What a Tangled Web—Federal Contractors and the Interaction of Federal and State Wage and Hour Laws

Our practice almost exclusively involves advising and representing federal contractors. And our significant amount of that work relates to compliance with the requirements of the unique federal wage and hour laws that govern those who do business with the Government. These include the Service Contract Labor Standards statute (aka the Service Contract Act or “SCA”), the Davis-Bacon Act (“DBA”), among others.

Of course, these laws operate in conjunction with the Fair Labor Standards Act (“FLSA”), most frequently with respect to overtime obligations, the payment of which often turns on whether particular activities constitute hours worked to ascertain when overtime compensation is owed but also the computation of the regular rate of pay. When particular activities occur before or after an employee’s regular work hours constitute hours worked is subject to the Portal-to-Portal Act (“PPA”). We have blogged several times about the complexities of what would seem otherwise straightforward concepts in the cases of commuting time, booting up computers, and taking time off in the middle of a workday.

However, all of these laws can be affected by state laws to the extent that those laws provide higher pay, time for work breaks, or paid sick leave. Generally, speaking the federal laws establish a nationwide base playing field. States are free to be more generous. That’s why federal contractors should be vigilant in making sure that they account for the various laws they face when operating in different jurisdictions.

A recent decision by the Maryland Court of Appeals (which is Maryland’s “supreme” court) held that state law, not the PPA, governs the determination of whether activities that are done before and/or after the employee’s work activities are to be compensable hours worked. See Amaya v. DGS Construction, LLC, Docket No. 14 (Md. July 13, 2022). Stated simply, the issue was whether the time spent on the travel time between an offsite parking lot to the site where construction was being performed is compensable. The employer took the position that the employees were commuting to work up until the time they reported to the site where they would be working. The employees, on the other hand, argued that they stopped commuting once they were had arrived to the offsite parking lot because they were required to park there by their employer.

The Court ultimately held that the case needed to go to trial because there were factual disputes over whether there was a requirement to park in the lot; however, it did rule that the PPA did not apply to this issue under Maryland wage and hour laws. Thus, cases applying the PPA would not be dispositive. This holding likely means that the employees will prevail if it is determined that the employer required them to park offsite. It is conceivable, but not foregone, that the employer would prevail under the PPA because the transportation time to and from the parking lot might be preliminary or postliminary activities that are not compensable.

We won’t dissect those issues and offer a lesson for this situation. However, we suggest that you should take this decision as a lesson that federal contractors must account for state law in every locality where work is performed. In Maryland, the question of what work activities are compensable is a state law question not governed by the PPA. Some states (California comes to mind) require that overtime be paid once an employee has worked over a certain number of hours in a given day on top of the duty to pay overtime if an employee works more than 40 hours. Many states require employers to provide paid sick leave. While federal contractors have a similar duty if the requirement is in their contract, the state obligation might exceed the federal requirement.

There’s a tangled web here that federal contractors can easily get caught in it. We’ve assisted many clients in sifting through these interlocking duties. We’re here to help.