I have defended more than one hundred Davis Bacon Act and state prevailing wage cases. This is a much nuanced area of law with many minefields for the unwary employer, one of which is the issue of what trade or craft to pay particular workers, i.e., classification. There are close calls, and some are not. A recent case illustrates this tension where the employer supposedly “repeatedly misclassified” workers to pay them lower wages. The case is entitled U.S. et al. v. J.D. Eckman Inc. et al., and was filed in federal court in the Eastern District of Pennsylvania.
The workers have sued in federal court, but the US Department of Labor has also weighed in, following its investigation of five projects involved in the lawsuit, where the agency found wholesale misclassification. The DOL concluded that “based on the records provided, it is apparent that [the employer] repeatedly misclassified employees, paying employees performing skilled work at laborer rates instead of the much-higher lineman or groundman rates that should have been paid pursuant to the applicable wage determinations and local area practice.”
The employer sought to dismiss the case last year, but the Judge ordered the parties to submit the matter of the workers’ classification(s) to the USDOL. The plaintiffs claimed that the employer misclassified the workers as Laborers or Operating Engineers when they were really performing Electrician work, which is a higher rate. The agency has now concluded that the Company engaged in a “pattern of misclassification.”
The DOL applied a certain construct to the five projects under review and suggested to the Court that the same construct be applied to other projects and misclassification claims. The DOL observed that there existed “a significant difference” in the rates for the various classifications. The difference (on one particular contract) was $3 per hour, a significant difference. The projects were highway and bridge improvement projects in several Pennsylvania counties.
The Takeaway
Employers always want to save money and there are many examples where trade unions claim the same work in the (usually exhaustive) scope of work provisions in their labor contracts. I know, from personal experience, that this is true with Laborers and Carpenters. In those cases, I have counseled clients to pay the lower rate where there exists a reasoned basis for doing so. However, an across-the-board classification of workers as one trade as opposed to another higher paid trade, will be discovered and acted upon by the governmental agency or a court.
And will be difficult to defend…
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