Federal Contractors Beware: Employees Can Sue For Additional Wages in California
If you’ve ever contracted to do work for a federal agency, then you’re probably intimately familiar with the federal Service Contract Act of 1965 (SCA)—which spells out what employers working on federal contracts have to pay their employees. Now a California Court of Appeal has ruled that employees working on federal contracts in California, however, can also sue for additional wages and penalties under the California Labor Code.
Gustavo Naranjo worked for the California company Spectrum Security Services, Inc. as a guard at one of the federal Immigration and Customs Enforcement (ICE) agency’s detention facilities. While Naranjo was paid the wages set out in the U.S. Secretary of State’s wage determination governed by the SCA, he nonetheless brought a class action lawsuit claiming Spectrum failed to pay missed meal and rest period premium pay and waiting time penalties, and failed to provide accurate wage statements, as required by California law.
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Overruling a lower court, the Court of Appeal held that while the SCA wage determinations set out minimum wage and hour requirements under federal law, California employers working on federal contracts are still required to comply with California minimum wage and hour laws. In other words, where California law requires you to pay more, you have to pay more. For Naranjo, this ruling means that he can go ahead with his class action lawsuit.
For all California employers who work on federal contracts, this means that even if you’re doing everything right under the SCA, you still have to comply with California wage and hour laws. Given the court’s ruling, California federal contractors should act quickly to conduct wage and hour audits and assess liability risks—before the lawsuits start rolling in.
We will have detailed advice on conducting comprehensive wage and hour self-audits in an upcoming issue of CEA.