Labor & Employment Law Daily Wrap Up, GOVERNMENT CONTRACTS—2d Cir.: Questions regarding New York prevailing wage promises and limitations period truncation certified, (Sep 10, 2025)

By Ronald Miller, J.D.

The appeals court concluded that New York law is so uncertain that it could not make a reasonable prediction about the answer to the questions.

The Second Circuit certified to the Court of Appeals of the State of New York the question whether the promise to pay prevailing wages is implicit in every public works contract so that individuals employed on public works projects may sue their employers to enforce the prevailing wage requirement under New York Labor Law § 220 even if the employer’s written contract does not include the statutorily required promise to pay prevailing wages. A second certified question was whether agreements to shorten the statute of limitations in public works contracts to one year are enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law. However, the appeals court concluded that fire alarm testers and inspectors were entitled to prevailing wages under § 220 (Walton v. Comfort Systems USA (Syracuse), Inc. dba ABJ Fire Protection Co., Inc., No. 23-7944 (2d Cir. Sept. 9, 2025)).

The employer is a full-service fire alarm and sprinkler company that offers fire alarm testing and inspection and repair services. The two plaintiffs in this action were employed as alarm systems technicians, which included doing various types of electrical and sprinkler work.

Public works contracts. The employer entered into contracts for fire alarm testing and inspection services with New York public works customers. All the contracts between the employer and the public works customers included a clause shortening the statute of limitations for a cause of action against the employer to one year. Additionally, some contracts contained a provision stating that services provided by the employer were not required to be paid under prevailing wage statutes. With respect to the scope of work, many of the employer’s public works contracts included language limiting the contracted-for services to testing and inspection and disclaiming any intent to contract for maintenance work.

The two employees brought a class action against the employer alleging that it failed to pay prevailing wages or adequate overtime pay to its employees, including a third-party beneficiary breach of contract claim for failure to pay class members prevailing wages for work performed on public projects in New York.

Lower court rulings. In May 2019, the employer moved for partial summary judgment on all the employees’ prevailing wage-related causes of action. In February 2020, the district court granted the employer’s motion for partial summary judgment, concluding that the contracts shortened the statute of limitations to one year and the employees, as third-party beneficiaries, were bound to that contract term. It also concluded that the employees could not enforce the prevailing wage requirement as third-party beneficiaries of the employer’s public works contracts because those contracts did not contain any clauses expressly promising to pay prevailing wages. Finally, the district court concluded that the testing and inspection services covered by the contract were not subject to prevailing wages under the New York Labor Law (NYLL).

The employees appealed challenging the district court’s grant of partial summary judgment on the prevailing wage claims.

Prevailing wage. New York Labor Law § 220 states that no worker doing certain types of work on public works projects shall be paid less than the prevailing rate of wages and requires contracts for employment on such projects to include a provision agreeing to pay prevailing rates. New York courts have held that a worker can sue to recover prevailing wages on a third-party beneficiary breach of contract theory.

This appeal raised three questions: (1) Were fire alarm inspectors and testers entitled to prevailing wages under § 220? (2) Is the promise to pay prevailing wages implicit in every public works contract so that individuals employed on public works projects may sue their employers to enforce the prevailing wage requirement under § 220 even if the employer’s written contract does not include the statutorily required promise to pay prevailing wages? And (3) Are agreements to shorten the statute of limitations in public works contracts to one year enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law.?

Testing and inspection work. As an initial matter, the Second Circuit addressed the dispute of whether the employer’s contracts for inspection and testing “covered” work entitled to prevailing wages under NYLL § 220. The New York Court of Appeals has described covered work under § 220 as “construction, maintenance or repair work.” So, the question was whether testing and inspecting fire alarms is “construction, maintenance or repair work.”

Based on a 2009 NYS DOL Opinion Letter, the Second Circuit concluded that testing and inspection work falls within the scope of the prevailing wage statute. The letter noted the New York State Fire Code’s “basic requirement for periodic inspection and testing of fire systems in order to ensure its operational integrity,” and concluded that “a contract to satisfy the [applicable] inspection and testing requirements is an integral part of an overall contract for the maintenance of a system. Accordingly, any public contracts which are aimed at satisfying the testing and inspection requirements of any code adopted for the purpose of maintaining fire systems in proper operating order are within the coverage of Article 8 of the Labor Law.”

The NYS DOL further noted that state contracts related to fire system maintenance treat “maintenance services” as including “testing, inspection and monitoring.”

Thus, this DOL Opinion Letter squarely applied to the testing and inspection services that were the subject of the public contracts here.

Third-party beneficiary claims. The next question was whether the employees can vindicate that right through a civil claim against the employer for breach of contract based on a third-party beneficiary theory.

Here, the Second Circuit concluded that although general principles of New York common law governing third-party beneficiary claims may suggest that plaintiffs cannot pursue a direct breach of contract claim under these circumstances, some New York Appellate Division cases regarding third-party beneficiary breach of contract claims seeking to enforce the right to prevailing wages under § 220 suggest otherwise, causing substantial uncertainty as to how the Court of Appeals would answer the question presented here.

Contractually shortened statute of limitations. The statute of limitations for an ordinary third-party beneficiary breach of contract claim is six years because it is “an action upon a contractual obligation or liability, expressed or implied.” But the employer’s public works contracts all include provisions shortening the statute of limitations to one year.

The Second Circuit did not doubt that the shortened statute of limitations was reasonable. Further, it observed that it’s clear that under New York law third-party beneficiaries are generally bound by the terms of the contracts pursuant to which they sue—including any provisions shortening the applicable limitations period.

Here, the named-plaintiffs’ claims accrued at the latest in 2014 and 2015—when they terminated their respective employments—and they did not commence this action until 2017, so there was no question that their claims would be time-barred under a one-year limitation period. Thus, the Second Circuit found there is a reasonable probability that the Court of Appeals of New York would conclude that the employees’ claims are time-barred.

However, New York courts do not appear to apply standard third-party beneficiary common law principles when assessing claims by workers to enforce their rights under § 220. At least some courts have held that the requirements of § 220 trump the intent of the contracting parties as to the availability of a contractual cause of action to vindicate the prevailing wage protection.

There was also a reasonable probability the New York Court of Appeals would conclude a plaintiff’s statutorily created contractual right to bring a third-party beneficiary claim belongs to the plaintiff and, in contrast to an ordinary third-party beneficiary claim, cannot be compromised or limited by an agreement between the contractor and government agency without the plaintiff’s consent.

Questions certified. Consequently, as to these latter two questions, the appeals court concluded that New York law is so uncertain that it could not make a reasonable prediction about the answer to those questions, such that the prudent path was to certify them to the New York Court of Appeals (the state high court).

The case is No. 23-7944.

Judge: Robinson, B.

Attorneys: Jason J. Rozger (Menken Simpson & Rozger) for David Walton and Kevin T. Maddison. Jessica F. Pizzutelli (Littler Mendelson) for Comfort Systems USA (Syracuse), Inc. dba ABJ Fire Protection Co., Inc.

Companies: Comfort Systems USA (Syracuse), Inc.; ABJ Fire Protection Co., Inc.

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