Court Opinion

ID: 4119848
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:43:12.6444+00
Date Added: 2024-06-11T14:21:49.227513
License: Public Domain

Applicability of the Service Contract Act to
         Volunteer Workers at the National Oceanic
              and Atmospheric Administration

Pursuant to 28 U.S.C. § 512, the Office of Legal Counsel has jurisdiction to resolve a legal
  dispute between the Departments of Commerce and Labor where the request for the
  opinion was made by the General Counsel of Commerce under authority delegated from
  the Secretary of Commerce.

The Service Contract Act prohibits contractors operating the National Oceanic and
  Atmospheric Administration library from using voluntary, uncompensated employees.
  Commerce may petition the Secretary of Labor for an exemption to permit the use of vol­
  unteer employees under the NOAA contract

                                                                                July 31, 1989

               M e m o r a n d u m O p in io n   for t h e g en er a l   C ounsel
                               D epartm ent       of   C om m erce

   This letter responds to Robert H. Brumley’s request o f June 10,1988 for
the opinion o f this Office as to the applicability o f the Service Contract
A ct ( “SCA” or “Act”) to a contract to operate the National Oceanic and
Atmospheric Administration ( “NOAA”) library in part by using voluntary,
uncompensated help to perform tasks that fall within the type of services
otherwise covered by the Act. For the reasons set forth below, we con­
clude that the Act applies to such contracts and that the contractor or
subcontractor may not use volunteer employees to perform tasks associ­
ated with operating the library.

                                     I. Background

   Congress enacted the Service Contract Act in 1965 “to provide labor
standards for the protection o f employees o f contractors and subconr-
tactors [sic] furnishing services to or performing maintenance service for
Federal agencies.” S. Rep. No. 798, 89th Cong., 1st Sess. 1 (1965). The Act,
as codified at 41 U.S.C. §§ 351-358, implements this goal by requiring con­
tractors and subcontractors on contracts greater than $2,500 to pay
workers at least the minimum wage. Section 351(a)(1) provides:

          (a )   Every contract (and any bid specification therefor)
        entered into by the United States or the District of Columbia
                                                 264
          in excess o f $2,500, except as provided in section 356 o f this
          title, whether negotiated or advertised, the principal pur­
          pose o f which is to furnish services in the United States
          through the use o f service employees, shall contain the
          following:

                (1) A provision specifying the minimum monetary
              wages to be paid the various classes o f service employ­
              ees in the performance o f the contract or any subcon­
              tract thereunder, as determined by the Secretary, or his
              authorized representative, in accordance with prevailing
              rates for such employees in the locality .... In no case
              shall such wages be lower than the minimum specified in
              subsection [351](b) o f this section.

41 U.S.C. § 351(a)(1).
  Section 351(b) mandates that in no circumstances shall wage levels fall
below the national statutory minimum wage:

             No contractor who enters into any contract with the
          Federal Government the principal purpose o f which is to
          furnish services through the use o f service employees and
          no subcontractor thereunder shall pay any o f his employ­
          ees engaged in performing work on such contracts less
          than the m inim um wage specified under section 206(a)(1)
          o f title 29.

Id. § 351(b)(1) (emphasis added). “Service employee” is defined in the
Act as “any person engaged in the performance o f a contract entered
into by the United States and not exempted under section 356 o f this
title, whether negotiated or advertised, the principal purpose o f which is
to furnish services in the United States ... and ... include[s] all such per­
sons regardless of any contractual relationship that may be alleged to
exist between a contractor or subcontractor and such persons." Id. §
357(b) (emphasis added).1 The Act prescribes penalties for noncompli­
ance ranging from payment o f compensation due underpaid employees
to cancellation o f the contract. 41 U.S.C. § 352(a).
   The rationale for this unqualified approach to fair labor standards
under the SCA was that service contracts represented “the only remain­
ing category o f Federal contracts to which no labor standards protections

  1   The legislative history o f the SCA elaborates somewhat on this definition. According to the House
Report, “‘Service em ployee’ means guards, watchmen, and any person engaged in a recognized trade or
craft or other skilled mechanical craft, or in manual labor occupations, and any other em ployee for
whom experience in such occupations is the paramount requirement ” H.R Rep. No. 948, 89th Cong., 1st
Sess. 5 (1965); see also S. Rep. N o 798 at 2.

                                                 265
appl[ied].” H.R. Rep. No. 948, 89th Cong., 1st Sess. 1 (1965). Congress was
concerned with preventing contractors from undercutting their competi­
tors for government service contracts by reducing labor costs. As the
House Report explained:

              The Federal Government has added responsibility in this
           area because o f the legal requirement that contracts be
           awarded to the lowest responsible bidder. Since labor costs
           are the predominant factor in most service contracts, the
           odds on making a successful low bid for a contract are
           heavily stacked in favor o f the contractor paying the lowest
           wage. Contractors who wish to maintain an enlightened
           wage policy may find it almost impossible to compete for
           Government service contracts with those who pay wages to
           their employees at or below the subsistence level. When a
           Government contract is awarded to a service contractor
           with low wage standards, the Government is in effect sub­
           sidizing subminimum wages.

Id. at 2-3.
   The current disagreement between the Department o f Commerce
( “Commerce”) and the Department o f Labor ( “Labor”) arose when
Commerce received a contractor’s proposal to use voluntary, uncom­
pensated employees to perform tasks covered by the Service Contract
A ct in operating the NOAA library. Commerce initially determined that
the A ct did not apply to such a contract.2 Labor then advised
Commerce by letter that the Act covered such contracts.3 In reply,
Commerce advised Labor that it had complied with Labor’s interpreta­
tion o f the SCA in awarding the NOAA contract. Commerce added,
however, that its compliance required it to pay an additional $140,164
in the contract price, and that it intended to raise the issue with the
Department o f Justice.4 On June 10, 1988, Commerce requested an
opinion from this Office, stating that it believes Labor’s position on this
issue to be in error and that “it is likely that this question will arise on
other procurements or in the course o f recompetition o f [the NOAA
library contract].”5

  2Memorandum for William Matuszeski, Director, O ffice o f A-76 Activities, NOAA, from James K White,
Assistant General Counsel fo r Finance and Litigation, Department o f Commerce (Nov. 16, 1987).
  3 Letter fo r J. Curtis Mack, II, Acting Administrator, NOAA, from Paula V Smith, Administrator, Wage
and Hour Division, Department o f Labor (D ec. 7, 1987) Smith reiterated this position in a letter to Mack
dated January 22, 1988.
  4 Letter fo r Paula V. Smith, Administrator, Wage and Hour Division, Department o f Labor, from William
E Evans, Under Secretary, N O AA (Apr 15, 1988)
  6   Letter fo r Charles J. Cooper, Assistant Attorney General, O ffice o f Legal Counsel, from Robert H
Brumley, General Counsel, Department o f Com m erce at 2 (June 10, 1988).

                                                  266
                                          II. Discussion

A. Jurisdiction

    The authority of the Attorney General to resolve this dispute between
the Departments o f Commerce and Labor is well-established. By law,
“[t]he head o f an executive department may require the opinion o f the
Attorney General on questions o f law arising in the administration o f his
department.” 28 U.S.C. § 512.6 Here, there is no doubt that the question
presented — whether Commerce, consistent with the SCA, can enter into
a contract for the operation o f the NOAA library that provides for the use
o f voluntary services — “aris[es] in the administration o f [the Commerce]
department.” See, e.g., Applicability of the Davis-Bacon Act to the
Veterans Administration’s Lease of Medical Facilities, 12 Op. O.L.C. 89,
91 n.4 (1988) ( “[Interpretation o f statute that will affect contracts
entered into by department is a legal question ‘arising in the administra­
tion o f the department’ within meaning o f ... 28 U.S.C. 512.”).7
   The Solicitor o f Labor challenges our jurisdiction to entertain
Commerce’s request for an opinion under 28 U.S.C. § 512 on the grounds
that, inter cilia, Commerce’s request was not made by the Secretary o f
Commerce and addressed to the Attorney General. Letter for John O.
McGinnis, Deputy Assistant Attorney General, Office o f Legal Counsel,
from Monica Gallagher, Associate Solicitor, Fair Labor Standards
Division, Department o f Labor at 2-4 (July 14, 1989).8 This argument,
however, completely ignores the fact that agency heads execute many o f
their important functions through delegation. A written request
addressed from the General Counsel o f Commerce to the Assistant

  c In addition to the statutory authonty set forth in 28 U.S C. § 512, Executive Order N o 12146, 3 C.F.R.
409 (1979), confers authonty on the Attorney General to resolve disputes between executive agencies
Executive Order No. 12146 provides in pertinent part
      1-4 Resolution o f Interagency Legal Disputes
      1-401. Whenever two or more Executive agencies are unable to resolve a legal dispute
      between them, including the question o f which has junsdiction to administer a particular
      program or to regulate a particular activity, each agency is encouraged to submit the dispute
      to the Attorney General
      1-402 Whenever two or more Executive agencies w hose heads serve at the pleasure o f the
      President are unable to resolve such a legal dispute, the agencies shall submit the dispute to
      the Attorney General pnor to proceeding in any court, except where there is a specific statu­
      tory vesting o f responsibility for a resolution elsewhere
 7 By statute, the NOAA is “under the jurisdiction and subject to the control o f the Secretary o f
Com m erce " 15 U S C § 1511(a)
  8The Solicitor o f Labor also contends that w e have no jurisdiction to respond to Com m erce’s request
under Executive Order No. 12146 Executive Order No. 12146, however, augments the authority co n ­
ferred on the Attorney General under 28 U.S.C. § 512 by, among other things, em powenng the Attorney
General to address questions raised by executive agencies not within one o f the executive departments.
See Memorandum for the Secretary o f Housing and Urban Development, from Charles J Cooper,
Assistant Attorney General, O ffice o f Legal Counsel at 6 & n 1 (Aug 6, 1987) Because w e conclude that
w e have jurisdiction to entertain Commerce’s request under 28 U S C § 512, w e need not address the
scope o f our authority under Executive Order N o 12146

                                                  267
Attorney General for the Office o f Legal Counsel may be entertained
under section 512.9

   B. Applicability o f the Service Contract Act to Volunteer Workers

   We believe that the SCA applies to the contract at issue here because,
although the Act does not expressly advert to volunteer workers, the
plain meaning o f the Act’s unqualified proscription o f subminimum
wages does not admit o f any such exception.
   The statutory command in the SCA is simple and direct: “No contrac­
tor ... shall pay any o f his employees ... less than the minimum wage.”
41 U.S.C. § 351(b)(1). The Senate Report accompanying the bill put the
matter just as starkly: “Persons covered by the bill must be paid no less
than the prevailing rate in the locality as determined by the Secretary,
including fringe benefits as an element o f the wages. No less than the
applicable minimum wage provided in the Fair Labor Standards Act, as
amended, can be paid.” S. Rep. No. 798 at 2.10
   Commerce contends that “the Act is not intended to apply to prohibit
volunteer services” apparently because the Act is silent with respect to
volunteer workers, and both the Act and its implementing regulations
implicitly refer to the payment o f classes o f “wage earning employees.”
Letter for Charles J. Cooper, Assistant Attorney General, Office o f Legal
Counsel, from Robert H. Brumley, General Counsel, Department o f
Commerce at 1 (June 10, 1988). In our view, although the Act does not
mention volunteer workers per se, the plain meaning o f the statutory
scheme that Congress has adopted does not permit such an exception.
   The SCA clearly directs that, with respect to “any contract with the
Federal Government the principal purpose o f which is to furnish services
through the use o f service employees,” no contractor “shall pay any o f his
employees engaged in performing work on such contracts less than the
minimum wage specified under section 206(a)(1) o f title 29 [the Fair
Labor Standards Act].” 41 U.S.C. § 351(b)(1).11 In turn, the term “service

  9The General Counsel o f Commerce has been delegated broad authority to “appear[] on behalf o f the
Secretary’1in legal proceedings and to “prepar(e) ... all papers relating to matters on which the opinion
o f the Attorney General is desired" Department o f Commerce, DOO No. 10-6 §§ 4.01(3), (5 ) (July 3,
1963). Th e Assistant Attorney General fo r the Office o f Legal Counsel has been charged with, among
other things, “ rendering informal opinions and legal advice to the various agencies o f the G overnm ent"
28 C.F.R. § 0.25(a) (1989); see also 28 U.S.C. § 510.
  10See also H R. Rep No 948 at 4 ( “No contractor holding a service contract shall pay any o f his em ploy­
ees perform ing the w ork on such contracts less than the minimum w age specified by section 6 (A ) 1 o f the
Fair Labor Standards A ct o f 1938.").
  11The command in the Fair Labor Standards Act, which covers employers providing contract services
that are not covered by the SCA, is equally direct
        Notwithstanding the provisions o f section 213 o f this title (excep t subsections (a )(1 ) and ( f )
      thereof), every em ployer providing any contract services (other than linen supply services)
      under a contract with the United States or any subcontract thereunder shall pay to each o f
                                              Continued

                                                      268
employee” is defined in relevant part as meaning “ any person engaged in
the performance of a contract entered into by the United States and not
exempted ... and ... inelude[s] all such persons regardless o f any con­
tractual relationship that may be alleged to exist between a contractor
or subcontractor and such persons." Id. § 357(b) (emphasis added); see
also 29 C.F.R. §§ 4.113, 4.150, 4.155.
   Commerce does not explain, nor can we discern, how an exception for
volunteer workers can be carved out o f this broad definition o f “service
employee” without doing violence to the plain meaning o f the Act. Under
section 357(b), a “service employee” is defined as any person who per­
forms work on a service contract entered into by the United States.
Furthermore, section 357(b) expressly provides that the nature o f an
employee’s contractual relationship with his or her employer has no bear­
ing on the employee’s covered status for purposes o f the Act.
Accordingly, we do not see any basis for ignoring the plain meaning o f the
Act and interpreting it as implicitly applying only to wage-earning
employees, particularly in light o f the maxim o f statutory construction
that “remedial labor statutes like the Service Contract Act are to be lib­
erally construed.” Menlo Service Corp. v. United States, 765 F.2d 805, 809
(9th Cir. 1985).
   Indeed, as the Solicitor o f Labor points out, construing the SCA in this
manner could potentially invite a range o f abuses: “permitting the use o f
‘volunteers’ removes equality from the competitive bidding process and
encourages contractors, if they wish to be low bidder, to replace their
employees with ‘volunteers’ or to induce their employees to accept some
form o f ‘volunteer’ status.... These results are contrary to the intention o f
Congress in enacting the SCA to increase the protection o f workers in the
service industry and to discourage contractors from reducing the com­
pensation o f workers.” Letter for John 0. McGinnis, Deputy Assistant
Attorney General, Office o f Legal Counsel, from Monica Gallagher,
Associate Solicitor, Fair Labor Standards Division, Department o f Labor
at 7-8 (July 14, 1989).
   Finally, we note that the use of volunteer workers under the SCA —
such as Commerce proposes with respect to the NOAA library contract
— may be considered on a contract-by-contract basis pursuant to a
request for a variance or exemption from the Act’s minimum wage
requirements in accordance with the standards set forth in 41 U.S.C. §
353(b) and the regulations at 29 C.F.R. § 4.123(b). See Letter for John O.
McGinnis, Deputy Assistant Attorney General, Office o f Legal Counsel,

 n (. continued)
     his employees whose rate o f pay is not governed by the Service Contract A ct o f 1965 .. or to
     whom subsection (a )(1 ) o f this section is not applicable, wages at rates not less than the
     [minimum wage] rates provided fo r in subsection (b ) o f this section
 29 U.S.C. § 206(e)(1).

                                                 269
from Monica Gallagher, Associate Solicitor, Fair Labor Standards
Division, Department of Labor at 8 (July 14, 1989).12 Accordingly, the
Secretary o f Commerce may petition the Secretary o f Labor for an
exemption to permit the use o f volunteer employees under the NOAA
contract.

                                        III. Conclusion

  Our review o f the Service Contract Act and its legislative history per­
suades us that the Act does not permit the implication o f an exemption
for contracts that provide for services rendered by volunteer employees.
Commerce remains free, of course, to petition the Secretary o f Labor for
an exemption specifically relating to the NOAA contract.

                                                               WILLIAM P. BARR
                                                        Assistant Attorney General
                                                          Office o f Legal Counsel

  12   A ccording to the Solicitor, Commerce has neither requested such an exemption nor provided Labor
with the information necessary to evaluate such a proposal. Id. at 8-9 & n 6

                                                  270