Newsletter Provided Notice of Wage Classification Requirement

The Court of Appeals for the District of Columbia Circuit concluded a contractor should have known it was required to classify its employees for prevailing wage purposes according to local union practice because the requirement was articulated in administrative and judicial decisions and the context of the Davis Bacon Act. After winning a bridge painting contract, the contractor received copies of general wage determinations listing the applicable wage classifications for the project. Although several of the determinations indicated the wages were based on collective bargaining agreements, the contractor did not contact the unions. Instead, it contacted other contractors, performed its own "tools of the trade" analysis, and classified and paid its employees as painters, laborers, or carpenters. In a subsequent government investigation of the contractor's labor practices, local unions and a trade group informed the government that painters claimed all work performed on bridge painting projects. The government determined the contractor violated the Act by misclassifying painters as laborers and carpenters and failing to pay correct prevailing wage rates, and withheld $1.3 million in contract payments. After obtaining no relief in administrative proceedings, the contractor filed suit in federal district court to recover the contract payments. The district court granted summary judgment in favor of the government, rejecting the contractor's contention it did not have fair notice of the classification requirement.

On appeal, the contractor argued the government failed to provide fair notice of the requirement to pay employees at the painter's wage or the obligation to base job classifications on locally prevailing union practice. However, the Wage Appeals Board's decision in Fry Brothers Corp. (WAB Case No. 76-6) provided adequate notice that contractors must use the job classifications of signatory unions when wage determinations are based on collective bargaining agreements. The court explained that although the Fry Brothers decision was not officially published, the case was reported in an issue of Labor Law Reports, published by CCH. Further, even though the Court of Appeals' opinion upholding Fry Brothers did not explain fully the board's decision, it provided public notice of the relevance of the decision to the determination of job classifications by stating the case "involved a dispute about the "wage scale required for a certain group of workers."" The court also noted the relevant language from the board's Fry Brothers decision was quoted again in a later published district court decision and a second unpublished decision reported in Government Contracts Reports and Labor Law Reports. The requirement was also incorporated into the government's field operations handbook, and the text of the Act, which focuses on local practice, and the applicable regulations, should have alerted the contractor it could not apply its own methodology for classifying jobs. As a contractor "admittedly engaged in hundreds of government contracts requiring Davis-Bacon Act compliance," it should have been aware of the requirements of Fry Brothers.

The appellate court also rejected the contractor's argument it should construe Fry Brothers narrowly to require only that contractors abide by known union practices. The relevant union signatories were noted in the wage determinations, and "although the [government] might have provided more explicit guidance that would have further forestalled a fair notice challenge, a company engaged in work subject to the [Act] cannot reasonably ignore the obvious." The contractor offered no explanation for failing to contact the relevant unions or the government for clarifications on local practices for classifying jobs, and "Fry Brothers and the principle that underlies it do not suggest that federal contractors may exercise less than a reasonable effort to determine the practice of signatory unions when wage determinations are based on collective bargaining agreements." The district court's grant of summary judgment was therefore affirmed. (Abhe & Svoboda, Inc. v. Chao, Sec'y, U.S. Dept. of Labor, CA-DC, 52 CCF ¶78,849)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )