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4th Circuit: FLSA covers federal contracts even when unmentioned

The 4th U.S. Circuit Court of Appeals gave a preliminary victory to nearly two dozen electrical workers at a construction project at the National Naval Medical Center in Bethesda, who claimed the subcontractor violated the Fair Labor Standards Act by shortchanging them on their overtime and by not paying them for the 15 minutes they were required to arrive each day before their shifts. (Courtesy U.S. Navy)

The 4th U.S. Circuit Court of Appeals gave a preliminary victory to nearly two dozen electrical workers at a construction project at the National Naval Medical Center in Bethesda (pictured above), who claimed the subcontractor violated the Fair Labor Standards Act by shortchanging them on their overtime and by not paying them for the 15 minutes they were required to arrive each day before their shifts. (Courtesy U.S. Navy)

The Fair Labor Standards Act enables workers on federal contracts to sue for unpaid wages even when the agreements state they are governed by laws permitting only the U.S. government to take legal action against the contractors, a federal appeals court has ruled in reviving a lawsuit from Bethesda.

The 4th U.S. Circuit Court of Appeals’ 3-0 decision is a preliminary victory for more than 20 electrical workers at a construction project at the National Naval Medical Center who claim the subcontractor violated the FLSA by shortchanging them on their overtime and by not paying them for the 15 minutes they were required to arrive each day before their shifts.

Senior U.S. District Judge J. Frederick Motz had granted summary judgment for the subcontractor, Power Design Inc., saying the contract clearly stated it would be governed by the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act, which call for enforcement by the U.S. Labor Department and provide no private right to sue.

But the 4th Circuit vacated Motz’s ruling in a published decision Monday and sent the case back for trial, saying “the FLSA’s plain language envisions that it would be applied along with other federal labor legislation,” including the DBA and CWHSSA.

The FLSA calls for employees to be paid for their assigned work for up to 40 hours per week and to receive time and a half for work beyond those 40 hours. The law expressly permits workers to sue in state or federal court for unpaid wage and overtime compensation and, if successful, to collect twice their economic loss.

Like the FLSA, the DBA requires federal contractors and subcontractors to pay their workers a “prevailing wage” and the CWHSSA requires contractors and subcontractors to pay time and a half for overtime. However, those two laws leave enforcement authority solely with the Labor Department, which can ban for up to three years the awarding of federal contracts to companies found in violation of the laws.

Daniel A. Katz, the workers’ attorney, hailed the 4th Circuit’s finding of a private cause of action under the FLSA despite the law not being mentioned in the contract. Leaving the enforcement of fair-wage provisions solely with the Labor Department would result in many shortchanging contractors going unpunished and their workers going uncompensated, said Katz, of The Law Offices of Gary M. Gilbert & Associates PC in Silver Spring.

The FLSA, by providing a private right of action, enables each worker to be a “private attorney general,” Katz added. “It’s impossible for the Department of Labor to investigate every violation.”

Power Design’s attorney, Leslie A. Stout-Tabackman, said she and her client are “disappointed and believe that the 4th Circuit did not fully understand the interplay between the Fair Labor Standards Act and the Davis-Bacon Act and got it wrong. We are considering whether to seek further review.”

Stout-Tabackman is with Jackson Lewis PC in Reston, Va.

Broad application

The case arose after Power Design signed on to be a subcontractor for Walbridge in that construction company’s 2010 contract with the U.S. Navy to design and build a facility at the Bethesda hospital. The subcontract contained the DBA and CWHSSA provisions but did not mention the FLSA.

St. Petersburg, Fla.-based Power Design then hired RDZ Electric and ES&R Construction to perform the electrical installation work under the subcontract’s terms.

The electrical workers sued Power Design in U.S. District Court in Baltimore in February 2014, alleging violations of the FLSA. Motz granted summary judgment for the company in May 25, 2015, prompting the workers to appeal.

Power Design — which denies any wrongdoing — argued before the 4th Circuit that the contract, by providing the DBA and CWHSSA as sole remedies, foreclosed the workers from bringing suit. The company called it reasonable for workers to opt for Labor Department enforcement, as the DBA and CWHSSA often call for higher wages than are required under the FLSA – an argument the appellate court found unconvincing.

“[W]e discern no conflict in the reach of the three statutes before us,” Judge Albert Diaz wrote for the 4th Circuit. “Rather, we are satisfied that Congress intended the FLSA to apply broadly notwithstanding any overlap with other labor statutes.

“In any event,” Diaz added, “a plaintiff’s request for less in damages than that to which he is entitled does not a legislative conflict make.”

The Labor Department also participated in the appeal, arguing in support of the workers.

Associated Builders and Contractors Inc., a national trade association, filed papers with the 4th Circuit in support of Power Design.

Judges Henry F. Floyd and Stephanie D. Thacker joined Diaz’s opinion in Jorge Amaya et al. v. Power Design Inc., No. 15-1691.