        SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

563
CA 10-02269
PRESENT: SCUDDER, P.J., CENTRA, CARNI, SCONIERS, AND GREEN, JJ.


ELLICOTT GROUP, LLC, PLAINTIFF-RESPONDENT,

                    V                                OPINION AND ORDER

STATE OF NEW YORK EXECUTIVE DEPARTMENT OFFICE
OF GENERAL SERVICES, DEFENDANT-APPELLANT.


ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL, ALBANY (VICTOR PALADINO OF
COUNSEL), FOR DEFENDANT-APPELLANT.

HARTER SECREST & EMERY LLP, BUFFALO (KENNETH W. AFRICANO OF COUNSEL),
FOR PLAINTIFF-RESPONDENT.


     Appeal from a judgment (denominated order) of the Supreme Court,
Erie County (John M. Curran, J.), entered January 19, 2010 in a
declaratory judgment action. The judgment granted the motion of
plaintiff for summary judgment declaring that the prevailing wage
clause that defendant sought to be included in a proposed lease is not
authorized by the Labor Law and that defendant violated the separation
of powers doctrine by insisting on the inclusion of that clause and
permanently enjoined defendant from mandating that the clause be
included in the lease.

     It is hereby ORDERED that the judgment so appealed from is
unanimously affirmed without costs.

     Opinion by CENTRA, J.: At issue in this appeal is whether
defendant, State of New York Executive Department Office of General
Services (OGS), had the authority to include a provision in a lease
agreement requiring plaintiff to pay prevailing wages to certain
workers regardless of whether the statutory requirements of the
prevailing wage law applied. We conclude that OGS did not have that
authority because the exercise of its executive power unlawfully
impinged upon a legislative function, and we thus conclude that the
judgment should be affirmed.

                         Prevailing Wage Law

     “Our State Constitution provides that laborers, workers and
mechanics engaged in ‘any public work’ cannot ‘be paid less than the
rate of wages prevailing in the same trade or occupation in the
locality within the state where such public work is to be situated,
erected or used’ ” (Matter of New York Charter School Assn. v Smith,
15 NY3d 403, 407-408, quoting NY Const, art I, § 17). Articles 8 and
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9 of the Labor Law implement this constitutional mandate. Labor Law §
220 (2) provides in relevant part that “[e]ach contract to which the
state or a public [entity] . . . is a party, and any contract for
public work entered into by a third party acting in place of, on
behalf of and for the benefit of such public entity pursuant to any
lease, permit or other agreement between such third party and the
public entity, and which may involve the employment of laborers,
workers or mechanics shall contain a stipulation that no laborer,
worker or mechanic . . . shall be permitted or required to work more
than eight hours in any one calendar day or more than five days in any
one week.” Subdivision (3) (a) provides that the wages to be paid to
a laborer, worker or mechanic “upon such public works” shall not be
less than the prevailing rate of wages.

     Thus, “[i]n general, Labor Law § 220 requires that certain
contracts involving the employment of laborers, workers or mechanics
on a public work project provide for the payment of the prevailing
wage rate” (New York Charter School Assn., 61 AD3d 1091, 1093, affd 15
NY3d 403). In order for the prevailing wage law to apply, two
conditions must be met: “(1) the public agency must be a party to a
contract involving the employment of laborers, work[ers], or
mechanics, and (2) the contract must concern a public works project”
(Matter of Erie County Indus. Dev. Agency v Roberts, 94 AD2d 532, 537,
affd for the reasons stated 63 NY2d 810; see New York Charter School
Assn., 15 NY3d at 408).

     Labor Law article 9 sets forth the prevailing wage requirement
for building service employees for building service work (see § 230
[1]; § 231 [1]). Building service work is defined as work performed
by a building service employee (see § 230 [2]), and a building service
employee is defined as “any person performing work in connection with
the care or maintenance of an existing building . . . for a contractor
under a contract with a public agency . . .[,] the principal purpose
of which is to furnish services through the use of building service
employees” (§ 230 [1]). The definition of building service employees
encompasses such occupations as building cleaners, groundskeepers,
window cleaners, and garbage collectors (id.). We have held that the
prevailing wage requirement of Labor Law article 9 applies to private
buildings “as long as the work is being done pursuant to a public work
contract” (Feher Rubbish Removal, Inc. v New York State Dept. of
Labor, Bur. of Pub. Works, 28 AD3d 1, 5-6, lv denied 6 NY3d 711).

                     Facts and Procedural History

     OGS, which enters into leases with private landlords for building
and office space for various state agencies, learned that the New York
State Department of Labor (DOL) was investigating certain leasing
projects of state agencies to determine whether prevailing wages were
being paid on those projects. OGS attempted to resolve the ambiguity
with the DOL, but “questions persisted because many of the cases
addressing the issue of whether prevailing wages must be paid on
projects that potentially involve ‘public work’ are very fact
specific.” To be consistent and to remedy any uncertainty, OGS
adopted a policy whereby all of its standard lease agreements would
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                                                         CA 10-02269

include a prevailing wage law clause. In other words, when soliciting
bids from prospective landlords, OGS required that they agree to a
clause in the proposed lease agreement that required them to pay the
prevailing wage “in instances where the work is being done to benefit
the State and public funds are being expended.” OGS admitted that the
clause would require the payment of prevailing wages “even where such
work might not meet the technical definition of ‘public work.’ ”

     Plaintiff is a private entity that owns approximately 11 office
buildings in downtown Buffalo and regularly submits bids for lease
agreements with OGS. OGS issued a Request for Information to
prospective landlords for the lease of, inter alia, approximately
23,000 square feet of space to the New York State Workers’
Compensation Board (WCB). OGS notified plaintiff and other
prospective landlords that the WCB lease would include a prevailing
wage clause requiring the landlord to pay the prevailing wage for work
such as alteration and construction performed on behalf of the public
entity, and for work performed by service employees such as janitors
on behalf of the public entity. Specifically, the prevailing wage
clause provided:

          “In relation to all work performed by laborers,
          workmen, or mechanics involving alteration,
          renovation, reconstruction, repair,
          rehabilitation, construction, or demolition
          performed on behalf of a public agency (entity)
          under this Lease/License Agreement, or in relation
          to all building service work as defined in Article
          9 of the New York State Labor Law, performed on
          behalf of a public agency (entity) under this
          Lease/License Agreement, the Landlord/Licensor
          shall abide by the provisions of Articles 8 and/or
          9 of the New York State Labor Law. The
          Landlord/Licensor agrees that the wages to be paid
          to any building service employee (including, but
          not limited, to watchmen, guards, doormen,
          building cleaners, porters, janitors, gardeners,
          groundskeepers, stationary firemen, elevator
          operators and starters, window cleaners and
          occupations relating to the collection of garbage
          or refuse and to the transportation of office
          furniture and equipment, and the transportation
          and delivery of fossil fuel), or to any worker,
          laborer, or mechanic, shall not be less than the
          prevailing wage for the locality in which the work
          is to be performed. The Landlord/Licensor shall
          contact the New York State Department of Labor to
          obtain the appropriate prevailing wage schedule,
          upon execution of the herein Lease/License
          Agreement.”

     Plaintiff submitted its bid and agreed, under protest, to the
inclusion of the prevailing wage clause. OGS notified plaintiff that
it was awarded the WCB lease.
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                                                           CA 10-02269

     Plaintiff commenced this declaratory judgment action seeking a
declaration that OGS lacked statutory authority to mandate that the
prevailing wage be paid for work on privately owned property leased by
OGS for the WCB. Plaintiff also sought a permanent injunction
restraining OGS from imposing the prevailing wage requirement in the
WCB lease. Plaintiff asserted that the lease agreement did not
involve public work, and that the prevailing wage requirement in the
Labor Law therefore did not apply. Plaintiff further asserted that
OGS exceeded its authority and violated the separation of powers
doctrine by mandating that the prevailing wage clause be included in
the lease.

     In its answer,   OGS asserted that it acted in accordance with its
statutory authority   under the Public Buildings Law when it included
the prevailing wage   clause in the lease. OGS further asserted that,
in doing so, it did   not violate the separation of powers doctrine.

     Plaintiff moved for summary judgment seeking various forms of
relief. In granting the motion, Supreme Court declared that the
prevailing wage clause in the proposed WCB lease agreement was not
statutorily authorized by articles 8 or 9 of the Labor Law, and
further declared that OGS violated the separation of powers doctrine
by insisting on the inclusion of the prevailing wage clause. The
court also permanently enjoined OGS from mandating that the clause be
included in the WCB lease. As previously noted, we conclude that the
judgment should be affirmed.

                                 Analysis

     In order for articles 8 and 9 of the Labor Law to apply here,
there must be a public works contract (see Erie County Indus. Dev.
Agency, 94 AD2d at 537, affd for the reasons stated 63 NY2d 810; Feher
Rubbish Removal, Inc., 28 AD3d at 5-6). In moving for summary
judgment, plaintiff met its initial burden of establishing that the
lease agreement did not involve public work (see Matter of 60 Mkt. St.
Assoc. v Hartnett, 153 AD2d 205, 207, affd 76 NY2d 993), and thus
established that OGS was not authorized under articles 8 and 9 of the
Labor Law to include the prevailing wage provision in the WCB lease.
OGS does not contend that the lease agreement involves a public works
project. Rather, it contends that, regardless of whether the lease
agreement would be subject to articles 8 and 9 of the Labor Law, OGS
is authorized by Public Buildings Law § 3 (12) to require plaintiff to
pay prevailing wages. That statute authorizes the Commissioner of OGS
to lease buildings and office space for state agencies “upon such
terms and conditions as he or she deems most advantageous to the
state” (id.). OGS contends that the prevailing wage clause “is simply
a contractual term that OGS seeks to include in plaintiff’s lease
because doing so is in the public interest and thus within its
contracting authority under Public Buildings Law § 3 (12).” We agree
with plaintiff, however, that OGS may not include the prevailing wage
clause in the WCB lease because OGS is thereby violating the
separation of powers doctrine.
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                                                         CA 10-02269

     The legislative, executive, and judicial branches constitute the
structure of our representative system of government (see NY Const,
art III, § 1; art IV, § 1; art VI, § 1). The “ ‘separate grants of
power to each of the coordinate branches of government’ imply that
each branch is to exercise power within a given sphere of authority”
(Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 821, cert
denied 540 US 1017). “Respect for this structure and the system of
checks and balances inherent therein requires that none of these
branches be allowed to usurp powers residing entirely in another
branch” (Subcontractors Trade Assn. v Koch, 62 NY2d 422, 427).

     OGS, as an administrative body, usurped the role of the
legislative body by adopting a policy mandating the inclusion of the
prevailing wage clause in all leases. In Under 21, Catholic Home Bur.
for Dependent Children v City of New York (65 NY2d 344, 353), the
Court of Appeals held that the Mayor of the City of New York violated
the separation of powers doctrine by promulgating an executive order
prohibiting employment discrimination by city contractors on the basis
of “ ‘sexual orientation or affectional preference.’ ” The Court held
that the executive was thereby impermissibly usurping the legislative
function by enacting social policies not adopted by the Legislature
and that the Mayor’s attempt “to broaden the class of persons
protected from discrimination by private employers, . . . however
commendable, is an enactment of policy which the City Charter leaves
to the City Council” (id. at 359). In addition, in Boreali v Axelrod
(71 NY2d 1, 6), the Court of Appeals held that the Public Health
Council, an administrative body, usurped the role of the Legislature
by promulgating a comprehensive code to govern tobacco smoking in
areas that were open to the public. The Legislature had been unable
“to reach an acceptable balance” with respect to the policy on the
problem of second-hand smoke, and thus the administrative agency made
its own policy decision and enacted regulations (id.). The Court held
that the administrative agency violated the separation of powers
doctrine “when it used the [broad enabling] statute as a basis for
drafting a code embodying its own assessment of what public policy
ought to be” (id. at 9).

     Likewise in this case, OGS usurped the role of the Legislature in
making its policy decision that prevailing wages should be paid even
for work that was not public work. It is for the Legislature, not
OGS, to define the parameters of when prevailing wages should be paid.
“[T]he separation of powers ‘requires that the Legislature make the
critical policy decisions, while the executive branch’s responsibility
is to implement those policies’ ” (Saratoga County Chamber of
Commerce, 100 NY2d at 821-822, quoting Bourquin v Cuomo, 85 NY2d 781,
784). Indeed, the Legislature made a substantive amendment to Labor
Law § 220 (2) in 2007 (see L 2007, ch 678, § 1). In addition, the
Legislature passed an amendment to article 9 of the Labor Law in 2010
(see 2010 NY Senate Bill 8379-A), although it was vetoed by the
Governor. Clearly, this is an area of the law that continues to
evolve, and it is the role of the Legislature to make any such
changes, not the role of an administrative agency.
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                             Conclusion

    Accordingly, we conclude that the judgment should be affirmed.




Entered:   April 29, 2011                      Patricia L. Morgan
                                               Clerk of the Court
