These cross-motions for summary judgment present the novel issue of a general contractor and surety's liability under the Bond Act, N.J.S.A. 2A:44-143 et seq., for a defaulting subcontractor's failure to comply with the Prevailing Wage Act, N.J.S.A. 34:11-56.25 et seq. In addition, the motions raise the issue of plaintiff Commissioner of Labor's standing to bring this action on behalf of the subcontractor's employees.
The relevant facts are not in dispute. On May 2, 1985, the general contractor, Ameron, Inc. (hereinafter "Ameron"), contracted with the City of Trenton (hereinafter "Trenton") to perform cleaning and cementing of mortar linings in the Trenton water system. Ameron, thereafter, on June 5, 1985, subcontracted with defendant Mar-D, Inc. (hereinafter "Mar-D") for material and labor on the contract.
As mandated by N.J.S.A. 34:11-56.25 et seq., the general contract between Ameron and Trenton required the general contractor to
. . . pay all workmen as a minimum the prevailing wage rate in accordance with Chapter 150 of the New Jersey Laws of 1963, Prevailing Wages on Public Contracts & U.S. Department of Labor Wage Rates with the higher rate for any given occupation being the governing rate.
In February 1986, employees of Mar-D complained to the New Jersey Department of Labor's public contracts section of the Office of Wage and Hour Compliance, claiming that they had been paid less than the prevailing wage. Plaintiff's preliminary investigation revealed that $55,092.82 (the difference between wages paid and the prevailing wage) was owing to 11 employees. Plaintiff concluded that defendant Mar-D violated the Prevailing Wage Act, N.J.S.A. 34:11-56.25, and brought this action on behalf of the 11 employees pursuant to N.J.S.A. 34:11-56.30. This statute requires employers on public works contracts to pay employees not less than the prevailing wage -- a rate determined by plaintiff. Plaintiff brought this action against not only the subcontractor, Mar-D but the general contractor, defendant Ameron, and the general contractor's surety, defendant Federal Insurance Company (hereinafter "Federal"). Mar-D is apparently no longer in business and has not been served in this action.
Plaintiff seeks to enforce its alleged statutory right to collect the wage deficiency on behalf of the employees, see N.J.S.A. 34:11-56.30 and -56.36, and alleges, as to defendant Ameron, that the general contractor is responsible for wage deficiencies due from subcontractors. Federal concedes, that if liability attaches to defendant Ameron, then defendant, Federal is liable as Ameron's surety.
The relevant section of the Prevailing Wage Act provides as follows:
If any workman is paid by an employer less than the prevailing wage to which such workman is entitled under the provisions of this Act, such workman may recover in a civil action the full amount of such prevailing wage less any amount actually paid to him or her by the employer. [ N.J.S.A. 34:11-56.40]
The Prevailing Wage Act sets forth the wage obligations of a general contractor and those of a subcontractor. All parties agree that the Legislature intended to, and indeed did, impose
several liability upon both general contractors and subcontractors for violation of the Prevailing Wage Act; however, Ameron maintains that the general contractor and/or its surety are not liable for a subcontractor's violation of the act. Ameron argues that the statute imposes liability only upon the entity which has the direct employer-employee relationship with the underpaid workers, and it is not responsible for Mar-D's violation of the statute. Ameron further urges that had the Legislature intended a general contractor, such as Ameron, to be liable for the failure of its subcontractor to comply with the Prevailing Wage Act, it would have ...