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Lawsuit Claims Prevailing Wage Requirements for Migrant Facilities is Unlawful

— August 19, 2021

U.S. Departments of Health and Human Services and Labor recently came under fire in a lawsuit over claims it exceeded its authority by adding prevailing-wage requirements into its contracts.

A nonprofit organization that “operates shelters for unaccompanied migrant children” is suing the federal government over allegations that the U.S. Departments of Health and Human Services and Labor “exceeded their authority by slipping prevailing-wage requirements into its contracts.

Brown wooden gavel; image by Rawpixel, via
Brown wooden gavel; image by Rawpixel, via

The suit was filed in San Antonio federal court earlier this week by BCFS Health and Human Services. The organization “cares for thousands of children at nine facilities in multiple states.” In the suit, the organizations allege “prevailing-wage rules were never meant to apply to cooperative agreements issued by the U.S. Office of Refugee Resettlement (ORR).” BCFS Health and Human Services is represented by Husch Blackwell.

What happened, though? What prompted the lawsuit? Well, according to the suit, “HHS in December acquiesced to DOL’s years-long bid to extend prevailing-wage requirements to agreements to operate migrant shelters, after maintaining for several years that those rules were inapplicable.” Without the requirements in place, “federal contractors such as BCFS are required only to pay employees the federal minimum wage.” The organization claims it “cannot afford the legally unsupported expansion of prevailing-wage rules into its agreements, and the agencies’ move raises the risk of DOL investigations, significant penalties, and being blacklisted from federal contracting.” It further stated:

“Notably, this self-inflicted crisis also occurs against a backdrop of an unprecedented surge of unaccompanied minor children crossing the U.S. border…and a political environment super-charged with hostility around the topic of immigration that threatens the very existence of ORR shelters.”

BCFS was formed 75 years ago and started off as an orphanage for Hispanic children. During the George W. Bush administration, it began caring for unaccompanied migrant children.

Last year, the organization was approached by the ORR and asked to open a “temporary influx center at a former dormitory for oilfield workers in Carrizo Springs, Texas, as the agency’s permanent bed system reached capacity.” At about the same time, HHS was issuing amended notices “retroactively incorporating prevailing-wage requirements into the nonprofit’s existing contracts,” according to BCFS. Since 2014, DOL “had been pushing the agency to require prevailing wages on ORR contracts,” according to the suit.

In February, the Carrizo Springs shelter opened and ended up housing “children who tested positive for COVID-19.” Then, in June, HHS asked BCFS to “extend its agreement to operate the facility, but insisted on applying the prevailing-wage rules,” the suit noted. The organization said the “requirements were not meant to apply to its agreements and that it needed more time to come into compliance.” It even threatened to shut down the facility.

In response, HHS “agreed to apply the rules only to the influx shelter and not to the other contracts, and to seek increased funding for the facility,” according to the suit.

When commenting on the suit, BCFS said “cooperative agreements with ORR are not contracts covered by the federal Service Contracts Act, and as a result, it is not required to pay prevailing wages to shelter employees.” It added that treating agreements like “contracts violates the SCA, the Administrative Procedure Act, and HHS’s own regulations for awarding contracts.”


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