Who bore the cost when Connecticut raised the required wage during a state service contract?

Plain-English summary

Connecticut had concluded earlier that covered service contractors must raise employees' pay when the state's standard wage rate increased during a contract. The labor commissioner then asked who ultimately bore the extra cost. In Formal Opinion 2006-26, Attorney General Richard Blumenthal agreed with the Department of Labor that the contracting state agency was responsible for reimbursing the contractor for the wage increase and associated direct costs, including higher payroll taxes.

The opinion distinguished the immediate duty to pay workers from the ultimate allocation of that cost. It described state contracts that required the contractor to pay the standard wage but did not expressly say who paid for later increases. The AG construed that gap against the state agencies that drafted the agreements, and recommended procedures and contract amendments to make reimbursement explicit.

Currency note

This opinion was issued in 2006. 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.

Covered service contractors at the time

The opinion said contractors still had to pay the standard wage as it rose during the contract. It then placed the added direct cost on the contracting state agency for the agreements analyzed, rather than treating the wage increase as a loss the contractor must absorb.

State agencies and covered workers at the time

The AG agreed with Labor's view that agencies should fund the increased wage and related direct costs so workers received the required pay. He recommended formal contract amendments for existing agreements and reimbursement terms in new ones.

Common questions

Q: Could a state service contractor keep paying the old rate after the standard wage rose?
A: No. The opinion repeated the AG's earlier conclusion that covered contractors had to pay the increased standard wage during a contract.

Q: Did the contractor have to absorb the added wage cost?
A: The AG said the contracting state agency ultimately bore the increase and associated direct costs under the agreements and statute he examined.

Q: Did the opinion address more than the wage amount itself?
A: Yes. It named associated direct costs, including increased payroll taxes, as part of the agency's responsibility.

Background and statutory framework

Conn. Gen. Stat. § 31-57f covered certain food, building, property and equipment service contracts with the state. Earlier AG opinions had said covered contractors must pay a revised standard wage when the rate increased. This opinion resolved the separate reimbursement question. It relied on the labor agency's interpretation, the purpose of protecting workers' wages, and the absence of language allocating later increases in state-drafted contracts.

The official page labels the opinion 2006-026 and prints April 10, 2006 as its date. This page preserves the source's date as printed.

Citations and references

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

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2006-formal-opinions/raeanne-curtis-acting-commissioner-of-labor-formal-opinion-2006026-attorney-general-state-of-connect

Original opinion text

Raeanne Curtis, Acting Commissioner of Labor, Formal Opinion 2006-026, Attorney General State of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

April 10, 2006

Raeanne Curtis

Acting Commissioner of Labor

200 Folly Brook Boulevard

Wethersfield, CT 06109

Dear Acting Commissioner Curtis:

As you know, Section 31-57f of the Connecticut General Statutes provides for the payment of a standard wage rate to certain service workers employed by contractors of the state or its agents. On September 8, 2003, this office issued an opinion letter concluding that state contractors must pay increases in the standard wage rate that occur during the period of a state contract and are promulgated by your department based on a formula established by the U S Department of Labor.

There has been uncertainty as to whether the contractor has a responsibility to absorb the cost of these increases, or alternatively the state agency must pay the contractor the increased costs. Your agency has concluded that the responsibility to pay for the standard wage increases ultimately lies with the state agencies. We agree with your agency's conclusion and are issuing this opinion to clarify the responsibilities and obligations of contractors and the State and its agents in adhering to section 31-57f of the Connecticut General Statutes A specific statute Section 31-57f (hereinafter "the statute")1 applies to employers

who enter into contracts or agreements with the state or its agents on or after July 1, 2000, to provide food, building, property or equipment services or maintenance. Conn. Gen. Stat. § 31-57f(a) 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). The statute applies to contracts with a value of $50,000 00 or more. Conn. Gen. Stat. § 31-57f(i). See AG Opinion 2005-027, letter to Commissioner Shaun B. Cashman, October 17, 2005.

Conn. Gen. Stat. §31-571(b) requires employers to pay their nonsupervisory employees an hourly rate that is not less than the standard wage rate established by the Labor Commissioner. Subsection (e) of the statute provides that the Labor Commissioner must determine the standard wage rate for each covered job classification by referring to the federal Service Contract Act of 1965. The standard wage rate shall be 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 percent surcharge to cover the cost of benefits, if none are offered to the employees Conn. Gen. Stat. § 31-57f(e).

Employers must keep detailed records documenting their compliance with the requirements of Conn. Gen. Stat § 31-57f, and the Labor Commissioner and his staff may conduct inspections and hold hearings to investigate complaints of nonpayment of the standard rate of wages. Conn. Gen. Stat § 31-57f(h) and (j). Employers who violate the statute may incur civil penalties.

Conn. Gen. Stat. § 31-57f(c) and (d). The Labor Commissioner is authorized to adopt regulations to carry out the provisions of the statute; Conn. Gen. Stat. § 31-57f(1); but none have yet been promulgated.

On October 9, 2001, this office advised state agency heads that the standard wage rates in effect at the time of a contract's renewal, not those in effect at the time of a contract's award, applied to options to extend a contract. In a

subsequent opinion letter, dated September 8, 2003, we determined that Conn. Gen. Stat. § 31-57f requires state contractors to increase employees' wages whenever the standard wage rate is increased. As stated in that opinion: "The legislative history of that statute… makes clear that its primary purpose was to ensure that employers who contract with the state to provide certain kinds of services pay their employees fair wages. "

The Department of Labor has informed us that it believes that the legislative policy goal of providing fair wages to employees, as set forth in Conn. Gen. Stat. § 31-57f, will not be achieved if employers subject to the provisions of Section 31-57f are required to pay their employees increases in the standard wage, without being reimbursed for such increases by the state agency with which they contract. If such employers are placed at an unfair economic disadvantage because of these state mandated wage increases, the jobs of the employees Section 31-51f seeks to benefit will be endangered, defeating the purpose of the statute. The Department of Labor has determined, therefore, that the increased standard wage rate should be paid by the state agency to the contractors in order to ensure that the workers receive their wages.

The Department of Labor has also informed us that numerous state agencies, including the Department of Public Works, the Department of Transportation, the Connecticut State Universities, and the University of Connecticut Health Center have agreed to pay increases in standard wages and associated costs to their contractors, who, in turn, paid the employees the back wages they were due.

The contracts between the state agencies and the contractors involved in this matter provide further important information about this question. We have reviewed a number of contracts between state contractors and state agencies, including the Department of Public Works, the University of Connecticut Health Center and Norwalk Community College. While these contracts state that the contractor must pay the standard wage rate, none state which party has the ultimate responsibility to pay for the increases in the standard wage. Each of the contracts in question was drafted by the state agency. A basic rule of contract construction provides that, "(w)here the language [in the contract] is ambiguous … we must construe those ambiguities against the drafter " Cantonbury Heights Condominium Ass'n., Inc. vs. Local Land Development, LLC, 273 Conn 724, 735 (2005). Accordingly, in light of the failure of the contracts to address this question, they must be construed against the agencies and in favor of the contractors. In other words, they must be construed to require the agencies to compensate the contractors for all costs of increases in the standard wage rate during the term of the contracts.

In light of these considerations, we agree with the Department's interpretation of Conn. Gen Stat. §31-57f. "[T]he practical construction placed on the statute by the agency, if reasonable is highly persuasive." Ottochian v. Freedom of Information Commission, 221 Conn. 393, 399 (1992). Courts accord considerable deference to the construction given a statute by the administrative agency charged with its enforcement, particularly when the agency has consistently followed its construction over a long period of time " Sutton v. Lopes, 201 Conn. 115, 120 (1986).

The legislature itself was concerned that the worker benefits set forth in Section 31-57f not disadvantage employers who provided such benefits, specifically directing that "employers with employees covered by collective bargaining agreements which call for wages and benefits that are reasonably related to the standard rate shall not be economically disadvantaged in the bidding process." Conn. Gen. Stat. §31-57f(f). Such concern for treating employers fairly who comply with the provisions of Section 31-57f is reasonably implied for all employers covered by all of the subsections of the statute. "It is not our practice to construe a statute in a way to thwart its 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). Finally, as we stated in our October 17, 2005 opinion to you: "No state agency or management company under contract with the state has the authority to thwart the legislative directives set forth in Section 31-57f. "

For the foregoing reasons, we conclude and advise you that pursuant to Conn Gen. Stat § 31-57f, any increase in the standard wage rate promulgated by you, based on a formula established by the TT S Department of Labor, along with associated direct costs, such as increased payroll taxes, is the responsibility of the contracting state agency. Further, we recommend that procedures be established and regulations be adopted pursuant to subsection (1) of the statute in order to notify the contracting parties of any increases in the standard wage, and to facilitate compliance with the statute Contract amendments to existing contracts should be executed to formalize this requirement and all new

contracts should require state agencies to reimburse employers for increases in the standard wage, subject to audit by the agency.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Glenn A. Woods

Assistant Attorney General

1 The Statute provides in relevant part as follows:

(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 of 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.

(l)The Labor Commissioner may adopt regulations, in accordance with chapter 54, [FN1] to carry out the provisions of this section.

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(m) The provisions of this section and any regulation adopted pursuant to subsection (1) of this section shall not apply to any contract or agreement entered into before July 1, 2000.