may create offsetting financial benefits for Nevada contractors. First, adept construction workers are more productive. And greater productivity means construction workers can complete work in less time, which may increase the likelihood of receiving early completion or other performance-based bonuses or improve a contractor’s chances of winning future bids. Additionally, skilled personnel are statistically less likely to be injured on the job. The national average cost per on-the-job injury is approximately $27,000 in the construction industry. As a result, a more skilled labor force may lead to some cost savings for contractors to offset the prevailing wage increase in this context.

Senate Bill 231

On May 28, 2019, Governor Sisolak also signed SB 231, which eliminates several provisions from Nevada’s law governing public works and planning. Under existing Nevada law, the government cannot require contractors to employ unionized workers as a condition of eligibility for public works contracts. Section 7 of SB 231 eliminates this prohibition. Put simply, when SB 231 becomes law on July 1, 2019, the government will be free to prohibit non-union contractors from bidding on public works projects.

Although this bill will not retroactively affect Nevada contractors with existing public works contracts, it could prevent Nevada contractors from bidding on public works projects in the future. Beginning July 1, Nevada’s pro-labor government can limit eligibility for its public works projects to contractors who employ union workers. Approximately 80 percent of Nevada’s construction workforce is not unionized. By extension, most Nevada contractors do not employ unionized workers and, therefore, will not be eligible for such union-only contracts.

Conclusion

“Righting anti-worker wrongs” may be a legitimate legislative interest, but Assembly Bill 136 and Senate Bill 231’s impact on Nevada’s contractors is no less important. Assembly Bill 136 may have counteracting effects on Nevada contractors with public works contracts, increasing their labor costs while financially benefitting them in other ways; however, under Senate Bill 231, the Nevada government will be allowed to disqualify the non-union contractor majority from the public works bidding process altogether. It is not certain that the government will exercise this power or, if it does, to what extent. Nevertheless, Nevada contractors may want to prepare for potential industry changes because of these two bills.