DEPARTMENT OF LABOR DECISIONS
DATE: August 23, 1989
CASE NO. 84-OFC-8.HTM
IN THE MATTER OF
OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS, U.S.
DEPARTMENT OF LABOR,
PLAINTIFF.
v.
WASHINGTON METROPOLITAN AREA
TRANSIT AUTHORITY,
DEFENDANT.
BEFORE: THE ASSISTANT SECRETARY FOR EMPLOYMENT STANDARDS
DECISION ON BACK PAY AND REMAND ORDER
Acting Assistant Secretary Alan C. McMillan issued a Final Decision and Remand Order (F.D.
and R.O.) in this case on March 30, 1989, finding that Defendant violated Section 503 of the
Rehabilitation Act of 1973, as amended, 29 U.S.C. § 793 (1982) (section 503 or the Act),
when it refused to hire Randolph T. Nicholas as a carpenter because of his handicap, high blood
pressure or hypertension. The F.D. and R.O. ordered Defendant to offer Mr. Nicholas a position
as a carpenter with appropriate pay and back dated seniority within 120 days of the order. The
F.D. and R.O. remanded the case to the Administrative Law Judge (ALJ) for the limited purpose
of taking "additional evidence on the amounts Mr. Nicholas could have earned with reasonable
diligence" between the date of discrimination and the date of the ALJ's supplemental order. The
ALJ was to calculate back pay and interest in accordance with the evidence and the interest
determination in the March 30 F.D. and R.O.
The ALJ held a hearing on remand on April 28, 1989, and issued a Supplemental Recommended
Decision (S.R.D.) on June 9, 1989. The S.R.D. found that Mr. Nicholas diligently sought employ-
ment with numerous employers by speaking to friends, driving to job sites, reading classified ads,
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speaking to union agents and going to union hiring halls. S.R.D. at 2. The ALJ found that periods
of Mr. Nicholas' unemployment were due to a variety of factors, including the short term nature
of many of the jobs held by Mr. Nicholas, and his decision to leave some nonunion jobs for union
jobs. The ALJ found that Mr. Nicholas diligently attempted to find work when he was
unemployed and physically able to work. Id
On May 26, 1989, Defendant filed a Motion for Relief Pending Further Administrative
Proceedings and Judicial Review. Plaintiff then requested that the Assistant Secretary stay the F.D.
and R.O. until the completion of all administrative proceedings and judicial review. The Acting
Assistant Secretary denied Defendant's motion on July 3, 1989, but entered a stay of the order
provisions of the F.D. and R.O. until 30 days after entry of a final order on the ALJ's supplemental
recommended decision. That stay continues in effect.
Defendant has excepted to the ALJ's finding that Mr. Nicholas was reasonably diligent in seeking
substantially equivalent employment; to the ALJ's characterization that Mr. Nicholas sought
employment with "numerous" employers, S.R.D. at 2; to the ALJ's finding that Mr. Nicholas was
"later restricted to light jobs" (because the transcript references and exhibit cited by the ALJ do
not support that conclusion), and to the ALJ's admission of the Government's Exhibit (GX) 45.
The Supreme Court enunciated some of the basic principles applicable in calculating an em-
ployer's back pay liability after a finding of discrimination in Ford Motor Co. v. EE0Q 458 U.S.
219 (1982). Although Ford Motor Co. v. EEOC arose under Title Vil of the Civil Rights Act of
1964, which includes a statutory requirement that a discriminatee mitigate damages, 42 U.S.C.
§2000e5(g) (1982), I hold that the same principles are applicable in section 503 cases. As
the Court noted in Ford Motor Co. v. EEOC, the duty to mitigate damages is "rooted in ancient
principles of law,and requires the claimant to use reasonable diligence in finding other suitable
employment." 458 U.S. at 231 (footnote omitted). The Court said further that "the unemployed
or underemployed claimant need not go into another line of work, accept a demotion, or take a
demeaning position [but] he forfeits his right to backpay if he refuses a job substantially equivalent
to the one he was denied." Id. at 231-232 (footnotes omitted). The employee need not "seek
employment which is not consonant with his particular skills, background, and experience [or]
which involves conditions which are substantially more onerous than his previous position". Id.
at 231, n.16, quoting NLRB v. Madison Courier, Inc., 472 F.2d 1307, 1320-1321 (D.C. Cir. 1972).
As the Acting Assistant Secretary held in the F.D. and R.O., Defendant has the burden of proving
that Mr. Nicholas did not exercise reasonable diligence in finding other suitable employment. Ra-
simas v. Michigan Department of Mental Health, 714 F.2d 614, 623-24 (6th Cir. 1983), and cases
cited therein. Defendant may satisfy that burden only if it establishes that 1) there were
substantially equivalent positions which were available, and 2) Mr. Nicholas failed to use
reasonable care and diligence in seeking such positions. Id. at 624. A substantially equivalent
position "must afford the claimant virtually identical promotional opportunities, compensation, job
responsibilities, working conditions, and status." Id. Moreover, the employee "is only required to
make reasonable efforts to mitigate damages [and] the reasonableness of the effort . . . should be
evaluated in light of the individual characteristics of the claimant and the job market." Id.
One of the most important characteristics of the Mechanic AA Carpenter position which Mr.
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Nicholas sought at WMATA was that it was full time, permanent employment with fringe benefits.
Mr. Nicholas testified at the first hearing that that was the reason "I applied for Metro, something
steady, and I wanted to get insurance." T. (10/2/87) at 10.[1] As Defendant's own expert witness
acknowledged, construction jobs, including carpentry, are generally intermittent, depending on
weather conditions and when a job is completed. T. (4/28/89) at 109. In addition, most of the
duties of a Mechanic AA Carpenter were performed indoors in bus garages or office buildings.
T. (10/2/87) at 59. Defendant offered no evidence that there were any full time, permanent
carpenter positions involving primarily indoor work available during the time period in question
and therefore has not car-ried the first part of its urden of proof.[2]
A complainant under section 503, of course, may not sit idle for ten years if substantially equiv-
alent employment is not available. NLRB v. Madison Courier, Inc., 472 F.2d at 1320-21; Sellers
v. Delgado Community College, 839 F.2d 11 32, 1137 n.2 (5th Cir. 1988). But the record here
demonstrates that Mr. Nicholas made reasonable efforts to find carpentry positions even though
the positions did not offer the same permanency, benefits or working conditions as the WMATA
Mechanic AA Carpenter position. Defendant's evidence of the availability of suitable jobs
consisted only of the testimony of Ms. Kathleen Sampeck, a vocational rehabilitation consultant
who assists people with disabilities in finding employment. T. (4/28/ 89) at 83. Defendant
introduced a list Ms. Sampeck derived from her records of carpenter jobs which she had found
available during the period 1982 to 1989. DX 20.
I agree with the ALJ, however, that Defendant did not identify which jobs, if any, were available
during the times Mr. Nicholas was unemployed and physically able to work from 1982 to 1989.
Ms. Sampeck testified that about 28 of the jobs on her list were light duty jobs, T. (4/28/89) at
104, but she conceded that there are fewer light duty jobs available, id. at 98, and she could not
state when any of the jobs on her list were available during the 1982-1989 period, id. at 102, or
how long any of them would have lasted. Id. at 110. In addition, the list does not identify any
jobs which offered full time, permanent employment in working conditions comparable to the
Mechanic AA Carpenter position.
Defendant virtually concedes that it is not contesting Mr. Nicholas' work history or job seeking
efforts from 1978 to 1982. Def. Exceptions to S.R.D. at 8. Indeed, from February 26, 1978, until
about the beginning of the summer of 1983, a total of over 1,900 calendar days, Mr. Nicholas was
unemployed only 47 days. GX 46. Semantic disputation over the ALJ's characterization that Mr.
Nicholas sought "numerous" jobs also does not aid Defendant in carrying its burden. Mr. Nicholas
testified several times at the hearing on remand that when he was unemployed he sought work by
driving to job sites, looking in the newspapers and making inquiries with friends. T. (4/28/
89) at 37-38; 41; 43-44; 45; 46; 47; 48. In the spring, summer and fall of 1983, for example,
Mr. Nicholas worked for five different employers, each of which offered only sporadic, temporary
work. GX 46. He continued to seek full time permanent employment during this period. At the
end of 1983, Mr. Nicholas found steady work with Miller and Long Co. and worked for that
company for almost all of 1984 until he injured his back on the job on December 12, 1984. Id.
When he was able to return to work in 1986, his doctor recommended he take only light duty jobs.
T. (4/28/89) at 42.[3] Mr. Nicholas sought light duty jobs at four Miller and Long work sites, but
none were available. T. (4/28/89) at 43-44. He looked for light duty work, such as interior work,
by looking in the papers and going to job sites. Through a friend, Mr. Nicholas found work
remodeling houses for a Mr. Ziad Kebenie and Chelsea Development. Id. at 45; GX 46. He did
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this work on a sporadic basis from about June, 1986, to June, 1988, while continuing to look for
permanent, full time employment. T. (4/28/89) at 45; GX 46. From June, 1988, to the date of the
hearing, Mr. Nicholas was able to find one job as a carpenter supervisor for about five or six
weeks, T. (4/28/89) at 47; GX 46, and he did a few odd jobs, while continuing to look for full
time, permanent employment by talking to friends, driving to job sites and speaking to work
superintendents. T. (4/28/89) at 47-48. Mr. Nicholas also explained some of the difficulties he
had finding jobs through the newspapers. T. (4/ 28/89) at 48.
These actions by Mr. Nicholas show reasonable diligence in seeking suitable employment, given
the nature of the position being sought, and Mr. Nicholas' personal characteristics at the time. Ra-
simas v. Michigan Dept. of Mental Health, 714 F.2d 614, 624; Hanna v. American Motors Corp.,
724 F.2d 1300, 1307-1309 (7th Cir. 1984); 0rzel v. City of Wauwatosa Fire Dept., 697 F.2d 743,
756-57 (7th Cir. 1983), cert. denied. 464 U.S. 992 (1 983). On the record as a whole, I find that
Defendant has not carried its burden of proving that Mr. Nicholas did not exercise reasonable
diligence in seeking suitable employment.
Defendant advances several other arguments in connection with this exception which I reject as
well. Defendant objects to the ALJ's failure to toll its back pay liability at the point when Mr.
Nicholas quit a nonunion job to change to a union position, arguing that a claimant cannot
voluntarily quit an interim position without good cause, and citing N.L.R.B. v. Aycock, 377 F.2d
81, 87 (5th Cir. 1967), and N.L.R.B. v. Mastro Plastics Corp., 354 F.2d 170, 174 n.3 (2d Cir.
1965). I am not persuaded that changing jobs because of a desire to work in a union position does
not constitute good cause. See discussion in Brady v. Thurston Motor Lines, Inc., 753 F.2d 1269,
1277-78 (4th Cir. 1985); Rasimas v. Michigan Dept. of Mental Health, 714 F.2d 614, 624 (a
substantially equivalent position includes "promotional opportunities, compensation, job
responsibilities, working conditions, and status." (emphasis added)); Sellers v. Dalgado Community
College, 839 F.2d at 1137; Williams v. Albemarle City Board of Education, 508 F.2d 1242, 1243
(4th Cir. 1974) ("comparability in status is often far more important . . . than comparability in
salary").
Similarly, Defendant argues that back pay is barred for the period after September 19, 1983,
when Mr. Nicholas voluntarily quit a job at Miller and Long after a dispute with his foreman.
The only evidence in the record is the testimony at the first hearing by the Payroll Supervisor
at Miller and Long that Mr. Nicholas' termination sheet stated that "there was a problem with
working conditions, that [Mr. Nicholas] had an argument with his foreman in front of other
employees." T. (10/2/ 87) at 68. Defendant offered no other evidence to explain the
circumstances of Mr. Nicholas' resignation from Miller and Long at that time. If anything, the
evidence in the record tends to show that Mr. Nicholas was justified in resigning following a
dispute about working conditions. See Brady v.Thurston Motor Lines. Inc., 735 F.2d at 1278.
Defendant also objects to the admission in evidence by the ALJ of GX 45, an 81 page compila-
tion of Mr. Nicholas' medical records from May 15, 1979, to February 4, 1986, on the grounds that
most of the records are relevant only to the question of whether Mr. Nicholas is handicapped, an
issue already decided in the F.D. and R.O. Defendant suggests that such material somehow affected
the ALJ's conclusions on the issue of mitigation of damages. Defendant also asserts that much of
GX 45 is duplicative of other evidence. I find nothing in the ALJ's S.R.D. to indicate he was
improperly influenced by material in GX 45 which may be relevant only to issues already decided
in this case. Moreover, the ALJ's S.R.D. is only a recommended decision, and I have all the
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authority to review the record and make findings of fact (and have made such findings, see
discussion at 4-8) which the ALJ had in presiding at the hearing. 41 C.F.R. §§ 60-
30.27 and 60-30.30 (1988); 5 U.S.C. § 557(b) (1 982). To the extent material in GX 45 is
duplicative, Defendant is not harmed.
Defendant excepted to the ALJ's refusal to find that Mr. Nicholas intentionally withheld
information relevant to his work history with which Defendant may have been able to prove that
additional setoffs were appropriate. Defendant argues that it was entitled to have an adverse
inference made against Mr. Nicholas that he did not exercise reasonable diligence or that he earned
more than the back pay due during the period covered by this withheld information. Defendant's
theory apparently was that, if it could obtain the amount earned by Mr. Nicholas' wife from 1986
to 1989 and the amount of the couple's expenses, the difference would show how much Mr.
Nicholas earned during that period.
To begin with, this approach is very speculative as a means of deriving Mr. Nicholas' earnings.
It would require a finding that Mr. Nicholas was not truthful in his testimony and in providing
Plaintiff the information on which GX 46 is based. Furthermore, Mr. Nicholas testified several
times that he did not know exactly how much his wife earned during this period, T. (4/28/89) at
69, 70, 72. Because they had recently been separated and his wife had left with a "hostile attitude"
id. at 72, he did not have access to her records. I find that it was in this context, and not as an
attempt to conceal information, that Mr. Nicholas said "I'm not going to discuss her business
because, you know, that's her business. I can't involve her into this." Id. at 71. Defendant's
exception III.B. is denied.
Defendant excepts in two respects to the ALJ's computation of offsets to back pay for time that
Mr. Nicholas was unable to work. First, Defendant argues that potential earnings during the time
Mr. Nicholas was out of work due to injuries covered by workers' compensation (i.e., on the job
injuries) should be offset against back pay due, and second, that the AU improperly set off the
portion of workers' compensation representing lost wages against the interest due, rather than
against the back pay.
The ALJ held that "monetary values should be placed on t1me out from work for sickness and
job injuries not covered by workers compensation and the total of these values should be offset
against recovery. . . . The claimant in the event of such sickness or non covered job accident
would not be available for work due to no fault of the defendant." S.R.D. at 4 (emphasis in
original). In other words, it is assumed that ordinary illnesses or accidents which are not work
related would have occurred absent the discrimination, whereas on the job injuries are considered
the fault of the discriminating employer because, absent the discrimination, the victim would not
have been in the position where the injury occurred. See Falls Stamping Co. v. United Auto
Workers, 485 F. Supp. 1097 (N.D. Ohio 1979), aff'd, 667 F.2d 1026 (6th Cir. 1981), cert, denied,
455 U.S. 1019 (1982). Plaintiff concedes that the offset for constructive earnings for Mr. Nicholas'
period of ill ness in February 1989 should be deducted from the back pay due rather than credited
against in terest. Plaintiff's Responses to Defendant's State ment of Exceptions to Supplemental
Recommend ed Decision at 23, n.5. To that extent, Defend ant's exception is granted. See below
at 14-15 for discussion of Plaintiff's exception to the ALJ's deduction of constructive earnings for
two other periods.
Defendant also asserts that the AU erred in the computation of prejudgment interest in several
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respects. Defendant's argument that interest cannot be assessed against WMATA because it is a
governmental entity which has not waived its immunity was considered and rejected in the F.D.
and R.O., slip op. at 28-29. Defendant also objects that the rate of interest should be limited to
6%, that interest should not have been compounded, and that if compounding is permissible, it
should not have been compounded more than once a year.
Department of Labor regulations implementing the Debt Collection Act of 1982, 29 C.F.R. Part
20 (1988), prescribe the rate of interest applicable to debts owed to the Department of Labor.[4]
In particular, 29 C.F.R. §20.58(a) requires that "[t]he rate of interest prescribed in section
6621 of the Internal Revenue Code shall be sought for backwages recovered in litigation by the
Department." The cases Defendant cites in support of its claim that the rate of interest should be
limited to 6% do not address the applicability of section 6621. 1 find that following the provisions
of section 6621 and 29 C.F.R. § 20.5B are the appropriate guides for determining the
applicable interest rates. Defendant's exception to the rate of interest is denied.
The regulations also provide that "[i]nterest shall not be assessed on interest. . . ." 29 C.F.R.
§ 20.58(c). The ALJ adopted Plaintiff's calculation of back pay and interest in Appendix A
to its proposed findings of fact. That calculation applied the appropriate interest rate under 29
C.F.R. § 20.58(a), but improperly assessed interest on interest. See Appendix A to Plaintiff's
Exceptions to the Administrative Law Judge's Supplemental Recommended Decision, explaining
the methodology for Plaintiff's calculation of back pay and interest. Defendant's exceptions that
prejudgment
interest should not be compounded and that it was improper to compound it more than a year are
granted.was more than once a year are granted.
Plaintiff excepted to the S.R.D. on several grounds.[5] Defendant did not reply to Plaintiff's ex-
ceptions. Plaintiff argues that rather than calculating interest on an annual basis, the ALJ should
have calculated back pay and interest quarterly, which is the methodology followed under Title
V11 of the Civil Rights Act of 1964 and the National Labor Relations Act. I find that
methodology is a reasonable means of achieving the objective of making a claimant whole by not
penalizing him for unusually high earnings in a particular quarter. Plaintiff's exception 1:A. is
granted.
Plaintiff also excepted to the ALJ's tolling back pay during two periods when Mr. Nicholas was
not working due to on the job injuries and his workers' compensation payments expired. Workers'
compensation payments may be limited in duration for reasons which are not related to the actual
period of temporary physical disability. Tolling back pay at the expiration of workers'
compensation payments, therefore, is not in accord with the principle discussed above that an
employer who has been found to have discriminated is liable for back pay during periods when
the claimant is unable to work due to injuries which would not have taken place absent the
discrimination. Plaintiff exception 1:B. is granted.
Finally, Plaintiff requests that Defendant be ordered to pay into the WMATA retirement fund the
employer's portion of the pension contribution, or if that is impossible, to purchase an annuity for
Mr. Nicholas of equivalent value. The ALJ had ordered that if pension contributions cannot be
made to the Transit Employees Retirement Plan, the value of Defendant's contribution should be
paid to Mr. Nicholas in cash. Plaintiff's approach would probably shelter this portion of the back
pay from income taxes, as would have been the case if it had been paid into the retirement fund.
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I find Plaintiff's approach reasonable and I adopt it. Accordingly, this matter is REMANDED to
the ALJ to recalculate pay and interest by:
1. Reducing the total back pay due by the amount Mr. Nicholas could have earned during his
period of illness in February 1989;
2. Increasing the back pay due by including back pay for the September 26, 1979 to January 1,
1980, and December 13, 1982 to February 15, 1983, periods;
3. Recalculating interest due on a quarterly basis;
4. Recalculating interest to eliminate compounding;
5. Recalculating interest by setting off interim earnings and the lost wage portion of
workers'compensation before calculating interest.
The parties are encouraged promptly to consult with each other in an effort to provide stipulated
calculations to the ALJ in accordance with this order. The ALJ shall submit his revised
supplemental recommended decision within 60 days of the date of this order.
SO ORDERED.
[ENDNOTES]
[1] 1 References to each transcript will be made by the date of
each hearing to avoid confusion.
[2] 2 Defendant suggests that Plaintiff had the burden of showing that Mr. Nicholas sought government jobs.
Defendant's Statement of Exceptions to Supplemental Recommended Decision at 9 (Def. Exceptions to S.R.D.).
This approach would have inverted the burden of proof; it was Defendant's burden to show that such jobs were
available and that Mr. Nicholas did not make reasonable efforts to obtain them. Defendant offered no evidence on
the availability of government jobs for carpenters.
[3] 3 Contrary to Defendant's assertion, there is support in the record for the conclusion that Mr. Nicholas was
restricted to light duty work, including the ALJ's record references. See T. (4/28/89) at 42, 1.25; 44, 1.20-22. Mr.
Nicholas testified at the remand hearing that his back, his arm, and his knee all continued to bother him. Id. at 45,
1.4-6.
[4] 4 Although those regulations are not binding in cases of debts owed by States or local governments, 29 C.F.R.
§ 20.51(a)(1), the Secretary has held that they do not abrogate the common law right of the government to
collect interest. See discussion in In the Matter of Department of Labor v. State of Florida Department of Labor
and Employment Securty, Case No. 84-CTA-228, Final Decision and Order of the Secretary issued December 9,
1988, appeal docketed, 893015 (11 th Cir. Jan. 9, 1989).
[5] 5 Plaintiff correctly points out that the interest due is lower than that calculated by the ALJ because he did not
set off Mr. Nicholas' interim earnings in each relevant period or the lost wage portion of workers' compensation
before calculating interest due. This adjustment, in addition to the ones discussed in the text, should be made in
the back pay and interest calculation.
