Attorney General's Opinion
Attorney General, Richard Blumenthal
February 2, 1995
Office of Policy and Management
80 Washington Street
Hartford, Connecticut 06106
Dear Secretary Jones:
Your office requested our opinion on four questions arising out of audits of municipalities and nonprofit entities conducted pursuant to the State Single Audit Act, Conn. Gen. Stat. § 4-230 et seq. (the "Act"). The Act establishes a uniform annual single audit procedure for recipients of combined federal and state financial assistance. The Act eliminates duplicate audits required under other state laws and regulations. As the Secretary of the Office of Policy and Management, you have been charged under the Act with the authority and duty to adopt regulations to implement the Act; § 4-236(a); and to assign cognizant agencies to implement the requirements of the Act; §§ 4-230(1), 4-235(a). In addition, you are charged with broad authority with respect to intergovernmental policy and the provision of planning and management assistance and technical assistance to local governments; and, lastly, you are required to advise the governor on matters concerning local government. Conn. Gen. Stat. §§ 4-65a(a); 4-66a(a), (c), and (d). Within this context we address your office's questions.
The first question was presented as follows:
Section 46a-54(15)(A) of the general statutes concerning Sexual Harassment Education and Training states that education and training must be provided by employers having fifty (50) or more employees. Questions have arisen as to whether the Board of Education should be considered as a separate employer, considering that they may have a separate Employer Number, independent payroll system and separate personnel policies and procedures. Should the Board of Education and the Municipality be considered as one employer for the purpose of determining the total number of employees?
Conn. Gen. Stat. § 46a-54(15)(A) sets forth one of the enumerated duties of the Commission on Human Rights and Opportunities ("Commission"). Because the interpretation of that provision should first be addressed by the agency which administers it, we will defer to the Commission at this time. Therefore, you may wish to request an interpretation from the Commission which may resolve this issue for you.
The second question asks,
Does Section 31-53 as amended by Public Act 93-392 require municipalities to proactively determine compliance with Wage Rates requirements by reviewing and testing payroll data on a current basis?
Although our answer to this question is "no," we have been informed by the Department of Labor that it encourages proactive auditing measures by municipalities and some municipalities do, in fact, inquire into the certified payrolls filed by construction contractors under Conn. Gen. Stat. § 31-53, as amended.
Conn. Gen. Stat. § 31-53, as amended, pertains to contracts for public works projects of the State or its political subdivisions. The relevant statutory provision to which you refer states:
(f) Each employer subject to the provisions of this section or section 31-54 shall (1) keep, maintain and preserve such records relating to the wages and hours worked by each employee and a schedule of the occupation or work classification at which each mechanic, laborer or workman on the project is employed during each work day and week in such manner and form as the labor commissioner establishes to assure the proper payments due to such employees or employee welfare funds under this section or section 31-54, AND (2) SUBMIT WEEKLY TO THE CONTRACTING AGENCY A CERTIFIED PAYROLL WHICH SHALL CONSIST OF A COMPLETE COPY OF SUCH RECORDS ACCOMPANIED BY A STATEMENT SIGNED BY THE EMPLOYER WHICH INDICATES THAT (A) SUCH RECORDS ARE CORRECT; (B) THE RATE OR WAGES PAID TO EACH MECHANIC, LABORER OR WORKMAN AND THE AMOUNT OF PAYMENT OR CONTRIBUTIONS PAID OR PAYABLE ON BEHALF OF EACH SUCH EMPLOYEE TO ANY EMPLOYEE WELFARE FUND, AS DEFINED IN SUBSECTION (h) OF THIS SECTION, ARE NOT LESS THAN THE PREVAILING RATE OF WAGES AND THE AMOUNT OF PAYMENT OR CONTRIBUTIONS PAID OR PAYABLE ON BEHALF OF EACH SUCH EMPLOYEE TO ANY EMPLOYEE WELFARE FUND, AS DETERMINED BY THE LABOR COMMISSIONER PURSUANT TO SUBSECTION (d) OF THIS SECTION, AND NOT LESS THAN THOSE REQUIRED BY THE CONTRACT TO BE PAID; (C) THE EMPLOYER HAS COMPLIED WITH THE PROVISIONS OF THIS SECTION AND SECTION 31-54; (D) EACH SUCH EMPLOYEE IS COVERED BY A WORKERS' COMPENSATION INSURANCE POLICY FOR THE DURATION OF HIS EMPLOYMENT, WHICH SHALL BE DEMONSTRATED BY SUBMITTING TO THE CONTRACTING AGENCY THE NAME OF THE WORKERS' COMPENSATION INSURANCE CARRIER COVERING EACH SUCH EMPLOYEE, THE EFFECTIVE AND EXPIRATION DATES OF EACH POLICY AND EACH POLICY NUMBER; (E) THE EMPLOYER DOES NOT RECEIVE KICKBACKS, AS DEFINED IN 41 USC 52, FROM ANY EMPLOYEE OR EMPLOYEE WELFARE FUND; AND (F) PURSUANT TO THE PROVISIONS OF SECTION 7 OF THIS ACT, THE EMPLOYER IS AWARE THAT FILING A CERTIFIED PAYROLL WHICH HE KNOWS TO BE FALSE IS A CLASS D FELONY FOR WHICH THE EMPLOYER MAY BE FINED UP TO FIVE THOUSAND DOLLARS, IMPRISONED FOR UP TO FIVE YEARS, OR BOTH....
1993 Conn. Pub. Act No. 93-392, § 1.
We find nothing in the foregoing statutory provision to require municipalities to do any more than receive the weekly certified payrolls which must contain the employer's signed statements which are prescribed by Conn. Gen. Stat. § 31-53 as amended by section 1 of 1993 Conn. Pub. Act No. 93-392. Our reading is supported by the following remarks of the sponsor of the 1993 amendments whose statements provide a strong indication of legislative intent. State v. Golino, 201 Conn. 435, 445, 518 A.2d 57 (1986).
REP. LAWLOR: (99th)
Some very legitimate questions were raised and I want to clarify them. First of all, all of the records we are discussing now are already required to be kept. The only change we are recommending is that someone has to certify that this is accurate and be willing to stand behind these records and be subject to criminal penalties if they intentionally sign a false, a certified payroll that in fact is false and if the purpose of their certification is to deceive the appropriate law enforcement agencies.
Secondly, the generation of paperwork is not a mandate on any municipality around the state. They don't have to do anything other than collect these documents. They don't have to read them, they don't have to verify them, they don't have to do anything other than have them available. If any individual persons wishes [sic] to inspect these documents to determine whether or not the prevailing wage law is being violated, then they have that opportunity to do so.1
REP. MAZZOCCOLI: (27th)
Through you, Mr. Speaker, would it be your expectation that a municipality that has a public works contract would then audit the payroll records to be sure that they're correct?
DEPUTY SPEAKER PUDLIN:
REP. LAWLOR: (99th)
Thank you, Mr. Speaker. Through you, first of all as far as this legislation is concerned, it only applies to jobs which are subject to prevailing rate at the outset. It doesn't apply to anything else, and secondly if a municipality wanted to conduct an audit today, they could do that, with or without this legislation. If they chose to do so, if they picked up a violation based on if they chose to review these certified payrolls and they just determined there was a violation, they could take whatever action they felt was appropriate, but this doesn't require them to do any of that.2
Based upon the foregoing clear legislative intent, we conclude that the 1993 amendments to Conn. Gen. Stat. § 31-53 do not require municipalities to review and test data on a current basis to verify the certified payrolls which must be filed by municipal contractors.
The third question relates to the term "public hospitals" and stated:
Section 4-233(a)(2) of the State Single Audit Act references an exception for "Public Hospitals". Does this allow all hospitals open to the public in the state from having to comply with the requirements of the Act or only those hospitals operated by municipalities?
Within the context of Conn. Gen. Stat. § 4-233(a)(2), the term "public hospitals" refers to hospitals operated by the State, its municipalities or audited agencies as defined in Conn. Gen. Stat. § 4-230(10). The analysis which supports our opinion follows.
The statutory section to which you refer, § 4-233(a)(2), provides:
(a) Each audit required by sections 4-230 to 4-236, inclusive, shall: ...
(2) Cover the entire operations, including financial operations, of the municipality, audited agency or nonprofit agency, except that such audit may exclude public hospitals.
At the outset we observe that the exclusion for public hospitals is discretionary and not mandatory. The word "may" conveys a discretionary act. General Motors Acceptance Corporation v. Powers, 137 Conn. 145, 149, 75 A.2d 391 (1950).
The question essentially asks us to define the term "public hospital" for purposes of the Act. There is very little law in Connecticut to aid us in this analysis. However, in one reported case, Edson v. Griffin Hospital, 21 Conn. Sup. 55, 144 A.2d 249 (1958), a Superior Court judge had the occasion to consider the issue of "whether the defendant is a private corporation operating a nonprofit private hospital or is a public corporation operating a public hospital." The Court opined:
The distinction between a public and private corporation has long been recognized. A public corporation is an instrumentality of the state, founded and owned in the public interest, supported by public funds, and governed by those deriving their authority from the state. Public institutions such as state, county and city hospitals and asylums are owned by the public and are devoted chiefly to public purposes.
On the other hand, a corporation organized by permission of the legislature, supported largely by voluntary contributions, and managed by officers and directors who are not representatives of the state or any political subdivision, is a private corporation, although engaged in charitable work or performing duties similar to those of public corporations. Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 669; Hughes v. Good Samaritan Hospital, 289 Ky. 123, 126. The difference between a public and private hospital is now clearly established, the latter being one founded and maintained by private persons or a corporation, the state or municipality having no voice in the management or control of its property or the formation of rules for its government. 41 C.J.S. 332; 26 Am. Jur. 588, § 3; note, 24 A.L.R.2d 850, 851. The mere fact that it is the recipient of state aid, financial assistance from the General Assembly, special grants from the surrounding towns, or contributions from the United Fund, Community Chest or New Haven Foundation does not change its status from a private to public hospital. Ninety-five per cent of its income is derived from charges for services rendered. West Coast Hospital Assn. v. Hoare, 64 So. 2d 293, 297 (Fla).
It is true, as the plaintiff claims, that in any number of instances hospitals in this state have been referred to as "public hospitals" or "public institutions," but in each instance consideration must be given to the particular problems in issue. When tax questions or general liability matters are dealt with, the terms are properly used and courts have so categorized them. It does not follow, however, that such a characterization renders them subject to public control. That they are engaged in charitable work for the benefit of the public, and thereby affected with a public interest, does not make them public corporations. It means no more than that they are operated for the public generally without gain or profit. The test is whether, under the charter or corporate powers granted, they have the right to elect their own officers and directors, with the power to manage their own affairs. Levin v. Sinai Hospital, 186 Md. 174, 178; Washingtonian Home of Chicago v. Chicago, 157 Ill. 414, 422, 425.
Id. at 57-8 (emphasis added). Accord Shulman v. Washington Hospital Center, 222 F. Supp. 59, 62 (D.D.C. 1963), citing Edson with approval.
We also note that Connecticut's Single Audit Act was modeled on the Federal Single Audit Act, which is codified at 31 U.S.C. § 7501 et seq. Conn. Joint Standing Committee hearings, Government Administration and Elections, 1991 Sess., pp. 393-4 (Testimony of Edwin Selden, OPM). 31 U.S.C. § 7502(d)(1)(B) provides:
(d)(1) Each audit conducted pursuant to subsection (a) for any fiscal year shall cover the entire State or local government's operations except that, at the option of such government--
(B) such audit may exclude public hospitals and public colleges and universities,
It is apparent from the context in which the term "public hospitals" appears in the Federal Single Audit Act that it is meant to encompass only those hospitals (and colleges and universities) that are part of a state or local government's operations. It is a sound principle of statutory construction to give federal and state statutes dealing with the same subject matter similar meanings. State v. Kreminski, 178 Conn. 145, 154, 422 A.2d 294 (1979). Applying this principle, we conclude that the term "public hospitals" as used in Conn. Gen. Stat. § 4-233(a)(2) means only those hospitals that are operated by the State of Connecticut, its municipalities or audited agencies, i.e., certain other political subdivisions; see § 4-230(10).
Based upon this analysis, the independent auditors conducting audits under the Act must determine first whether public hospitals will be excluded from the scope of the audit. If it is determined that such hospitals will be excluded, then the auditor must review the particular hospital's charter or other grant of corporate powers to construe whether the hospital has the right to elect its own officers and directors with the power to manage its own affairs or whether the State or a municipality has some authority over the management or control of hospital property or the adoption of its rules of governance. If the latter is the case, then the hospital would be a public hospital for purposes of § 4-233(a)(2).
The final question concerns Executive Orders Nos. Three and Seventeen and is presented as follows:
The requirements concerning Nondiscrimination, Employment Openings and Compliance Staffing have been considered relevant only in cases where a municipality enters into a contractual (grant) agreement with a state agency. These contracts require that Executive Orders # 3 and # 17 be followed. The interpretation has been to require the municipality to comply with the above requirements as they relate to a particular contract not the activities of the municipality as a whole. Is this a correct interpretation of when the Executive Orders and Nondiscrimination rules apply and the scope to which they apply?
Our response to the last question is "no."
Executive Order No. Three was promulgated on June 16, 1971, and Executive Order No. Seventeen, on February 15, 1973. These executive orders will continue in effect indefinitely until additional formal action is taken by the legislative or executive branches of government. See 1986 Conn. Op. Atty. Gen. 43 (1986).
Executive Order No. Three pertains to all state contracts and subcontracts for construction on public buildings, other public works, and goods and services. Its primary purpose is to implement Conn. Gen. Stat. § 4a-60 (formerly § 4-114a) which requires all entities entering into contracts with the State to agree not to discriminate against any person or group of persons on various enumerated bases. This executive order applies to all contractors of the state including its political subdivisions. Although Conn. Gen. Stat. § 4a-60(a) does not apply to contracts between municipalities and non-State agencies, it does apply to contracts between the State and a municipality. Executive Order No. Three requires a State contractor, inter alia, to file compliance reports with the contracting agency or the State Labor Commissioner, as the case may be. The reports must contain the contractor's and subcontractor's employment policies and statistics as prescribed by the Labor Commissioner.
The answer to your office's specific question lies within the text of this Order. Section IV of Executive Order No. Three plainly states:
... The labor commissioner may also provide by regulation for the exemption of facilities of a contractor which are in all respects separate and distinct from activities of the contractor related to the performance of the state contract, provided only that such exemption will not interfere with or impede the implementation of this Order, and provided further, that in the absence of such an exemption, all facilities shall be covered by the provisions of this Order. (Emphasis added.)
Thus, from the terms of Executive Order No. Three itself, it is evident that the nondiscrimination and employment practices and training requirements are intended to apply to all aspects of a contractor's business, not simply business activities associated with a particular state contract, unless specifically exempted by Labor Department regulations.
We reach the same result with respect to Executive Order Seventeen as well. Section II of Executive Order No. Seventeen explicitly provides:
Every contractor and subcontractor having a contract with the state or any of its agencies, boards, commissions, or departments, every individual partnership, corporation, or business entity having business with the state or who or which seeks to do business with the state, and every bidder or prospective bidder who submits a bid or replies to an invitation to bid on any state contract shall list all employment openings with the office of the Connecticut State Employment Service in the area where the work is to be performed or where the services are to be rendered. (Emphasis added.)
Section I of Executive Order No. Seventeen delegated the administration of the Order to the State Labor Commissioner. On March 21, 1973, the Labor Commissioner issued General Letter No. 73-4 to All State Agencies, Boards, Commissions and Department Heads. The General Letter states: "Governor Meskill's Executive Order No. 17 is designed to provide assistance to Connecticut's unemployed citizenry by requiring that all contractors or subcontractors doing business with the State list all employment openings with the Connecticut State Employment Service."
The intent of Executive Order No. Seventeen was to make the availability of jobs in this state known to the veterans returning to civilian life during this period in our history.3 (FN3) The scope of the Order, therefore, is intended to be broad so as to make known to prospective employees all new, available positions offered by the State's contractors and to do so through the job bank maintained by the Connecticut State Employment Service in the area where the contractor's work is to be performed or where the services are to be rendered. We therefore do not believe that a municipality's duty to comply with this executive order is limited to a particular contract as opposed to its activities as a whole.
We trust the foregoing elucidates the four areas of concern that were raised.
Very truly yours,
William J. Prensky
Assistant Attorney General
1 36 Conn. H.R. Proc., pt. 26, 1993 Sess. 9318-9 (June 1, 1993) (remarks of Rep. Lawlor) (emphasis added).
2 36 Conn. H.R. Proc., pt. 26, 1993 Sess. 9339 (June 1, 1993) (remarks of Rep. Lawlor) (emphasis added).
3 The preamble of Executive Order No. Seventeen states:
"WHEREAS, large numbers of our citizens who have served in the Armed Forces of our nation are returning to civilian life in our state and seeking employment in civilian occupations and ..."