*****************************************
In the Matter of: *
*
Disputes concerning the payment of *
prevailing wage rates and overtime, *
and proper classification by: * Case No.: 93-DBA-79
*
FOREMOST MECHANICAL SYSTEMS *
Prime Contractor *
*
With respect to laborers and *
mechanics employed by the prime *
contractor under Contracts No. *
9-PG-81-20810, No. 9-PG-81-24210, *
No. 0-SP-81-0090, No. GS-07P-90-VA- *
C0002, and No. GS-07P-89-JXC-0013, *
to perform mechanical work at the *
Denver Federal Center in Denver, *
Colorado *
Respondent *
*****************************************
Appearances:
Kristi Floyd, Esquire
Office of the Solicitor
U.S. Department of Labor
1999 Broadway, Suite 1600
Denver, CO 80202
For the Administrator
Gayle V.L. Young, Esq.
P.O. Box 368
Westminster, CO 80030
For the Respondent
Before: DAVID W. DI NARDI
Administrative Law Judge
DECISION AND ORDER
[PAGE 2]
The Administrator, Wage and Hour Division, filed an Order
of Reference, in the above-captioned case, on August 16, 1993,
regarding the payment of prevailing wages and overtime pay by
Foremost Mechanical systems ("Respondent") on the five contracts
listed in the heading, above, pursuant to the Davis Bacon Act
("DBA"), 40 U.S.C. §276a, et. seq., and the Contract
Work Hours and Safety Standards Act ("CWHSSA"), 40 U.S.C.
§§327, et. seq. On January 17, 1993, Joe W.
Kardoley, Respondent's owner, requested a hearing on this matter.
This matter was assigned to this Administrative Law Judge and
hearings were held in Denver, Colorado, on April 13 and 14, 1994.
At the hearings, the parties were given the opportunity to offer
their witnesses, documentary evidence and oral arguments in support
of their respective positions. The parties requested the
opportunity to file briefs and an appropriate briefing schedule was
established.
The following references shall be used herein: TR for the
official hearing transcript; ALJ EX for an exhibit offered by this
Administrative Law Judge; GX for an exhibit offered by the
Administrator and RX for an exhibit offered by the Respondent.
Post-hearing, Respondent has offered "supplementary government
contracts ... that refer to government contract exhibits 1,3,5,9
and 12." (RX 10) The parties requested a short extension of time
within which to file their post-hearing briefs (RX 11) and the
request was granted. Attorney Young, by letter dated June 26, 1994
(RX 12), clarified and further identified RX 11. Briefs were
timely filed and they have been admitted as GS 22 and RX 13,
respectively. The record was closed on July 26, 1994, as no
further documents were filed.
The following issues have been presented to me for resolution:
1. Whether Foremost Mechanical Systems ("Respondent")
Misclassified its Employees as "Mechanical Laborers" on the
Contracts in Question?
2. If Respondent did Misclassify its Employees on the Contracts
in Question, what Adjustments to the Wages Paid to these Employees
would be Appropriate?
3. Whether Dennis Hartley Waived his Right to Wages Owed Him When
He Entered into a Settlement Agreement with Foremost Mechanical
Systems?
4. Whether or not the Actions of Respondent were Sanctioned by
[PAGE 3]
the Contracting Officers and its Agents such that Respondent
Reasonably Relied on Government Agencies with Regard to the
Classification of Mechanical-Laborer in Classification of Its
Employees?
5. Whether the Department of Labor Violated Respondent's
Procedural Due Process Rights by Failing to Follow Requirements
under 29 CFR Part 5, 6 and 7?
6. Whether the Equal Access to Justice Act (EAJA) applies to the
Case at Hand?
SUMMARY OF THE EVIDENCE
1. RESPONDENT'S VERSION
Foremost Mechanical Systems ("Respondent"), a sole
proprietorship operated by its president, Joe W. Kardoley, has been
in the business of heating, air conditioning, and ventilation since
1985. (TR 357) Mr. Kardoley has had 35 years experience as a
steam fitter, pipefitter, master plumber, and certified welder and
holds numerous licenses and certificates in these areas. In
addition, he has been an instructor in welding at Red Rocks
Community College (TR-359) and continues to attend continuing
education seminars in the areas of refrigeration and heating. (TR
359) Because of his extensive experience, Mr. Kardoley was
certified by this Court as an expert in these areas at the hearing.
(TR 360)
In 1989, Respondent entered into 5 contracts with the federal
government to provide heating, air conditioning and ventilating
services to different government agency buildings. These were the
Bureau of Reclamation (GX 1) (9-PG-81-20810)($15,620), (GX 3, 9-PG-
81-24210) ($15,580), and (GX 5, No. O-SP-81-0090), General Services
Administration (GX 9, GS-07P-90-VA-COOO2) ($2,460), and (GX 12, GS-
O7P-89-JXC-0013). The period covered by the contracts began in
April, 1989 and ended in January, 1990. The contract in Building
67 was merely an extension of a contract which the Respondent had
completed in 1987 to perform induction unit work. The Respondent
has no past history of labor violations under the Davis-Bacon Act
and the Respondent has entered into approximately 25 contracts with
the federal government ranging in amount from $75 to $170,000 since
1987. (TR 364, 365) In fulfilling the contracts in issue Mr.
Kardoley's procedures and practices, especially with respect to his
hiring of employees, were in every way consistent with the way he
[PAGE 4]
had been accustomed to doing them in fulfilling these previous
government contracts.
As evidence of these past practices, evidence concerning Mr.
Kardoley's 1987 contract was submitted. During the 1987 contract,
Mr. Kardoley hired Richard Steiner, whom he classified as a
mechanical-laborer, and Mr. Steiner performed the work of a
mechanical-laborer. These tasks included such things as handing
Mr. Kardoley tools and pulling on a chain pull. (TR 369) Mr.
Steiner was interviewed by Duane Chesley, a compliance officer who
conducted a Labor Standards Interview. Mr. Chesley never disputed
his classification as mechanical-laborer or the rate at which he
was paid ($12.50 per hour). (TR 371) The Respondent also submitted
weekly certified payroll records which showed Mr. Steiner's
classification as mechanical-laborer. (TR 373)
The projects in question required Respondent to furnish and
install parts to the refrigeration system for the mezzanine floor
(GX 1) and revise the existing heating system in building 56(GX 5),
provide auxiliary cooling in building 67 (GX 3), to perform duct
modifications in building 41 (GX 9), and to make HVAC (heating,
ventilation, and air conditioning) repairs to building 67 (GX 12).
Incorporated as part of the contracts were Wage
Determinations: CO-89-4, CO-88-4. The classification, "Laborers,
Group 3" was listed in each wage determination, along with the
classification definition: Group 3; Mechanical, Air, Gas and
Electrical Power Tool Operators, Burners on Demolition, Gunnite
Nozzlemen, and Sandblasters. These workers are paid $12.24 per
hour. The schedule also lists four groups of Laborers, numbered 1-
4. Laborers in Group 1 are defined as Final Cleanup Laborers who
are paid $5.75 per hour. Laborers in Group 2 are defined as
General Cleanup Laborers who are paid $11.99 per hour. Laborers in
Group 4 are defined as Mason Tenders who are paid $13.59 per hour.
Subsequent wage determinations showed that Group 3 Laborers were
deleted, and a new classification, HVAC technician, was added. (TR
402)
Depending on the needs of the job, the Respondent hired
employees using the following job classifications: Welder,
pipefitter and mechanical-laborer. As a journeyman in the areas of
welding, plumbing, steamfitting and pipefitting, Mr. Kardoley
performed all journeyman work as indicated in the payroll records.
The only exceptions to this were when others were occasionally
hired to perform some of the pipefitting or welding work, or when
some of his employees performed duties outside of their mechanical-
laborer job classification without authorization. (TR 392)
[PAGE 5]
The following employees worked under Mr. Kardoley on the
above-referenced contracts:
Dennis Banks worked on buildings 56 and 67. Respondent hired
Dennis Banks as a mechanical laborer to assist his uncle, Lawrence
Banks, who was already working for Respondent as a pipefitter on
building 67. Dennis Banks' specific duties included checking
controls on smaller thermostats (TR 378), carrying buckets, moving
furniture, holding ladders (TR 413), carrying the compressors up
the stairs and acting as fire watch. (TR 431) Mr. Kardoley
performed all of the welding and fitting of heat exchangers and
pumps when Dennis Banks worked for him. (TR 380)
Anthony Lell worked on building 48 on contract no. GS-07P-90-
VA-COOO2, building 56 and building 67. On building 48, Mr. Lell's
only tasks were to pass tools to Mr. Kardoley and hold the ladder
on which Mr. Kardoley stood (TR 385-386, 424). On building 48,
since the building arrived prefabricated, the sheet metal work had
already been done and Mr. Kardoley merely pieced it together. (TR
424-425) Thus, Mr. Lell did not have any opportunity to perform
any sheet metal work. On building 56, Mr. Lell merely held the
pipe as Mr. Kardoley worked on it and did not perform any
pipefitting work himself. (TR 388) His use of a torch on this job
falls within the mechanical-laborer job classification because it
involves demolition work. Mr. Lell sometimes had attendance
problems; not showing up for work without calling, or working just
part of the day. (TR 387-388, 393)
Anthony Gonzales worked on buildings 56 and 67. On building
56, he was initially hired as a pipefitter-welder and paid $21.20
per hour. (TR 389, 391) When he worked as a mechanical-laborer, he
was paid $15.00 per hour. Mr. Kardoley planned to lay off Mr.
Gonzales when the jobs were completed, but Mr. Gonzales pleaded
with Mr. Kardoley to keep him on the payroll because of his
family's financial circumstances. Because the contracts were
winding down, Mr. Kardoley was only able to offer him work as a
mechanical-laborer on building 67, work involving flushing
induction units. Mr. Gonzales agreed to accept this position. Mr.
Kardoley paid him $15.00 per hour on (GX 5, Contract Solicitation
No. 0-SP-81-00090). When Mr. Gonzales worked as a Mechanical-
Laborer/Welder on building 67, he was paid the higher welder's
rate. (TR 389-391)
Dennis Hartley worked on building 56 primarily as a
Mechanical-Laborer and, for two days, as a pipefitter. (TR 395)
When he worked as a pipefitter, he was paid appropriately for those
hours. (TR 395) Mr. Hartley was admonished on several occasions to
[PAGE 6]
do no welding, but he tried to weld anyway (TR 396) and the
Respondent was finally forced to take extraordinary measures,
sending Mr. Hartley to Thornton to work on a non-government job, in
order to prevent Mr. Hartley from welding. Mr. Hartley used a
torch appropriate to his classification as a mechanical-laborer.
(Id.)
Respondent filed the weekly certified payroll records (WHO347)
required under the contracts on a timely basis. These payroll
sheets showed the employee's classification, their rate of pay and
benefits, along with the actual time spent on each project and the
total amount of earnings for the week. There was no dispute with
the federal agencies or with Respondent's employees during the
contract terms as to the classification of the employees or that
they were not performing work not contained in their
classification. The employees accepted their pay checks without
objection. It was not until after they were laid-off in December,
1989 - January, 1990 that Anthony Lell, Anthony Gonzales and Dennis
Hartley filed their complaints with the Department of Labor. For
the most part, Mr. Kardoley performed all of the skilled labor that
did not fall in the category of mechanical laborer. The payroll
records accurately reflected the actual hours of Mr. Kardoley and
his employees who worked in each classification.
Respondent was first notified in February or March, 1990 that
a complaint had been filed against him (TR 403) and he met with
Chuck Plante, investigator, on three occasions beginning in August,
1990 (TR 404-405) providing him access to his records and certified
payroll sheets. Respondent also cooperated with other government
officials in the investigation of this matter. It was not until
February, 1991, that another meeting was held in which a demand was
made upon Respondent to make payments to his former employees. (TR
407)
II. ADMINISTRATOR'S VERSION
A. Coverage Under the DBA and CWHSSA
Respondent was the prime contractor on five contracts to
perform mechanical work at the Denver Federal Center, Denver,
Colorado and all contracts were subject to the labor standards
provisions of the DBA and CWHSSA, as so stipulated at the hearing.
(TR 32) All contracts were subject to Wage Determination ("WD")
CO89-4. All WDs, except for the one attached to contract no. GS-
07P-89-JXC-0013, included modification 2. (GX 11), Contract no. GS-
07P-89-JXC-0013's WD included modification 1. (TR 283; GX 13) For
[PAGE 7]
the purposes of this matter, both modifications contained the same
relevant classifications and wage rates. (TR 283)
B. Prevailing Wages
The DBA requires that each contract over $2,000, for the
construction of public buildings or public works, to which the
United States is a party, contain a clause setting forth the
minimum wages to be paid to various classes of laborers and
mechanics employed under the contract. Contractors are required to
pay their contract employees no less than the "locally prevailing"
wages and fringe benefits. The DBA assigns to the Secretary of
Labor responsibility for predetermining the prevailing wage rates
and fringe benefits to be paid on contracts. 40 U.S.C.
§276a(a). In order to carry out this responsibility, wage
surveys are conducted by Wage and Hour offices of the Department of
Labor.
Marlene Page, the Director of Government Contract Enforcement
for the Wage and Hour Division of the United States Department of
Labor, explained the process through which wage surveys and the
resultant WDs are created. Initially, inquiries are sent out to
various companies that perform a certain type of work[1] in a
certain region or state. When the various companies return the
questionnaires, the wage analyst checks the information to ensure
that it complies with the set parameters for the survey. The
requests for information are sent to both union and non-union
employers. The information is then compiled and a computer program
is generated to mathematically compute the prevailing wage rate for
each craft surveyed. If union rates prevail, as they do in the
above-captioned contracts, it means that more than half of the
responders who employed people in a particular craft, were
signatories to the union contract and paid the union rate. The
prevailing wage rate is then placed in the WD for the particular
classification surveyed. Ms. Page went on to explain that she had
reviewed GX 11 and 13 and determined that union rates had prevailed
for both Steamfitters or Pipefitters and for Sheet Metal Workers.
(TR 243, 250-254) Additionally, the business managers for both the
Pipefitters and Sheet Metal Workers, as well as independent
contractors in both of these fields testified that union rates had
prevailed during the relevant time period. (TR 157, 174, 189, 232)
When union rates prevail, the Department of Labor ("DOL")
accepts the jurisdictional lines of the unions involved. (TR 255)
The only time that there would be a deviation from this practice is
when two unions both claimed the same type of work (TR 255) and
then that jurisdictional dispute would have to be resolved.
However, no such dispute is present in the situation at hand. At
[PAGE 8]
the hearing, after reviewing all five contracts involved, Ted
Doxtater, Business Manager for the Colorado Laborer's District
Counsel, Mike Salazar, Business Manager for the Sheet Metal
Worker's Union, Local 9, and Dennis Cole, Business Manager for the
Pipefitters,[2] Local Union 208, all agreed that the work involved
on the contracts at issue would belong to either the Pipefitters or
Sheet Metal Workers. (TR 191-3, 233-247) They further testified
that Laborers do not work in conjunction with either Pipefitters or
Sheet Metal Workers and that Laborers would not be employed to
perform any of the tasks on the contracts at issue. (TR 142-4, 149,
186, 194, 226, 240, 246-7) Additionally, Dennis Cole and Mike
Salazar testified that neither the Pipefitters Union nor the Sheet
Metal Workers Union has a "helper" classification. (TR 186, 226).
Finally, none of the workers employed by Respondent were registered
apprentices under either program. (TR 410)
C. The Classifications At Issue
Respondent employed Pipefitters and Sheet Metal Workers on
all five of the disputed contracts. However, in almost all
circumstances, Respondent listed these employees as Mechanical
Laborers, a classification not listed in the applicable WDs. (GX 2,
4, 6, 10, 11, 13 and 14) The applicable wage rate for Steamfitters
or Pipefitters was $21.20 per hour, including fringe benefits. The
rate for Sheet Metal Workers was $21.80. (GX 11, 13) FMS paid the
employees $12.50 per hour, while listing them as Mechanical
Laborers. (GXs 2, 4, 6, 10 and 14)
At the hearing, several witnesses testified regarding the
types of tasks performed and the various tools used by Pipefitters,
Sheet Metal Workers and Laborers. Additionally, GX 15 and GX 16
describe in detail the jurisdiction of the Pipefitters' Union,
Allen Stone, a contractor who has been in the Pipefitting
industry since 1957, testified that his business, a Pipefitting and
Plumbing outfit, generally is involved in "the installation of
plumbing, heating and cooling systems, air conditioners; installing
the HVAC equipment, standard plumbing, et cetera." (TR 167) After
reviewing the contract documents involved in this matter, Mr. Stone
testified that he could tell, by looking at the contracts, the
types of tasks required by each contract. The tasks required by
the contracts are the types of tasks that his company would be
hired to perform, with the exception of GX 9, which would clearly
be sheet metal work. (TR 161-162, 168) On the other four
contracts, Mr. Stone testified that Pipefitters of Pipefitter
Apprentices would perform all tasks, that Laborers would not
perform any tasks on the contracts and that Laborers never work in
[PAGE 9]
conjunction with Pipefitters. (TR 161) Mr. Stone additionally
described some of the tools used by the Pipefitters: "welding as it
relates to the piping trade; pipe cutter; wrenches. If we're doing
refrigeration work, refrigeration evacuation equipment; tubing --
a myriad of tools." (TR 162)
Dennis Cole, Business Manager for Pipefitters Local Union 208,
testified generally about the tasks performed by Pipefitters. Mr.
Cole explained that Pipefitters install pipe, handle steam heat,
hot water heat and air conditioning. "We put in the power houses,
cooling water in the power houses, hot water in the power houses,
and go all the way down to commercial, residential and the same
thing; refrigeration units, low-temperature refrigeration." (TR
223) Mr. Cole also testified that, although Laborers might work on
the same site as Pipefitters, they would never assist or work in
conjunction with Pipefitters. (TR 226) In fact, Laborers would not
even be allowed to carry pipe or compressors to the work site. (TR
245; GX 15, p. 45, regarding transporting materials to the site).
Tools of the trade include "pipe wrenches, pipe cutters, pipe
reamers, welding equipment, 747s to put up shields, to put hangers
up and then run the pipe in the hangers; move the pipe around ..."
according to Mr. Cole. (TR 225) Mr. Cole, after reviewing the
contracts contained in GX 1 - GX 14, stated that the tasks required
by the contracts would be performed either by Pipefitters or Sheet
Metal Workers. (TR 233-240) Laborers, according to Mr. Cole, would
not perform any of the tasks required by these contracts. (T-240)
Unless registered apprentices were used on these contracts, the
employees performing the work on the contracts would have to be
paid Pipefitter wages (or, in some cases, Sheet Metal Worker
wages), even if they were not journeymen Pipefitters. (TR 421)
William Davis, who has been a Sheet Metal Worker for 26 years
and a Superintendent for eleven years, described the types of tasks
typically performed by Sheet Metal Workers. "Most of our work
deals with the transference of air by means of a sheet metal duct,
either round or square. We do air conditioning, we do heating, we
do venting, most anything that would have to do with sheet metal."
(TR 172) Mr. Davis, after reviewing GX 9, stated that this
contract involved the installation of 12 inch round return air duct
work, and that this entire contract would be performed by Sheet
Metal Workers. (TR 176) The types of tools used by Sheet Metal
Workers include "snips; straight snips, rights, lefts, maybe double
cuts; some device for hangers, either a gun or a drill to drill the
concrete; drills and a ladder." (TR 176) Mr. Davis stated that
Laborers would not perform any work on GX 9. (TR 176)
Mike Salazar, Business Manager for the Sheet Metal Workers
[PAGE 10]
Union, Local Union 9, testified that he had total authority
regarding the jurisdiction of Sheet Metal Workers in the State of
Colorado and that "Sheet Metal Workers do everything that has to do
with the fabrication and installation of heating, ventilation and
air conditioning systems. That means that they fabricate all duct
work, they can install the duct work that they fabricate. They
also install the various types of equipment that furnish air into
those systems. They do very many different types of ventilation
systems for taking bad air out of buildings, inducing clean fresh
air into buildings ... Just almost everything and anything that is
built out of sheet metal the Sheet Metal Worker can do." In the
field, the types of tools used by the Sheet Metal Worker include
various snips (right, left aviation, bolt-on, straight, etc.),
power operated hand-held shears, drill motors, screwdrivers,
pliers, hammers, saws and whatever else may be necessary to work
with sheet metal. After reviewing the contract documents contained
in GXs 1-14, Mr. Salazar stated that all tasks required by the
contracts would be performed by either Pipefitters or Sheet Metal
Workers. Sheet Metal Workers would perform the tasks required on
GX 9. Mr. Salazar testified that Laborers would not be used to
perform any of the tasks required by GX 9 and further stated that
Sheet Metal Workers never work directly with Laborers. (TR 187,
188, 191-194)
Respondent classified its employees as Mechanical Laborers on
the contracts at issue. Numerous witnesses testified that there is
no such classification in the WDs and that the term "Mechanical"
contained under the Laborers' classification, Group 3, referred to
the types of tools that could be used by a Laborer, rather
than to a classification of employees, (TR at 143, 146, 149-152,
247, 273, 303, 307). Even Respondent's own witness, Duane Chesley,
had never used the term Mechanical Laborer and treated the
classification as a regular Laborer classification. Mr. Chesley
also described the Group 3 under the Laborer classification as
referring to tools used by a Laborer, rather than a
classification. (TR 319, 321, 322)
Ted Doxtater, Business Manager of the Laborers' Local in
Colorado, testified regarding the jurisdiction of the Laborers'
Union. Mr. Doxtater testified that a Laborer, Group 3, would have
no part in assisting a Pipefitter or a Sheet Metal Worker. (TR at
140-142). After reviewing the contract documents contained in GXs
1-14, Mr. Doxtater stated that Laborers, of any kind, would
not perform any of the tasks required by these contracts.
(TR at 142). Mr. Doxtater explained in detail that the Group 3
portion under the Laborers' classification referred to tools
rather than to a type of classification of employee. (TR 143-6,
148-9)
[PAGE 11]
D. The Contracts And The Tasks Performed On The Contracts
i. Contract No. 9-PG-81-20810, GX 1:
Government Exhibit 1 is a contract with the Bureau of
Reclamation for the installation and replacement of a refrigerated
compressor, a dryer and refrigeration piping in building 56. (TR
68) Mr. Cole testified as to what would be required on this
contract, stating that a "Pipefitter would get the unit, if it's a
package unit where the compressor and evaporator are all one unit,
they'll set that and then they'll pipe out of that system to the
evaporator and pipe back with this inch and five-eights and seven-
eights copper, and to do that they would go through and put shields
in the roof or in the ceiling, I should say, they're on the walls;
cut the -- measure and cut the pipe with tubing cutters, take a
reamer and ream the inside, take sandcloth and sand the outside of
the pipes and the inside of the fittings, put them together and
probably silver solder them using an oxyacetylene rig." (TR 234-5)
Mr. Cole categorically stated that Pipefitters would perform all of
these tasks, as outlined in GX 15. (TR 236-7)
Dennis Banks, who was classified as a Mechanical Laborer on
this contract, testified that he worked in building 56 putting in
exhaust fans, running a few controls and working with Mr. Kardoley
and another individual on an air conditioning unit in the roof.
(TR 200) Mr. Banks testified further that he used wrenches,
screwdrivers, grinders, pipe wrenches, soldering torches and
cutting torches, as well as other basic hand tools. (TR 202)
Charles Plante, investigator for the Wage and Hour Division,
determined that Dennis Banks was misclassified, based on his
discussions with the Pipefitters' Union and Laborer's Union and Mr.
Plante concluded that Dennis Banks should have been classified as
a Pipefitter on GX 1 and should have been paid at the rate of
$21.20 per hour, rather than the $12.50 per hour that he was
receiving. (TR 271-274)
Moreover, Dennis Banks was working with or assisting Joe
Kardoley, a Journeyman Pipefitter, and Don Boswell, classified as
a "HVAC Ser. Technician."[3] (GX 2) Since the WD does not contain
a Helper classification and since Mr. Banks was not a registered
apprentice, Respondent was required to pay Dennis Banks the
Pipefitter rate. (TR 241)
Mr. Plante computed back wages for Dennis Banks by subtracting
$12.50 per hour from $21.20 per hour and then multiplying this
figure by the number of hours worked. (TR 274) Back wages due
under the DBA are ,757.40. Due to the misclassification,
[PAGE 12]
overtime was paid at the incorrect rate ($12.50 x 1.5 = $18.75,
instead of $21.20 x 1.5 - $31.80), resulting in additional back
wages due under CWHSSA in the amount of $70.98. Total back wages
computed on this contract are ,828.38. (GX 2, GX 17, p.1)
ii. Contract No. 9-PG-81-24210, GX 3:
Government Exhibit 3 is a contract with the Bureau of
Reclamation for the modification of the heating and air
conditioning system in building 67. (GX 3) Mr. Stone testified
that the work involved on this contract would either be performed
by Pipefitters or Sheet Metal Workers, depending on whether the
modifications were being made to the air (duct) or piping system.
(TR 169) Government Exhibit 3, Section K, further defines the type
of work to be performed on the contract and states that the intent
of the project is "to provide auxiliary cooling for the S.W. office
of the 14th floor ..." Paragraph 13, of Section K, requires that
"the Contractor shall relocate any existing piping and/or conduit
as necessary so that the new cooling unit can be installed."
(Id.)
Dennis Banks and Dennis Hartley were classified as Mechanical
Laborers on this contract. Mr. Hartley testified that all the work
he did for Respondent at the Denver Federal Center was Pipe
Fitting/Welding. (TR 109) Mr. Kardoley testified that in all
buildings in which Dennis Banks assisted him, Kardoley was either
doing Pipefitting or Sheet metal work. Mr. Kardoley admitted that
Banks was not registered as an Apprentice for either trade.
(TR 409-410)
Government Exhibit 4, the certified payrolls that accompany GX
3, list Dennis Banks and Dennis Hartley as Mechanical Laborers. (GX
4) Both employees were performing the work of Pipefitters on this
contract and should have been so classified. (TR 276) Charles
Plante computed back wages for both employees by subtracting the
Mechanical Laborer rate ($12.50) from the Steam Fitter rate
($21.20) and multiplying this by the number of hours worked by each
employee (TR 277) Mr. Hartley was credited $250 on this contract
based on additional monies that he had previously received from Mr.
Kardoley. (TR 277) Total back wages computed for DBA violations
are $728.75. (GX 4, GX 17, p.2) Mr. Hartley worked 80.5 hours on
this contract and is owed $700.35 (80.5 hours x $8.70, the
difference between $21.20 and $12.50). dennis Banks worked 32
hours on this contract and is owed $278.40 (32 x $8.70).
iii. Contract no. O-SP-81-00090, GX 5:
Government Exhibit 5, a contract with the Bureau of
Reclamation, is also for the modification of the heating system for
[PAGE 13]
wings 1300, 1400, 2300 and 2400, in building 56. (GX 5) Section K
again provides a more detailed description of the work to be
performed on this contract and much of the work involved the
replacement and relocation of heat exchangers. The specifications
additionally require the piping system to be flushed and
hydrostatically tested after the revision of the piping work.
(Section K.2, ¶ g) Temperature control panels were to be
relocated and a new "condensate" pump was to be provided to serve
the heat exchangers.
Mr. Kardoley classified himself as a Pipefitter/Welder on this
contract and classified Edward Gonzales as a Pipefitter/Welder on
this contract. (GX 6) As already noted, none of the employees
involved were registered apprentices or Helpers. (TR 410)
Anthony Lell testified that, while working for Respondent, he
did basically everything a Pipefitter does, except for welding.
This included tasks such as, cutting and fitting pipe; cutting,
threading and screwing pipe together; cutting, fitting and
soldering pipe together; taking out circulating pumps and
installing new ones; installing hanger systems for the piping; and
entering systems for the piping and equipment. (TR 35) Mr. Lell
was a journeyman plumber at the time he worked for FMS and has been
involved in the plumbing/pipefitting industry since 1977. (TR 33)
Mr. Kardoley admitted that Lell would have known what tasks a
Pipefitter would perform, as he was a journeyman at the time. (TR
383)
Mr. Kardoley testified that, in building 56, the employees
were removing the existing heating system and reusing the pipe in
the new system, to the greatest extent possible. (TR 397, 420)
Because the piping was to be reused, Mr. Hartley did the cutting,
as Mr. Kardoley thought that he would do the best job. (TR 397)
Mr. Hartley's time cards show that he did welding in building 56
during the weeks of September 30 through October 10, 1989. (GX 21)
William Copeland did not testify at the hearing, but is listed on
the certified payrolls for this contract. (GX 6) Mr. Kardoley
testified that Mr. Copeland was the Leadman on this project,
although there is no Leadman classification in the WD.(TR 423;GX11)
Again, Allen Stone and Dennis Cole testified that either
Pipefitters or Sheet Metal Workers would be used on this contract,
depending on whether the work involved air ducts or pipes. (TR 169,
237-8) Because two individuals are listed as Pipefitters on the
certified payrolls, it is reasonable to conclude that the work
involved pipefitting rather than sheet metal work. (GX 6) In any
event, Anthony Lell, Dennis Hartley and William Copeland were
misclassified as Mechanical Laborers, while performing pipefitting
[PAGE 14]
work and assisting other Pipefitters. As previously discussed,
Laborers are never used to assist Pipefitters. Clearly,
Laborers should not have been used to perform the tasks on this
contract. (TR 142, 144, 161, 226, 240, 246-7)
Charles Plante computed back wages totalling ,941.60 for the
three employees who were misclassified on this contract. (GX 17,
p.3) Mr. Plante again subtracted the amount paid from the wage
rate owed and multiplied this figure by the number of hours worked
by the employee. (TR 278-280) William Copeland was paid $15 per
hour while Dennis Hartley and Anthony Lell were paid $12.50 per
hour. (T 279; GX 6) Anthony Lell is owed ,191.90 (137 hours x
$8.70) Dennis Hartley is owed $402.50 (75 hours x $8.70 - $250
credited for payment previously received from Respondent). William
Copeland is owed $347.20 ($21.20 - $15.00 = $6.20 per hour x 56
hours). (GX 6)
iv. Contract No. GS-07P-90-VA-C0002, GX 9:
GX 9 is a contract with the General Services
Administration for the installation of 12" round return air duct
work in building 48. (GX 9) Mr. Kardoley testified that he
performed sheet metal work in building 48 and the Anthony Lell
assisted him and handed him tools, including a staycon gun, power
activated firing device, tin snips and aviation snips. (TR 419)
Lell was not registered as an apprentice, nor was there a
classification for Sheet Metal Worker Helper. (TR 419-420)
William Davis, after reviewing GX 9, testified that the work
required by this contract would be performed exclusively by Sheet
Metal Workers. (TR 176-177) Similarly, Mike Salazar agreed that
the work would be performed by Sheet Metal Workers. (TR 191) Mr.
Lell who testified regarding the sheet metal work that he performed
at building 48, stated that he folded sheets of sheet metal over,
which would snap into sections, and that he would join the ends,
crimp them, screw them together and then hang them in the ceiling
with steel straps. He further testified that he used right-hand
snips, left-hand snips, straight shears, screw guns and a power
activated tool ram set in the performance of these tasks. (TR
39,40)
Charles Plante again computed back wages on this contract for
the misclassification of Anthony Lell as a Mechanical Laborer. (TR
281) Plante subtracted the $12.50 per hour that Lell was paid from
the $21.80 per hour that he should have been paid and arrived at
total back wages due him of $409.20. (GX 10, GX 17, p.4; TR 281)
v. Government Contract No. GS-07P-89-JXC-0013, GX 12:
[PAGE 15]
GX 12, a contract with the General Services Administration for
HVAC repairs in building 67, involves the replacement of pumps,
heat exchangers and induction air units as well as hydronic system
cleaning and testing, insulation, testing and balancing. (GX 12)
This is the only contract which used WD CO89-4, with modification
1, rather than modification 2. (GX 13) As noted above, the
relevant rates for Sheet Metal Workers and Pipefitters are the same
in both WDs.
Allen Stone, after reviewing GX 12, testified that the tasks
required by this contract would be done predominantly by
Pipefitters and secondly by Insulators. (TR 170) Mr. Cole
testified that most of the work on this contract would belong to
the Pipefitters, including the HVAC repairs, replacement of pumps,
hydronic system cleaning, flushing and testing, as well as the
balancing and testing of the hydronic system. Insulators would do
the insulation testing and balancing. (TR 237-238)
Dennis Banks testified that he worked with another Pipefitter,
Larry Banks, in building 67 and that they flushed the piping for
the induction air units, and then went through each unit flushing
any coils that were blocked up and identified units that needed
further work. (TR 200) The Labor Standards Interview taken by
Duane Chesley of Dennis Banks, corroborates this testimony. (GX 18)
The tools used to flush the units included crescent wrenches, pipe
wrenches and screwdrivers. (TR 208) Dennis Banks testified on
cross examination that he did do work with piping. He went on to
explain that, in building 67, he would help Mr. Kardoley remove and
replace heat exchangers. He would get the pipe ready when removing
the heat exchangers and then Mr. Kardoley would do the welding.
Mr. Kardoley listed himself as a Fitter on the certified payrolls.
(GX 14) Both Dennis Banks and Mr. Kardoley would then reinstall
the equipment. (TR 209-210)
Mr. Kardoley testified that Messrs. Lell and Gonzales replaced
45 induction units in building 67. (TR 382) GX 19, a Labor
Standards Interview of Mr. Lell, shows that he was "demonstrating
induction unit operation" at the time of the interview.
Additionally, Mr. Lell told the investigator, Duane Chesley, that
he was a Fitter. Mr. Chesley stated, on the form, that Mr. Lell
was not properly classified and paid. (GX 19)
Edward Gonzales testified about flushing and replacing
induction units. (TR 120-123) They would cut out the induction
units, put new pipe in, run new copper pipe and install new units,
using pipe wrenches, tubing cutters, flare tools and crescent
wrenches. (Id.) Mr. Gonzales also testified that Messrs.
Lell and
[PAGE 16]
Banks worked with him doing the same type of tasks, with the
exception of welding. (TR 123) Mr. Gonzales, who has been a
Pipefitter since 1972 and who is also a member of the Pipefitters'
Union, testified that the tasks he now performs, as a union member,
did not differ from the tasks he performed while working for
Respondent. (TR 118-19, 124)
Dennis Hartley was classified as a Welder/Fitter for one week
on this project and paid the correct wage rate. (GX 14 at 11)
Edward Gonzales was paid the proper wage rate for two weeks, while
being classified as a mechanical Laborer/Welder. (GX 14 at 13,14)
However, for the next three weeks, Mr. Gonzales was paid $15.00 per
hour. During the first two of these three weeks, Mr. Gonzales was
listed as a Mechanical Laborer. During the third week, he was
listed as a Mechanical Laborer/Welder, but still was paid only
$15.00 per hour. (Id. pp. 15-17)
Charles Plante again charged violations of the DBA with
regards to the misclassification of Dennis Banks, Anthony Lell and
Edward Gonzales. (TR 286) Although Mr. Plante did not testify at
the hearing regarding the misclassification of Mr. Gonzales during
the work weeks beginning December 22, 1989, December 29, 1989 and
January 5, 1990, the certified payrolls clearly show the violations
and these violations were included into the back wage calculations
listed in GX 17. (GX 14 at 15-17, GX 17 at 5)
Back wages totalling $7,874.74 were computed for these three
employees for DBA violations. (GX 14, GX 17 at 5) Anthony Lell is
owed $460.70 because during weeks ending 11/17/89, 12/08/89 and
1/05/90, he was paid $12.50 per hour. Accordingly, Mr. Plante
subtracted this figure from $21.20 and multiplied times the number
of hours worked (49 hours x $8.70 = $426.30). During the week
ending 12/29/89, Lell was paid $15.00 per hour (8 hours x $6.20 =
$49.60). During the week ending 1/12/90, Lell was paid $25.00 per
hour and Respondent was given credit for the excess over $21.20 (4
hours x ($-3.80) = ($-15.20)). (GX 14)
Dennis Banks is owed $6867.20 (794 hours x $8.70 = $6907.80 -
$40.60) which represented additional pay that Mr. Plante discovered
on Dennis Banks' payroll checks. (GX 14) Additionally, back wages
totalling $14.87 were computed for Dennis Banks under CWHSSA. (GX
14 at 8, GX 17 at 5)
Edward Gonzales is owed $546.84 (88.20 hours x 6.20). (GX 14)
On the basis of the totality of this closed record and having
observed the demeanor and having heard the testimony of credible
[PAGE 17]
witnesses, I make the following:
Findings of Fact and Conclusions of Law
1. Whether Respondent Misclassified its Employees as
"Mechanical Laborers" on the Contracts in Question?
Respondent denies the allegations that it misclassified
and underpaid the named employees, or that it violated overtime
regulations and affirms that it has fully complied with the
requirements of the Davis-Bacon Act herein.
Respondent concedes that mechanical laborers employed by
the Respondent on all of the contracts were subject to the
provisions of the Davis-Bacon Act (40 U.S.C. 276a) and the
regulations duly promulgated thereunder. Consequently, the
Contractor was required to pay to its employees who worked on such
projects the wages specified in Wage Determinations CO-89-4, CO-88-
4 incorporated in the contract documents for such projects.
Respondent paid its employees the wages stated in such Wage
Determinations. Respondent also concedes that these contracts were
subject to the Contract Work Hours and Safety Standards Act, 40
U.S.C. Sections 327, et seq., and Department of Labor Regulations
promulgated at 29 C.F.R. Part 5.
Pursuant to 29 C.F.R. 5.22, "such wage determinations state
the minimum wages to be paid various classes of laborers and
mechanics based upon the wages determined by the Secretary of Labor
to be prevailing for the corresponding classes of laborers and
mechanics employed on projects of a character similar to the
contract work in the city, town, village, or other civil
subdivision of the state in which the work is to be performed."
The term "wage determination" includes the "original
decision and any subsequent decisions modifying, superseding,
correcting, or otherwise changing the provisions of the original
decision. The application of the wage determination shall be in
accordance with the provisions of Section 1.6 of this title." 29
C.F.R. 5.1(a)(1)(q)
Respondent submits that Mechanical-Laborer is a valid job
classification because Mr. Kardoley uses the term "mechanical-
[PAGE 18]
laborer" to refer to persons who work with mechanics and who hand
tools, wrenches, and otherwise assist someone who is a craftsman.
A mechanical-laborer may also hold ladders, hold pull chains or use
a torch, for example. (TR 363) Mr. Kardoley testified that his
usage of this job classification follows that which is commonplace
in non-union shops and that he has regularly encountered this job
classification during his approximately 20 years of experience
working in non-union shops. (TR 363)
Respondent posits that much of this dispute seems to concern
the question of whether the category of "mechanical-laborers" even
exists in the vocabulary of the Department of Labor's job
Classification scheme. The evidence shows that over long periods
of time persons having the power to make binding commitments to the
Respondent on behalf of the contracting agencies, shared in Mr.
Kardoley's usage of this job classification and that classification
had not been challenged. Before construction under a contract
begins a conference is normally held to review the work to be
performed and to agree upon a job classification and wage rate
schedule. At such a conference held as far back as 1989, Mr.
Kardoley informed the contracting officer, Barbara Byron, that he
planned to use mechanical-laborers and was told that she saw
nothing wrong with that. (TR 373) There is nothing to indicate
that the contracting officers on any of these contracts ever used
this occasion to voice any objections to Mr. Kardoley's usage of
this job classification for his workers. Nor did his usage of this
job classification in his weekly certified payroll records cause
any concern when they were reviewed by contracting agency
officials.
Respondent also submits that usage of this job classification
is widespread, at least among those officials with whom Mr.
Kardoley had occasion to deal. After Mr. Lell and Mr. Hartley were
laid off and they filed these complaints, they were asked to
provide the contracting agency with documentation in a letter
signed by Vicki Cook, contracting officer. This letter used the
term "mechanical-laborer" to describe their job classification, an
indication that this term was in current usage within the
contracting agencies. (RX 6, RX 9)
Margaret Miller, contract specialist, also received a copy of
this letter and at the time she received it, she did not think
there was anything wrong with classifying these workers as
mechanical-laborers. (TR 345) Moreover, according to notes which
he made at the time, Duane Chesley conducted a Labor Standards
Interview of Dennis Banks on behalf of the Department of Labor in
which he says that he observed Dennis Banks flushing induction
units while working as a "mechanical-laborer." (RX 5)
[PAGE 19]
Respondent suggests that this issue also may be settled even
more definitively by reference to the Wage Determinations schedule.
This schedule contains a general category of Laborers, of which one
of the listed subclassifications is Group 3: Mechanical, Air, Gas
& Electric Power Tool Operator, Burners on Demolition, Gunnite
Nozzlemen and sand blaster. Obviously then, a mechanical-laborer
is just one of the several types of Group 3 Laborers, according to
Respondent's thesis.
29 C.F.R. Section 5.1(a)(1)(m) defines the "Laborers" or
"Mechanics" classification given in the Wage determinations as
follows:
"It includes those workers employed by a contractor
or subcontractor at any tier whose duties are
manual or physical in nature (including workers who
use tools or who are performing the work of a
trade), as distinguished from mental or managerial.
'Laborers' or 'mechanics' includes apprentices,
trainees, helper, ... Working foremen who devote
more than 20 percent of their time during a
workweek in performance of duties of a laborer or
mechanic and who do not meet the criteria of 29 DFR
Part 541 are laborers or mechanics for the time so
spent"
Section 5.2(n)(4) further defines the term, "helper." A "helper" is a
"... semi-skilled worker (rather than a skilled
journeyman mechanic) who works under the direction
of and assists a journeyman. Under the
journeyman's direction and supervision, the helper
performs a variety of duties to assist the
journeyman such as preparing, carrying and
furnishing materials, tools, equipment, and
supplies and maintaining them in order; cleaning
and preparing work areas; lifting, positioning, and
holding materials or tools; and other related,
semi-skilled tasks as directed by the journeyman.
A helper may use tools of the trade at and under
the direction and supervision of the journeyman.
The particular duties performed by a helper vary
according to area practice."
Accordingly, Respondent submits that the cited regulation
does, indeed, recognize workers who perform the tasks contemplated
[PAGE 20]
by Mr. Kardoley as "mechanical laborers" and that a proper
interpretation of the Wage Determination schedule by the
responsible contracting agency official would have removed this
issue as a source of controversy, according to Respondent.
Respondent concedes that it was acutely aware of the limited
range of duties allowed to mechanical laborers and Mr. Kardoley
also knew that some of his employees possessed skills qualifying
them for more demanding job classifications. Because of this, he
insisted that they only perform tasks falling within the
mechanical-laborer classification and told them that they were
hired only to perform mechanical-laborer work. He was further
motivated in this by his concerns for his workers' safety, which
could have been compromised if they were allowed to perform work
with which they were unfamiliar and which was not within their
classification. (TR 427)
Respondent's normal procedure when hiring new employees was to
explain to them their job classification in the wage determination
and also discuss with them the scope of their job duties and what
functions they were not allowed to perform. (TR 375)
However, Mr. Kardoley concedes that he was not able to give
each of his workers constant supervision, that some of these
workers willfully disobeyed his wishes and that lapses did occur in
which one or more workers performed tasks outside their job
classifications without Mr. Kardoley's authorization. On each of
these occasions, Mr. Kardoley admonished the workers involved, took
steps to prevent such disobedience of his orders in the future and
made appropriate adjustments to the wages paid to the employees.
However, according to Respondent, these lapses were never so
extensive as to change these workers' basic job classifications.
Furthermore, it makes little sense to reward these workers by
allowing them to exploit Mr. Kardoley's inability to constantly
monitor their activities and claim an entitlement to higher wage
payments on the basis of having willfully disregarded their
instructions not to perform other skilled work. Mr. Kardoley was
diligent in his efforts to limit these workers' activities to those
permitted by their job classification as shown by his testimony
that he prevented Dennis Banks from doing pipefitting work (TR 378,
413) and that he told Anthony Lell not to perform any pipefitting
work on contract no. GS-07P-90-VA-COOO2. (GX-9) Mr. Kardoley told
Dennis Hartley, who wished to upgrade his welding skills so as to
qualify for employment at Rocky Flats, not to weld (TR 375-376) and
finally, as noted above, resorted to sending Mr. Hartley to
Thornton to work on a non-government job to prevent him from
[PAGE 21]
welding. (TR-396) When, through deceptive and devious behavior,
these workers succeeded in working at tasks above their job
classification, they were paid at the appropriate higher wage rate,
according to Respondent's basic position.
The Administrator argues that these workers could not have
been mechanical-laborers since that job classification is not
contained in the Wage Determination schedule and that, therefore,
these workers must have been pipefitters, sheetmetal workers or
some other kind of skilled workers. The testimony received from
these workers themselves shows that by deception and disobedience
they may have occasionally performed some of these skilled jobs,
but that this skilled work was never predominant. The
Administrator's position is therefore clearly untenable. The Wage
Determination schedule does allow for several categories of
laborers and the only dispute should be over the question of which
category of laborer is most appropriate for the work that these
employees actually did, according to Respondent.
At the outset, I find and conclude that the five contracts
involved are covered by the DBA and CWHSSA, as the DBA requires
that "contractors and subcontractors shall pay all mechanics and
laborers employed directly upon the site of work, unconditionally
... the full amounts accrued at time of payment computed at wage
rates not less than those stated in the advertised specification"
40 U.S.C. §276a(a) and 29 C.F.R. §5.5(a)(1). The
totality of this closed record leads to the conclusion that
Respondent failed to pay its employees the rates required by the
contracts and applicable WDs.
Charles Plante's investigation of Respondent covered the time
period between August 22, 1988 and August 22, 1990. (TR 270) The
certified payrolls contained within GX 1 - GX 14 clearly show that
the misclassifications charged were for work performed within this
two year time frame.
I also note that Mr. Kardoley testified that, on all five
contracts at issue he, himself, performed either Sheet Metal of
Pipefitter work. (TR 409-10, 419) I accept the testimony of the
three union business managers that laborers never assist
either Sheet Metal Workers' or Pipefitters. The business managers
further stated that the large majority[4] of all tasks required by
the contracts at issue would be within the jurisdiction of the
Pipefitters' Union or Sheet Metal Workers' Union. No tasks on the
contracts would be performed by Laborers. (TR 140, 142, 191-4, 226,
223-247) Moreover, none of the five employees involved were
registered apprentices in either trade, and there is no Helper
[PAGE 22]
classification for either trade. (TR 410, 419-20) Accordingly,
since the five employees performed work on the five contracts at
issue, they must be paid as either Sheet Metal Workers or
Pipefitters. (TR 241) This is so even if they were not journeymen
and regardless of the employees' skill levels. 29 C.F.R.
§5.5(a)(1)(i). See also J.B.L. Construction Co., Inc.,
CCH Lab. L. Rep. 31,239 (1978); Matter of Titan Atlantic
Construction Corp.. CCH Lab. L. Rep. 31,238 (1978);
see also Dembling v. Framlau Corporation, 350
F. Supp 457 (D.C.PA. 1973), WAB Case No. 70-5 (April 19, 1971)
I find most persuasive the fact that not one witness, with the
exception of Mr. Kardoley, had ever used or heard of the
classification "Mechanical Laborer," and there simply is no
credible evidence that such term was widespread in the industry.
(TR 145, 161, 177, 247, 273, 319, 321, 351) Rather, all agreed
that the Group 3 subheading under the Laborer classification
referred to types of tools used by Laborers and that this
was not a separate classification, (TR 143, 146, 148-152, 247, 273,
322) I also find most persuasive the testimony of Mr. Doxtater,
the person responsible for the jurisdiction of the Laborers' union.
He is the person who has the greatest interest in ensuring that
other unions do not take work that is within his jurisdiction and
who has the greatest knowledge with regard to the type of work
claimed by the Laborers' union. As discussed above, when union
rates prevail in a WD, the Department accepts the union
jurisdictional lines. Fry Brothers Corporation, WAB Case
No. 76-6, at 17 (June 14, 1977). See also Tele-Sentry Security,
Inc., 86 DBA 33; 86 DBA 44 (Decision of the ALJ, Sept. 11,
1987), aff's, WAB No. 87-43 (June 7, 1989); Jos. J.
Brunetti Constr. Co., and Dorson Elec. & Supply Co., Inc., WAB
No. 80-9 (Nov. 18, 1982); and J.B.L. Constr. Co., 23 WH
Cases (BNA) 1064 (Decision of the ALJ, July 18, 1978). Normally,
the business agent of the union is consulted about jurisdictional
questions. (TR 153, 196-7) The business managers of all three
unions involved agreed that the work performed on the contracts
contained in GX 1 - GX 14 was the work of Sheet Metal Workers or
Pipefitters and was not the work of Laborers, even if classified as
"Mechanical Laborers." (TR 142, 191, 233, 246-7)
All witnesses agreed that they could tell from their review of
the contracts the types of tasks that would be required to fulfill
the contractual obligations. Although certain witnesses did
testify that they could not tell, from simply looking at the cover
sheets of the contracts, if the work would be performed by Sheet
Metal Workers or Pipefitters, they could tell that the work would
belong to one group or the other and that in no case would Laborers
be allowed to perform this type of work. (TR 246-7) On the
[PAGE 23]
contracts in which it was difficult to tell if the work would
belong to the Sheet Metal Workers or the Pipefitters, Mr. Plante
used the lower Pipefitter rate, giving Respondent the benefit of
the doubt. Moreover, the employees' testimony leads to the
conclusion that work performed on all contracts, except for GX 9,
was generally that of Pipefitters. Clearly, GX 9 related to work
which would be claimed by the Sheet Metal Workers' Union. (TR 176,
191)
Allen Stone and William Davis, independent contractors who
perform work of the type required by the contracts at issue,
reviewed the five contracts in question and testified that these
are the types of contracts on which either Sheet Metal Workers or
Pipefitters would perform those tasks. (TR 161, 164-5, 168-70, 175-
6) Both have a great deal of experience in their respective fields
and testified as independent witnesses, with no ulterior motive.
Thus, their testimony is most persuasive in resolving the issues
before me.
The great weight of the testimony clearly leads to the
conclusion that the WDs did not contain a "Mechanical Laborer"
classification and that the five employees performing work on these
contracts were required to be paid either the Sheet Metal Worker or
the Pipefitter wage rate, as listed in the WDs. The improper
classifications are clearly listed in the certified payroll
documents for each contract; thus, there is no question that the
employees were improperly classified, I find and conclude.
I simply cannot accept Respondent's reasons for failing to pay
the wage rates required by the contracts. Mr. Kardoley initially
attempted to shift the blame for the misclassifications by taking
the position that some contracting official had told him that it
was proper to classify his employees as Mechanical Laborers.
However, Margaret Miller, the only contracting official who
testified on behalf of Respondent, testified that she does not tell
a contractor what classifications to use and that she makes the
assumption that the contractors know what classifications are
proper, based on the contract and the WDs. (TR 340-1, 351-2)
While Ms. Miller was not sure what tasks would be performed by a
Mechanical Laborer, she knew that welding would be outside of the
tasks performed by Laborers. (TR 347, 351-3) Moreover, Ms. Miller
testified that she never did an in-depth analysis of the tasks
being performed by Respondent's employees. (TR 350)
Mr. Chesley, a witness called on behalf of Respondent, could
not recall discussing the term "Mechanical Laborer" at the
[PAGE 24]
preconstruction conference with Mr. Kardoley, but did testify that
he does not normally discuss work classifications with the
contractors. (TR 317-8) Mr. Chesley has not used the term
"Mechanical Laborer" and did not recall seeing it in any WD. (TR
319) In his Labor Standards Interview of Respondent's employees,
Mr. Chesley simply treated the term "Mechanical Laborer" as
equivalent to a Laborer. (TR 321) As noted above, Mr. Chesley
stated that the term Mechanical under the Group 3 Laborer
classification, only referred to the types of tools used by the
workers, and does not establish a separate classification. (TR 322)
Mr. Chesley also never performed any type of in-depth analysis of
the tasks performed by Respondent's employees, the types of tools
used by the employees, or of the applicable WDs. (TR 331-2)
While Mr. Kardoley attempted to blame the contracting
officials for the misclassifications, the hearing testimony clearly
leads to the conclusion that the contracting officials had no part
in choosing the classifications used by Respondent in the
performance of the contracts. Moreover, even if the contracting
officials had played a part in approving the use of incorrect
classifications, Ms. Miller testified that the contracting agency
cannot bind the DOL in these types of matters (TR 352) as the
Department is the final arbiter of DBA; Charles Plante also
testified that a contracting official cannot bind the DOL and that
if a contractor has questions about classifications, the questions
are to be referred to the Administrator. (TR 303, 311-12) 29
C.F.R. §5.13. See Labor Servs., Inc., WAB No. 90-14
(May 24, 1991), United Constr. Co., Inc., WAB No. 82-10;
AT&T Communications, et. al., CCH LLR WH Ad. Rulings,
¶32,149(WAB 1991); LTG Construction Co., et al., Case
Nos. 91-DBA-64/89/90/91/92/
93/94/95; 92-DBA-29/30/31/32 (Decision and Order of this
Administrative Law Judge, July 1, 1993); Arbor Hill Rehab.
Project, WAB No. 87-4 (Nov. 3, 1987); Warren Oliver Co.,
WAB No. 8408 (Nov. 20, 1984); Metropolitan Rehab. Corp., WAB
No. 78-25 (Aug. 2,. 1979); Tollefson Plumbing and Heating
Co., WAB No. 78-17 (Sept. 24, 1979) and Fry Brothers,
supra.
Mr. Kardoley also attempted to justify the misclassifications
by claiming that the employees were satisfied with their wages, had
accepted the wages throughout the duration of the contracts and, in
one case, that Dennis Hartley had entered into a settlement
agreement with regard to this matter. However, these arguments are
completely irrelevant. Even if the employees had agreed to the
incorrect wage rate, settlement agreements or waivers of this
nature are invalid. The correct WD rate must be paid "regardless
of any contractual relationship which may be alleged to exist
between the contractor and such laborers and mechanics." 29 C.F.R.
[PAGE 25]
5.5(A)(1); see also 29 C.F.R. 5.2(o). As the Supreme Court
has held regarding the payment of minimum wages under the Fair
Labor Standards Act, an employee cannot waive his rights under a
statute that serves the public interest. Brooklyn Savings Bank
v. O'Neil, 324 U.S. 697, 704 (1945). The DBA is a remedial
statute enacted for the benefit of workers rather than contractors.
Thomas J. Clements, Inc., WAB No. 84-12 (Jan. 25, 1985)
aff'g 82-DBA-27 (Decision of the ALJ, June 14, 1984).
See also L.T.G. Construction Co., supra at 16-20. A
contractor is not entitled to receive Davis-Bacon contracts as a
matter of right and an employer seeking the award of government
contracts undertakes to fulfill all the Act's obligations; any
other result would undermine the integrity of the DBA and its
remedial purposes as intended by Congress. Walsh v.
Schlecht, 429 U.S. 401, 411 (1977); United States v.
Binghamton Constr. Co., 347 U.S. 171, reh'g denied, 347
U.S. 940 (1954). Therefore, employees cannot waive their rights to
be paid DBA wages.
The evidence is overwhelming on this issue. Respondent
clearly misclassified the five employees involved as Mechanical
Laborers as there is no such job classification in the WDs. These
employees should have been classified as Pipefitters or Sheet Metal
Workers and paid the applicable wage rates. Respondent is clearly
liable for the back wages owing to the five employees due to the
misclassifications.
2. If Respondent did Misclassify its Employees on the
Contracts in Question, what Adjustments to the Wages Paid to these
Employees would be Appropriate.
In the event that this Administrative Law Judge should
conclude that Respondent's employees were misclassified, and I have
already done so in the preceding section, Respondent submits that
the Wage Determination schedule, as incorporated in these
contracts, gives the wage rates that would apply to their proper
classifications. Since it was never argued that even if these
employees were properly classified that they were not paid a wage
appropriate to that classification, the question of what should be
regarded as the prevailing wage is irrelevant.
However, according to the Respondent, if the definition of
"prevailing wage" should somehow be deemed to be of importance for
deciding this dispute, the Administrator interprets the words
"prevailing wages" to mean "union wages." The definition given in
the statute makes clear that union wages are not necessarily the
same as prevailing wages.
29 C.F.R. Section 5.5(1)(1)(i) provides that:
[PAGE 26]
"Such laborers and mechanics shall be paid the
appropriate wage rate and fringe benefits on the wage
determination for the classification of work actually
performed, without regard to skill, except as provided in
5.5(1)(4). Laborers or mechanics performing work in more
than one classification may be compensated at the rate
specified for each classification for the time actually
worked therein: Provided that the employer's payroll
records accurately set forth the time spent in each
classification in which work is performed."
The Administrator submits that union rates and union
classifications are the "prevailing wages" in this case, implying
that only union wages were taken into consideration. GX 15 and 16
- collective bargaining agreements - were admitted into evidence by
this Administrative Law Judge despite the Respondent's objection of
relevance, and should not have been admitted. Respondent again
points out that the collective bargaining agreement submitted was
effective beginning in June, 1990 and that this agreement cannot be
used as a reference for questions arising prior to that date. 29
C.F.R. Part 1, 1.2(a)(1) provides that the "prevailing wage" shall
be the wage paid to the majority of laborers or mechanics in those
classifications on similar projects in the area during the period
in question. In compiling wage rate information, the Administrator
obtains information from contractors' associations, labor
organizations, public officials and other interested parties,
reflecting wage rates paid to laborers and mechanics on various
types of construction in the area. Section 1.3(a) Thus, union
wages paid in the area are only a part of information considered in
determining the appropriate wage determination, according to
Respondent.
The collective bargaining agreements (GX 15, GX 16) were
admitted into evidence as those agreements are routinely obtained
by the Wage and Hour Division as part of its surveys of various
industries to establish the Wage Determinations. Those agreements
are relevant and material herein and the fact that those agreements
became effective in June of 1990 is no reason not to admit them as
the crucial questions herein are the misclassification of employees
and the appropriate wages due them in accordance with the WDs
applicable to the contracts.
I simply cannot accept Respondent's thesis that the union rate
is not the prevailing rate in the Wage Determinations. It is now
well-settled that the requirements of the CWHSSA are clear,"...the
[PAGE 27]
wages of every laborer and mechanic employed by any contractor or
subcontractor in his performance of work on any contract ... shall
include compensation, at a rate not less than one and one-half
times the basic rate of pay, for all hours worked in excess of
forty hours in the work week." 40 U.S.C. §328(A); 29 C.F.R.
§5.5(b)(1).
Overtime violations were discovered on two of the five
contracts involved, GX 1 and GX 12. The certified payrolls for
these contracts show Dennis Banks working over 40 hours in a work
week, while not receiving the correct overtime pay. (GX 2, GX 14)
The incorrect overtime rate that was paid is a direct result of the
misclassification of Dennis Banks, as already found above. Charles
Plante calculated the overtime pay due Dennis Banks by subtracting
the amount paid from the amount that should have been paid, based
on the proper Pipefitter classification. (TR 275, 288) Dennis
Banks is owed $70.98 on GX 1 and $14.87 on GX 12. (GX 17)
The back wages owed in this matter are straight forward and
have been computed based on the certified payrolls provided by
Respondent. For every hour that Respondent's employees worked on
the five contracts involved, the employees are owed the difference
between the Laborers' rate ($12.50) and either the Pipefitter's
($21.20) or Sheet Metal Worker's ($21.80) rate. For each contract
and for each employee, Charles Plante computed the difference
between the rate paid and the rate owed and multiplied this figure
by the number of hours worked by each employee. (TR 274, 277, 279-
81, 285-8) Mr. Plante credited additional amounts paid by
Respondent and subtracted these amounts from the back wages owed.
(TR 277, 280, 287) The amount owed each employee on each contract
is clearly set forth above, in the factual discussion of each
contract.
Four of the five employees, to whom back wages are owed,
testified at the hearing, describing the various tasks they
performed on each contract. Moreover, the certified payrolls
clearly set forth which employees worked on each contract and the
particular classification listed for each employee. All five
employees are owed the back wages found above. There is no
requirement that every employee testify. Apollo Mechanical
Inc., WAB Case No. 90-42 (March 13, 1994); Permis
Construction Corp. and Trataros Construction Corp. WAB
Case Nos. 87-55 & 87-56 (Feb. 26, 1991) (both construing the
principles of Anderson v. Mt. Clemens Pottery, Co., 328 U.S.
680 (1946) to permit an award of back wages to non-testifying
employees based upon the representative testimony of a small number
of employees). Once a pattern or practice has been established,
the burden shifts to the Respondent to rebut the
[PAGE 28]
occurrence of violations. Permis Construction Corp.,
supra at 7. Moreover, Respondent did not argue that William
Copeland's situation was different in any way from that of the four
testifying employees. William Copeland worked on the contract set
forth in GX 5, was listed as a Mechanical Laborer and was paid $15
per hour as a Leadman. Clearly the applicable WD contains no such
classification and Mr. Copeland is entitled to back wages for the
misclassification, just like the four testifying employees.
Back wages are owed to five employees in the total amount of
$12,797.54 ($12,711.69 for DBA violations and $85.85 for CWHSSA
violations). The back wages owed to each employee are clearly set
forth above. The back wages owed on each contract are also set
forth in GX 17, the summary of the violations.
3. Whether Dennis Hartley Waived his Right to Wages Owed Him
When He Entered into a Settlement Agreement with Respondent
The Administrator cites Brooklyn Savings Bank v.
O'Neil, et al., 324 U.S. 697, 65 S.Ct. 895 (1945) as
dispositive of the issue of whether the Settlement Agreement
voluntarily entered into between Respondent and Mr. Hartley waives
Mr. Hartley's right to claim damages for wages owed to him because
of alleged misclassification.
In Brooklyn Savings, the U.S. Supreme Court held that
the release signed by the employee was not given in settlement of
a bona fide dispute between the parties with respect to
coverage or amount due and that the release constituted a mere
waiver of the employee's right to liquidated damages. In
Brooklyn Savings, the Supreme Court found that the parties
knew that more than $500.00 was due at the time the employer
tendered the $500.00 to the employee in return for a comprehensive
release. Also, the fact that the employee refused to accept
payment suggested to the Court that there was no valid settlement.
Respondent submits that the issues and facts in Brooklyn
Savings are distinguishable from the case at hand. When
Respondent settled the claim with Mr. Hartley for $500.00, there
was a genuine dispute as to the amount of wage payments owed.
Because the Respondent learned that Mr. Hartley, without his
consent or knowledge, had been welding on fittings that were
eventually reused in the heating system, Respondent decided that it
was reasonable to believe that some monies were indeed owed and
entered into this Settlement Agreement in satisfaction of these
obligations.
Respondent further submits that allowing Mr. Hartley to remain
[PAGE 29]
a party to this dispute would reopen matters covered by his
Settlement Agreement with the Respondent, on which a full and final
resolution had been reached, and would be tantamount to permitting
a judicial breach of this agreement. The terms of the Settlement
Agreement, showing the comprehensive nature of its coverage, were:
"Due to an agreement reached between myself, Dennis
Hartley, and Joe W. Kardoley, the agent for Foremost
Mechanical Sys. Inc., I now, freely and voluntarily, wish
to rescind my complaint, lodged against the
aforementioned, Company."
"The Complaint which originated while I was employed
by Foremost Mechanical Sys. Inc. and which pertains to
the above listed subject, and while working on the above
captioned Government contracts, has been resolved to my
complete satisfaction."
"Consequently, I now wish to consider this matter
completed and closed."
Mr. Hartley accepted payment and signed this agreement and had
his signature notarized on May 10, 1990. The terms of this release
show that Mr. Hartley accepted this $500.00 as the best estimate of
all monies owed to him. The parties understood themselves to be
entering into an agreement in which Mr. Hartley declared the matter
resolved to his complete satisfaction and that the parties might be
permitted to regard the matter as completed and closed.
The settlement agreement was made as a result of a bona
fide dispute between the two parties, in consideration of a
bona fide compromise and settlement. There is nothing in
the Davis-Bacon Act to prevent the effective operation of such an
agreement upon the claim for prevailing wages. The Davis-Bacon Act
does not disallow an employee from waiving his rights and
Respondent submits that Mr. Hartley is bound by that Settlement
Agreement, should be dismissed as a party to this proceeding and is
not entitled to any additional amounts herein.
However, as already noted above, all employees of a contractor
must be paid the rate(s) specified in the Wage Determination as the
DBA is a remedial statute enacted for the benefit of workers rather
than contractors. Thomas J. Clements, Inc., supra; L.T.G.
Construction Co., supra at 16-20. An employee cannot waive
his/her right to receive the appropriate WD rate because any waiver
thereof would frustrate the purposes and undermine the integrity of
the DBA and the remedial purposes intended by Congress.
Brooklyn Savings
[PAGE 30]
Bank, supra at 704; Walsh v. Schlecht, supra at 411.
The correct wage rate must be paid "regardless of any contractual
relationship which may be alleged to exist between the contractor
and such laborers and mechanics." 29 C.F.R. § 5.5(a)(1).
Thus, Mr. Hartley is entitled to the additional amounts due
him as I find and conclude that the Settlement Agreement is not
binding herein. However, Respondent is entitled to a credit for
that payment made to Mr. Hartley.
4. Whether or not the Actions of Respondent were
Sanctioned by the Contracting Officers and its Agents such that
Respondent Reasonably Relied on Government Agencies with Regard to
the Classification of Mechanical-Laborer in Classification of Its
Employees?
The Respondent claims the defense of estoppel in that it
relied to its detriment upon the temporary absence or inaction of
government notification of any violation, that the Department is
estopped from claiming that Respondent improperly used the
classification of "mechanical-laborer" because the contracting
officers themselves used the very same term in their correspondence
with him (RX 5, 6), and because they did not object to the
classification when Respondent submitted the certified payroll
sheets suggests that Respondent had sufficient reason to rely on
this classification.
According to Heckler v. Community Health Services of
Crawford County, Inc., 467 U.S. 51 (1984), the party claiming
estoppel must have relied on its adversary's conduct in such a
manner as to change his position for the worst and that reliance
must have been reasonable in that the party claiming the estoppel
did not know nor should it have known that its adversary's conduct
was misleading.
The wages the Respondent paid to each employee on the five
government projects were approved by each project's contracting
officers. Respondent submitted certified weekly payroll reports on
the contracts required; these reports showed each employee, his
work classification, payroll deductions and the net amount paid
each worker. The contracting officer on each project determined
that the Respondent had complied with all labor standards and
provisions which applied to the contracts; each project went
through the final inspection; each contract was certified
completed. According to Reorganization Plan No. 14 of 1950, the
contracting agency "retains the primary responsibility for
investigating violations and enforcing the Davis-Bacon Act.
"See[PAGE 31]
Universities Research Association v. Coutu, 91 LC Section
33,992450 U.S. 754, 759 n.5(1981) SeeRobert v.
Fitzgibbon, a sole Proprietor dba Shamrock Five Construction
Company, Plaintiff v. Raymond J. Donovan, Secretary of Labor,
United States Department of Labor, et al., Defendants, 102 LC
46,619 (January 18, 1985). During the contract term and during
previous contracts Mr. Kardoley had entered into with the federal
government, neither the department of Labor nor the contracting
agencies ever had cause to contact him concerning problems with the
payrolls that were submitted or with regard to any labor
violations.
Mr. Kardoley relied on the Wage Determinations as incorporated
in the contracts, and the contract language itself. He carefully
reviewed all documents thoroughly to ensure he was in compliance,
according to Respondent.
Respondent also submits that the Labor Standards interviews
also suggest that Respondent was complying with the law. With the
exception of the second interview of Anthony Lell, Respondent was
provided no indication that he was in violation of the law. This
was only an apparent violation manufactured by Mr. Lell out of
considerations for his own personal gain in light of the fact that
his employment with the Respondent was due to end.
29 C.F.R. 5.2 defines "contracting officer" as a "person with
the authority to enter into, administer and/or terminate contracts
and make related determinations and findings. The term includes
certain authorized representatives of the Contracting Officer
acting within the limits of their authority as delegated by the
Contracting Officer."
Pursuant to 29 C.F.R. Section 5.6(a)(3), the Federal Agency
shall cause such investigations to be made as may be necessary to
assure compliance with the labor standards clauses required by 5.5
and the applicable statutes listed in 5.1. Investigations shall be
made of all contracts with such frequency as may be necessary to
assure compliance. Such investigations shall include interviews
with employees, which shall be taken in confidence, and
examinations of payroll data and evidence of registration and
certification with respect to apprenticeship and training plans.
In making such examinations, particular care shall be taken to
determine the correctness of classifications and to determine
whether there is a disproportionate employment of laborers and of
apprentices or trainees registered in approved programs.
29 C.F.R. Part 1, 1.6(a)(1)(2)(b), which deals with the
procedures for predetermination of wage rates, also provides that
[PAGE 32]
"contracting agencies are responsible for insuring that only the
appropriate wage determinations are incorporated in bid
solicitations and contract specifications and for designating
specifically the work to which such wage determinations will
apply." As stated above, Respondent did not receive any
notification during the performance of the contracts in 1988 or
1989, or during the previous contracts, that he was improperly
misclassifying his employees or that he was interpreting the wage
determinations incorrectly.
Respondent essentially submits that the consequences of the
Administrator's actions were detrimental to the Respondent in that
monies to which it was entitled have been withheld for the last
five years. Respondent completed the work for which the government
had contracted. Payment was recommended by the inspection officer.
There was no indication that Respondent did not perform
satisfactorily. For a small business such as Respondent's, $12,000
represents a substantial sum of money whose loss represents a
significant reduction in revenues, preventing him from meeting his
operating expenses and other financial obligations, or expanding
his ability to provide services to his customers.
This withholding also prevents him from bidding on further
contracts with the federal government. Respondent's reliance was
reasonable. If a contractor cannot rely on the contracting
language or the contracting officers in charge of administering the
contract, then enforcement of the contract provisions becomes a
matter of selective enforcement -- an arbitrary and capricious way
of administering government contracts -- which prevents the
contractor from ever being certain that he is in compliance with
the terms of his contract and applicable law, and in which the
contractor's liability becomes unlimited and unknown. Citizens
dealing with the government are entitled to some minimum standard
of decency, honor, and reliability. This standard cannot be met
when two arms of the government claim concurrent jurisdiction and
the binding acts of one can be undone by the other upon some other
interpretation of the same facts. "Men naturally trust their
government, and they ought not to suffer for it, according to
Respondent." Menges v. Dentler, 33 Pa.495, 500 (1859)
Respondent has used the term "mechanical-laborer" ever since
he was awarded his first contract with the federal government. At
the start of each contract, the contracting officer was made aware
of the number of employees he was hiring and their job
classifications. There was no objection at that time to the use of
the mechanical-laborer classification. Respondent, in good faith,
used laborers to perform mechanical-type work. It was not until
the Department of Labor conducted their investigation that
[PAGE 33]
Respondent was told that the Department had determined that there
was no such classification as "mechanical-laborer." The facts in
the instant case are distinguishable from the facts in
Heckler. In the present case, Respondent has lost a legal
right to monies owed to him for work that was performed for the
government and, as a result, has suffered a loss in income and a
loss in status with the government. When a private party is
deprived of something to which it was entitled of right, it has
surely suffered a detrimental change in its position. Id. at
61.
Mr. Kardoley justifiably relied on his past experiences in all
of the previous contracts he had entered into with the federal
government and they reasonably became the basis of his performance
and/or procedures for completing his business under the present
contracts. Because he had not been told that job classifications
used in these previous contracts were incorrect or that the
certified payroll records were incomplete or inaccurate, he applied
the mechanical-laborer classification in the same manner as he had
done before. Testimony by union representatives attesting that
there was no such classification as "mechanical-laborer" should be
taken as relevant only to union construction projects, which in the
State of Colorado would be a substantial minority of all
construction projects, and this testimony can therefore be of only
limited value in deciding the case at hand, according to
Respondent.
Respondent further submits that the evidence shows that the
contracting agencies, through the contracting officer on each
contract, are charged with enforcing contractor compliance with the
provisions of the Davis-Bacon Act. The facts also show that the
Davis-Bacon Act as administered here by the Department of Labor on
the subject of this dispute differs significantly from the Davis-
Bacon Act administered by the contracting agencies. In effect, the
Respondent is being required to answer to two different masters on
the same questions and the Department of Labor gives no deference
to the acts of the contracting agencies. The Department of Labor
has not said how a contractor with no specialized knowledge of
bureaucratic procedures or the basis on which overlapping
jurisdiction has been delegated or shared between different
agencies is to know that when a contracting officer directs him to
take action to achieve compliance with the Davis-Bacon Act, this
officer is not the final authority on the matter and that
compliance with the officer's directive is no guarantee of
compliance with the Davis-Bacon Act. If the contracting agencies
are charged with enforcing the Davis-Bacon Act but have no
authority to certify the contractor's compliance with its
provisions, then without a long and tedious process of referring
[PAGE 34]
all questions decided by the contracting officer for review at the
Department of Labor the contractor can never know where he stands.
This is ridiculous, according to Respondent. If the contracting
agency is charged with enforcing the Davis-Bacon Act, and regulates
the contractor's behavior with respect to the Act, the contractor
is entitled to assume that the contracting officer speaks with some
authority and that directives from this officer need not be
referred to some higher authority.
As already noted above, Ms. Margaret Miller, the only
contracting official who testified on behalf of the Respondent,
testified categorically that she does not advise a contractor as to
what employee classifications should be used as she assumes that
the contractor, as a knowledgeable industry person, knows what
classifications are proper, based on the contractual terms and the
Wage Determinations. While Respondent raises the doctrine of
collateral estoppel in defense of its actions, this closed record
conclusively establishes that neither Ms. Miller nor Mr. Chesley
nor anyone made an in-depth analysis of the tasks and
classifications of Respondent's employees until the investigation
herein by Mr. Plante led him to conclude that the DBA and CWHSSA
were violated by Respondent, and he so advised Respondent.
Even assuming, arguendo, that someone at the
contracting agency had advised Mr. Kardoley that he could use the
term "Mechanical Laborer," that advice is not binding upon the
Administrator as the Administrator, as the duly appointed
representative of the Secretary of Labor, is the final arbiter of
the DBA, the CWHSSA and the implementing regulations. Thus, a
contracting official cannot bind the Department and a contractor
should refer to the Administrator any and all questions about any
of the terms in the contract. In this regard, see LTG
Construction Co., et al., Case Nos. 91-DBA-
64/89/90/91/92/93/94/95; 92-DBA-29/30/31/32 (July 1, 1993), wherein
I concluded that Collateral Estoppel and Laches, in those
circumstances, did not run against the Administrator. In LTG
Construction Co., I stated, beginning on page 31, as follows:
"Plaintiff submits that he is not estopped from
obtaining back wages for employees herein. Respondents
argue for such estoppel on the basis of the HUD's alleged
misrepresentation in its handbook (CX 38) and in its
September 19, 1989 letter to PHA. (CX 42) However,
Plaintiff argues that the record shows that there are no
factual or legal merits to LTG's estoppel position
because estoppel is irrelevant to LTG's conduct.
[PAGE 35]
"The basic principles of the estoppel doctrine are
that a party claiming estoppel must have reasonably
relied upon and/or changes position due to the conduct of
the other party. See Heckler v. Community Health
Services of Crawford, 467 U.S. 51, 104 S. Ct..2218,
2224-2225 (1984), and Precious Metals Assoc. v.
Commodity Futures, 620 F.2d 900, 908-909 (1st Cir.
1980). In the instant case, LTG had prepared its project
budget well before HUD issued CX 42. Under that budget,
Veazie Street was considered a non-prevailing wage
workplace. Moreover, during the summer of 1989, Lloyd
Griffin indicated to HUD Providence officials that Veazie
would serve independent builders. (See Azar, TR
1854-1856, 1893). However, there were no independent
recipients of Veazie's products, there were no contracts
with other companies and virtually one hundred percent of
Veazie's product went to the Turnkey project, according
to Plaintiff. (See Poirier, TR 1451-1456; Katz,
TR 2320-2321; Goodwin, TR 315)
"The Complainant submits that these facts establish
that LTG, in intentionally underpaying employees, did not
do so in reliance upon HUD. The handbook, CX 38, and the
letter, CX 42, merely restate the legal principles set
forth in 29 C.F.R. § 5.2. In no way does the
handbook or CX 42 state that the DBRA does not apply to
an off-site workplace of which one hundred percent of the
products serve a federally-funded project. Plaintiff
posits that LTG determined its course on its own long
before receipt of CX 42, and not only made inaccurate
statements to HUD about Veazie's purposes and activities,
but in fact did what it had always planned to do
at the Veazie Street location. Under these facts,
estoppel cannot apply, for there was no reasonable
reliance nor any change in position. See, e.g.,
Precious Metals, supra, at 620 F.2d 908.
"Moreover, according to Plaintiff, the estoppel
doctrine does not apply even if HUD's conduct is viewed
in a light most favorable to LTG and Mr. Griffin.
"The courts have had occasion throughout the years
to address claims of estoppel against the federal
government. From these cases have arisen well-settled
principles holding that even federal employees' neglect
of duty will not bar enforcement of the public interest
and that a party who deals with a federal agency,
[PAGE 36]
particularly a party already knowledgeable in the subject
area, has a duty to ascertain the law and to ensure that the
federal agents with whom he/she is dealing had the binding
authority sought by the party claiming estoppel. In Utah
Power & Light Co. v. United states, 243 U.S. 389 (1916),
the plaintiff, like LTG, had asserted that federal agents knew
what it had been doing, did not object and impliedly
acquiesced. The Court held that laches or neglect of duty by
federal officers is no defense to an action to enforce the
public interest.
"This same principle has been applied in a variety
of contexts. For example, in Heckler v. Community
Health Servs. of Crawford, 467 U.S. 51, 104 S. Ct.
2218 (1984), the Court held that those who seek public
funds must act with scrupulous regard for legal
requirement, are expected to know the law, may not rely
on conduct of government agents contrary to law and must
ascertain that he with whom they deal stays within the
bounds of authority. Id., at 104 S. Ct. 2225-
2226.
"The U.S. Supreme Court, in a case remarkably
similar to this case, held that an entity which
participated in a federal program had a duty to
familiarize itself with applicable legal requirements,
and should have sought advice from the Secretary of
Health and Human Services rather than relying on a
conduit and being satisfied to rely on that conduit's
judgment. Id. at 2226. Thus, LTG should have
familiarized itself with Part 5, which was applicable
under the PHA contract, and should have sought advice
from the Secretary of Labor. As LTG and its affiliated
corporations, PGG and GHA, and Lloyd T. Griffin, Jr.,
their principal, did not seek such advice, they cannot
now raise an estoppel defense in an attempt to defeat
these proceedings, according to Plaintiff.
"The First Circuit Court of Appeals has also
addressed the estoppel issue. In Precious Metals
Assoc. v. Commodity Futures, 620 F.2d 900 (1st Cir.
1980), the court held that where an entity went ahead
with an activity of doubtful legality, it could not
assert that the silence of the enforcement authority
provided a basis for estoppel (or laches). Id. at
909-910. This was particularly so in the face of clear
regulations prohibiting the conduct at issue. The court
condemned the attempt to "cover" uncertain legality by
inquiring
[PAGE 37]
into its status while going ahead with the conduct itself.
Ibid.
"The courts have held that the mistakes of one
agency cannot estop another from enforcing the law. The
salient cases exemplify this principle. In Graffv. C.I.R., 673 F.2d 784 (5th Cir. 1982), the court
held that the Internal Revenue Service was not equitably
estopped from collecting tax deficiencies because HUD
officials had made incorrect representations of law. The
concurring opinion is on point here and Judge Brown
stated at 785-786:
Graff also argues that since HUD, putting
visions of sugar plum fairies and hefty tax
deductions in his head, enticed him to enter
into this project, the Government is now
estopped to deny him those deductions.
We agree entirely with the tax court that no
estoppel applies. In U.S. v. Stewart,
311 U.S. 60, 61 S. Ct.. 102, 85 L.Ed. 40
(1940), the only case directly on point cited
by either side, the Supreme Court declined to
estop the Commissioner from taxing income on
federal farm loan bonds, although the Farm
Loan Board had advertised that the bonds were
tax-exempt. The Court reasoned that
determinations by the Board in an area well
beyond its authority could not bind the IRS,
the only arm of the government charged with
administration of the tax laws. That holding
governs here. Whatever the conduct of the HUD
officials in an area of the law in which they
had neither statutory responsibility nor
expertise, their mistaken assessment of the
tax effect of the interest reduction payments
cannot bind the Commissioner. One simple
solution presented itself to Graff: make
further inquiries. Either a lawyer or the IRS
could have reviewed the proposal. Either
would, no doubt, have noticed and pointed out
the serious tax problems involved. Just as
the prospective purchasers of the Brooklyn
Bridge should seek another opinion before
acting, so graff, receiving tax advice that
quite literally was too good to be true,
should have looked before he leaped. With
[PAGE 38]
these comments added, I concur.
"The Supreme Court, in the case cited by Judge
Brown, U.S. v. Stewart, 311 U.S. 729, 61 S. Ct.
390 (1940), had made it clear that where an agency (Farm
Board) makes unauthorized representations in printed
circulars, such action cannot estop the government from
enforcing the law even by an affirmative undertaking to
waive or surrender a public right. Id. at 61 S.
Ct. 108. Also see U.S. v. Ven-Fuel, Inc., 758
F.2d 741, 761 (1st Cir. 1985), where the court held that
federal carelessness did not give rise to estoppel where
the proponent of estoppel did not review applicable
regulations. Moreover, in Falcone v. Pierce 864
F.2d 226, 228-231 (1st Cir. 1988) the court held it would
not, in effect, rewrite a federal contract absent
reasonable reliance by the private party upon misleading
statements. The court also held that where a longtime
participant in federal housing programs had actual notice
of requirements and failed to have an attorney review the
governing legal requirements, estoppel would not apply.
"Plaintiff further submits that even where a federal
agent has acted beyond the scope of authority, the United
States is not estopped from implementing the law.
See, e.g., Urban Data Systems, Inc. v. U.S., 699
F.2d 1147 (Fed. Cir. 1983); U.S. v. One Buick Riviera
Auto, 560 F.2d 897 (5th Cir. 1977); Walls v.
Mississippi State Dept. of Public Welfare, 730 F.2d
306 (5th Cir. 1984). See also Donovan v. Daylight
Dairy Prods., Inc., 102 CCH L.C. ¶ 34,616 at pp.
46,489-46,590 (D. MA), aff'd 779 f.2d 784 (1st
cir. 1985), where the court held that where an employer
has misinterpreted the advice of a compliance officer, it
has no "reliance" defense and that, moreover,
representations of a line enforcement official do not
bind the Department of Labor.
"Plaintiff also posits that representatives of HUD
did not mislead LTG respecting whether or not Veazie
Street was subject to the DBRA because the HUD Handbook
and CX 42 state that an off-site facility would be
subject to the DBRA if it were "dedicated exclusively, or
nearly so, to performance of the (federally-funded)
contract or project." These statements are consistent
with 29 C.F.R. 5.2.(a) (2). Thus, HUD did not mislead
LTG as to LTG's DBRA obligations. Rather, HUD simply
restated the law, according to Plaintiff's thesis.
[PAGE 39]
"That LTG may have interpreted the handbook or the
letter to infer that Veazie Street work was not DBRA work
does not insulate LTG from back wage liability. LTG did
not consult either HUD's general counsel or any
Department of Labor office respecting its Veazie-related
obligations. (See, e.g., Poirier, TR 145-146)
Had LTG contacted the Department of Labor, LTG could have
learned that a prefabrication plant used in the
development of a project, particularly a plant (1)
located in close proximity to the housing sites, (2)
which was located and operated wholly with reference to
the project and, (3) the products of which were dedicated
solely to the project, see Goodwin, supra,
was subject to the prevailing wage rules of DBRA.
"Plaintiff argues, in the alternative, that even if
HUD misled LTG, the Department of Labor is not estopped
from obtaining back wages.
"Assuming, arguendo only, that HUD's letter,
handbook, and alleged knowledge of the project budget and
the Veazie Street operations constituted de facto
advice or acquiescence in LTG's understanding or belief
that Veazie work was DBRA-exempt, the Plaintiff may
nevertheless obtain back wages because the public
interest may not be sacrificed to the interests of a
private party and because the purposes and aims of the
DBRA cannot be subordinated to LTG's interests, even if
HUD had misled LTG.
"In summary, Plaintiff argues that the law is plain
and well-settled, that the foregoing estoppel analysis
also applies to the back wage issues in the context of
cleaners, "owner-operators," independent subcontractors
and payment of subcontractor's principals. The HUD
Handbook and any HUD (or PHA) advice are similar to the
Farm Board's circulars in Stewart or the sugarplum
fairies in Graff. LTG had no right to rely upon
them and it cannot now cite them as a basis to deny money
owed to those who worked on the project. LTG should have
read its own contract and reviewed or sought advice as to
Part 5, according to Plaintiff.
"On the other hand, Respondents strenuously argue
that Plaintiff should not prevail herein because the
[PAGE 40]
claims are barred by equitable estoppel.
"Estoppel acts to bar a party from asserting an
otherwise legitimate claim because conduct or
representations of that party have caused the recipient
to act in such a way that to enforce the legitimate claim
would produce undue hardship or an unjust result. The
essence of estoppel is to prevent a party from asserting
a claim that would otherwise be appropriate. While
Plaintiff asserted against the government, Respondents
argue that this is simply an inaccurate statement of the
law. The First Circuit Court of Appeals, in two
opinions, has reversed District Court cases founded on
the concept that there could be no estoppel against the
government and has acknowledged the concept. Best v.
Stetson, 691 F.2d 42 (1st Cir. 1982); Akbarian v.
Immigration & Naturalization Serv., 669 F.2d 839 (1st
Cir. 1982).
"The Respondents distinguish a case cited by
Complainant, of Heckler v. Community Health Servs. of
Crawford County, Inc., 457 U.S. 51 (1984), and point
out that the Court found that the facts did not present
even the usual situation for the application of the
principles of estoppel and thus it declined, in these
important words, to express an opinion on whether there
could be estoppel against the government.
Petitioner [a governmental agency] urges us to
expand this principle into a flat rule that
estoppel may not in any circumstances run against
the government. We have left the issue open in the
past and do so again today. Though the arguments
the government advances for the rule are
substantial, we are hesitant, when it is
unnecessary to decide this case, to say that there
are no cases in which the public interest in
ensuring that the government can enforce the law
free from estoppel might be outweighed by the
countervailing interest of citizens in some minimum
standard of decency, honor and reliability in their
dealings with the government.
Heckler, 467 U.S. at 60-61.
"Respondents reject Plaintiff's basic position that
there is no estoppel against the government because the
[PAGE 41]
above-quoted language has been interpreted to support the
proposition that there are, in fact, situations in which
estoppel can be applied against the government. Davis,
Administrative Law in the 80's, Supplement to
Administrative Law Treatise, Chapter 20, p. 390 (1989).
"The application of the concept of estoppel against
the government requires a three-part inquiry, according
to Respondents: (1) Has there been conduct by a
governmental agent or entity that has induced reasonable
detrimental reliance by a private party; (2) Was the
governmental conduct (or representation) authorized; and
(3) If the governmental conduct was unauthorized, what
interests of the government will be affected and do those
interests outweigh the injustice that will be imposed
upon the private party as a result of the government
action. Note Equitable Estoppel of the
Government, 79 Colum. L. Rev. 551, 558 (1979) cited
in Akbarian v. Immigration & Naturalization Serv,
supra...
"Respondents also argue that they reasonably relied
upon the advice and representations of HUD officials,
that they engaged in good faith discussions and
negotiations with the local HUD and PHA officials,
beginning with initial bidding process and that
Respondents were never given the slightest impression
that HUD officials had no authority to provide the
opinions and advice given to Respondents. The
Respondents relied upon the HUD officials because "there
is no doubt that HUD as the contracting agency has the
initial responsibility for the administration of these
programs." Respondents relied upon the HUD officials
from September of 1989 to September 29, 1992, at which
time they learned, to their extreme detriment, that the
Department of Labor has the ultimate power of
interpretation and enforcement of DBRA. Mr. Griffin has
been constructing low-income housing in the Providence,
Rhode Island area for almost twenty years and he always
looked to the local HUD office for answers to his
questions or concerns. Respondents posit that there "is
not a single piece of evidence to suggest that Mr.
Griffin was or should have been aware that the Department
of Labor had a different position than that directed by
HUD."
"Respondents also argue that the denial of estoppel
(1) would result in a financial windfall to "private,
[PAGE 42]
non-governmental parties while potentially increasing
government cost in implementing (HUD's) housing goals," (2)
would ignore and frustrate HUD's governmental objectives and
directives in maximizing the availability of affordable
housing for low-income people and in providing employment
opportunities for community residents, some of whom may have
behavioral problems, (3) would produce an unjust result and a
financial burden on Respondents because Mr. Griffin negotiated
and budgeted the Turnkey Project on the basis of his
discussions with the local issues of HUD and PHA and (4) would
effectively put out-of-business the firm providing most of the
low-income housing to the City of Providence.
"Respondents also submit that it is contrary to
every equitable concept that the Plaintiff may change and
modify those understandings by and between Respondents,
PHA and HUD. Respondents, in asking that Plaintiff's
claim for back wages be completely denied, quote the
words of Justice Stevens in Heckler, supra, that
citizens have an interest". . . in some minimum standard
of decency, honor and reliability in their dealings with
the government." Heckler v. Community Health Servs.
of Crawford County, 456 U.S. at 60-61, 104 S. Ct.
2218 (1984).
"On this issue, I accept the Plaintiff's position
that the estoppel doctrine does not apply against the
plaintiff based on well-settled legal principles that
laches or neglect of duty by federal officers or
employees is no defense to an action to enforce the
public interest embodied in federal statutes. Heckler
v. Community Health Servs. of Crawford, 467 U.S. 51
(1984); Utah Power & Light Co. v. United States,
U.S. 389 (1916).
"Moreover, mistakes of one agency cannot estop
another from enforcing the law. See, e.g., Graff v.
C.I.R., 673 F.2d 784 (5th Cir. 1982)(the IRS is not
equitably estopped from collecting tax deficiencies even
though the taxpayer had followed incorrect
representations of law made by HUD officials).
Furthermore, where another federal agency makes
unauthorized representations in printed circulars, such
action cannot estop the government from enforcing the law
even by an affirmative undertaking to waive or surrender
a public right. U.S. v. Stewart, 311 U.S. 60
(1940) (the Supreme Court declined to sop the IRS from
taxing income on federal farm loan bonds, although the
Farm Loan Board had advertised that the bonds were tax-
exempt). It has
[PAGE 43]
also been held that even where a federal agent has acted
beyond the scope of authority, the United States is not
estopped from implementing the law. Walls v. Mississippi
State Dept. of Public Welfare, 730 F.2d 306 (5th Cir.
1984).
"This Administrative Law Judge, in concluding that
laches and estoppel are not applicable herein against
Plaintiff, also accepts Plaintiff's thesis that Mr.
Griffin and his affiliated firms did not reasonably rely
upon and/or did not change position due to the conduct of
HUD officials as LTG had initially prepared budget
estimated based on the assumption that Veazie Street was
DBRA-exempt. It is obvious that the project was
seriously underbid and that, after PHA added additional
requirements for each unit, various "loopholes" were
discovered and Respondents thereafter took advantage of
the provisions relating to subcontractors, independent
contractors and the cleaning issue.
"Moreover, while Mr. Griffin had made plans to use
components and sections fabricated at Veazie Street to
serve other independent customers, these plans were
speculative and preliminary and cannot be used to justify
payment of wages lower than the applicable prevailing
wage as virtually all of the products built at Veazie
Street were dedicated to the Turnkey Project.
"Plaintiff submits that HUD did not mislead LTG with
reference to Veazie Street, independent subcontractors,
owner-operators or on the cleaning issue.
"I agree. Mr. Dziok's September 19, 1989 letter (CX
42) is merely a restatement of the law; it is in response
to a specific request by the PHA and actually deals with
the Turnkey Project. That advice was passed on to Mr.
Griffin and he acted in accordance with that information.
However, the advice he was given relates to bona fide
independent contractors, subcontractors, owner-operators
and independent firms, not an affiliated corporation
performing the cleaning work in an attempt to evade the
DBRA.
"Therefore, on the issue of back wages, I agree with
Plaintiff that the public interest may not be sacrificed
to the interests of a private party as the purposes and
aims of the DBRA cannot be subordinated to Mr. Griffin's
interests." LTG Construction Co., et al., supra
at pp.
[PAGE 44]
31-40.
In view of the foregoing, I find and conclude that the
doctrines of laches and Collateral Estoppel are not available as a
defense herein by the Respondent.
5. Whether the Department of Labor Violated Respondent
Foremost's Procedural Due Process Rights by Failing to Follow
Requirements under 29 CFR Part 5, 6 and 7.
The length of time between the alleged unlawful labor and
employment practices, their investigation and demand for a hearing
is unreasonable and unconscionable, and such delay by the
Department of Labor resulted in injury and prejudice to Respondent.
The contracting officers failed to refer any disputes on
classifications and wage rates to the Administrator of the Wage and
Hour Division in accordance with agency procedures for
determination. Pursuant to the Contract Disputes Act of 1978 (41
U.S.C. 601-613),(e) for Contractor claims of $50,000 or less, the
Contracting Officer must, if requested in writing by the
Contractor, render a decision within 60 days of the request.
Respondent failed to receive a timely response to any of his
inquiries.
The Respondent was first notified by letter dated February or
March, 1990 that it was being investigated for labor violations.
It responded denying any wrongdoing. For the next several years,
the Department of Labor subjected Respondent to numerous
interviews. More than three years later, on August 19, 1993 an
Order of Reference was issued in the instant case. A Pre-hearing
Order was subsequently issued on September 4, 1993. Finally, a
hearing was scheduled for April 13 and April 14, 1994. There has
been inexcusable delay on the part of the Department of Labor.
Tilo Company, Inc., W&H AdRul (CCH), 31,114 (WAB 1977). The
Department of Labor has provided no justifiable reason for this
delay. The backlog of cases as cited by Chuck Plante, the
compliance officer, is not an acceptable reason. The Respondent
has been irreparably prejudiced by the Administrator's delay of
nearly five years in prosecuting this action.
As was clearly apparent at trial, the claims have become
stale. Many employees could not remember when they worked as
pipefitters or welders. All they could recall is that they worked
as mechanical laborers at $12.50 per hour. Mr. Gonzales clearly
forgot that he was paid as a welder. Mr. Hartley did not recall
the discrepancies between the two letters he provided to the
Department of Labor. It is clear from the evidence adduced at
[PAGE 45]
trial that Dennis Banks, in particular, has little interest in the
outcome of this matter, and he seemed to be of the opinion that no
wages are owing.
The Department of Labor has shown a lack of good faith and
dilatory tactics throughout the investigation, according to
Respondent, who essentially asks that the proceeding be dismissed
and the withheld money be returned to Respondent.
I cannot accept the respondent's claim of a lack of due
process herein as the courts and Wage Appeals Board have
consistently approved the Department's procedures in investigating
and presenting these cases.
For example, the Department's procedures in making
investigations of labor standards violations, notifying contractors
of alleged violations, providing the contractor an opportunity to
answer charges and allow contractors to appeal debarment
recommendations did not deny an employer its due process rights.
The employer was amply informed of the nature of the charges
against it and had repeated opportunities to present arguments and
evidence to rebut those charges. Matter of Cosmic Construction
Co., Inc., WAB No. 79-19, September 2, 1980.
Moreover, due process was accorded to a government contractor
at an administrative hearing on wage violations alleged against it.
The contractor was fully informed of the charges; was given ample
opportunity to rebut the charges; and was well represented by
counsel. Matter of Glenn Electric Co., Inc. WAB No. 79-21.
March 22, 1983, ¶ 31,443; aff'd (DC Pa.; 1984) 101 LC
¶ 34,571; aff'd (CA-3; 1984) 102 LC ¶ 34,643, 755
F.2d 1028.
It is now well-settled that the Department has the authority
to establish its priorities in determining compliance with the DBA
and related statutes, to determine those matters which will be
formally prosecuted and those matters in which debarment will be
sought. Thus, Respondent's due process rights have been protected
throughout and any delay herein is due partly to such priorities
and partly to an attempt to resolve this matter voluntarily.
6. Whether the Equal Access to Justice Act (EAJA) applies to
the Case at Hand.
U.S.C. 5 Section 504(a)(1) states that:
"An agency that conducts an adversary adjudication
shall award, to a prevailing party other than the United
[PAGE 46]
States, fees and other expenses incurred by that party in
connection with that proceeding, unless the adjudicative
officer of the agency finds that the position of the agency
was substantially justified or that special circumstances make
an award unjust. Whether or not the position of the agency
substantially justified shall be determined on the basis of
the administrative record, as a whole, which is made in the
adversary adjudication for which fees and other expenses are
sought."
In the Matter of United States Department of Labor,
Complainant v. Paul G. Marshall, et. al., Respondents, No. 86-
DBA-00133 (June 30, 1988), an employer was entitled to attorney
fees after successfully defending a government debarment action
since the underlying agency proceeding constituted an "adversary
adjudication" within the meaning of the Equal Access to Justice
Act. The court held that the application of the Equal Access to
Justice Act was not limited to litigation arguments but also
applied to positions taken in agency actions that preceded the suit
for attorney fees.
Respondent submits that 29 C.F.R. Section 6.6 was promulgated
at the same time as EAJA and derives directly from the rules (29
C.F.R. Part 16) promulgated under the initial EAJA (Pub. L. 96-
481). See, 49 F.R. 10626. 29 C.F.R. Section 6.6(a),
implementing the provisions of the Equal Access to Justice Act,
states that Proceedings under this part are not subject to the
provisions of the Equal Access to Justice Act. In any hearing
conducted pursuant to the provisions of the Part 6, Administrative
Law Judges shall have no power or authority to award attorney fees
and/or other ligation expenses pursuant to the provisions of the
Equal Access Act.
"Section 16.104(a)(2)(ii) of Part 16,29 C.F.R.
16.101 et. seq., specifically provides for the award of
fees in adversary adjudications involving violations and
debarments under the Walsh-Healey Act at 41 U.S.C. 39.
Moreover, Section 4(a) of the Service Contract Act, 41
U.S.C. 353(a) specifically incorporates Section 39 of the
Walsh-Healey Act. Section 39 of Walsh-Healey, 41 U.S.C.
§35 et. seq., as relevant herein, specifically
empowers the Secretary to hold hearings, wherein the
adjudicative officer:
shall make findings of fact after notice and
hearing which findings shall be conclusive
[PAGE 47]
upon all agencies of the United States, and if
supported by the preponderance of the evidence,
shall be conclusive in any court of the United
States .."
Respondent further submits that the hearing in which the
parties participated is a Section 554 adjudication, one in which a
"hearing on the record is required by statute," and is therefore an
"adversary adjudication" within the meaning of 5 U.S.C.
504(b)(1)(C) of the Equal Access to Justice Act. Violations and
debarments of the Service Contract Act and the Davis Bacon Act are
heard under Part 6. See, 29 C.F.R. 6.1, 6.15 et.
seq. Such Part 6 proceeding is a formal adversary adjudication
on the record conducted in accord with the applicable Rules of
Practice and Procedure, 29 C.F.R. 6.1, 6.15 et seq. in which
the federal government is always represented."
The Administrative Law Judge in Paul G. Marshall,
supra, determined that a Service Contract Act debarment
proceeding is as much an "adversary adjudication" as is a Walsh-
Healey Act debarment proceeding within the meaning of 5 U.S.C.
§554 and §504(b)(1)(C) of the Equal Access to Justice
Act. Therefore, 29 C.F.R. §6.6 is in conflict with 5 U.S.C.
§504(b)(1)(C) with regard to violation and debarment
proceedings, just as are proceedings for violations and debarment
under the Davis Bacon Act. Since the statute supersedes the
regulations, 29 C.F.R. §6.6 cannot be given effect.
The Administrative Law Judge also found that 29 C.F.R.
§6.6 was not promulgated in consideration of the amended EAJA
and its legislative history is in conflict with EAJA, according to
Respondent.
In the instant case, the hearing on April 13 and 14 was an
"adversary adjudication" since it involved the question of whether
the contractor had violated the Davis-Bacon Act. It required a
hearing on the record due to disputed facts in the case. The
federal government was required to be a party in this matter as it
was the party who had withheld monies from the contractor. It was
the intent of Congress in enacting EAJA that individuals not be
deterred from seeking review of, or defending against unjustified
government action. A party should be able to obtain qualified
counsel.
The Respondent submits that it should be the prevailing party
and therefore is entitled to attorney fees and costs because the
position of the United States was not substantially justified or
that special circumstances existed. The burden of proof lies with
[PAGE 48]
the federal government to prove that it was substantially justified
in its actions. The standard of proof is whether a "reasonable
person could think it correct." Pierce v. Underwood, 487
U.S. 552, 566 n. 2 (1988)
"5 U.S.C. §504(b)(1)(E) provides, as relevant herein:
"Position of the agency" means, in addition to the position
taken by the agency in the adversary adjudication, the action
or failure to act by the agency upon which the adversary
adjudication is based; ...
Quoting from Paul G. Marshall, "The legislative
history clarifies the statutory language:
'When the escape clause was originally written, it
was understood that "position of the United States" was
not limited to the government's litigation position but
included the action - including agency action - which led
to the litigation'
"Interpreting the EAJA so as to restrict its application
to mere litigation arguments, and not the underlying
action which made the suit necessary, would remove the
very incentive for careful agency action that Congress
hoped to create in 1980 National Resources Defense
Council v. EPA, 703 F.2d 700, 710 (3d Cir. 1983)"
"The committee's clarification of the 'position' term is
intended to broaden the courts or agency's focus of
inquiry for EAJA purposes beyond mere litigation
arguments and to require an assessment of those
government actions that form the basis of the litigation.
We believe this conclusion is implicit in the EAJA
definition of the term "United States," which includes
any agency and any official of the United States acting
in his or her official capacity rather than merely the
position taken by the government's lawyers ..."
"In the cases where the private party is a prevailing
defendant, the definition of "position of the United
States (or agency)" necessarily includes an evaluation of
the facts that led the agency to bring the action against
the private party to determine if the agency or
government action was substantially justified. To meet
its burden of proof in these cases, the agency must
demonstrate to the court or adjudicative officer that it
was substantially justified."
[PAGE 49]
With regard to "substantial justification," the legislative
history also provides clarification:
"Several courts have held correctly that 'substantial
justification' means more than merely reasonable.
Because in 1980, Congress rejected a standard of
"reasonably justified" in favor of "substantially
justified," the test must be more than mere
reasonableness."
The Administrator was not justified in withholding
monies from Respondent. No complaints were filed by
employees during the contract as to their
misclassification as mechanical laborers even though they
were in a position to know the difference between a
skilled and unskilled laborer. Some of the complaining
employees, having previously worked as pipefitters or
welders, were familiar with the requirements under the
Davis-Bacon Act and what was expected of them. No
documentation was provided by the employees who
complained even after letters were sent to them
requesting supporting evidence; no attempt was made by
the investigator to determine when the employees worked
as mechanical laborers and when they worked in other
classifications. The two letters Mr. Hartley sent to the
Department of Labor as to the number of hours he worked
as a mechanical laborer were inconsistent. The
investigator failed to perform a thorough investigation
by speaking to the contracting officers or the inspection
officer who interviewed the employees. To commence an
action in mere anticipation that there may be cause is
contrary to our legal requirements under our system of
law.
"Special circumstances" also existed in that for
over a year, Mr. Kardoley made the reasonable assumption
that he was complying with the requirements under the
contract since no official had informed him, after he had
submitted timely certified payroll sheets, that there was
no such classification as mechanical-laborer or that he
was filling out the sheets incorrectly. He placed
reasonable reliance on their actions or inactions. Mr.
Kardoley, having entered into similar contracts with the
federal government previously and having filled out the
payroll sheets in the same manner, reasonably believed
that he was doing it correctly. Respondent engaged in no
[PAGE 50]
conduct which unreasonably protracted the final resolution of
this matter. In fact, it was the Department of Labor that
unreasonably protracted this case for the past 5 years and has
denied Respondent the opportunity to fully resolve this matter
in a timely manner, causing him to incur attorney fees, lost
profits, etc.
On the other hand, the Administrator submits that the issue of
the application of the EAJA is not properly before this
Administrative Law Judge as Respondent must seek such remedy by
filing a separate complaint. Moreover, proceedings under the DBA
are clearly not subject to the EAJA. In Roderick
Construction Co., WAB Case No. 88-39 (Dec. 20, 1990), the
Board held that a DBA proceeding is not subject to the EAJA because
a DBA hearing is not an "adversary adjudication" within the meaning
of EAJA, since the DBA does not contain a hearing requirement.
Moreover, the DOL's regulations at 29 C.F.R. 6.6(a) and Part 16
were not invalidated by the repeal of the original version of the
EAJA and its later reenactment in 1985.
While this issue is moot as Respondent is not the prevailing
party, I have set out the parties' positions for benefit of
reviewing authorities. However, I do state that the
Administrator's position is the more reasonable interpretation and
I would so rule.
Accordingly, I find and conclude that Respondent has violated
the DBA and CWHSSA, as alleged by the Administrator, that
Respondent misclassified five employees as Mechanical Laborers, a
classification not permitted by the WDs, that those employees
performed the work of Pipefitters and Sheet Metal Workers on all
five contracts, that those employees must be paid the appropriate
wages as contained within the WD that was attached to and made a
part of each contract and that back wages are owed to the five
employees in the total amount of $12,797.54, as already found
above.
[PAGE 51]
ORDER
It is therefore ORDERED that the Administrator,
Wage and Hour Division, or her lawfully-appointed designee, shall
pay to each of the five employees identified herein the amounts due
each, as specifically found herein, and such payments shall be made
from the funds previously withheld by the Administrator.
DAVID W. DI NARDI
Administrative Law Judge
Dated:
Boston, Massachusetts
DWD:gcb
SERVICE SHEET
Case Name: Foremost Mechanical Systems
Case No.: 93-DBA-79
Title of Document: Decision and Order
A copy of the above document was sent to the following:
Tedrich Housh, Jr., Reg. Solicitor Joe W. Kardoley
Office of the Solicitor Foremost Mechanical Systems
U.S. Department of Labor 2225 S. Hoyt Court
Room 1585, Federal Office Bldg. Lakewood, CO 80277
1999 Broadway, Suite 1600
Denver, CO 80202
Attn: Kristi Floyd, Esq. H.D. Harvell
Acting Regional Admin.
Gayle V.L. Young, Esq. General Services Admin.
Attorney at Law Building 41
P.O. Box 368 Denver Federal Center
Westminster, CO 80030 Denver, CO 80225
Doug Davidson
Co-Counsel for Trial Litigation
U.S. Department of Labor
Office of the Solicitor
Room N-2716
200 Constitution Avenue N.W.
Washington, D.C. 20210
Maria Echaveste
Administrator
Wage and Hour Division
U.S. Department of Labor
Room S-3502, FPB
200 Constitution Avenue N.W.
Washington, D.C. 20210
INTEROFFICE MAIL
Reporter
GAYLE C. BONIA
Legal Tech
[ENDNOTES]
[1] There are four types of construction which are surveyed:
highway, heavy, building and residential. (TR 251)
[2] Although the WD uses the term Steamfitter, various
professionals, including the Respondent, himself, testified that
the terms Steamfitter and Pipefitter may be used interchangeably
and that any functional distinctions from the past have basically
vanished. (TR 223, 360)
[3] Although the applicable WD does not list a HVAC Ser.
Technician, no violation was charged as Don Boswell was paid
Pipefitter wages. Mr. Kardoley explained that he used this
designation as a further breakdown of the Pipefitter
classification. (TR 428-9)
[4] Mr. Cole indicated that some of the tasks required by GX 12
would be performed by Insulators. (T 239) In any event, none of
the tasks on any contracts at issue would be performed by
Laborers of any kind.
