SOU will pay most of the costs of $2.5 million settlement
Southern Oregon University and Texas-based American Campus Communities will each pay a share of a $2.5 million settlement after the state determined they had not paid workers enough for the construction of two new residence halls and a dining hall.
American Campus Communities, a builder and manager of campus properties, will pay $600,000 of that bill, SOU officials said this week.
SOU and American Campus Communities have lease and financing deals for Shasta Hall and McLoughlin Hall, the residence halls.
SOU will use money from its housing department to pay its portion of the settlement. Housing is an auxiliary service, so no university general fund dollars will be used to pay the settlement, SOU Head of Community and Media Relations Ryan Brown said in email interviews this week.
Cash previously reserved and saved from the construction project will be used to substantially fund the settlement, he said.
"There is no anticipated increase to the cost of student housing due to the settlement," he said.
Brown said there are no projects currently planned that will be negatively impacted by the settlement. Maintenance spending also will not be affected.
In late December, Oregon Labor Commissioner Brad Avakian announced the $2.5 million wage settlement for 325 employees who worked on the two residence halls and the dining hall. State officials said workers were underpaid because they were not paid a prevailing wage required on public projects.
SOU did not admit to any wrongdoing in the settlement.
State officials said construction of the residence halls and The Hawk dining facility was essentially a single, large public project. Construction of the buildings began in 2012, with all three completed in the first week of September 2013. The same architect and general contractor worked on the project, which was administered by SOU as a single project.
"The project was improperly divided and should have been considered one project. Workers should have earned Oregon's prevailing wage rate," Charlie Burr, communications director for the Oregon Bureau of Labor and Industries, said this week.
Some projects can be divided into public and private portions, with higher prevailing wages applying to the public portions and the private portion exempt, he said.
"When we took a look at it, we decided the overall project should be one project," Burr said. "From our perspective, it was a clear public project subject to prevailing wage."
SOU could have potentially considered the American Campus Communities portion of the project to be separate and private. With the terms of the settlement requiring caution in statements made by the involved parties, Burr declined to say whether SOU considered the construction of the residence halls to be a separate, private project.
"We didn't have to answer the question of whether the residence halls were a discrete and private project. You could ask SOU about their approach," he said.
Brown declined to answer specifically whether SOU believed part of the construction project should have been exempt from prevailing wage laws because of the financing and lease arrangements it has with American Campus Communities for the two residence halls.
Instead, he referred back to a statement SOU issued in response to the announcement of the $2.5 million settlement, which read, "Though SOU disagreed with BOLI's conclusion that additional wages were owed on the project, due to the time and cost of litigating the dispute, the SOU administration concluded that it was in the best interest of all involved to mutually resolve the dispute. SOU is looking forward to moving on from the issue and continuing to serve our students and community."
Burr said if there are questions about whether a construction project is public or private, involved parties can seek a determination in advance from the state Bureau of Labor and Industries so they know whether prevailing wage laws will apply. He said SOU did not seek a determination in advance.
The $2.5 million settlement with SOU is the largest in the Oregon Bureau of Labor and Industries' 112-year history, state officials said.