What a strange turn of events, a Department of Labor being cited for not paying the prevailing wage. Yet this is exactly what has happened in Delaware. A Delaware state court has refused to dismiss a lawsuit alleging that the state’s Department of Labor has misclassified workers on public works construction products and has improperly enforced the state prevailing wage statute. The case is The Roofers, Inc. d/b/a Tri-State The Roofers v. Delaware Department of Labor and is being heard in the Superior Court in Delaware.

The judge rejected the Delaware DOL’s contention that the company failed to exhaust its administrative remedies before taking the matter into the Delaware courts. The controversy centered around disputed wage classifications.  On public works projects, workers are classified by trades and paid according to the rate for that trade.  Initially, the DOL has the responsibility to assign certain work to certain trades, but a contractor may challenge that determination and that was what happened herein.

The state DOL tried to mount a procedural defense to the judicial action.  The agency argued that the contractor had not appealed its decision “in writing.” Yet, the employer had met with the Secretary of Labor to rebut the allegations, which the court ruled (quite correctly) was the equivalent of sending the required notice to the DOL.  The matter arose when the DOL alleged that the contractor did not pay the rate for sheet metal workers, but rather paid the roofer or carpenter rate (a lower rate) for the work at issue.

In July 2009, the state DOL notified the contractor of the alleged violations, but the letter did not alert the contractor to its right to appeal.  The agency then ordered the prime contractor to withhold funds from the contractor, against the liabilities for the alleged underpayments.  The contractor then filed he lawsuit, which challenged the DOL’s classification system as not complying with the Administrative Procedures Act.  This gimmicky, procedural tactic launched by the DOL has now failed and the case will proceed.  For once, it is a DOL that will be obliged to prove the propriety of its classification procedures.

What goes around, comes around.