New York’s Off-Site Custom Fabrication Prevailing Wage Law Faces Federal Challenge, by Andrew L. Richards, Esq., 6-3-2026

On May 28, 2026, a coalition of construction industry groups filed suit in the U.S. District Court for the Northern District of New York seeking preliminary and permanent injunctive relief to block New York’s new prevailing wage law covering certain off-site custom fabrication performed for public works projects before the law takes effect on June 18, 2026.

In Associated General Contractors of New York State, LLC v. Hochul, the plaintiffs, including the Associated General Contractors of New York State, contend that the statute unlawfully regulates certain fabrication performed outside New York, violates constitutional protections governing interstate and foreign commerce, is impermissibly vague, and imposes compliance obligations that cannot be administered in a practical manner.

On December 20, 2025, Governor Kathy Hochul signed S.2536-A/A.2747-A, which amended New York’s prevailing wage law to include certain off-site “custom fabrication” within the scope of covered public work. The amendment applies to specified custom fabrication performed for a particular public works project, including certain wall panel systems, woodwork, electrical systems, plumbing systems, HVAC-related duct systems, rebar cages, and mechanical insulation, even when the fabrication occurs outside New York. Read more in KD’s alert here.

Workers performing covered off-site custom fabrication must be paid the prevailing wage rate and supplements established for the New York county where the public project is located, regardless of where the fabrication work is performed. The statute defines covered “custom fabrication” to include certain specified items that are solely and specifically designed and engineered for a specified public work project and excludes components, portions, modules, or materials that are otherwise stocked or readily available absent a specified public work project.

The law takes effect on June 18, 2026, and applies to public works projects advertised for bid on or after that date. The plaintiffs seek to prevent enforcement of the law before it becomes operative.

The complaint challenges the law on several constitutional grounds. Among other things, the plaintiffs allege that the statute improperly burdens interstate commerce by requiring out-of-state fabricators to comply with New York’s prevailing wage, registration, reporting, and certified payroll requirements in order to continue supplying products for New York public works projects. The complaint also alleges that the statute improperly reaches fabrication performed in foreign countries and therefore infringes constitutional limitations on state regulation of foreign commerce.

The plaintiffs further contend that key statutory terms—including “custom fabrication,” “solely and specifically designed and engineered,” and “stocked or readily available”—are insufficiently defined, creating uncertainty regarding what products and activities are covered. According to the complaint, this lack of clarity exposes contractors, subcontractors, fabricators, suppliers, and manufacturers to potential liability while making compliance difficult or impossible in many fabrication environments.

The complaint also alleges that the law unfairly exposes general contractors to liability for prevailing wage compliance failures by fabrication entities and suppliers located in other counties, states, and even foreign countries. The plaintiffs contend that contractors cannot realistically monitor or verify compliance by off-site fabrication facilities in the same manner they can oversee on-site subcontractor work.

For contractors, subcontractors, suppliers, manufacturers, and owners involved in New York public works projects, the dispute bears close watching. Unless the court intervenes, businesses involved in potentially covered off-site fabrication should be evaluating whether their operations, vendor relationships, bid assumptions, contract provisions, and payroll practices may be affected once the law takes effect.

Author:
Andrew L. Richards
Co-Chair of Construction Practice Group