Without the Miller Act, subcontractors and suppliers on federal projects would have a much tougher time recovering payment after a dispute. Because the Act provides such vital protection, states followed suit by passing Little Miller Acts. While their provisions differ, the basics are the same: those providing labor or material to public projects can make a surety bond claim after going unpaid. The ability to make a surety bond claim is invaluable for subs and suppliers since public property is not subject to a mechanics lien. But just who is protected?
Under the Miller Act, “[e]very person that has furnished labor or material in carrying out work provided for in a contract for which a payment bond is furnished…may bring a civil action on the payment bond for the amount unpaid,” (emphasis added). The Miller Act is intended to be broadly interpreted in order to provide the utmost protection to those who furnish labor or materials. For this reason, Miller Act claims are not easily tossed aside. Courts are also prejudiced against contracts that alter a claimant’s right to a Miller Act claim. However, the Miller Act has its limits and grey areas. Most notably, there is not a clear consensus as to what qualifies as labor under the Miller Act beyond physical work.
For more information on the legislation, here are the basics of the Miller Act.
Labor Under the Miller Act
In U.S. ex rel. Naberhaus-Burke, Inc. v. Butt & Head (try not to laugh at that name), a federal district court noted that the word labor “has been construed to include physical toil, but not work by a professional, such as an architect or engineer.” Simple enough, right? Well, the very next sentence goes on to say that the term labor “does include an architect or another professional who actually superintends the work as it is done on the job site.” Other courts have agreed, cleaning up the idea to state that when engineering or architectural supervision or inspection is done on-site, that work satisfies the requirement of labor under the Miller Act.
However, this does not provide an avenue for an architect or engineer to sneak into Miller Act protection. Following U.S. v. Metro Const. Co., a voluntary inspection made for the purpose of falling under the Act does not qualify as providing labor under the Miller Act because the inspection was not provided for in the contract.
What about project managers that provide work on a project, but not necessarily physical labor or architectural/ engineering expertise? In U.S. ex rel. Olson v. W.H. Cates Const. Co., the Eighth Circuit Court of Appeals found “the on-site supervisory work of a project manager falls within the purview of the Miller Act if such a superintendent did some physical labor at the job site or might have been called upon to do some on-site manual work in the regular course of his job.” The Fifth Circuit accepted this principle in U.S. v. Federal Ins. Co., but held that a project manager who had been living on-site and cleaning the office and bathrooms along with other managerial duties (negotiating new contracts, preparing bid proposals, signing purchase orders, etc.) was not entitled to recovery under the Miller Act. The work done in addition to managerial duties was not enough to qualify as labor under the Miller Act.
This may have felt like the evolution of a rule, but it’s important to remember that this idea of what constitutes labor under the Miller Act is built on a shaky foundation. Cases discussing the issue have been few and far between, and only a few appellate courts have made decisions on the definition of labor. However, we can say that work involving physical exertion is quite clearly labor. For professional work, such as that of an architect, engineer, or project manager, supervisory and inspection work done on site may qualify as labor under the Miller Act so long as it is done pursuant to the contract. If this work includes some level of physical exertion, the chances increase that their work will be considered labor. Ultimately, this is a complex issue that can vary by jurisdiction, so your best bet is to ask a local construction attorney whether your work qualifies as labor under the Miller Act.