Opinion ID: 454348
Heading Depth: 2
Heading Rank: 4

Heading: The Laboratory's Exempt Status

Text: 16 Lawrence Livermore Laboratory is a federally-owned research facility operated by the University of California on behalf of the U.S. Department of Energy. Neither party disputes that the contract between the University and DOE is not covered by the Service Contract Act because its principal purpose is not to furnish services through the use of service employees. 10 Appellants argue that since the Laboratory's own employees are not covered by the Act, neither should be Menlo's referred and indistinguishable additions to an otherwise exempt work force. 17 The regulations, however, clearly contemplate the Act's application to contracts between exempt prime contractors and secondary providers of services. 11 While it may be true that Menlo's employees serve in capacities identical to those filled by direct employees of the Laboratory, the differential impact of the Act upon their respective employees turns upon the difference in the principal purpose of the respective contracts. While Menlo has principally contracted to provide services (including the services of its employees), the University has principally undertaken management and operation, tasks not subject to the Act. 18 Appellants' repeated insistence that the Laboratory unquestionably exercised more control over referred workers than did Menlo ignores the fact that Menlo was neither without authority over these workers nor without contractual responsibility for their performance. The district court found Menlo and the Laboratory to be joint employers, doubtless because each acted as employers in certain respects. While the Laboratory was effectively responsible, for example, for working conditions and supervision, Menlo was responsible for payroll (including the setting as well as disbursing of wages). It is appropriate that the Act's minimum wage provisions apply to Menlo, because Menlo set the level of wages paid to the referred employees. Menlo therefore cannot rely on the Laboratory's exemption. Cf. Bonnette v. California Health & Welfare Agency, 704 F.2d 1465, 1469 (9th Cir.1983) ([a]ll joint employers are individually responsible for compliance with the FLSA.). 19 AFFIRMED.