Employment Law Daily FLSA overtime claims OK even though federal contract incorporated laws with no private right of action
Wednesday, August 17, 2016

FLSA overtime claims OK even though federal contract incorporated laws with no private right of action

By Lorene D. Park, J.D. Noting that Congress intended for the FLSA to apply broadly notwithstanding any overlap with other labor statutes, the Fourth Circuit found no conflict between the FLSA, the Davis-Bacon Act (DBA), and the Contract Work Hours and Safety Standards Act (CWHSSA). The appeals court therefore reversed summary judgment against FLSA overtime claims by electrical workers on a federally funded project, which the lower court had granted based on its conclusion that the DBA and CWHSSA, which do not provide for a private right of action, governed the federal contract at issue (Amaya v. Power Design, Inc., August 15, 2016, Diaz, A.). The plaintiffs, electrical construction workers, worked for companies that were hired by Power Design to perform electrical installation work on a new naval facility in Bethesda, Maryland. This was a federally funded project and Power Design had entered into a subcontract that expressly incorporated the DBA and CWHSSA, but did not incorporate the FLSA. FLSA overtime suit. Filing suit under the FLSA for unpaid overtime, but not under the DBA or CWHSSA, the plaintiffs alleged that the subcontractor routinely required that they work over 40 hours each week and to arrive at the job site 15 minutes early without signing in, but did not pay for all hours worked. Granting summary judgment for Power Design, the district court found that the subcontract was a federal one to which the DBA and CWHSSA applied, that neither statute provided a private right of action (they only provided for enforcement by the DOL), and that the plaintiffs could not circumvent those laws by bringing FLSA claims. The interplay of the FLSA, DBA, CWHSSA. Reversing, the Fourth Circuit found no conflict in the reach of the three federal statutes. To the contrary it found that Congress intended for the FLSA to apply broadly notwithstanding any overlap with other labor statutes. In reaching this result, the appeals court examined the purposes of all three statutes. It noted that both the DBA and the CWHSSA apply to federal (or federally funded) construction contracts and subcontracts. The DBA applies to contracts valued over $2,000, requires employees be paid the “prevailing” wage set by the Secretary of Labor, and requires that the calculation of overtime under “any federal law” be based on the “regular or basic hourly rate” set by the Secretary. The CWHSSA applies to “any” federally funded construction contracts for public works valued over $100,000 and requires employees be paid overtime at time and one-half their “basic rate of pay.” The DBA is designed to set an earnings floor and promote the hiring of local labor; the CWHSSA has the complementary objective of making the 40-hour workweek and corresponding overtime pay uniformly applicable to federal contract and subcontract work. The FLSA, noted the appeals court, has the broader purpose of eliminating substandard labor conditions throughout the nation and to raise living standards. Unlike the DBA and CWHSSA, the FLSA clearly provides a right of action; employees may sue in state or federal court for unpaid minimum wages and overtime compensation, plus liquidated damages. Laws not mutually exclusive. Reviewing the history and text of the statutes, as well as cases addressing the interplay of the FLSA and laws similar to the DBA and CWHSSA, the Fourth Circuit found no reason to conclude that the three laws should be construed as mutually exclusive. For one thing, as noted above, the statutes have distinct purposes. In addition, the FLSA’s plain language envisions that it would be applied along with other federal labor legislation. Also, “Congress was aware when it passed the CWHSSA that the FLSA already applied to ‘much of the construction industry,’ meaning that with the CWHSSA’s concurrent application, ‘many contractors may well find themselves governed by several different legislative standards and enforcement procedures applicable to the same conduct.’” The same was true of the DBA. Power Design’s arguments to the contrary were not persuasive. The fact that the DBA and CWHSSA do not provide an implied private right of action did not create a conflict with the FLSA, and neither did the fact that the DBA requires the payment of wages that may be higher than the FLSA’s minimum wage. In addition, the CWHSSA’s and FLSA’s maximum-hour-workweek and overtime requirements are the same. No conflict in calculating overtime. The Fourth Circuit also found that the DBA’s directives to use the prevailing cash rate and to exclude fringe benefits when calculating overtime dovetail with the FLSA’s method for computing overtime. As for using the higher hourly wage when calculating overtime under the FLSA, the DBA “specifies that ‘[i]n determining the overtime pay to which a [worker] is entitled under any federal law, the regular or basic hourly rate of pay (or other alternative rate on which premium rate of overtime compensation is computed) . . . is deemed to be the rate computed under §3141(2)(A),’ 40 U.S.C. §3142(e), which is ‘the basic hourly rate of pay’—or the DBA’s ‘prevailing wage’” minus fringe benefits.” Thus, continued the appeals court, when the FLSA “requires overtime be ‘not less than one and one-half times the regular rate at which [the worker] is employed,’ we supplant ‘regular rate’ with the DBA’s prevailing basic hourly rate. This statutory interplay creates no conflict between the acts, and is entirely consistent with Supreme Court and circuit precedent.” Remand. Based on the foregoing, the appeals court remanded. It noted that the record contains the prevailing rates (set by the Secretary of Labor) applicable to the contract, certified payroll records, and affidavits of workers stating that they were paid below the prevailing contract rate. In the appellate court’s view, that was an issue of proof that the district court could address.

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