Attorney General's Opinion
Attorney General, Richard Blumenthal
January 15, 2008
Department of Administrative Services
Your department has asked whether the state is responsible for paying increases to the minimum wage when state contracts are silent as to which party will absorb the cost associated with such increases. We conclude that the state has an obligation to reimburse contractors for increases in the minimum wage that may occur during the term of a contract when the contract is silent on that issue. Additionally, this office recommends that all state contracts specifically provide for state responsibility for payment of increases in the minimum wage during a contract term.
You informed this office that the Department of Administrative Services (“DAS”) delegated authority to the Department of Public Works (“
The Contracts are silent on whether the State has an obligation to reimburse CCPA for any expenses that it incurs as a result of increases in minimum wages. Specifically you ask:
Pursuant to 4a-82(o) 1 contracts in effect on or after
My opinion is that the State should reimburse contractors for increased costs resulting from increases in the minimum wage during the term of a contract. Fundamental fairness, legislative intent, statutory language, as well as the public policy reasons for the minimum wage rate, all argue persuasively that the state has an obligation to pay for these increases.
This office has issued two opinions concerning the duty of the State to reimburse contractors for standard wage increases: 013 Conn. Op. Atty. Gen. (2003) issued to Department of Labor Commissioner Shaun B. Cashman and 026 Conn. Op. Atty. Gen. (2006) issued to Department of Labor then-Acting Commissioner Raeanne Curtis (attached). Each opinion concludes that contractors are entitled to reimbursement for the increase in standard wages. The question in the 2003 Opinion was whether applicable labor statutes required employers to raise standard wage rates during the life of the contract. In that opinion, this office analyzed the applicable statutes and found that the General Assembly’s use of the present tense in the statute indicated an intent for employees to receive wage rates in effect at the time they are paid, as otherwise the General Assembly would have articulated a limitation. Further, the opinion stressed that the primary purpose of the labor statute is to ensure fair wages to employees and quoted the proponent of the bill,
[T]his bill deals with the inequities and wages for janitorial [and] food service employees who are contracted by the state. When, as many people know, when our state contracts out for janitorial [and] food services, we become the lowest payer employer for this service in the state. Our bidding process forces contractors to pay the lowest wages, with little or no benefits. We pay poverty wages for working men and women. . . . This bill . . . creates a fair system to compensate our janitors.
The question in the 2006 opinion was whether the contractor or the state had to absorb the cost of the standard wage increases. In that opinion, the Attorney General relied in part on a Department of Labor conclusion that forcing employers to absorb the cost of increases in standard wages instead of reimbursing them for those costs would thwart the legislative goal of paying fair wages. The Department of Labor reasoned that if employers must absorb those costs, they are at a competitive disadvantage, which in turn tends to adversely affect the security of the employees’ jobs and defeats the labor statute’s purpose. Since none of the contracts reviewed for the 2006 opinion specified which party was responsible for paying the increase in wage rates, and since the State drafted the contracts, the opinion concluded that the State was responsible for reimbursing contractors for the cost of the increases in standard wage rates.
In regard to the present issue, the Department of Labor's Wage and Hour Section has informed my office that it believes the State should reimburse CCPA for increases in the minimum wage. There is no question that CCPA's workers are entitled to be paid at least the minimum wage.
State payment of minimum wage increases during a contract's term is required by the clear, powerful public policy considerations underlying the minimum wage laws themselves. The Department of Labor has reasonably reached this conclusion and we agree. Both the standard wage and the minimum wage further the same public interest of preserving
As with the standard wage, the present contracts are silent on who is ultimately responsible for paying the increase in minimum wage rates, the contractor or the state. Consistent with our 2006 opinion on standard wage increases, the state should be responsible for reimbursing employers for increases in the minimum wage that occur during the term of a contract.
I recommend that DAS in the future include appropriate provisions in its contracts consistent with this opinion.
Very truly yours,
1 Conn. Gen. Stat § 4a-82(o) provides as follows: “During the term of the pilot program described in subsections (b) to (e), inclusive, of this section, any contract awarded pursuant to section 17b-656 shall remain in effect with no changes in the formula for fair market value. Additionally, any new janitorial contract awarded pursuant to section 17b-656 shall be limited to not more than four full-time employees per contract.”