This, That, or the Other? Classifying Service Employees 101 – Part 2
Two weeks ago, I wrote about a recent enforcement action by the Department of Labor (“DOL”) Wage and Hour Division (“WHD”) in which a contractor purportedly misclassified its employees. WHD found that it did, and the contractor had to pay fairly substantial back wages and penalties.
That contractor’s problems arose out of one of the more bedeviling compliance tasks for service contractors whose contracts are covered by the Service Contract Act (“SCA”) – namely how to classify workers to ensure they are paid the proper wages under a DOL-issued Wage Determination (“WD”). DOL-issued WDs must be incorporated into service contracts and covered service employees must receive the prevailing wages and fringe benefits specified therein (unless the employees are covered by a collective bargaining agreement).
As I noted, WDs contain classifications for various kinds of positions such as clerical workers, security personnel, food service employees, and there are even classifications for morticians and embalmers. I then pointed out that it’s up to the contractor to examine the WDs and figure out the proper classification applicable to each employee so as to ensure they’re properly paid. In other words, the jobs performed by the service employees must be “mapped” or “slotted.”
In my earlier blog I offered an example in which a contractor operates a cafeteria. The cafeteria has hot entrée and fast-food stations from which customers can select food for purchase. Now, as I mentioned, the contractor has to figure out how to classify its employees under the WD, which lists a number of food service classifications and their wage rates. DOL has published a directory (presently the SCA Directory of Occupations, 5th edition) that sets forth brief descriptions of the kinds of work that are covered by each classification. A link to the directory can be found at sam.gov under the heading “SCA Resources” at this link: https://sam.gov/content/wage-determinations. Here’s the link to the current edition of the SCA Directory: https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/SCADirectVers5.pdf. Because I wanted to keep things brief, I didn’t get into the weeds of these definitions. That’s today’s task.
Many (and I mean many) years ago I worked in a fast-food joint that served burgers, hot roast beef sandwiches, fries, and it had a toppings bar where patrons could add lettuce, tomato, ketchup, mustard, etc., etc. I don’t remember my job title, but on a typical shift I did a lot of different things. Each day I seasoned and baked a dozen roasts, shredded many heads of lettuce, sliced dozens of tomatoes, and made trays of hamburger patties – all in accordance with specific instructions. Once all that was done, I stocked the toppings bar and then took my position on the line for the lunch rush grilling and wrapping burgers, making roast beef sandwiches, and dropping baskets of fries – all for the cashier to assemble each order. Towards the end of the lunch rush, I pulled trash from the restaurant and then washed all the pans, cookware, utensils, and toppings bar containers.
If I had that job at the fast-food station of this SCA-covered contract, how would I be classified? Here are some choices, their wage rates listed in the District of Columbia WD, and the description of duties from the SCA Directory:
Cook I: $20.22
The Cook I independently performs moderately difficult tasks in preparing small quantities of quickly prepared food such as steaks, chops, cutlets, hamburgers, eggs, salads and other similar items. Excludes workers who exercise general supervision over kitchen activities.
Cook II: $23.51
The Cook II prepares in large quantities, by various methods of cooking, meat, poultry, fish, vegetables, seasons and cooks all cuts of various meats, fish and poultry, boils, steams or fries vegetables, makes gravies, soups, sauces, roasts, meat pies, fricassees, casseroles, and stews. Excludes food service supervisors and head cooks who exercise general supervision over kitchen activities.
Food Service Worker: $17.01 (but you actually have to pay $17.50 per hour under the DC minimum wage law – see this blog for more about the maze of minimum wage rates).
The Food Service Worker (Cafeteria Worker) serves as a cafeteria and/or delicatessen/bakery worker helping in the preparation, presentation and serving of specialty meats, delicacies, preserved foods, cheeses, salads, breads and sweets to patrons. The incumbent assists in weighing, pricing and wrapping selected foods on plates, trays and in bags, prepares food displays in counter cases and other display units, greets customers as they arrive at service counter, takes special orders, and answers basic customer questions about specialty foods. Using prepared ingredients and following routine, repetitive steps, this Worker makes hot and/or cold sandwiches, fruit and vegetable trays, salads and rotisserie chicken, may slice and/or mix simple ingredients, as needed, cleans counters and trays, washes dishes and maintains cleanliness of preparation, work and display areas, inspects and cleans equipment. This Worker may assist in any or all of the following: measuring and mixing ingredients as directed, assists in preparing, cooking and decorating breads, rolls, pastries, cakes and other bakery items, receives, unloads trucks, and stores stock, takes special orders or unusual food requests from customers, takes payment and makes change for customers
It should be obvious that some of the duties that I performed fall under all three of these descriptions. However, my duties don’t fall under any single description. One could deduce that there is no applicable classification and that a new classification has to be formulated using the DOL conformance process. However, that’s not really appropriate in this situation because conformance is permitted only when the work an employee performs under the contract is not within the scope of any classification listed on the wage determination, regardless of job title (29 C.F.R. § 4.152(c)(1); FAR § 22.1019(b)). Moreover, the conformance process presents some uncertainties that could lead to unanticipated costs that may not be recovered.
The goal is not to find an exact match, as DOL has said, “Under the SCA, a proposed classification need not be conformed merely because it does not fit precisely within the definitional contours of preexisting wage determination classifications, so long as it is ‘within the scope’ of any such classification” (Wage-Hour Op. Ltr. SCA-2007-2, July 13, 2007, citing In the Matter of CACI, Inc., Deputy Secretary of Labor Case No. 86-SCA-OM-5, slip op. at 23 (March 27, 1990)).
In this instance, I think the bulk of my duties would have fallen under the Food Service Worker classification. However, somewhere around 30 percent of my time was spent on the morning food prep tasks that fall within one of the two Cook classifications. In my judgment, the Food Service Worker classification is clearly defensible. However, I could see DOL focusing on the time spent prepping and cooking and conclude that the contractor violated the SCA when it chose the lower paid classification.
I hope this illustrates the challenges associated with classification. It’s unfortunate (and not rare) that fair minded contractors that serve the Government in good faith can be tagged by DOL as bad actors simply because DOL disagrees with their judgment. A contractor should exercise some care when it goes about slotting its workers under an SCA wage determination. Where a position seems particularly unclear, it may be advisable to seek counsel.