In Carrion v. Agfa Construction, Inc., the Second Circuit Court of Appeals recently reaffirmed its prior interpretation that there is no private right of action under the Davis-Bacon Act (DBA) to recover prevailing wage or fringe benefit rates. The court refused to overturn its 2003 decision in Grochowski v. Phoenix Construction in which it ruled that the DBA does not “confer[ ] a private right of action on an aggrieved employee for back wages” and that state law claims, such as those based upon contract to achieve the same result, were not permitted.
The DBA contains prevailing wage and fringe benefit rate requirements that apply to federal contracts for construction and to most construction contracts that receive federal assistance. The U.S. Department of Labor’s Wage and Hour Division (WHD) issues wage determinations that establish the prevailing rates. Passed in 1931 as economic recovery legislation, the intent of the DBA was to maintain area wage standards applicable to federal construction projects and to prevent contractors from submitting low bids using itinerant employees who were paid at lower wage rates that undercut the area rates. The DBA continues to stir debate today within the construction community, but appears to be beyond the reach of any meaningful Congressional reform.
The plaintiff in the Agfa case, José Carrion, had worked as a laborer on various construction projects for the company. He filed suit in federal court against the employer seeking to recover the prevailing wages and fringe benefits required by the DBA as well as alleging unlawful discrimination. The district court dismissed the DBA prevailing wage claim, citing the Second Circuit’s precedent in Grochowski. Carrion appealed the dismissal of the DBA claim, arguing that the appeals court should overrule the precedent established by the Grochowski decision because it was erroneous and should be overruled or limited to its facts. Carrion claimed that he was a third-party beneficiary to a construction contract between the company and a housing authority, which had received federal funds and incorporated the DBA requirements. He also claimed that a 2008 New York Court of Appeals decision necessitated that the appellate court review its earlier decision.
The Court of Appeals ruled that the district court did not err in dismissing the prevailing wage claim. It stated that the Grochowski decision was still valid precedent of the Second Circuit and that it was “bound by decisions of prior panels” unless an en banc panel or the Supreme Court of the United States overrules it. It further stated that it was not persuaded that a New York court’s “differing view of the preemptive scope of federal law” was a sufficient basis to reconsider the controlling precedent. Finally, the Court of Appeals noted that the Supreme Court had cited the Second Circuit Grochowski decision in a 2011 case in which the Court had held that the Public Health Services Act did not confer a private right of action upon third-party beneficiaries of contracts.
In the 2003 Grochowski case, the Second Circuit held that state law claims for breach of a construction contract subject to the prevailing wage requirements of the DBA were not valid because the DBA lacks a private right of action to enforce those prevailing wage requirements. The court reasoned that Congress provided a regulatory scheme that afforded administrative remedies but it did not authorize a private right of action. It concluded by stating that since there is no private right of action under the DBA, “efforts to bring . . . claims as state common-law claims are clearly an impermissible ‘end run’ around the DBA.”
While the DBA may have limited application, this case is important because it reiterates the generally accepted position that there is no private right of action under the DBA, unlike under the Fair Labor Standards Act. Thus, the only way employees on a federal construction site can complain about their wage and fringe benefit rates is by filing a complaint with the WHD which, in turn, will conduct an investigation and seek an administrative remedy where appropriate. A private action under the DBA and state claims to achieve indirectly the same results are not litigation tools generally available to employees and their attorneys.