Breaking News: Federal Court Enjoins New York’s Off-Site Custom Fabrication Prevailing Wage Amendment

At the end of last year, I wrote about New York's continuing expansion of prevailing wage obligations. What began as a requirement tied to traditional public work has, over time, extended into private projects receiving public benefits, certain hauling operations, renewable energy projects, contractor registration requirements, and electronic certified payroll filing obligations. Of all these developments, the one that caused the most immediate concern in the construction industry was the amendment extending New York prevailing wage requirements to certain off-site custom fabrication performed for public works projects.

That amendment was scheduled to take effect on June 18, 2026, and was to apply to contracts put out to bid on or after that effective date. In general terms, the amendment would have required prevailing wages to be paid to workers performing covered custom fabrication for a New York public works project, even when that fabrication occurred away from the project site, and even when it occurred outside New York—or the United States. The applicable rate would have been the prevailing wage rate for the New York county where the public work project is located, not the wage rate where the fabrication facility is located.

The statute covers custom fabrication that is “solely and specifically designed and engineered for a specified public work project”. It identifies, among other items, exterior or interior wall panel systems, woodwork, electrical, plumbing, heating, cooling, ventilation or exhaust duct systems, rebar cages, and mechanical insulation. A later chapter amendment narrowed the definition by removing the prior open-ended phrase “but not limited to”, and by excluding components, portions, modules, or materials that are otherwise stocked or readily available absent a specified public work project. Even so, the statute still prefaces the list with the word “including”. Because of these issues, the practical line between a covered custom-fabricated item and an ordinary supplied component remains far from self-evident.

The compliance problems were obvious. Public owners and contractors would have needed to determine, at the bidding and procurement stage, whether off-site work qualified as covered custom fabrication. Contractors would then have had to push New York prevailing wage, certified payroll, and registration requirements down the supply chain—including to fabricators located in other states or foreign jurisdictions. That raises real-world questions that the statute did not adequately answer: How is a New York contractor supposed to compel an out-of-state or international supplier to register with the New York State Department of Labor? How are certified payroll obligations enforced against a supplier with no New York presence? How should a fabrication shop segregate covered and non-covered work when identical components may be manufactured side by side for public and private projects?

Those concerns are not merely administrative. The amendment also presents serious constitutional questions because it attempts to regulate work performed (commerce) outside New York and, in some instances, outside the United States. Unsurprisingly, a coalition of construction industry organizations and contractors, led by the Associated General Contractors of New York State, commenced a federal lawsuit challenging the amendment, and sought emergency injunctive relief before the law took effect.

On May 28, 2026, the United States District Court for the Northern District of New York entered a Consent Order for Preliminary Injunction. The injunction prevents the off-site custom fabrication amendment from taking effect while the case proceeds through the initial motion practice. In practical terms, the amendment is on hold. It has not been upheld, struck down, or rewritten by the Court. It simply cannot be enforced at this time.

Under the Consent Order:

1. The New York State Department of Labor and the New York Attorney General are barred from enforcing the amendment;

2. Public owners, including state agencies, municipalities, and school districts, and private owners whose projects are otherwise subject to New York prevailing wage requirements, are not required to comply with the amendment or include its terms in their contracts;

3. General contractors, subcontractors, fabricators, and other project participants, regardless of location, are not required to comply with the amendment or any of its conditions; and

4. The State is barred from taking enforcement action, including civil penalties, debarment proceedings, or criminal referrals, based on alleged noncompliance with the amendment.

The injunction is good news for contractors, subcontractors, fabricators, taxpayers, and (ironically) public owners. Without the injunction, the amendment would have created immediate uncertainty in bidding, procurement, supply-chain management, certified payroll compliance, and contract administration. It also would have put contractors in the unenviable position of trying to impose New York public work obligations on suppliers who may have no operational connection to New York other than supplying a component ultimately used on a New York project.

That said, the injunction is only the first procedural step. Contractors should not treat it as the final word. The lawsuit will proceed, and the Court may ultimately uphold the amendment, invalidate it in whole or in part, or leave room for the Legislature to revise the statute. For now, the amendment is suspended until further order of the Court.

The takeaway is simple: the off-site custom fabrication prevailing wage amendment is not presently enforceable, but the issue is not over. Contractors bidding New York public work should continue to monitor the litigation, review bid documents carefully, preserve flexibility in subcontract and purchase order language, and avoid assuming that the injunction permanently eliminates the risk.

If you have questions about how prevailing wage requirements may apply to your company or your projects, please contact me at gspaun@wbgllp.com or (914) 607-6425. And, as always, stay tuned for further developments.

If you would like more information regarding this topic please contact Gregory J. Spaun at gspaun@wbgllp.com or call (914) 607-6425