Could Connecticut split state service contracts to avoid standard wage requirements?

Plain-English summary

Connecticut's labor commissioner asked in 2005 whether standard wage requirements could apply when a state agency or management company divided covered services at one location among contracts individually below the statutory dollar threshold. The AG said Labor could look at the combined annual spending and enforce the wage law where the aggregate exceeded the threshold and the arrangements sought to avoid the statute.

The answer was conditional. The AG said Labor had authority to make the necessary factual and discretionary determination; he did not decide a particular set of contracts.

Currency note

This opinion was issued in 2005. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Service workers and contractors at the time

For covered food, building and property services, the opinion treated multiple contracts at one site as potentially subject to the standard wage rule even when each was below the individual threshold. Management companies and their vendors could both be affected.

Labor and purchasing officials at the time

The AG relied on Labor's authority to interpret and enforce Conn. Gen. Stat. § 31-57f and to review contract awards for attempts to evade it. He said the department could consider the total value at one location and the circumstances of the contracting arrangement.

Common questions

Q: Did each contract have to exceed the threshold by itself?
A: The AG said Labor could apply the rule to multiple smaller contracts at the same location when the combined spending exceeded the threshold and the arrangement met the conditions he described.

Q: Could vendors working for a management company be covered?
A: Yes. The opinion said the standard wage provisions could reach vendors supplying covered services through a state management contract.

Q: Did the AG decide every group of small contracts was an evasion?
A: No. He left the factual and discretionary assessment to the Labor Department.

Background and statutory framework

Conn. Gen. Stat. § 31-57f covered specified service work under state contracts above a yearly threshold. Its subsection (j) empowered Labor to review contract awards for attempts to avoid the law. The AG read the law as allowing Labor to address a group of related contracts at one location instead of stopping at each contract's face value.

Citations and references

Statutes cited in the opinion: Conn. Gen. Stat. § 31-57f; Conn. Gen. Stat. § 31-57f(j).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2005-formal-opinions/commissioner-shaun-b-cashman-2005027-formal-opinion-attorney-general-of-connecticut

Original opinion text

Commissioner Shaun B. Cashman, 2005-027, Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

October 17, 2005

Commissioner Shaun B. Cashman

Department of Labor

Wethersfield, CT 06109

Dear Commissioner Cashman:

Your department has asked for advice on the payment of wages to service workers employed by contractors of the state or vendors supplying services to state contractors. You ask if the standard wage rate provisions of Conn. Gen. Stat. § 31-57f apply to the contracts between the state and management companies and between management companies and their vendors under various scenarios.

Your request for this advice is prompted by requests for guidance to the Labor Department from the Department of Public Works and the Judicial Department. DPW has asked your department whether Conn. Gen. Stat. § 31-57f applies to contracts between a management company and its vendors if the contract between the state and the management company exceeds $49,999 per year, but the contracts between the management company and its vendors do not exceed $49,999 per year. DPW also asks whether the statute applies if DPW contracts directly with multiple vendors to provide services at the same location, as opposed to contracting with a management company, if each of the vendor contracts is less than $49,999 per year, but the aggregate amount for those vendor contracts exceeds $49,999. The Judicial Department has inquired whether Conn. Gen. Stat. § 31-57f applies if a management company has multiple contracts with the state for work at the same site, if each contract is less than $49,999 per year, but more that $ 49,999 per year in the aggregate.

You have informed this office that it is the position of DOL that the statute applies to management companies and their vendors whenever a state agency spends more than $49,999 per year for covered services under the statute at any one location. You have taken this position to ensure that state agencies and management companies under contract with the state do not circumvent the requirements of section 31-57f. You have also informed this office that the DOL Wage and Workplace Standards Division is willing to review state agency contracts for covered services on a case by case basis for compliance with Conn. Gen. Stat. § 31-57f.

We conclude that the Department of Labor has the statutory authority to interpret and enforce the provisions of Conn. Gen. Stat. § 31-57f and to ensure that the legislative directives contained in that statute are complied with by state agencies and their contractors. Conn. Gen. Stat. § 31-57f(j). Consequently, it is our opinion that the DOL has the authority to conclude, under the appropriate circumstances, that when the state enters into a contract or contracts with management companies and vendors and the aggregate expenditure at one location for covered services under Conn. Gen. State. § 31-57f exceeds $49,999 per year, Conn. Gen. Stat. § 31-57f applies to the management companies and the vendors, even if the individual contracts between the state and the management companies or between the management companies and their vendors do not exceed $49,999 per year. The DOL may enforce the provisions of' Conn. Gen. Stat. § 31-57f in those situations where it determines that multiple contracts, each less than $49,999 per year, have been executed with the same or different contractor for the same location in an attempt to avoid the requirements of section 31-57f, if the total value of those multiple contracts exceeds $49,999.

Conn. Gen. Stat. § 31-57f sets standards for the payment of wages by state contractors to their employees on certain service contracts. The statute applies to employers having contracts or agreements with the state or its agents in excess of $49,999 per year to provide food, building, property or equipment service or maintenance entered into on and after July 1, 2000. Conn. Gen. Stat. § 31-57f (a), (i) and (m). An employer who pays the state for a franchise to provide food preparation or service is also covered. Conn. Gen. Stat. § 31-57f (k). Wages paid on and af­ter July 1, 2000 on an hourly basis to any such employee shall be at a rate not less than the stan­dard rate determined by the Labor Commissioner pursuant to Conn. Gen. Stat. § 31-57f (g) and Conn. Gen. Stat. S 31-57f (b).

The Labor Commissioner determines the standard rate for covered wages by reference to the federal Service Contract Act of 1965. Conn. Gen. Stat. § 31-57f (e). The standard rate is equal to the minimum hourly rate for service workers set forth in the federal Register of Wage Determinations under the Service Contract Act plus a thirty per cent surcharge to cover the cost of benefits if none are available. Id.

Section 31-57f provides in relevant part:

(a) As used in this section: (1) "Required employer' means any provider of food, building, property or equipment services or maintenance listed in this subdivision whose rate of reimbursement or compensation is determined by contract or agreement with the state or any state agent: (A) Building, property or equipment service companies; (B) management companies providing property management services; and (C) companies providing food preparation or service, or both; (2) "state agent" means any state official, state employee or other person authorized to enter into a contract or agreement on behalf of' the state; (3) person means one or more individuals, partnerships, associations, corporations, business trusts, legal representatives or organized groups of' persons; and (4) "building, property or equipment service" means any janitorial, cleaning, maintenance or related service.

(b) On and after July 1, 2000, the wages paid on an hourly basis to any employee of a required employer in the provision of food, building, property or equipment services provided to the state pursuant to a contract or agreement with the state or any state agent, shall be at a rate not less than the standard rate determined by the Labor Commissioner pursuant to subsection (g) of this section ...

(i) This section shall not apply to contracts, agreements or grants which do not exceed forty-nine thousand nine hundred ninety-nine dollars per annum

The plain language of Conn. Gen. Stat. § 31-57f directs that the provisions of the statute apply whenever employment results from a state contract with a "required employer" for more than $49,999 per year. It applies to wages paid pursuant to "contracts, agreements or grants" with the state or any state agent exceeding forty-nine thousand nine hundred ninety-nine dollars per annum. Under the statute, management companies contracting with the state can be both "required employers" and "state agents." Consequently, contracts between the state and a management company and between a management company and its vendors exceeding $49,999 per year are subject to the statutory requirements. While there is no question that section 31-57f applies to individual contracts in excess of $49,999, the questions raised by DPW and Judicial relate to the execution of multiple contracts, each less than $49,999, but whose aggregate value exceeds $49,999 at one location.

No state agency or management company under contract with the state has the authority to enter into multiple contracts to thwart the legislative directives set forth in section 31-57f. “‘It is not our practice to construe a statute in a way to thwart its purpose . . . or in a way that fails to attain a rational and sensible result that bears directly on the purpose the legislature sought to achieve.’ . . . Colonial Penn Ins. Co. v. Bryant, 245 Conn. 710, 725, 714 A.2d 1209 (1988).” State v. Reynolds, 264 Conn. 1, 32 (2003). The Department of Labor is specifically empowered to review contract awards to determine if they constitute an attempt to avoid the requirements of section 31-57f. Conn. Gen. Stat. § 31-57f(j). In such circumstances, the Department of Labor may conclude that section 31-57f applies to multiple contracts of less than $49,999 per year with one or more management companies or one or more vendors at the same location if the aggregate per year payment to the management companies or vendors is more than $49,999 at that location. A Department of Labor conclusion that an agency has attempted to avoid the requirements of Section 31-57f is a factual and discretionary determination entitled to deference. “An agency’s factual and discretionary determinations are to be accorded considerable weight by the courts.” Secretary of the Office of Policy and Management v. Employees Review Board, 267 Conn. 255, 262 (2004); City of Hartford v. Hartford Municipal Employees Association, 259 Conn. 251, 261 (2002).

In summary, we conclude that Conn. Gen. Stat. § 31-57f applies whenever employment results from a contract between the state and a management company with a value of more than $49,999 per year. Section 31-57f applies to employees of a vendor under contract with a management company if the management company's contract with a vendor is for more than $49,999 per year. The Department of Labor has the authority to prevent a state agency or a management company under contract with the state from circumventing the statute by executing multiple contracts, each less than $49,999 per year, with the same or different management companies or vendors if the aggregate value of those contracts exceeds $49,999 at one location.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Thadd A. Gnocchi

Assistant Attorney General