This Service Contract Act case initially was brought before the Administrative Review Board through petitions for review filed by the U.S. Postal Service; Emery Worldwide Airlines, Inc.; Evergreen International Airlines, Inc.; Kitty Hawk Air Cargo, Inc.; Express One International, Inc.; the National Air Carrier Association, Inc; the Regional Airlines Association; Captain Hal Winters (a pilot employed by Ryan International Airlines, acting as an employee representative); and the Department of the Air Force Headquarters Air Mobility Command. These petitions all focused on the prevailing wage rates for airline captains and first officers set by the Wage and Hour Administrator's designee (Administrator) in a decision letter issued December 13, 1996. The wage rates are applicable to Postal Service contracts for transporting mail by air under two air transport contracts the "ANET" and "WNET" contracts.

   With limited exceptions not at issue in this case, service contracts entered into between the Postal Service and its service providers are subject to the Service Contract Act, as amended. 41 U.S.C.A. §351 et seq. (1994)(SCA or Act). All the petitioners argue that the wage rates in the Administrator's December 13, 1996 determination letter are incorrect. Generally, the Postal Service, the airline industry parties and the Air Force challenge the Administrator's prevailing wage rates as too high, while Capt. Winters challenges the wage rates as too low and argues that the Board should order the Administrator to revert to an earlier prevailing wage determination (WD-95-0029 (Rev. 1)) that had been issued for the Postal Service contracts in May 1996.

   A second group of appeals challenges the Administrator's determination that pilots are not exempt as "learned professionals" under the Service Contract Act and the "Part 541" regulations implementing the Fair Labor Standards Act (FLSA) exemptions. See 29 U.S.C.A. §213 (1998); 41 U.S.C.A. §357(b); 29 C.F.R. Part 541 (1999).

   Before the Board are two questions for decision. First, is the Administrator correct in finding that airline pilots are not "learned professionals" under the Labor Department's regulations at 29 C.F.R. Part 541, and therefore are not exempt from the prevailing wage requirements of the Service Contract Act? And second, if airline pilots are not professionals under the Part 541 regulations, are the Administrator's prevailing wage rates for the captain and first officer classifications an appropriate exercise of the Administrator's discretion under the Service Contract Act?

   In this decision, we first review the history and structure of the Postal Service's air transport operations. We next review the procedural history of the case, and address outstanding motions. We then address the arguments relating to the "professional exemption" issue, and conclude with an analysis of the Administrator's wage determination and the challenges raised by the Petitioners.

   We have jurisdiction pursuant to 29 C.F.R. §§4.56 and 8.1(b)(1) and (6) (1999).

   Since the early 1990's, the Postal Service's air transport services have been subject to a succession of SCA prevailing wage determinations issued by the Wage and Hour Division. Wage Determination WD-95-0229 (Rev. 1) was issued by the Division on May 16, 1996, and initially was provided to the Postal Service to be used in connection with the ANET contract.

   The Postal Service and several airline industry parties objected to the wage determination, and submitted requests for review and reconsideration of the wage determination rates for captain and first officer, pursuant to 29 C.F.R. §4.56. The Air Force, which contracts for approximately $70 million annually in air passenger and cargo services, also requested reconsideration. In addition to challenging the methodology that the Administrator used for determining the challenged wage rates, several parties argued that airline pilots are "professionals" within the terms of the Fair Labor Standards Act and its implementing regulations, and therefore exempt from SCA coverage. 29 U.S.C.A. §213; 41 U.S.C.A. §357(b); see generally 29 C.F.R. Part 541.

   The Administrator issued his decision on the request for review and reconsideration in a December 1996 letter, modifying (and reducing) the captain and first officer wage rates. Although the Administrator's decision letter comprehensively responded to the wage rate issue, it did not address the professional exemption question.

   The Administrator's December 1996 decision was appealed to this Board through petitions for review filed by the Postal Service, Emery, Evergreen, Kitty Hawk, Express One, National Air Carrier Association (NACA), Dept. of the Air Force, and Capt. Winters pursuant to 29 C.F.R. §4.56(b). The case was docketed as ARB Case No. 97-033. In addition to challenging the modified wage rates for captains and first officers, the Postal Service, Air Force and airline industry parties (collectively, "the industry parties") again argued before this Board that the pilots employed on the Postal Service contracts were exempt professionals under the SCA, and that it therefore was improper for the Administrator to issue wage determination rates governing their compensation on the contract.

   After the initial briefing, the Board concluded that it should consider the professional exemption question. However, because the Administrator had not issued a final decision on this issue, the Board remanded the matter to the Administrator with instructions to invite the parties to submit their views on this question, along with relevant documents. Remand Order, ARB Case No. 97-033 (July 23, 1997).

   On September 16, 1998, the Administrator issued a supplemental decision on the professional exemption question. The Administrator found that airline pilots were not "professionals" within the terms of the Part 541 exemption regulations, and therefore properly were viewed as "service employees" subject to the prevailing wage protections of the SCA. This ruling was appealed by the industry parties. This new appeal was docketed as ARB Case No. 98-131. In conjunction with this appeal, the Board revived the earlier challenges to the December 1996 wage rate decision. The Air Line Pilots Association (ALPA) intervened in the case, solely with regard to the professional exemption issue.

   Oral argument was held on June 24, 1999, in Washington, D.C.

   By letter dated February 24, 2000, Emery withdrew its appeal on the professional exemption issue. By letter dated April 5, 2000, Emery withdrew its appeal of the Administrator's wage determination rates.

   As part of his brief in support of the Administrator's September 1998 decision on the professional exemption question, Capt. Winters attached two declarations by Ryan pilots purporting to show that their wages were reduced after missing work, thereby demonstrating that they were not paid on a "salary basis" as defined under the Part 541 regulations. Winters Brief Att. A & B. On January 26, 1999, a joint motion to strike these declarations and redact Winters' brief was submitted by the Postal Service, Emery, Kitty Hawk, Evergreen, NACA, and the Regional Airlines Association, on the theory that the attachments were not part of the administrative record in the case and therefore should not be considered by this Board, citing 29 C.F.R. §§8.1(d), 8.4(a)(7), and Harbert International, Case No. 91-SCA-OM-5, Sec. Dec. (May 5, 1992).

   Because we do not rely on these materials in deciding the professional exemption issue (infra), we DENY the joint motion to strike because it is moot.

   At oral argument, the Postal Service and the airline parties produced a chart entitled "Comparison of Compensation Drivers." This chart purported to show that the "monthly flight hours" of pilots at major air carriers (including specifically UPS and FedEx) were sharply higher than the number of flight hours worked by pilots on the ANET and WNET contracts. Capt. Winters objected to the introduction of these charts, asserting that they were misleading because the figures for ANET and WNET pilots reflected only flight hours, while the figures for other pilots reflected "credited time," which is different. At the hearing, the Board ruled that it would consider the charts only to the extent that they summarized material within the Administrative Record.

   The Board subsequently received a Motion to Clarify the Record from Capt. Winters expanding on his objections to the airline industry's chart, and offering his own new data to counter the claim that ANET and WNET pilots fly fewer hours. The new data was not part of the Administrative Record in the case, drawing objections from the Postal Service and several airline industry parties. The Administrator submitted a statement expressing support for Capt. Winters' objection to the industry's chart as misleading and beyond the scope of the material in the record, and expressing concern about the focus on "flight vs. non-flight" hours.

   As discussed below, the Board views the number of hours worked by pilots at various airlines as potentially relevant to setting reasonable prevailing wage rates. Because the wage determination matter is being remanded to the Administrator, it is unnecessary to resolve this issue at this juncture. The Motion to Clarify therefore is DENIED.

   The Administrative Review Board's consideration of the Administrator's decisions under the Service Contract Act is in the nature of an appellate proceeding. 29 C.F.R. §8.1(d). We review the Administrator's rulings to determine whether they are consistent with the statute and regulations, and are a reasonable exercise of the discretion delegated to the Administrator. Dep't of the Army, ARB Case Nos. 98-120 through 98-122 (Dec. 22, 1999), slip op. at 16 (citing ITT Federal Services Corp. (II), ARB Case No. 95-042A (July 25, 1996) and Service Employees Int'l Union (I), BSCA Case No. 92-01 (Aug. 28, 1992).

   Although the professional exemption matter was not central to the initial challenges to the Administrator's wage determination rates, we consider this question first because the coverage of pilots under the SCA appropriately is viewed as a threshold matter. If we were to conclude that the captains and first officers are professionals within the terms of the Part 541 exemption regulations, it follows that these workers would be excluded from SCA prevailing wage coverage for these occupations on the Postal Service's air transport contracts.

   In this section, we first review briefly the legal framework in which the exemption claim arises. Second, we reconsider and rescind a statement made by the Board in its July 1997 Remand Order, in which the Board opined that the Administrator would lack authority to issue a wage determination in the event that the airline pilots flying Postal Service routes were deemed "professionals" and exempt from SCA coverage. Third, we consider the merits of the exemption claim.

   A. Statutory and regulatory context.

   The Service Contract Act requires that "service employees" working on federal service contracts must be paid no less than the prevailing wage "in accordance with prevailing rates for such employees in the locality[,]" as determined by the Secretary of Labor. 41 U.S.C.A. §351(a). However, certain employees are excluded from SCA prevailing wage coverage by statutory definition:

The term "service employee" means any person engaged in the performance of a contract entered into by the United States . . . (other than any person employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in part 541 of Title 29, Code of Federal Regulations, as of July 30, 1976, and any subsequent revision of those regulations) . . . .

41 U.S.C.A. §357(b) (emphasis added). Thus the statute exempts from coverage executive, administrative and professional employees as those terms are defined in the Secretary's FLSA regulations. Stated differently, when enacting the Service Contract Act, Congress legislatively adopted the Secretary's Part 541 regulations as the statutory standard for SCA exemption.

   Sections 6 and 7 of the Fair Labor Standards Act (29 U.S.C.A. §§206 and 207) are the basic minimum wage and overtime requirements governing workers in the United States. Section 13(a)(1) of the statute exempts from these wage and overtime requirements

any employee employed in a bona fide executive, administrative, or professional capacity . . . or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor] . . .)[.]

29 U.S.C.A. §213(a)(1).

   Under this delegated authority, the Secretary of Labor has promulgated legislative regulations at 29 C.F.R. Part 541 that "define and delimit" the FLSA exemption categories. Subpart A of the Part 541 regulations ("General Requirements") include concise tests for meeting the exemption requirements; Subpart B of the regulations expand on these tests by outlining the parameters of the exemptions. See generally 29 C.F.R. §541.99 et seq.

Failure to meet any one of the three elements of the short test means that an employee is "non-exempt," i.e., is not a "professional" under terms of the regulations or the SCA.

   In analyzing the pilot exemption issue in this case, we note that "the [FLSA] §13(a)(1) exemptions are 'construed narrowly against the employer seeking to assert them,' and the employer bears the burden of proving that employees are exempt." Dalheim v. KDFW-TV, 918 F.2d 1220, 1224 (5th Cir. 1990) quoting Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960) and citing Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 206 (1966).

B. Whether the Wage and Hour Administrator would be precluded from issuing prevailing wage rates for captains and first officers employed on the Postal Service ANET and WNET contracts, even assuming that some pilots might be deemed exempt as professionals.

   In the Board's July 25, 1997 Remand Order returning this case to the Administrator for a ruling on the professional exemption issue, the Board stated that "if the pilots and first officers providing services under [the Postal Service] . . . contract are exempt, the Department of Labor has no authority to issue a wage determination covering them[.]" Slip op. at 2 (citing Hi-Craft Clothing Co. v. NLRB, 660 F.2d 910, 918 (3d Cir. 1981), for the proposition that an agency has no authority to act when it clearly lacks coverage over a matter.) Having reviewed the materials subsequently submitted by the parties to the Administrator and to this Board, we conclude that this declaration was overbroad under the circumstances of this case, and incorrect.

   Of the three criteria of the professional exemption short test listed above, the first ("work requiring knowledge of an advanced type in a field of science or learning" etc.) reasonably is characterized as a threshold categorical test that addresses an employee's generic occupational classification. That is, can the overall job classification be viewed as one of the "learned professions" based on its advanced educational requirements in a field of science or learning?

   In contrast to this first categorical issue, the second and third criteria of the short test are more employee-specific i.e., once it is determined that the employee's primary functions are in an occupation that ordinarily qualifies for exempt status as a profession, does the specific employee's work involve the consistent exercise of discretion and judgment, and is the specific employee compensated on a salary basis? These are questions of fact that can only be resolved based on the work and working conditions of the individual employee. Thus, even if the occupations of airline captain or first officer met the threshold "advanced knowledge" test, it would not automatically follow that all pilots per se were exempt professionals. If an individual pilot's duties in fact do not require the consistent exercise of discretion and judgment, or if an individual pilot in fact is not paid on a salary basis (as defined by the regulations), then the pilot would not be exempt under the Part 541 regulations and the SCA.

   A brief illustration is helpful. Assume that a branch of the armed services has decided to contract-out the operation of a health clinic to a private contractor. The agency advises the Wage and Hour Division that an SCA wage determination is needed for the bid specifications, and that the clinic operator will employ several registered nurses on the job. The "registered nurse" occupation is recognized as one of the learned professions under the Part 541 regulations, and therefore could be exempt. 29 C.F.R. §541.301(e). Is the Wage and Hour

Division authorized to issue a prevailing wage rate for registered nurses? Certainly because the Division cannot possibly know in advance whether the service contractor will pay the nurses on a true "salary basis" (a requirement for SCA exempt status), or whether the nurses instead might be paid on an hourly basis (and therefore non-exempt). It therefore is essential that a wage rate be issued. Of course, if the nurses on the contract meet all three requirements of the Part 541 short professional exemption test (learned profession, consistent exercise of discretion and judgment, and salary basis pay), the SCA wage rate issued by the Division probably would not apply to them, because they would not be "service employees" within the SCA's definition. 41 U.S.C.A. §357(b).

   None of the parties to this proceeding disputes the high level of skill needed to pilot a large jet airplane safely, and the expectation that captains and first officers will conduct themselves "professionally" in their work, as the term is used in common parlance. In addition to citing various definitions of the term "professional" from popular dictionaries, several of the parties supporting exempt "professional" status note that ALPA's Code of Ethics refers to pilots as "professionals" 32 times; the Bureau of Labor Statistics' Occupational Outlook Handbook a Labor Department publication similarly characterizes pilots as "highly trained professionals." AR98 Tab B Exhs. 17, 20. But in this dispute, we are not called upon to reach a general pronouncement about the worth of airline pilots or the importance of their work. The specific and limited question that we must answer is whether airline pilots are "learned professionals" under the SCA, i.e., that they meet the tests of the Part 541 regulations. 41 U.S.C. §357(b).

1. Whether the airline pilots primarily perform work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study.

   As discussed above, the threshold question that must be answered under the "learned profession" exemption test is whether the captain and first officer job classifications require knowledge of an advanced type in a field of science or learning. 29 C.F.R. §541.3(a)(1). It is only after this categorical question is resolved in favor of exemption that it useful to consider closely the other criteria of the long or short exemption tests.

   The Secretary's Part 541 interpretive regulations provide helpful guidance. To qualify as a "learned profession" under the regulations, an occupation should have several characteristics, including, inter alia:

• "Knowledge of an advanced type in a field of science or learning" (29 C.F.R. §541.3(a)(1)) means that the profession is learned through a "prolonged course of specialized intellectual instruction," rather than a general academic education or an apprenticeship. 29 C.F.R. §541.301(a), (d).

• Generally, "advanced knowledge" means knowledge that cannot be obtained at the high school level. 29 C.F.R. §541.301(b).

• Entry into the profession typically requires an advanced academic degree as "a standard (if not universal) prerequisite," such as the fields of law, medicine, nursing, accounting, actuarial computation, engineering, architecture, teaching, and various types of physical, chemical and biological sciences (including pharmacy and registered or certified medical technologists). Although in some instances the professional training may consist of concentrated study lasting fewer than four years (e.g., registered nurses who have been examined by state licensure boards), the examples of "learned professions" cited by the Secretary almost universally are entered following four years or more of higher education, with significant specialization. 29 C.F.R. §541.301(e)(1).

   In arguing for exempt status for the ANET and WNET pilots, the industry parties (i.e., Postal Service, Air Force and airline industry parties) correctly identify the "knowledge of an advanced type in a field of science and learning" requirement as central to the "learned profession" portion of this case, observing in their reply brief that

the critical issue which this [Administrative Review] Board must decide is whether, as a matter of law, the applicable Part 541 Fair Labor Standards Act . . . Regulations mandate that a job classification customarily require[s] a college or other advanced degree (or at least an amount of in-classroom teaching time equivalent to that required to earn such a degree) in order for the classification to be eligible for the professional exemption. WHD argues that the Regulations do so require. WHD therefore concludes that flying an aircraft simply "is not the type of work contemplated by the regulations for exemption as a professional employee," since the FAA regulations do not require a college or other advanced degree or specific comparable amount of classroom study.

Jt. Reply at 1-2 (citations omitted). The industry parties assert vigorously that the Part 541 regulations do not explicitly require that workers possess an advanced college degree to qualify for exempt professional status, and that the combination of sophisticated in-flight instruction and ground training that pilots ordinarily receive meets the regulatory standard for advanced and prolonged study.

   The industry parties point to the initial and on-going education pilots receive in fields needed to fly a large jet aircraft, as required by FAA regulations found at 29 C.F.R. Part 121 (2000). An example of such a curriculum the outline of the training program used by ANET subcontractor Express One is found in the Administrative Record as AR98 Tab E Exh. 2. The industry parties assert that this type of "Part 121" training course, which in this instance is 182 hours in length, is sufficient to meet the "prolonged course of specialized instruction and study" characteristic of a learned professional. See, e.g., USPS Brief at 10-11.

including knowledge of cyclones as associated with fronts; cloud formations; National Weather Service Meteorological Handbook No. 1, as amended; weather conditions, including icing conditions and upper-air winds, that affect aeronautical activities; air navigation facilities used on Federal airways, including rotating beacons, course lights, radio ranges and radio marker beacons; information from airplane weather observations and meteorological data reported from observations made by pilots on air carrier flights; the influence of terrain on meteorological conditions and developments, and their relation to air carrier flight operations; radio communication procedure in aircraft operations; basic principles of loading and weight distribution and their effect on flight characteristics. See 14 C.F.R. §61.153. The pilot must also pass a practical flying test covering such matters as preflight, takeoff, landing, instrument, inflight and emergency procedures. 14 C.F.R. §61.157.

USPS Brief at 9-10, n.4.

   In addition to presenting evidence regarding the training provided to pilots flying on the ANET and WNET contracts, the industry parties also rely heavily on the Fifth Circuit's decision in Paul v. Petroleum Equipment Tools Co., 708 F.2d 168, reh'g den'd, 714 F.2d 137 (1983), in support of their claim that pilots are "learned professionals" under the Service Contract Act. In Paul, a divided panel upheld a lower court decision finding that the pilot of a company twin-engine turboprop was a "learned professional" under the FLSA criteria, and therefore was exempt from the FLSA's overtime payment requirements. With regard to the first criterion of the FLSA exemption test (i.e., knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study), the court majority in Paul acknowledged that the record included little information about Paul's training; however, the court took judicial notice of the FAA's ATP certificate requirements, supra, and based solely on these FAA requirements and associated FAA testing materials concluded that the knowledge learned while qualifying for the ATP certificate was "advanced" and the period of training "prolonged" within the terms of the Secretary's FLSA regulations. Paul, 708 F.2d at 172-73.

   In support of its finding that Paul was FLSA-exempt as a "learned professional," the court also relied on opinion letters issued by the Wage and Hour Division:

[W]e are persuaded that Paul performed exempt professional work. The Wage and Hour Division, whose interpretations are entitled to "great weight," has, without vacillation, been unwilling to take a contrary position for at least fifteen years. While the Division has noted that "pilots as a class cannot be considered exempt professional employees on an industry wide basis," see Application of Policy (Flight Personnel), 6 Lab. Rel. Rep. (BNA) 92:653-54 (1976), it also has stated that it will take "no action" against a defined subclass of pilots of which Paul is a member. That is, an assertion of exempt status by the employer of any pilot with Paul's rating and experience level would not be opposed[.]

Id. at 173-74 (footnote and additional citations omitted).

   In citing Paul, the industry parties argue that the multi-engine 727s and DC-8s flown by pilots on the Postal Service ANET and WNET contracts are considerably larger and more complex than the relatively small plane flown by Paul. Moreover, the record in the case before this Board includes more specific data concerning pilot training than apparently was before the Paul court. In their view, it therefore follows that the same analysis that resulted in the Fifth Circuit's conclusion that Paul was an exempt "learned professional" under the FLSA applies with even greater force to the ANET and WNET pilots under the SCA.

29 C.F.R. §541.301(b). Finally, while the regulations recognize that some members of a profession may not hold an advanced degree,

The requisite knowledge . . . must be customarily acquired by a prolonged course of specialized intellectual instruction and study. . . . The word "customarily" implies that in the vast majority of cases the specific academic training is a prerequisite for entrance into the profession. It makes the exemption available to the occasional lawyer who has not gone to law school, or the occasional chemist who is not the possessor of a degree in chemistry, etc., but it does not include the members of such quasi-professions as journalism in which the bulk of the employees have acquired their skill by experience rather than by any formal specialized training.

* * * * *

The typical symbol of the professional training and the best prima facie evidence of its possession is, of course, the appropriate academic degree, and in these professions an advanced degree is a standard (if not universal) prerequisite.

29 C.F.R. §541.301(d), (e)(1) (emphasis added).

   With the Administrator, we believe that the language of the regulation is clear that for an occupational classification to be deemed eligible for "learned profession" status, some form of advanced, formal, specialized academic training (or its equivalent) is a prerequisite. The professions explicitly identified in the regulations almost all require specialized college-level or even graduate-level study; to the extent that the Administrator recognizes any lesser standard for a "professional" occupation, the minimum requirement identified in the regulations (specifically, for registered nurses) is for a shortened, intense, specialized college- type academic program coupled with registration by a state examining board. 29 C.F.R. §541.301(e)(1). Although the regulations recognize that some individuals working in a professional occupation occasionally may acquire their knowledge through learning outside a formal academic environment, or may not achieve the academic degree that is customary in their field, it is evident that formal specialized academic training in a field of science or learning is a threshold prerequisite for recognizing an occupational category as a profession under the FLSA regulations.

   Based on the extensive record in this case, there can be no doubt that the airline pilot occupation does not meet this test. In a statement submitted to the Administrator as part of the remand of this case, ALPA offered the following observation (with supporting evidence) about the wide-open nature of the pilot profession:

No airline requires a basic, much less an advanced, academic degree in aviation or piloting as a prerequisite to employment as an airline pilot. In fact, it is rare that a college degree of any sort is required. Only seven airlines out of the 167 covered in the Air, Inc. "Airline Information and Address Directory" a directory compiled for pilot job applicants require a four-year degree as a hiring prerequisite. . . . The petitioner in this case, Emery Worldwide Airlines, Inc., not only does not require its pilots to hold a college degree in any subject, but apparently does not require that they hold even a high school degree. Similarly, Emery's subcontractors, Ryan International and Evergreen International Airlines, do not require college degrees of their pilots.

advanced type in a field of learning that was acquired by a prolonged course of specialized intellectual instruction and study." 708 F.2d at 172. The court reached this conclusion even while acknowledging that there was no evidence in the trial record documenting the level of training "customarily" required to become ATP-certified. Id. at 171. Stated differently, the court (1) took judicial notice of the FAA's ATP certificate requirements, (2) concluded that persons who held ATP certificates possessed knowledge of an advanced type, and (3) inferred that this knowledge must have been acquired through training that met the academic requirements associated with the "learned profession" exemption. Id. at 171-73. In addition, the court concluded that the Wage and Hour Division's long-standing "non-enforcement" policy regarding FLSA overtime requirements for various workers in the aviation industry, as manifested through various Wage and Hour Opinion Letters, supported a finding of exempt professional status. Id. at 173-74.

   Like the Administrator, we respectfully disagree with the Paul majority's analytical approach and conclusion, for several reasons.

enforcement policy or allocation of limited prosecutorial resources, not a substantive declaration that pilots or any flight employees actually meet the "learned profession" test or, for that matter, any other Part 541 exemption.

   Curiously, it appears that the majority in Paul leaps from these Wage and Hour opinion letters to conclude that if the Division has chosen not to enforce FLSA overtime requirements for pilots, it is a reflection of the Division's view that pilots do not need such protections and therefore are exempt professionals under the FLSA. 708 F.2d at 174-75. But as the dissent in Paul correctly notes, although the Division repeatedly has adopted a non- enforcement position, "it has never exempted those pilots. Indeed, it has consistently declined to do so." Id. at 175. We believe this is a fair reading of the opinion letters regarding whether the Administrator ever has viewed pilots generally as exempt professionals under the FLSA. Plainly he has not, and the parties making this link seriously misconstrue the import of the non- enforcement position.

   Furthermore, in this proceeding it is extremely important to note that the same Wage and Hour Division pilot opinion letters declaring a non-enforcement policy under the FLSA explicitly state that the non-enforcement "position does not apply to employees, including pilots and copilots, subject to the provisions of the Service Contract Act, the Davis-Bacon Act, and the Contract Work Hours and Safety Standards Act . . . ." Opinion WH-357, supra. Thus, even if we were to agree with the Paul decision's interpretation of these opinion letters with regard to FLSA coverage, it is abundantly clear that the Administrator has never intended these opinion letters to exempt pilots from SCA coverage.

   The preponderance of the evidence supports the sentiment expressed in the ALPA Code of Ethics (submitted for the record by Emery), which states that "[a]n Air Line Pilot will remember that his is a profession still largely dependent on the proper training of apprentices by masters of the art during regular operations. . . ." AR98 Tab B Exh. 17 at 2-3. Although charged with an extraordinary degree of responsibility, the training of airline pilots in this country typically does not revolve around specialized college-type academic instruction, but more- closely resembles the classic apprenticeship model a "structured, systematic program of on- the-job supervised training" coupled with a program of related instruction. 29 C.F.R. §29.4 (1999). We therefore conclude that the occupations of captain and first officer do not meet the regulatory criteria for exemption under the Part 541 regulations, and therefore do not meet the statutory criteria for exemption under the SCA.

   The impulse to characterize airline pilots as "professionals" is strong and understandable. In addition to the airline pilot's tremendous responsibilities, there is a certain mystique that surrounds the job the image of the uniformed flight crew confidently navigating huge, complex planes along the airways. And the disastrous consequences of pilot error are fixed in the public imagination, with the potential for loss of many lives and property. But is it not true that these types of responsibilities are shared with other workers in the transportation industry, differing for airline pilots only by degree? What of the ship captain in stormy weather piloting an oil tanker, or a ferry? What of the passenger bus driver on a rainy highway, or the truck driver or train engineer hauling radioactive waste or other hazardous materials? In each case, these workers are charged with operating complex equipment and using knowledge and skill to make critical split-second decisions,

drawing on their training and expertise; if they err, there may be catastrophic danger to life, property and the environment. While the public should expect a high degree of training for these workers, and the highest degree of diligence i.e., that they should be "professional" in their approach to their work is this enough to make each of them "professionals" under Part 541, and therefore exempt from SCA protection?

   In light of the goals of these protective statutes, the text of the Secretary's regulations, and the record before us, we find that airline pilots are not members of a "learned profession" under the Part 541 regulations, and therefore are not exempt from Service Contract Act coverage.

2. Whether airline pilots meet the "consistent exercise of discretion and judgment" and "salary basis" criteria of the professional exemption short test.

   Because we have concluded that airline pilots do not meet the first criterion of the 3-part short test, it is not necessary for us to reach a definitive conclusion regarding the two other elements of the test. However, we discuss briefly a significant problem in trying to address either of these two criteria as part of this wage determination proceeding.

   As discussed above, the "advanced knowledge" criterion involves a generic examination of the airline pilot classifications, which the Board reasonably can evaluate based on general evidence of the pilot occupation as a whole. However, the second and third criteria of the professional exemption short test are more particularized, i.e., does an individual pilot actually exercise discretion and judgment consistently, and is the pilot compensated on a salary basis?

   Wage determination cases reach the Administrative Review Board by means of a direct appeal from policy determinations made by the Wage and Hour Administrator. Although parties to the underlying proceeding submit evidentiary material to the Administrator, and we evaluate the reasonableness of the Administrator's decision in light of the overall record, there is no formal evidentiary proceeding, no opportunity for adversarial testing of the evidence, and no formal fact finding. Procedurally, then, the opportunity to engage in rigorous development of an evidentiary record is severely limited in a wage determination case, particularly when contrasted with enforcement cases that are litigated under the SCA regulations at 29 C.F.R. Part 6 Subpart B (1999), which provide for a formal evidentiary hearing before an administrative law judge.

   The Administrative Record in this case illustrates the dilemma that we would confront if we needed to reach the "discretion and judgment" and "salary basis" tests. See 29 C.F.R. §541.3

   The airline industry parties offer extensive argument (with various supporting exhibits and declarations) to show that pilots constantly exercise discretion and judgment in their work, having ultimate authority with respect to all critical flying decisions. On the other hand, Capt. Winters argues that flying airplanes is a routine task governed by air traffic control personnel, flight manuals, autopilots and checklists also supported by exhibits and declarations. Virtually all these materials focus generically on the work of pilots, without the kind of particularized inquiry that is

needed to reach a finding that specific workers are exempt professionals. The Administrator does not address the "discretion and judgment" issue at all in his opinion letter, and none of the parties have had an opportunity to cross-examine their adversaries' declarants or challenge the adversaries' exhibits. As a practical matter, based on the record assembled in this wage determination challenge, it would be unrealistic for the Board to attempt the kind of fact-finding needed to reach this question.

   Similar problems exist with regard to the salary basis test. The industry parties assert that the ANET and WNET pilots are compensated on a salary basis, but it is unclear whether their supporting materials address the pay practices at each and every one of the airlines that work on the Postal Service contracts again, the kind of particularized inquiry that would be necessary to make a "salary basis" finding. The Administrator argues that the airlines failed to submit the kind of detailed payroll information that would be needed to reach the salary basis question; the industry parties cry foul, asserting that the Wage and Hour Division actively discouraged them from submitting such data. Capt. Winters has submitted extra-record declarations from Ryan pilots challenging Emery's claim that Ryan's pilots never are docked for losing work time; oddly, the claim that Ryan pays its pilots on an hourly basis is made by a management official at a different company. Like the discretion and judgment issue, it would be extraordinarily difficult to reach this question without a proper evidentiary hearing.

   In short, even if we had concluded that airline pilots as a class met the "advanced knowledge" element of the exemption short test, we are doubtful we could reach a final determination regarding the second and third elements based on the record normally developed during the review and reconsideration of a wage determination.

A. The SCA wage determination process.

limited to due process claims and claims of noncompliance with statutory directives or applicable regulations." Commonwealth of Virginia at 592 (citing Califano v. Sanders, 430 U.S. 99, 109 (1977)).

Dep't of the Army, slip op. at 25.

   Prevailing wage determinations are developed by the staff of the Wage and Hour Division. In this work, the Division most commonly relies on data from wage surveys conducted by the Bureau of Labor Statistics (BLS), but may also rely on other data sources, both from other government agencies as well as from private sources. 29 C.F.R. §4.51(a). The Division generally uses data showing the median wage rate paid to an occupation; however, under special circumstances suggesting that the median wage rate may not properly reflect prevailing local rates, the Division may rely on the arithmetic mean (average) of the wage rates. 29 C.F.R. §4.51(b).

   In addition to the explicit guidelines found in the SCA regulations, the Board has noted that "the Administrator has wide discretion to adopt practical, pragmatic approaches that promote the efficient administration of the Act, so long as these choices . . . [are] not inconsistent with the statute and . . . [are] sufficiently justified." Dep't of the Air Force SAF/AQCR Eastern Regional Office, ARB Case No. 98-125 (May 26, 2000), slip op. at 10, citing D.B. Clark III, ARB Case No. 98-106 (Sept. 8, 1998); Dep't of the Army, supra; McDonald's Corp., BSCA Case No. 92-02 (Sept. 30, 1992); Service Employees Int'l Union, AFL-CIO, CLC ("SEIU I"), BSCA Case No. 92-01 (Aug. 28, 1992).

B. The Bureau of Labor Statistics' surveys of wage rates paid to airline captains and first officers, and the Administrator's 1996 wage determinations.

passenger and cargo airlines, while the 1989 BLS survey excluded cargo carrier data. The 1980 and 1984 surveys appear to have reported data only on an "all-carrier" basis, while the 1989 and 1995 surveys reported both all-carrier data and data from industry sub-categories (major, national and regional carriers). The 1989 survey included break-out data on captains and first officers based on the number of "credited flight hours" actually flown per month; other surveys (including the 1995 survey) did not. One constant among all the surveys, however, was that data on captain and first officer salaries were reported as a "monthly salary" amount, rather than the hourly wage typically used in the BLS area wage survey program. Id.

[¶2] Because several parties have questioned the necessity of changing the methodology previously used to establish the prevailing rates for flight crew personnel, we again considered using a weighted median; however, we have rejected that approach because it does not yield a statistically reliable measure of central tendency. Because the median is not an arithmetic measure, a weighted average of the median rate from two or more separate groups may not bear any relationship to the median of the combined groups. If two groups are to be combined in this manner, it would be more appropriate to use the mean since a weighted average of the means from the two groups would, in fact, be the mean for the combined groups. If the weighted mean methodology had been used in 1989, the rate for Captains would have been $5,082 per month.

[¶3] As indicated above, the second methodology used previously to establish the SCA rate for First Officers was to adopt the median rate for national carriers. Had this methodology been used to establish the Captain rate in 1989, the Captain rate would have been $4,839. Based on information that you [i.e., the Postal Service] and other parties have submitted, however, we do not believe that using data only from national carriers is an appropriate methodology in this case. As you have indicated, both national and regional carriers perform work on this contract and, at a minimum, data from both regional and national carriers should be considered. In any event, the most recent BLS survey [i.e., the 1995 survey] does not provide a median rate for national carriers and this methodology could not be replicated with the most recent survey.

[¶4] The key issue in the reconsideration request is whether data from major carriers should be used to establish the SCA prevailing rate and, if so, the extent to which major carrier data should be used. You have indicated that the type of service solicited by the Postal Service is directed toward the provision of aircraft and crews that are operated by specialist airlines, and not one of your contracts for dedicated air services is held by a major carrier. Thus, you contend that a WD which includes wages paid by major carriers would not reflect the wages prevailing in the industry which performs the work. Moreover, the Postal Service's entire dedicated air program is less than half the annual revenue level of a major carrier. Furthermore, you contend that passenger carriers and integrated carriers (i.e., cargo carriers that provide both air and ground transportation delivery services) should be considered separate from "dedicated" cargo carriers similar to those used under the Postal Service contracts.

[¶5] The pilots have stated that the WD should be based on the all carrier data and should reflect a wage rate derived by using a statistical measure of central tendency from those companies eligible to bid. They further contend that the wage determination process should not differentiate between companies based on the amount of revenue produced by an air carrier. They note that the Postal Service's primary competitors for express mail service, Federal Express and the United Parcel Service, are both major carriers.

[¶6] Although we believe it is significant that major carriers do not perform any of the contract work for the Postal Service, we believe that the comparison of the Postal Service express mail delivery service to Federal Express and UPS is a compelling factor requiring that some major carrier data be used to establish the prevailing rate for this contract. The current wage determination being challenged [i.e., the May 1996 wage determination] utilizes data from all carriers; however, rather than using the all carrier median or mean rate, we adopted the low end of the middle range (i.e., the 25th percentile rate) as the prevailing rate. We adopted the low end of the middle range methodology in recognition of the fact that the all carrier data are skewed heavily toward the major carriers. By using the low end of the middle range we gave some weight to the data for major carriers while attempting to adjust for the skewed nature of the all carrier data.

[¶7] Upon further review, however, we have concluded that this methodology still results in a rate that is skewed toward the rates paid by major carriers. The most recent BLS survey shows that 86.7 percent of all Captains are employed by the majors, 9.4 percent are employed by nationals, and 3.9 percent are employed by regionals. These percentages are consistent with the percentages derived from the 1989 BLS survey. Based on these percentages it is clear that even at the 25th percentile, the rate is still primarily a rate paid by major carriers.

[¶8] Rather than using the low end of the middle range methodology, we have concluded that a more appropriate rate for the Captain and First Officer wage rates would be a simple average of the means of regional, national, and major carrier data. The rate based on these data is straight forward [sic], continues to utilize the BLS survey data, and gives additional weight to data from regional and national carriers. By using a simple average, we use a methodology that is not dominated by any group. The influence of the major carrier data is reduced in recognition of the fact that these data are strongly influenced by large passenger airlines. At the same time, major carrier data are considered in recognition of the fact that some major carriers are engaged in air transportation

of correspondence and packages. In addition to reducing the influence of major carrier data, this methodology increases the influence of regional carrier data in recognition of the fact that regional carriers comprise a larger portion of the contract air transportation marketplace than their overall 3.9 percent would indicate. The revised methodology results in a wage rate for captain of $7,316 per month and a wage rate for First Officer of $4,314.

[¶9] Finally, while we have concluded that the use of some major carrier data is appropriate for the contracts in question because of the similarities between the USPS express mail service and the services provided by Federal Express and UPS, we do not believe that the same methodology is necessarily appropriate for other smaller short term contracts for air transportation services. For other small limited service contracts, including the Postal Service's CNET or Christmas time contracts, the average mean of nationals and regionals will be utilized to establish the SCA prevailing wage rates for Captain and First Officer. Under this methodology, the wage rate for Captain is $5,550 and the wage rate for First Officer is $3,059.

AR97 Tab A (emphasis added).

C. The requirement that SCA prevailing wage rates be tied to worker classifica- tions, not employer size or industry.

   As noted above, employment in the airline industry is dominated by the "major" airlines, i.e., companies with annual revenues exceeding billion (including all the major passenger airlines, plus FedEx and UPS). The BLS wage survey shows that wage rates paid by the major airlines generally are much higher than the rates paid by the national and regional carriers.

   Working from the premise that wage data from the major carriers should be excluded when calculating the wage determination, the Postal Service and industry parties argue that the case should be remanded to the Administrator with instructions to conduct a new wage survey limited to the "contract air cargo" industry. Alternatively, these parties suggest that the Administrator either should revert to the March 1996 wage determination rates (based on the 1989 data), or adopt new wage rates based on the 1989 data for national and regional carriers (excluding major carrier data) with an upward adjustment for inflation. See, e.g., AR97 Tab L Att. 12A; Emery Pet. at 39-40.

   In sum, at each turn the Administrator adopted a non-standard wage determination methodology that focused on the differing kinds of employers in the air carrier industry. Even though it appears that the Administrator has assumed that the work of "operating large multi-engine aircraft" is the same throughout the aviation industry, he has declined to focus on the wages to the employees without regard to the industry segment in which they work.

   But this approach flatly contradicts the long-standing positions of the Administrator, this Board and this Board's predecessors. Under the Service Contract Act, the Secretary is charged with determining the "wages to be paid the various classes of service employees. . . in accordance with prevailing rates for such employees in the locality." 41 U.S.C. §351(a) (emphasis added). It was the consistent view of this Board's SCA predecessors (i.e., the Deputy Secretary and the Board of Service Contract Appeals) that the prevailing wage inquiry must focus on the work performed by an employee classification across all industries, not just the particular industry in which an employee worked. For example, in Federal Savings and Loan Insurance Corp., the Deputy Secretary observed that:

The Administrator's reliance on the BLS cross-industry data was correct under MOSCA and the regulations. Neither the statute nor the regulations restricts the employment data base of the wage survey to classifications within a single industry. Rather, they refer to various occupational classes of employees (who may work in a number of industries) in a locality.

87-SCA-WD-4 (Sept. 28, 1990) , slip op. at 11; accord General Services Administration, Region 6, Case No. 86-SCA-WD-12 (Jan. 27, 1988). Consistent with this approach, the Board of Service Contract Appeals expressed strong skepticism in rejecting a wage determination sharing some conceptual similarities to the one before us in this case, with the Administrator proposing to set prevailing fringe benefit rates by using data geared to the fringe benefits paid by small employers, rather than all-employer fringe benefit data. Service Employees Int'l Union, AFL-CIO, CLC (SEIU II), BSCA Case No. 93-08 (Sept. 23, 1993).

   The Administrator cannot have it both ways, arguing one day that the SCA requires the Board to consider only cross-industry or all-employer data, then reversing course without a sound explanation and issuing wage determinations that pick and choose among data and methodologies based on which employers are most likely to bid on a procurement. While the Administrator has very broad discretion to fashion prevailing wage determinations, that discretion must be exercised with some measure of consistency; otherwise, the entire process risks being labeled arbitrary and result-driven. When an agency interprets a statute or regulation inconsistently, without offering a sound rationale for its shift in approach, the agency inevitably will receive less deference by a reviewing body. Pauley v. Bethenergy Mines, Inc., 501 U.S. 680, 689 (1991) ("As a general matter . . . the case for judicial deference is less compelling with respect to agency positions that are inconsistent with previously held views."); Molycorp, Inc. v. U.S. Environmental Protection Agency, 197 F.3d 543, 546 n.1 (D.C. Cir. 1999) ("To be sure . . . if an agency took a position in an enforcement proceeding in district court that was clearly inconsistent with a prior enforcement policy statement, we would not be surprised if a district court's reaction would be unfavorable."); Batanic v. Immigration and Naturalization Service, 12 F.3d 662, 666 (7th Cir. 1993) (no deference given when agency offers inconsistent interpretations of statute).

   We reject the methodology underlying the captain and first officer wage determination rates in the Administrator's December 1996 final decision letter, because the methodology is an unreasonable departure from the long-standing view of the Administrator, this Board and earlier designees of the Secretary that the SCA's prevailing wage requirement must focus on the work performed by employees, regardless of the nature of their employer's industry. Because we reject this methodology, we therefore remand this matter to the Administrator to issue a new wage determination based upon cross-industry data.

   We note that on remand the Administrator still exercises very substantial discretion when determining the prevailing wage rate for captains and first officers, based on the data that are before him. All that we hold in this section is that the Administrator's wage determination cannot be based on a methodology contrived to favor wage rates paid by one section of the aviation industry over rates paid by another.

D. Other arguments and matters raised in the wage determination challenge.

   The Board is mindful of the very long time that this case has been pending before different levels of the Department, and the need to reach a final, acceptable conclusion to this wage determination dispute. In an effort to promote a speedy resolution to this matter, we evaluate several subsidiary issues that have been presented by the parties.

1. The number of hours worked by ANET and WNET pilots may be considered by the Administrator when issuing a revised wage determination.

   One of the strongest concerns expressed by the industry parties has to do with the number of hours worked by pilots on the ANET and WNET contracts compared with many of the pilots at major airlines, particularly the passenger carriers:

The average number of hours flown per month by pilots under the ANET-93-01 contract is 55 hours. Basically, it is a four-hour nighttime cargo operation. Pilots do not have extended layovers and may return home after their night's work. The average number of hours flown per month by major carriers is higher than for regional and national carriers. According to Future Aviation Professionals of America (FAPA) data, the guaranteed minimum number of hours per month for pilots of [one] major integrated carrier, UPS, is 75.

USPS Pet. at 17-18 (citations omitted). Capt. Winters disputes this representation in papers that were filed after oral argument.

entirely possible that they are uninterested because they cannot compete at the wage levels that have been set by the Administrator on these contracts since the early 1990s. This is yet another reason why wage determinations based on a narrow subdivision of an industry should be disfavored.

3. The alleged greater efficiency of UPS and FedEx that results from using larger aircraft is irrelevant.

   The Administrator focused on the presence of UPS and FedEx among the roster of major carriers in his rationale for including major carrier wage data in his methodology. In response, the industry parties argue that the comparison is unfair because UPS and FedEx use larger, wide-body aircraft than the Postal Service's contractors, and therefore are more efficient (i.e., UPS and FedEx pilots can be paid higher wages because each airplane hauls more cargo). In the view of the industry parties, this is further justification for excluding major carrier data.

   Similarly, contrary to the argument raised by some of the parties, the Administrator is under no obligation to issue wage determinations that reflect entry-level wage rates for an occupation. While it is true that the Wage and Hour Division sometimes has subdivided an occupational classification into multiple levels of skill and responsibility, reflecting the differing tasks that are performed as workers mature into journeyman status (see, e.g., Raytheon Systems Co., ARB Case No. 98-157 (Apr. 26, 2000)), there is nothing in the Service Contract Act supporting the notion that the prevailing wage should be geared to entry-level wages; to the contrary, the entire concept of prevailing wage rates requires that such rates should be the result of an analysis of wages paid to all employees in a given job classification, regardless of seniority or tenure.

    Based upon the record before us, we find that airline captains and first officers are not learned professionals within the terms of the Secretary's Part 541 exemption regulations. Therefore, we affirm the Administrator's determination that pilots are "service employees" covered by the SCA under the statutory definition found at 41 U.S.C.A. §357(b). We deny the Postal Service, airline industry and Air Force petitions for review on this issue.

   With regard to the wage rates for the pilot and first officer classifications found in the Administrator's decision letter of December 13, 1996, we conclude that the Administrator's methodology and the resulting wage determination rates are contrary to the statute and inconsistent with the decisional law of this Board and its predecessors. To the extent that the various petitions for review seek recission of the December 1996 wage rates, they are granted and this matter is remanded to the Administrator to issue new wage determination rates for captains and first officers in accordance with this decision.

   The petition of Capt. Hal Winters specifically has urged the Board to reinstate the wage rates found in the pre-December 1996 wage determination, WD-95-0029 (Rev. 1). However, these wage rates de facto were withdrawn by the Administrator. They do not represent a "final decision of the Administrator" (29 C.F.R. §8.2(b)), and therefore are not before us. Although we disagree with the rationale that was advanced by the Administrator in support of WD-95-0029 (Rev. 1), if the Administrator determines that pilots and first officers on these procurements routinely work significantly fewer hours than their counterparts at most other air carriers, he may conclude that wage rates such as these (based on all-industry data, but discounted) would be a reasonable approximation of prevailing rates for the ANET and WNET contracts, in light of the record before him.

   In remanding to the Administrator to issue a new wage determination, we emphasize that we do not direct the Administrator to conduct any new surveys in order to issue a new wage determination for the Postal Service contracts; indeed, given the protracted length of this proceeding, conducting a new survey arguably would work an unnecessary hardship on the workers and the Postal Service contractors by adding further delay. The Administrator is encouraged to issue a new wage determination based upon the ample material already in the record, as well as any other material that the Administrator may find useful.

   The Administrator is urged to issue a new wage determination expeditiously, consistent with this Decision. The Administrator is further ORDERED to submit a report to this Board on the status of this matter every thirty days.

   SO ORDERED.

      PAUL GREENBERG
      Chair

      E. COOPER BROWN
      Member

      CYNTHIA L. ATTWOOD
      Member