Philadelphia prevailing wage law expanded, impact on employers to be determined

By Carrie Salls | Nov 22, 2016

PHILADELPHIA — Although it is too soon to tell whether a prevailing wage ordinance signed by Mayor Jim Kenney on Oct. 27 will force any affected employers in the city to resort to layoffs, Fisher & Phillips associate Gregory D. Hanscom told the Pennsylvania Record “it’s possible, of course.”  

Hanscom said the newly expanded law applies to some employers in the city receiving government funding, such as hospitals, universities, stadiums paying concessions workers and the convention center. The ultimate effects of the expanded ordinance will depend on just how many employers and employees are impacted, he said.


The new law, which was unanimously passed by the Philadelphia City Council, took effect immediately after the mayor signed the legislation, meaning employers who were not currently paying the prevailing wage needed to find the extra money right away, rather than during a transition period.


The law is particularly designed to help lower income workers, Hanscom said, and is part of a nationwide push to raise the minimum wage to $15.


“This is an ongoing effort in Philadelphia to raise wages,” Hanscom said. “(The mayor’s office is saying) minimum wage is not a living wage.”


Hanscom said the prevailing wage is above minimum wage, but is set by individual industry standards. As a result, he said there is no one specific wage imposed under the new ordinance. If employers are already paying the prevailing wage, they will not be affected by the change.


The city defines the prevailing wage as “a rate of pay determined by the U.S. Department of Labor based upon the particular geographic area for a given class of labor and type of project.”


“They have to pay their employees more money to the extent they weren’t already paying them the prevailing wage,” Hanscom said. “I guarantee there were a number of employers that were below.”


The expanded ordinance is expected to cover thousands more employees working in Philadelphia.


Hanscom said employers can contact applicable city or state agencies to find out exactly how much they should be paying under the prevailing wage law. “Certain employees are going to get a raise,” he said.


Hanscom said the penalty for non-compliance with the ordinance is severe enough that most employers should be eager to pay the higher wage.


“The city is authorized to withhold any funds owed to employees,” Hanscom said.


A prevailing wage law is certainly not new to Philadelphia. Such an ordinance has been on the books since the 1950s. However, it has only recently been expanded to apply to more and more employees.


The city joins numerous municipalities and government entities across the country that are taking action in an effort to raise the federal minimum wage above the current $7.25 per hour. In fact, some of those municipalities have already passed higher minimum wage requirements.


Meanwhile, the U.S. Department of Labor has enacted new overtime pay regulations, which are scheduled to take effect on Dec. 1. Those new federal overtime laws are expected to mean bigger paychecks for millions of U.S. workers.

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