Arbitrability of Service Contract Act or Davis-Bacon Act Job Classification Disputes – Don’t Go There!
“The further a society drifts from truth, the more it will hate those who speak it.”
—George Orwell
You are a federal contractor performing either construction contract or service contracts using a unionized workforce. The union wants you to pay higher wages than what was agreed upon in your collective bargaining agreement (“CBA”). Or the union thinks the workers are working in a different job classification not specified in the CBA. You can’t agree, so the union demands arbitration. What should happen next?
As a general rule, there are no private causes of action to enforce the Davis-Bacon Act (“DBA”) or the Service Contract Act (“SCA”). Exclusive jurisdiction over those laws is vested in the U.S. Department of Labor (“DOL”). See, e.g. SecTek, Inc., CBCA 5084-R (2016), https://www.cbca.gov/files/decisions/2016/CHADWICK_08-03-16_5084-R__SECTEK_INC.pdf (vacating an earlier decision and dismissing a SCA-related dispute for lack of jurisdiction, and thereafter resulting in a new filing at the DOL where it was decided exactly the opposite of the earlier Board decision).
This rule is enforced by a Disputes Concerning Labor Standards clause ordinarily set forth in your government service or construction contract. See FAR 52.222-13; 29 C.F.R. 4.6(r); and 29 C.F.R. 5.5(a)(8). Of course, this doesn’t prevent state law, Fair Labor Standards Act, or contract based litigation, so long as it is not dressed up as an attempt to enforce either of these acts. But to the extent these legal claims required the dispute resolution forum to address substantive interpretations of the SCA or DBA, those issues are likely committed to DOL for resolution and no other forum .
The classic example of an issue committed to DOL is the question of what is the proper job classification of a worker under either the SCA or DBA. While there has been some erosion of the exclusivity rule for other kinds of disputes, the one red line that has been consistently enforced is the issue of job classification. The decision about how to classify a worker under either the SCA or the DBA is one that is committed to the exclusive jurisdiction of DOL. That doesn’t mean that some special language in a CBA might try to vary this rule, and allow some other forum to interpret the CBA, but the basic rule remains – any attempt to interpret the proper classification under the SCA or DBA rules belong exclusively at DOL and not in some court or other alternate disputes forum like arbitration.
In a nutshell, the proper classification of a worker under either a SCA wage determination (“WD”) (especially those based on a section 4(c) CBA) or a DBA WD is a subject matter which was not capable of being resolved in arbitration. Conventionally, the arbitrator jurisdiction is limited to enforcement of the contract, and not to enforcement of the SCA or DBA. Specifically, under the Federal Arbitration Act (“FAA”), any arbitrator who seeks to usurp DOL’s exclusive jurisdiction, should either back off or face having his or her arbitral award vacated on the basis that ”where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” FAA, 9 USC § 10. Stated another way, the arbitrator usually has no jurisdiction to rule on this kind of DBA or SCA job classification dispute.
The most recent case on point is Sorrell v. Paige Industrial Services, Inc., Case No. 21-7062, 2022 WL 684295 (DC Cir. 2022) where the court noted that:
But the problem with Appellant's reliance on the Davis-Bacon Act is that the Department of Labor has primary jurisdiction to determine whether Appellee violated the Davis-Bacon Act. 29 C.F.R. § 5.11; United States v. Dan Caputo Co., 152 F.3d 1060, 1062 (9th Cir. 1998); United States ex rel. Windsor v. DynCorp, Inc., 895 F. Supp. 844, 851–52 (E.D. Va. 1995). And in at least one case, a court went even further and held that the Department has sole responsibility for resolving classification disputes under the Davis-Bacon Act. United States ex rel. Windsor, 895 F. Supp. at 852. Regardless, since Appellant did not first bring his Davis-Bacon claim before the Department of Labor to resolve, the district court was correct to refuse to consider Appellant's claim in the first instance.
Id. at 1.
Of course, Sorrell is a DBA case, and it doesn’t involve deferral by an arbitrator, only deferral by the Federal courts. However, the same classification jurisdictional rule applies to the SCA and to arbitrators. Another recent and instructive 2021 case is International Brotherhood of Electrical Workers , Local 113 v. T&H Services, 8 F. 4th 950 (10th Cir. 2021), involving both the SCA and the Davis-Bacon Act. The contract there was primarily for services and governed by the SCA. But the workers were arguing the roofing work was covered by DBA. The court noted that ‘[t]he two acts are quite similar”. Id. at 953. Thus, for our purposes the SCA and the DBA are interpreted in the same manner. Id. at 957. There is other authority to the effect that the SCA also requires the same deferral. And there is ample law about the lack of any private cause of action under the SCA. In T&H Services the 10th Circuit decided that the arbitrator would have no jurisdiction to apply prevailing wage law to general maintenance workers seeking to be classified as roofers and thus denied the motion to compel arbitration. Id. at 953.
The 10th Circuit in T&H Services went on to describe why the arbitration of these classification decisions would be wrong: “Arbitration of Davis-Bacon classification disputes would be even more problematic. The advantages of uniform, reliable determinations would be completely undermined by leaving the decisions to the idiosyncrasies of a multitude of arbitrators.” Id. at 961-963. See also Oil, Chem. & Atomic Workers Int'l Union, AFL-CIO Loc. 2-652, 769 P.2d at 551 (“Davis-Bacon determinations are clearly the province of [the contracting agency] under federal law ... [and] [b]ecause neither [party] has any authority to make Davis-Bacon determinations, there can be no conflict leading to arbitration under [the CBA].”); Local Union No. 787, Int’l Union of Elec., Radio & Mach. Workers, AFL-CIO v. Collins Radio Co., 317 F.2d 214, 220 (5th Cir. 1963) (“But it is equally important to assure that neither party— through one guise or another— may obtain the intervention of an arbiter when the contract clearly excludes it from the reach of the grievance machinery.”). See also DynCorp v. Teamsters, Chauffeurs, Warehousemen Industrial and Allied Workers of America, Local Union 166, No. 93-0129-1264, 1993 WL 13767135, at *5–6 (Dec. 1, 1993) (Richman, Arb.)(declining to arbitrate whether work performed by the grievants were DBA work entitled to higher rate of pay).
Accordingly, I think both DBA and SCA job classification disputes have to be submitted to DOL and be resolved through the statutory and regulatory process established under either act. Job classification disputes should not be arbitrated. I think arbitrators who do so are abusing their authority when they accept the union invitation to review the rates specified in the CBA and displace them with prevailing wage rates. Similarly, it is an abuse to pull a prevailing wage determination and job classification pay rate therefrom and impose it on a section 4(c) SCA wage determination. That prevailing wage determination and classification isn’t even in the contract. And under Section 4(c) of the SCA -- it has been completely displaced by the CBA-based wage determination.
Don’t let arbitrators go there. Let them know they don’t have the jurisdiction to do this. And if they fail to heed the warning, go to federal court and move to vacate their arbitral awards. This is one area where deferral to arbitration is not the rule.