North American Construction Corp., 94-DBA-57 (ALJ )
Date:
Case No.: 94-DBA-57
In the Matter of:
Disputes concerning the payment of
prevailing wage rates by and proper
classification by:
NORTH AMERICAN CONSTRUCTION CORP. and
C.H. NICKERSON AND CO., INC. d/b/a
NICKERSON ENGINEERS AND CONTRACTORS,
General Contractors
and
SAFETY ELECTRIC CONSTRUCTION CO., INC.,
Subcontractor
and
Proposed debarment for labor
violations by:
SAFETY ELECTRIC CONSTRUCTION CO., INC.,
and AMERICO GLORIA, individually and
as President
With respect to laborers and mechanics
employed by the contractors under
Contract No. GS-02POCUC0030 NCT
87449/RCT 89151 for replacement of
boilers and construction of Annex
Building at Federal Building and
Courthouse in Bridgeport, Connecticut;
and contract No. CWF-110 #1 for
construction of the Wastewater Treatment
Facility at Ridgefield, Connecticut.
Appearances:
Kevin E. Sullivan, Esquire
Office of the Regional Solicitor
U.S. Department of Labor
One Congress Street, 11th flr.
Boston, MA 02114
For the Complainant
William B. Barnes, Esquire
Rosenstein and Barnes
1100 Kings Highway East
P.O. Box 687
Fairfield, CT 06430
For Safety Electric Construction Co., Inc.
and Americo Gloria
Joy Beane, Esquire
Day, Berry and Howard
One Canterbury Green
Stamford, CT 06901-2047
For Intervenor TIG Insurance Co.
Robert W. Heagney, Esquire
Gilman and Marks
Two Riverview Square
East Hartford, CT 06108
For C.H. Nickerson and Co., Inc.
Lori B. Alexander, Esquire
Alan J. Sobol, Esquire
Tyler, Cooper and Alcorn
205 Church Street
P.O. Box 1936
New Haven, CT 06509
For North American Construction Co.
Before:
DAVID W. DI NARDI
Administrative Law Judge
DECISION AND ORDER
PROCEDURAL BACKGROUND
This proceeding began with an ORDER OF REFERENCE
dated July 6, 1994 and signed by the Regional Administrator,
Wage and Hour Division, Employment Standards Administration.
(ALJ EX 1) This Order of Reference authorized a hearing pursuant
to 29 C.F.R. 5.11(b) and 5.12 on disputes concerning the
payment of prevailing wage rates, overtime pay and proper record
keeping and debarment arising under the labor standards
provisions of the Davis-Bacon and Related Acts and the applicable
implementing regulations issued thereunder at 29 C.F.R. Part 5.
Accordingly, disputes concerning the payment of prevailing
wage rates, overtime, proper record keeping and proposed
debarment, more particularly described in the caption of this
Order, have been duly referred to the Office of Administrative
Law Judges under the Davis-Bacon Act, 40 U.S.C. 276a, et
seq., the Davis Bacon Related Acts, as denoted at 29 C.F.R.
Part 5, the Contract Work Hours and Safety standards Act, 40
U.S.C. 327, et seq., and the applicable regulations
issued thereunder at 29 C.F.R. Part 5, Sections 5.11(b) and 5.12.
Concerning the proposed debarment, the Regional
Administrator of the Wage and Hour Division has found reasonable
cause to believe that violations of the Davis-Bacon Act by Safety
Electric Construction Co., Inc. and Americo Gloria constitute a
disregard of their obligations to employees within the meaning of
29 C.F.R. 5.12(b)(1) and that the actions of Safety Electric
Construction Co., Inc. and Americo Gloria at issue herein
constitute willful or aggravated violations of the labor
standards of the Davis-Bacon Related Acts, as listed at 29 C.F.R.
5.1.
These violations are more specifically described in the Wage
and Hour Division s letters to the contractors, which are
attached to the ORDER OF REFERENCE. Also attached are the
letters in response from the contractors. (ALJ EX 1)
Pursuant to said laws, regulations and delegation of
authority by the Secretary of Labor, the matter was assigned to
this Administrative Law Judge and was duly scheduled for hearing
by appropriate NOTICE OF HEARING AND PRE-HEARING ORDER.
(ALJ EX 5) Several continuances were granted to permit the
parties to complete their discovery, and a short continuance was
granted because of the partial government shutdown impacting the
Department of Labor. (ALJ EX 6 through ALJ EX 17A) Hearings
were held on November 6,8,9 and 27, 1995 in New Haven and New
London, Connecticut at which times the parties were afforded the
opportunity to present oral argument, testimony and documentary
evidence in support of their respective positions. The following
references will be used herein: ALJ EX for an exhibit offered by
this Administrative Law Judge, CX for an exhibit offered by the
Administrator, RX for an exhibit offered by Respondents and TIGX
for an exhibit offered by TIG Insurance Company.
Post-hearing evidence has been admitted as:
EXHIBIT NO. ITEM FILING DATE
ALJ EX 18 This Court s Order sending 12/11/95
copies of CX 15 - CX 19,
RX 3, RX 5 and RX 6 to the
parties.
CX 21 Administrator s request for 01/16/96
an extension of time for the
parties to file their briefs.
RX 7 Respondents motion for an 01/18/96
extension of time for the
parties to file their briefs.
(the requests was granted)
ALJ EX 19 Letter sending two (2) 01/23/96
subpoenas to counsel
for the Administrator
CX 22 Administrator s request for 02/09/96
an additional extension of
time as he had been recently
assigned to another trial
due to an office emergency.
ALJ EX 19A The extension was granted as 02/19/96
no objection was interposed
CX 23 Attorney Sullivan s letter 02/20/96
filing the
CX 24 February 5, 1996 letter 02/20/96
from Brian L. Fisher,
Associate General Counsel,
Blue Cross Blue Shield of
Connecticut, to Judith McFarren,
Investigator, Wage and Hour
Division, New Haven, Connecticut,
as well as the
CX 25 Revised Summary of Unpaid 02/20/96
Wage (Form WH-56) and Wage
Transcription and Computation
Sheets. (Form WH-55)
RX 8 Attorney Barnes request for 02/20/96
a short extension of time for
the parties to file their
briefs. (the request was
granted as there was no objection)
TIGX 1 February 20, 1996 from Attorney 02/22/96
Joy Beane, on behalf of TIG
Insurance Company as the assignee
of North American Construction
Corp., moving to intervene in the
proceeding to exercise its rights
to any overage of the amounts
currently being withheld by the
Administrator. (the motion is
hereby granted as no objections
have been raised to such interven-
tion herein.)
CX 14 A document entitled 03/08/96
Actual Valuation;
Safety Electric Construction
Co., Inc. Profit Sharing Plan.
Plan Year, July 1, 1990
Date of Valuation, June 30, 1991
(as no objections were filed
thereto)
RX 9 Attorney Barnes request for a 03/11/96
short extension of time for the
parties to file their briefs.
ALJ EX 20 The request was granted. 03/12/96
RX 10 The parties request for an 04/12/96
additional extension of time.
ALJ EX 21 The request was granted. 04/12/96
RX 11 The parties request for a 05/13/96
short extension of time.
ALJ EX 22 The request was granted. 05/14/96
RX 12 Attorney Barnes letter 05/20/95
confirming the briefing
schedule.
RX 13 Respondents brief 05/21/96
CX 26 Complainant s brief 05/22/96
RX 14 Respondents Reply Brief 06/04/96
The record was closed on June 4, 1996 as no further
documents were filed.
I. Summary of the Evidence
As noted above, this action was brought by the Secretary of
Labor (herein Administrator or Complainant) as a result of
alleged violations by Respondents, Safety Electric Construction
Co., Inc. and Americo Gloria, of record keeping, prevailing wage,
and overtime provisions of the Davis-Bacon Act, the Davis Bacon
Related Acts, and the Contract Work Hours and Safety Standards
Act on two federal construction projects: the Federal Building
and Courthouse in Bridgeport, Connecticut, and the Wastewater
Treatment Facility at Ridgefield, Connecticut. Complainant
submits that the record establishes that employees should be
awarded back wages and that Respondents Safety Electric
Construction Co., Inc. and Americo Gloria should be debarred for
the appropriate period of time.
Respondent Safety Electric Construction Co., founded by its
president, Americo Gloria, and his wife in 1975 or 1976,
performed work on these two projects as the electrical
subcontractor, employing journeyman and apprentice electricians
to do the work. (CX-8, CX-12, CX-13; Tr. 802, 842)
Respondents Safety Electric and Americo Gloria were
obligated to pay prevailing wage rates and fringe benefits to
their employee electricians consistent with General Wage Decision
No. CT89-1, which was applicable to these two projects.
(Tr. 496-498; CX-5; see also CX-8 and CX-10) Because the
federal projects were located in Area 3 (Bridgeport and
Ridgefield), the prevailing wage (basic hourly) rate including
the fringe benefit required by the Wage Decision to be paid by
Respondents to electricians was $27.95 per hour. (CX-5; Tr. 497-
498, 510) Broken down, the prevailing wage (basic hourly) rate
was $21.45 while the fringe benefit hourly rate was $6.50.
(Tr. 511)
Respondents were also required to pay apprentice
electriciansduly registered in a sanctioned apprenticeship
programa percentage of the $21.45 journeyman prevailing wage
(basic rate) that ranged from 50% for the novice apprentice to
85% for the apprentice with the most hours of service plus the
$6.50 fringe benefit hourly rate. (CX-12, Tr. 601, 603;
see 29 C.F.R. 5.5(a)(4)) The lowest apprentice rate
including the hourly fringe benefit was $17.23 per hour ($10.72 +
$6.50) (Tr. 911-913, 606-620) Respondents were required to pay
an unregistered "apprentice" the journeyman prevailing
wage (basic rate) of $21.45 plus the $6.50 per hour fringe
benefit until the effective date of his registration. Even
though properly registered, however, an apprentice must have been
supervised by a journeyman (the required ratio being one
apprentice to one journeyman) in order to be paid a percentage of
the journeyman's rate. If unsupervised or if the ratio of
apprentice to journeyman was anything more than one to one, for
instance two apprentices to one journeyman, then the Respondents
were required to pay the "apprentice" the journeyman prevailing
rate. (Tr. 603-606, 906, 916-917) In addition, Respondents'
subcontract agreement explicitly required the payment of overtime
compensation for all hours worked over forty in a workweek.
CX-13 at p. 5, ¶ 20.
A. Respondents Paid Less Than the Required Prevailing
Wage
Complainant submits that the record in this case clearly
supports a finding that Respondents failed to pay the prevailing
wage (basic hourly) rate of $21.45 per hour to journeyman
electricians that worked on the Courthouse and Ridgefield federal
projects. During his testimony, Respondent Americo Gloria
conceded paying less than the prevailing rate of $21.45 to
journeyman electricians by acknowledging the accuracy of wage
rate figures reflecting hourly rates that Respondents actually
paid employees who worked on the federal projects. (CX-4,
Tr. 853-855, 1050-1051) The record demonstrates that Respondents
paid most of the journeyman electricians a basic rate of $17 or
$17.50 per hour rather than the required basic prevailing rate of
$21.45 per hour. (CX 4) Respondents' underpayment of the
journeyman electrician prevailing wage rate is confirmed also by
the certified payroll records for each project (CX-8 and CX-10)
and by the testimony of employees Mario Fontes, Almerindo Alves,
Edwin Cruz, Kevin Karpinski, Marco Russo, Allan Peck, Robert
McSperrin, Bruce Toth, Rocco Cuscuna, Frank Pellaggi and Gregory
Tetro. (Tr. 15-17, 50-52, 65-67, 126-127, 151-153, 173-175, 208-
210, 224-225, 314-316, 334, 383-384, 386, 428-432)
B. Respondents Failed to Pay the Required Fringe
Benefits
With regard to the fringe benefit package payment
requirement, Respondents represented on the back of the certified
payroll records that they contributed on behalf of each
journeyman electrician $4.75 per hour for medical and dental
insurance, $2.69 per hour to a pension and profit share plan and
$3.46 per hour for holidays and vacations, and contributed on
behalf of each apprentice electrician $4.75 per hour for medical
and dental insurance, .65 per hour to a pension and profit
share plan and $.96 per hour for holidays and vacations. This
assertion was false, as established by the record, according to
the Complainant. Respondent Americo Gloria, who gave his son the
aforementioned fringe benefit figures for him to enter on the
certified payrolls (Tr. 820-821), testified that those fringe
benefit figures were only "estimates," not fringe benefit
contribution payments actually made. (Tr. 772-773, 1035-1036)
Although Respondent Gloria acknowledged that his contract
required Respondents to furnish fringe benefits to each and every
employee on the first day of their employment, Respondent Gloria
admitted that Respondents did not do so. (Tr. 774-775) He
testified that employees did not receive medical insurance until
after a ninety-day waiting period, and that this waiting period
also applied to employees' holiday and sick day benefits.
(Tr. 832, 1071) Furthermore, although Respondent Gloria
acknowledged that Respondents' contract required that employees
not covered by medical insurance be paid the medical fringe
benefit in cash, he conceded that these employees did not receive
medical fringe benefits in cash. (Tr. 777) Finally, Respondent
Gloria admitted that he did not make pension fringe benefit
contributions of $2.69 per hour for employees who worked on the
two federal projects. (Tr. 783, 786-787) He also conceded that
he did not directly pay these employees the pension fringe
benefit cash equivalent of $2.69 per hour. (Tr. 787, 792)
When Judith McFarren, U.S. Department of Labor, Wage & Hour
Division investigator, asked Respondent Gloria for documentation
of the fringe benefit contributions actually made on behalf of
employees who worked on the federal projects in order to reflect
a credit toward Respondents' backwage liability on the Wage
Computation and Transcription Sheets, Respondent Gloria provided
her with a document showing medical benefits premiums paid and
life insurance information for only a limited select group of
employeesmany employees' names were conspicuously absent from
this document. (Tr. 484-485, 513-514, CX-7) Based upon this
information and employee interviews, Investigator McFarren
determined (1) that most employees did not receive medical and
dental benefits, (2) that those employees who did get medical and
dental benefits received benefits that were less than $4.75 per
hour, (3) that no employees received the pension and profit share
plan benefits and (4) that Respondents' representation of a $3.46
per hour holiday and vacation benefit contribution was inflated.
(Tr. 536-537)
Investigator McFarren's determination of the aforementioned
fringe benefit payment violations was confirmed by the testimony
of employee witnesses, according to Complainant.
Mario Fontes testified that he received no sick pay and no
medical insurance coverage. (Tr. 18-19)
Edwin Cruz, who was paid $17 per hour plus $2 per hour as a
medical insurance benefit cash equivalent because he was already
covered by his wife's medical insurance, testified that he did
not receive any vacation pay or any other fringe benefits.
(Tr. 66-68, 75)
Custodio Ramos testified that he never received any type of
benefits, that Respondents did not give him paid holidays but
required Saturday work to get a holiday off and that Respondents
refused to give him vacation pay. (Tr. 86, 97, 105-106)
Kevin Karpinski testified that he did not receive any fringe
benefits with the exception of holiday pay for Christmas, and
that he had to work a Saturday to get off Thanksgiving.
(Tr. 127-128)
Marco Russo testified that he did not receive sick day,
holiday pay or vacation pay benefits while working on the
Ridgefield project. Mr. Russo also testified that employees'
receipt of a paid holiday was conditioned on the employee making
it up by working another day. (Tr. 160, 162)
Allan Peck testified that he did not get Christmas as a paid
holiday. (Tr. 176-177)
Robert McSperrin testified that to his knowledge he did not
receive any fringe benefits. (Tr. 213)
Bruce Toth testified that he received no medical benefits or
vacation pay while on the Ridgefield project and that he did not
believe that he received any sick pay. (Tr. 231-232)
Chris Matola testified that he did not receive medical or
vacation pay benefits and that he was not presented with any kind
of benefit package either in writing or orally. (Tr. 251) In
fact, Mr. Matola testified that upon his hiring, he was told
there were no benefits, just the flat rate of $12 per hour.
(Tr. 252-253, 260)
Rocco Cuscuna testified that he did not receive any medical
benefits or vacation pay and that he did not believe that he
received any holiday pay. (Tr. 317-318)
Anthony Pavone testified that he never received medical
benefits until after he left the Ridgefield project and
that his receipt of holiday pay for Thanksgiving was contingent
upon him working Saturday. (Tr. 352-353)
Frank Pellaggi testified that he worked at Ridgefield for
$17 per hour with no benefits and that he was not given Labor Day
as a paid holiday. (Tr. 384, 386-387)
Ralph Sheldon testified that he never received benefits
while at Ridgefield and that he did not receive any paid
holidays, including Christmas and Thanksgiving. (Tr. 403-404)
Complainant submits that this summary of the testimony by
Respondents employees, including Respondent Americo Gloria's own
admission, demonstrates not only that Respondents committed
fringe benefit violations but also that Respondents' "estimates"
of fringe benefit contributions were gross exaggerations without
basis in fact. Even when we select employees that received
Respondents' highest fringe benefit contribution, Respondents'
estimates are unrealistic and exaggerated. For example,
Respondents represented on their certified payrolls that they
made medical benefit contributions on behalf of Mr. Tetro of
$4.75 per hour or a yearly contribution of approximately $9,880.
In fact, Mr. Tetro's monthly medical premium was only $272.26 or
$3,267 per year. Even though Investigator McFarren accorded
Respondents an excessively generous credit in the amount of
$314.48 per month, or $3,773 per year, this credit was still
$6,107 less per year than what Respondents claimed was
actually contributed on Mr. Tetro's behalf. (Tr. 537-539, 572-
575; CX-6 at A-14)
Furthermore, with regard to Almerindo Alves, Respondents
represented that he was paid a fringe benefit package of
approximately $11 per hour when he was actually paid only $3.83
per houra shortfall of approximately $7 per hour. (Tr. 577-
279; CX-9, CX-10)
Finally, although Respondents in fact made no pension
contribution on behalf of employees during the time these
employees performed work on the federal projects, Respondents
nonetheless represented making contributions in the amount of
$2.69 per hour or $5,491 per year on behalf of each and every
employee. (Tr. 539)
C. Respondents Paid Apprentice Electricians Less Than
the Required Wage Rate
According to Complainant, responsibility for registering
apprentices and complying with the apprenticeship ratio
requirements found at 29 C.F.R. 5.5(a)(4) rests with the
contractor. Van Den Heuvel Electric, Inc., WAB Case No.
91-03 (February 13, 1991); Kasler Corporation, WAB Case
No. 90-03 (April 29, 1991); Schnabel Associates, Inc., WAB
Case No. 89-18 (June 28, 1991); Sid Grinker Company, Inc.,
WAB Case No. 92-07 (September 25, 1992).
Complainant submits that the record supports a finding that
Respondents shirked that responsibility because they paid
electricians designated as apprentices on certified payrolls less
than the required percentage of the journeyman prevailing wage
rate plus fringe benefits as mandated by Connecticut's apprentice
registration program. (See CX-12; Tr. 613-621) Since
Exhibit CX-4 and testimonial evidence demonstrate that
Respondents paid electricians identified as apprentices hourly
rates that ranged from only $10 to $12.50 per hour and since
these employees received little or no fringe benefits, these
employees, some of whom were not properly registered or
supervised, were paid less than even the lowest apprenticeship
rate of 50% of the journeyman's rate plus fringe benefits or
$17.23 per hour. (Tr. 35, 86, 90, 197-199, 201-202, 249, 252-
253, 260, 351-355, 400-406, 411, 621)
By way of illustration, Investigator McFarren determined
that Chris Matola worked on the federal project beginning on
October 4, 1991 but was not effectively registered as an
apprentice until November 20, 1991. Accordingly, for the work
weeks from October 4, 1991 until November 20, 1991, Mr. Matola,
who was paid $12 per hour, should have been paid the basic
journeyman's rate of $21.45 per hour (not including the $6.50 per
hour in fringe benefits). After November 20, 1991, Mr. Matola
was paid $12 per hour when he should have been paid 65% of the
basic prevailing rate of $21.45 or $13.54. (Tr. 610-612; CX-12)
When Mr. Matola's fringe benefit package entitlement is added to
his $13.94 basic apprentice rate, Mr. Matola should have been
paid $20.44 per hour. (Tr. 612) Accordingly, Safety underpaid
Mr. Matola $8.10 per hour from November 20, 1991 until his
employment on the federal project ended, resulting in a total
underpayment amount for that period of $3,848.69. (Tr. 613; CX-9
at A-13)
Moreover, Mr. Matola's testimony reveals that Respondents
failed to adequately supervise both him and his partner
apprentice for the majority of their time at Ridgefield.
Mr. Matola testified that he worked with another apprentice at
Ridgefield without any supervision. They would receive their
assignments in the morning setting out their tasks for the eight
hour span or for the week. (Tr. 255) With the exception of work
on "risers," where four or five apprentices worked with one or
two journeymen periodically, Mr. Matola and his partner
apprentice worked alone. (Tr. 256-257) He estimated that two to
three weeks involved supervised work, while the rest of the weeks
involved unsupervised work. (Tr. 257)
In light of this evidence, with the exception of two to
three weeks, Mr. Matola should have been paid the full
journeyman's rate plus fringe benefits of $27.95 and the
investigator's original backwage computation for him should be
considerably larger. (See Investigator's Post-Hearing
filed Revised Wage Computations dated February 7, 1996 and in
evidence as CX 25)
Anthony Pavone, an apprentice registered on September 3,
1995 and without supervision the majority of his time on the
project from November 18, 1991 to November 27, 1991, should have
received the journeyman rate of $21.45 plus fringe benefits
rather than the $10 per hour, $11 per hour, and $12 per hour
rates paid him by Respondents. (Tr. 351-355, 358-359, 369)
Because the investigator credited Respondents with 50% of the
rate plus fringe benefits on her original backwage computation
sheet (CX-9 at A-15, CX-12), Mr. Pavone's backwages of $2,096
reflected on that computation sheet should actually be doubled.
(Tr. 614-616) (See Investigator's Post-Hearing filed
Revised Wage Computations dated February 7, 1996 [CX 25])
Ralph Sheldon, an apprentice registered on July 26, 1991 who
should have been paid 50% of the journeyman prevailing rate and
fringe benefit package of $27.95 when he began work on the
project, or $17.23 per hour (see CX-9 at A-21), was
initially paid only $10.98 per hour including fringe
benefits. (Tr. 911-913, 616-620, 400-401) From February 7 to
February 24, 1992, Mr. Sheldon should have received $18.30 per
hour (fringe benefits included), 55% of the journeyman's rate,
but was only paid $12.98 per hour (fringe benefits included).
D. Respondents Failed to Pay Any Overtime
Compensation
According to Complainant, it is uncontroverted that
Respondents failed to pay overtime compensation to employees who
worked over forty (40) hours in a work week on the federal
projects. Employee witnesses testified consistently that they
were paid at straight time for all hours worked in excess of
forty in a week. (Tr. 15-17, 37, 93-94, 127, 199-200, 210-212,
227-228, 249-250, 318-320, 355-357, 432) Not only did
Respondents present no evidence to dispute their failure to pay
required overtime compensation, but Respondent Gloria also
admitted that his company had a policy of not paying employees
overtime compensationpaying only straight time pay for hours
worked over forty in a workweek.
E. Respondents Violated Record-keeping Requirements
Under 29 C.F.R. 3.4(b) and 5.5(a)(3)(i) and (ii), a
contractor is required to maintain accurate weekly records
stating, inter alia, each employee's job classification,
pay rates, daily and weekly hours worked, and actual wages paid.
Under 5.5(a)(3)(ii)(3), the contractor must certify that the
employees were paid the wage rates applicable to the
classifications in which they worked, according to Complainant.
When Investigator McFarren met with Respondent Americo
Gloria and reviewed Respondents' payroll records sometime around
November 13, 1991, Respondent Gloria told her that the time
cards, which formed the basis for information entered on the
payroll records, were thrown away once the weekly payroll was
completed. (Tr. 474) Since the payroll records did not reflect
employees' hourly pay rates, Investigator McFarren asked
Respondent Gloria for a list of employees' names with their
associated pay rates. (Tr. 474) He provided Investigator
McFarren with such a list in lieu of the time cards, which time
cards he asserted he had thrown out. (Tr. 475, 482) Based upon
the data in this list coupled with Respondents' weekly payroll
records, Investigator McFarren determined that Respondents were
paying employees straight time for overtime work. (Tr. 483)
Investigator McFarren, after conducting confidential
employee interviews, visiting job sites and reviewing project job
logs, Investigator McFarren ultimately presented Respondent
Gloria with her back wage computations and a back wage liability
bill sometime in January 1992. (Tr. 485-486) Respondent Gloria
then obtained legal representation. After a series of meetings
involving Investigator McFarren and Respondent Gloria and his
attorneys, Respondent Gloria's attorney called the Department to
inform Investigator McFarren that the time cards had been found.
(Tr. 487) Investigator McFarren then updated her investigation
based on the sudden appearance of these time cards. (Tr. 488)
Based upon her review of these time cards, Investigator
McFarren determined that the certified payrolls were falsified
because Saturday work and overtime work reflected on Respondents'
time cards were not reflected on their certified payroll records.
(Tr. 489) Every one of Respondents' certified payroll records
reflected forty hours worked or less than forty hours worked each
and every week for every employee. (Tr. 542-543; See CX-8
[Courthouse certified payroll records]; Tr. 572-574)
Respondents' own time cards, however, indicated that employees
worked over forty hours in given work weeks notwithstanding the
fact that the certified payroll records reflected forty hours or
less for each and every work week. (Tr. 543-544) Saturday work
actually performed by employees was also not reflected on the
certified payroll records. (Tr. 573)
Investigator McFarren identified other Record-keeping
irregularities based upon her review of Respondents' time records
which contained some cross-outs and insertions that did not
appear to be in the employee's handwriting. For instance, Mike
Evans' time card with an ending date 12/13/91 contained a cross-
out of the Courthouse job location and an entry in its place of
Connecticut Post Malla non-federal, non-prevailing wage job.
Investigator McFarren reasonably concluded that Respondents
crossed out "courthouse" and substituted the non-prevailing rate
Connecticut Post Mall job to reduce its backwage liability.
(Tr. 635-641, CX-11) Accordingly, Investigator McFarren
reflected on her backwage computation sheet that Mr. Evans worked
not on the Connecticut Post Mall job but on the courthouse
prevailing wage job. (Tr. 637-638, CX-6)
Other examples of Record-keeping irregularities were
identified by Investigator McFarren with regard to Respondents'
reducing overtime hours reflected on employee Jerry Sullivan's
weekly time records for the week ending 11/15/91. (Tr. 641-644;
CX-11) In addition, with respect to employee Bruce Toth, who was
employed 57 hours at Ridgefield for the work week ending 11/2/91
as reflected on his time card, there was no corresponding
certified payroll record for Toth for that particular workweek.
Accordingly, Investigator McFarren transcribed 57 hours for Toth
onto the Wage Transcription and Computation Sheet with the date
11/8/91, which date is the pay date that corresponds to the
workweek ending date of 11/2/91. (Tr. 589-591) Similarly,
with respect to employee Chris Matola, who was employed for 44
hours for work week ending 10/5/91, Mr. Matola does not appear on
the certified payroll for that work week. (Tr. 592) Moreover,
Mr. Matola, who was employed during work weeks ending 12/20/91,
12/27/91, and 1/10/92, was not listed on any certified payroll
record corresponding with that date. (Tr. 593-596) In fact,
Mr. Matola, who was employed during work weeks in January and
February 1992, was not listed on any certified payroll record
corresponding with that employment period. (Tr. 596) Finally,
Mr. Matola was not paid for a sick day he took on January 20,
1992. (Tr. 597)
Investigator McFarren's findings of Respondents' Record-
keeping irregularities were also confirmed by Ms. Sandra
Barrachina, a field supervisor for the Wage and Workplace
Standards Division at the Connecticut Labor Department, during
the course of the state investigation she conducted jointly with
Investigator McFarren. On Investigator Barrachina's visit to
Respondents' establishment in February 1992 to do a record audit,
Respondent Gloria represented to her that Respondents' time cards
were discarded after people were paid. (Tr. 923) Respondent
Gloria's attorney subsequently contacted Investigator Barrachina
informing her that the time cards had been found; those time
cards were reviewed at the attorney's office on March 24, 1992.
(Tr. 924)
Investigator Barrachina's review of time cards revealed
overtime Record-keeping under-reporting, erasures, and cross-outs
reducing numbers of hours worked to reflect proper overtime
compensation being paid when straight time was actually paid as
well as erasures and cross-outs eliminating a state prevailing
rate job and substituting a private job so that a prevailing rate
would not be required to be paid. (Tr. 926) Specifically,
Investigator Barrachina determined that Respondents had paid
straight time for overtime work on eight occasions in 1991 as
reflected on eight time cards and that time cards for 28 weeks in
1991 reflected erasures and cross-outs and reductions of hours to
make it appear that time and one-half was paid and to match the
payroll. (Tr. 936-937, 958-965; see CX-15 through CX-19)
Investigator Barrachina testified that based upon her six
years experience as a field supervisor, Respondents' Record-
keeping irregularities signified "an attempt to circumvent the
requirements of overtime to make it appear that you're in
compliance." (Tr. 926.) This attempt to circumvent overtime
requirements was a deliberate act of Respondents, according to
Investigator Barrachina, because the company's reduction of hours
was calculated mathematically to closely feign overtime payment
compliance. She noted that Respondents' Record-keeping falsifi-
cation was corroborated by employees who indicated that they did
not alter their own time cards. (Tr. 927-928, 948)
The state investigation, like the federal investigation,
examined Respondents' payment of fringe benefits in addition to
the payment of prevailing wages and overtime. (Tr. 932) The
same fringe benefit figures that Respondents entered on the
federal certified payrolls were also entered on the certified
payrolls applicable to the Bunnell school project, a subject of
the state investigation. When questioned by Investigator
Barrachina about pension contributions, Respondent Gloria did not
provide her with any pension contribution payment information.
(Tr. 933, 934)
With regard to her review of Respondents' insurance premium
payment documentation, Investigator Barrachina determined that
Respondents' actual payments made on behalf of some employees
were much less than what Respondents represented as having been
paid on behalf of employees on the certified payrolls. (Tr. 933-
934) Furthermore, although Respondents represented on the
certified payrolls that they had made contributions to furnish
medical insurance to all employees, some employees in fact
received no medical insurance. (Tr. 934) Investigator
Barrachina also determined that most employees did not receive
either holiday or vacation pay notwithstanding Respondents'
representation on the certifiers of a generous holiday/vacation
benefit package. (Tr. 934)
F. Respondents' Backwage Liability
According to Complainant, it is well settled that where
payrolls are unreliable, backwages may be assessed on the basis
of employee testimony. It is likewise settled that the Secretary
may obtain backwages for non-testifying employees where the
record and testimony of testifying witnesses establishes that
they are entitled to compensation. See,In The Matter
of Structural Services, WAB No. 82-13 (June 22, 1983).
Also see, Matter of Schnabel Associates, Inc., supra, and M.G.
Allen and Associates, 29 WH Cases (BNA) 374 (1988), citing
both Structural Services andAnderson v. Mt. Clemens
Pottery Co., 328 U.S. 680, 66 S.Ct 1187 (1946). An employer
who has failed to keep accurate records of employees' hours
worked may not complain that the Secretary's backwage
computations are imprecise. Schnabel, supra, citing
Anderson, and referencing Brock v. Norman's Country
Market, 835 F.2d 823 (9th Cir. 1988). Accord,P.M.B.C., Inc., CCH LLR WH Ad. Rulings, ¶ 32,058 (WAB
1991), citing Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir.
1986). The Wage Appeals Board has held that backwage awards
based upon "reconstructed" backwage computations based in part on
employee-provided evidence are appropriate in Davis-Bacon Act
cases. Trataros Construction Corporation, CCH LLR WH Ad.
Rulings ¶ 32,266 (WAB 1993).
Investigator McFarren, based upon information contained on
Respondents' own time card records, Respondents' employee pay
rate list (CX 4), employee interviews, and Connecticut's
apprenticeship program information (CX-12), calculated
Respondents' backwage liability, which is reflected on Wage
Transcription and Computation Sheets applicable to both the
Courthouse and Ridgefield projects. (Tr. 483, 485-486, 498-501,
601-606, 613-621) She then transcribed the backwage gross
amounts found due Respondents' employees onto a Summary of Unpaid
Wages. (Tr. 501-501; CX 6 and CX 9) With regard to the
Courthouse project, Investigator McFarren determined that
Respondents underpaid fifteen employees a total amount of
$49,686.95 as a result of Respondents' prevailing wage, fringe
benefit and overtime pay violations. With regard to the
Ridgefield project, she determined that Respondents underpaid
twenty-four employees a total amount of $89,823.46 as a result of
Respondents' prevailing wage, fringe benefit and overtime pay
violations. (CX 6 and CX 9)
However, because employee testimony during the trial
revealed additional wage under-payments not reflected on
Investigator McFarren's original backwage liability calculations
set forth in Exhibits CX 6 and CX 9, Investigator McFarren made
adjustments to her calculations. Those backwage adjustments are
reflected on "revised" Summary of Unpaid Wages and Wage
Transcription and Computations Sheets dated 2/7/96 applicable to
both projects. These "revised" backwage liability calculations
were submitted to the Court and Respondents on a post-hearing
basis and have been admitted as CX 25.
Ridgefield Project
With regard to backwage liability adjustments made pertinent
to the Ridgefield project, Investigator McFarren determined that
Respondents' total backwage liability increased from $89,823.46
to $100,764.63. The specific adjustments made in that increase
of Respondents' backwage liability are supported by testimonial
evidence and are identified below.
Chris Matola's fringe benefit package credit accorded
Respondents on the Investigator's original wage computation sheet
(see CX-9 at A-13) was as follows:
Medical Insurance - $344.22 693 hours (4 months) = $.50
per hour credit
Holidays - 2 days X 8 hours X $12 = $240 693 (4
months) = $.34 per hour credit
Total Credit - $.84 per hour credit
Because Mr. Matola testified that he did not receive medical
benefits and that he received only two paid holidays,
Respondents' fringe benefit credit was reduced and adjusted on
the Investigator's revised wage computation sheet as follows:
Medical Insurance - per hour credit
Holidays - 2 days X 8 hours X $12 = $192 693 (4
months) = $.28 per hour credit
Total Credit - $.28 per hour credit
In addition, since Mr. Matola testified that he was under the
supervision of a journeyman electrician for only two to three
weeks on the federal project, Mr. Matola's backwages were further
adjusted to reflect the full journeyman rate for 674 hours worked
on the project while the apprentice rate was computed for the
three weeks or 120 hours that Mr. Matola worked "unsupervised."
As a result of these adjustments, Mr. Matola's backwages were
increased $2,725.50 from $9,289.46 to $12,014.96 as reflected on
the revised wage computation sheet.
Anthony Pavone's fringe benefit package credit
accorded Respondents on the Investigator's original wage
computation sheet (see CX-9 at A-15) was as follows:
Medical Insurance, paid holidays and sick days - .65 per
hour credit
Because Mr. Pavone testified that he did not receive medical
benefits, that he received only one paid sick day and only one
paid holiday, Respondents' fringe benefit credit was reduced and
adjusted on the Investigator's revised wage computation sheet as
follows:
Medical Insurance - per hour credit
Holiday - 8 hours X $11 = $88 520 hours (3
months) = $.17 per hour credit
Sick Days - 8 hours X $11 = $88 520 hours (3
months) = $.17 per hour credit
Total Credit - $.34 per hour credit
In addition, since Mr. Pavone testified that he was not
supervised by a journeyman electrician for hours he worked on the
project, Mr. Pavone's backwages were further adjusted to reflect
the full journeyman rate for a total of 379 hours worked on the
project. As a result of these adjustments, Mr. Pavone's
backwages were increased $4,193.76 from $2,096.43 to $6,290.19 as
reflected on the revised computation sheet.
Allan Peck's fringe benefit package credit accorded
Respondents on the Investigator's original wage computation sheet
(see CX-9 at A-16) was as follows:
Medical Insurance - $314.48 X 12 months = $3,773.76
Vacation - 10 days X $17.50 X 8 hours = ,400
Holidays - 6 days X $17.50 X 8 hours = $910
Sick Days - 4 days X $17.50 X 8 hours = $560
Total Credit - $6,643.76 2080 hours (one year) =
$3.19 per hour credit
Because Mr. Peck testified that he received only one week paid
vacation, only two paid sick days, and only five holidays plus
two paid hours off on Christmas Eve, Respondents' fringe benefit
credit was reduced and adjusted on the Investigator's revised
wage computation sheet as follows:
Medical Insurance - $314.48 X 12 months = $3,773.76
Vacation - 5 days X $17.50 X 8 hours = $700
Sick Days - 2 days X $17.50 X 8 hours = $280
Holidays - 5 days X $17.50 X 8 hours = $700
Christmas Eve - 2 hours X $17.50 = $35
Total Credit $5,488.76 2,080 (one year) = $2.64
As a result of these adjustments, Mr. Peck's backwages were
increased $412.50 from $5,466.45 to $5,878.95 as reflected on the
revised computation sheet.
Marco Russo's $379.32 backwage entitlement was based
upon Respondents' time records, a large number of which were
missing for Mr. Russo, which records indicated that Mr. Russo
worked a total of only two Saturdays of overtime. This
information was reflected on the Investigator's original wage
computation sheet (see CX-9 at A-19) as follows:
DBRA Rate - $21.45 + $5.70 fringe benefit = $27.95 per hour
Rate Paid - $17 per hour
Prevailing Wage Underpayment - $10.95 per hour X 17 hours =
$191.63
Overtime Underpayment - $21.45 per hour X .5 X 17 hours =
$187.69
Total Backwages Due - $379.32
Because Mr. Russo testified that he worked seven weeks on
Saturday and Sunday and one week on just Saturday, Respondents'
backwage liability was increased and adjusted on the
Investigator's revised wage computation sheet (an average number
of hours [19 hours] for each week was used to compute these
backwages) as follows:
DBRA Rate - $27.95
Rate Paid $17
Prevailing Wage Underpayment - $10.95 per hour X 146 hours =
,598.70
In addition, Mr. Russo's performance of work on Saturdays and
Sundays resulted in Mr. Russo working overtime the entire time of
his employment on the federal project. Accordingly, half-time
pay was computed for Mr. Russo - $21.45 X .5 X 146 overtime hours
= ,565.85
Total Backwages Due - ,598.70 + ,565.85 = $3,164.55
As a result of these adjustments, Mr. Russo's backwages were
increased by $2,785.23 from $379.32 to $3,164.55.
Edward Seixas' fringe benefit package credit accorded
Respondents on the Investigator's original wage computation sheet
(see CX-9 at A-20) was as follows:
Medical Insurance - $314.48 X 12 months = $3,773.76
Vacation - 10 days X $12.50 X 8 hours = ,000
Holidays - 6 days X $12.50 X 8 hours = $600
Sick Days - 4 days X $12.50 X 8 hours = $400
Total Credit - $5,773.76 2,080 hours (one year) =
$2.78 per hour credit
Because Mr. Seixas testified that he did not take any sick days,
Respondents should not have been given credit for four paid sick
days. Accordingly, Respondents' fringe benefit credit was
reduced and adjusted on the Investigator's revised wage
computation sheet as follows:
Medical Insurance - $314.48 X 12 months = $3,773.76
Vacation - 10 days X $12.50 X 8 hours = ,000
Holidays - 4 days X $11.50 X 8 hours, 2 days X
$12.50 X 8 hours = $768
Sick Days -
Total Credit - $5,541.76 2,080 hours (one year) =
$2.66 per hour credit
- $2.78 - $2.66 = $.12 X 154 hours =
$20.94 underpayment
Also, on Exhibit A-20 an error was made at the bottom of the
original computation sheet, the entry of $18.30 less $15.28
should have read $18.30 less $14.28, not $15.28, which equals
$4.02, not $3.02. This caused an increase of $8 to $20.94 or
$28.94.
Ralph Sheldon's fringe benefit package credit
accorded Respondents on the Investigator's original wage
computation sheet (see CX-9 at A-21) was as follows:
Medical Insurance - $344.24 (one month premium) 520 hours
(3 months) = $.66 per hour credit
Holidays - 2 days X $10 X 8 hours = $160
- 2 days X $11 X 8 hours = $176
- (Total $336) 1,040 hours (6 months) =
$.32 per hour credit
Total Credit - $.66 + $.32 = $.98 per hour credit
Because Mr. Sheldon testified that he did not receive medical
benefits or holiday pay, the $.98 fringe benefit credit was
eliminated and Mr. Sheldon's backwages were accordingly increased
by $795.24 from $4,801.15 to $5,596.39 as reflected on the
revised computation sheet.
Courthouse Project
With regard to the backwage liability adjustments made
pertinent to the Courthouse project, Investigator McFarren
determined that Respondents' total backwage liability increased
from $49,686.95 to $51,749.73. The specific adjustments made
that increase Respondents' backwage liability are supported by
testimonial evidence and are identified below.
Mario Fontes' fringe benefit package credit accorded
Respondents on the Investigator's original wage computation sheet
(see CX-6 at A-4) was as follows:
Medical Insurance - ,288.44 360 hours (2 months) = $3.58
per hour credit
Holidays - 2 days X $17.50 X 8 hours = $280 867
hours (5 months) = $.32 per hour credit
Total Credit - $3.58 + $.32 = $3.90 per hour credit
Because Mr. Fontes testified that he did not receive medical
benefits, sick pay, or vacation pay, Respondents' fringe benefit
credit was reduced and adjusted on the Investigator's revised
wage computation sheet as follows:
Medical Insurance -
Holidays - 2 days X $17.50 X 8 hours = $280 867
hours (5 months) = $.32 per hour credit
Total Credit - $.32 per hour credit
As a result of this reduction in credit, Mr. Fontes' backwages
were increased by ,170.66 from $4,886.74 to $6,057.40 as
reflected on the revised computation sheet.
Kevin Karpinski's fringe benefit package credit
accorded Respondents on the Investigator's original wage
computation sheet (see CX-6 at A-6) was as follows:
Medical Insurance - $379.90 X 4 months = ,519.60 693
hours (4 months) = $2.19 per hour credit
Holidays - 3 days X $17.50 X 8 hours = $490
1,213 hours (7 months) = $.40 per hour
credit
Sick Days - 1 day X $17.50 X 8 hours = $140 1,213
hours (7 months) = $.12 per hour credit
Total Credit - $2.19 + $.12 + $.40 = $2.71 per hour
credit
Because Mr. Karpinski testified that he received only one
holiday, no paid sick days, and no vacation, Respondents' fringe
benefit credit was reduced and adjusted on the Investigator's
revised wage computation sheet as follows:
Medical Insurance - $379.90 X 4 months = ,519.60 693
hours (4 months) = $2.19 per hour credit
Vacation -
Holidays - 1 day X $17.50 X 8 hours = $140 1,213
hours (7 months) = $.12 per hour credit
Sick Days -
Total Credit - $.12 + $2.19 = $2.31 per hour credit
As a result of this reduction in credit by $.40 per hour,
Mr. Karpinski's backwages were increased by $281.60 ($.40 per
hour X 704 hours worked on project) from $6,516.54 to $6,798.14
as reflected on the revised computation sheet.
Custodio Ramos' fringe benefit package credit
accorded Respondents on the Investigator's original wage
computation sheet (see CX-6 at A-10) was as follows:
Medical Insurance - $150.08 X 12 months = ,800.96
Vacation - 10 days X $12.50 X 8 hours = ,000
Holidays - 3 days X $12 X 8 hours = $288
- 3 days X $12.50 X 8 hours = $450
Total Credit - $3,538.96 2,080 hours (one year) =
.70 per hour credit
Because Mr. Ramos testified that his vacation was taken
before the Courthouse project (resulting in his hourly rate being
less than reflected on the original wage computations) and that
he received only five paid holidays, Respondents' fringe benefit
credit was reduced and adjusted on the Investigator's revised
wage computation sheet as follows:
Medical Insurance - $150.08 X 12 months = ,800.96
Vacation - 10 days X $8 X 8 hours = $640
Holidays - 3 days X $12 X 8 hours = $288
- 2 days X $12.50 X 8 hours = $200
Total Credit - $2,928.96 2,080 hours (one year) =
.41 per hour credit
As a result of this reduction in credit by $.29 per hour (.70
less .41), Mr. Ramos' backwages were increased by $369.38 from
$8,088.24 to $8,457.62 as reflected on the revised computation
sheet.
Edward Seixas' fringe benefit package credit accorded
Respondents on the Investigator's original wage computation sheet
(CX-6 at A-11) was $2.78 per hour based upon Respondents being
given credit for four paid sick days. Because Mr. Seixas
testified that he did not take any sick days, Respondents' fringe
benefit credit was reduced by $.12 per hour from $2.78 per hour
to $2.66 per hour on the revised computation sheets. Moreover,
since Mr. Seixas also testified that he was an "unsupervised"
apprentice electrician for three days on the federal project, his
pay of $12.50 per hour for those three days (24 hours) should
have been $21.45 per hour and his backwages as reflected on the
revised computation sheets increased by $8.95 per hour X 24
hours. As a result of these adjustments, Mr. Seixas' backwages
were increased by $241.14 from ,200.14 to ,441.28 as
reflected on the revised computation sheet.
G.Debarment is Warranted:
In the instant case, Respondents' work on the Bridgeport
Federal Building and Courthouse implicates the Davis-Bacon Act,
not one of the "Related Acts." See CX-13; ALJ EX 1.
Where a contractor disregards its obligations under the Davis-
Bacon Act, debarment for three years is mandatory and (in
contrast to Davis-Bacon Related Act cases) evidence of
"mitigating factors" or "extraordinary circumstances" is
irrelevant. See,G & O General Contractors, Inc.,
WAB Case No. 90-35 (February 19, 1991) and 29 C.F.R. 5.12(a)(2).
Respondents also performed work on the Ridgefield Wastewater
Treatment Facility, which implicates the Davis-Bacon Related
Acts, namely the Federal Water Pollution Control Acts. (ALJ
EX 1) Under the Davis-Bacon Related Acts (DBRA), including the
Contract Work Hours and Safety Standards Act (overtime
compensation provision), debarment is warranted whenever a
contractor's violations of labor standards are aggravated or
willful. (See 29 C.F.R. 5.12(a)(1))
Respondents' policy of not paying overtime evinces a
deliberateness and willfulness alone sufficient to warrant the
imposition of the debarment sanction in this case. When this
illicit policy is considered in conjunction with Respondents'
knowing underpayment of the required prevailing wage rates
(see footnotes 4 and 5, supra) and fringe benefits
(Tr. 774-775), and evidence of substantial recordkeeping
irregularities including the failure to reflect on certified
payrolls any overtime hours worked, the debarment sanction
is particularly appropriate and compelling under either the
Davis-Bacon Act (simple disregard) or the Davis-Bacon Related
Acts (aggravated or willful disregard) debarment tests.
Moreover, evidence of Respondent's violation of state prevailing
wage laws and Respondent Gloria's guilty plea to state criminal
charges of overtime violations (see CX-1) as well as
Respondents' violation of federal overtime (FLSA) requirements
(see CX-2) provides further support for the imposition of
the debarment sanction. See, M.C. Lazzinaro Construction
Corp., WAB No. 88-8 and 89-12 (March 11, 1991); Matter of
Property Resources Corp., CCH LLR WH Ad. Rulings, ¶
32,078 (April 29 1991).
Since Respondents' prevailing wage, overtime, fringe benefit
and recordkeeping violations constitute not only a disregard of
their obligations under the Davis-Bacon Act, but also a reckless,
aggravated, or willful disregard of their obligations under the
Davis-Bacon Related Acts, Complainant respectfully submits that
this Court should issue an order debarring Respondents and any
entity in which they have a substantial interest pursuant to 29
C.F.R. 5.12.
RESPONDENTS POSITION
Respondents submit that neither Mr. Gloria nor Safety should
be debarred. There were technical violations of the wage and
hour laws. The Department tried to make it appear that the
violations were serious and that Safety knowingly violated the
law. Without deprecating the importance of the wage and hour
laws, the better evidence is that the violations were neither
serious nor intentional. Therefore, debarment is inappropriate.
Americo Gloria, a Portuguese immigrant like many of his
employees, assembled what he believed to be a fair compensation
package. Safety paid its electricians the wage generally paid in
the area, or better, plus benefits. The employees were glad to
get the jobs. Although overtime was paid as straight time, no
one was forced to work it, and employees who did not work
overtime, did not suffer. These violations are not outrageous,
and it is undisputed that Mr. Gloria is no longer in management
and no wage and hour violations have occurred since the
investigation.
Nor is there adequate evidence of bad intent. The
Department infers intent from a variety of factors, including
repeated violations, unverified assumptions, sloppy paperwork and
lack of cooperation with the investigation. On close
examination, none of these factors show bad intent.
The Department claimed that repeated violations showed
intent, pointing to the state investigation and the judgement
entered on nonprevailing wage claims. The Department is unfairly
applying the standards of a large computerized contractor to a
family business run out of the home. Safety did pay benefits and
Mr. Gloria s estimate of their value was inaccurate but was
based, not on his imagination, but on information supplied by an
insurance agent. The information was insufficiently detailed,
and the results were wrong, but the effort was made.
Mr. Gloria registered his apprentices as promptly as he
could given the state of the company and the state s Department
of Labor manpower shortage. He paid them as apprentices because
that is what they were. It never occurred to him to double the
pay of the apprentices because they could not be registered on
time. The safety apprentices were generally accompanied by
electricians; there were foremen on the job, and apprentice work
was inspected. Safety could never have kept track of each
apprentice so that every minute they spent alone would be paid at
journeyman rate. The Department says that this should have been
done but, under the circumstances, Mr. Gloria s assumption that
he was obeying the law was not unreasonable.
While Safety s paperwork was sloppy because the business was
short of cash and badly run, there was no elaborate scheme to
defraud. Safety had work far beyond the capacity of its
management. It went bankrupt shortly after these events. Some
time cards were lost, some were corrected and some were dictated
by illiterate employees to supervisors. There was no forgery or
deliberate failure to keep records. The failure to individually
adjust the value of the benefits for each certified payroll, like
the other problems with the certified payrolls, occurred because
Mr. Gloria s teenage son, compiling certified payrolls after
school, photocopied old forms in haste and ignorance.
The Department relies most strongly on failure to cooperate
with the investigation. It alleges refusal to provide records,
alteration of records and after-the-fact creation of records.
The Department also claims bribery and intimidation of Safety s
employees.
However, according to Respondents, the reality is much less
dramatic. The Department s investigator, egged on by an
aggressive state investigator, became angry and decided that
Safety was crooked when we had to redo her calculations to
reflect additional time cards. Although the testimony revealed
that the cards had been misplace by Mr. Gloria s teenaged son in
the trunk of a borrowed car, the Department investigator, new to
the job (this was one of her first prevailing wage
investigations, if not the very first one), and irritated by the
extra work, concluded that Safety had something to hide and
started recharacterizing the evidence. Every missing record was
obstruction, every erasure and strikeout on a time card was
forgery, and every conversation between Mr. Gloria and an
employee was intimidation. The Safety employees encouraged this
picture, and told the Department investigator what whe wanted to
hear, because they wanted big checks. The evidence presented at
the hearing did not support this interpretation. There were bad
assumptions and sloppy paperwork - not fraud.
Safety submits that it believed it was in compliance with
the Act and the regulations, that Safety was a family-run
business that locked the sophistication of those firms with
numerous lawyers and accountants to give competent advice before
embarking upon a course of action. Safety s practices, though
contrary, in some respects, to the prevailing wage laws, were
clear. No one was forced to work
overtime and Mr. Gloria did not pay overtime because he did not
think he had to do so if the employees were free to decline it.
(Tr. 765, 807) While the Administrator submits that Safety
intentionally violated the law by not paying apprentices as
Journeymen prior to their registration (Tr. 602-604, 671), Mr.
Gloria had no idea that this was the law.
Safety tried to register apprentices on time but was
prevented by a manpower shortage at the Department of Labor. (Tr.
1054-55) Although the Department investigator claimed that it
was error not to register, she had absolutely no knowledge
whether Safety could have registered apprentices. (Tr. 670-71)
Custodio Ramos, an employee openly hostile to Safety,
corroborated Mr. Gloria s testimony that he tried to register but
the representative from the Connecticut Department of Labor was
not there. (Tr. 92, 109-10)
The Department investigator said that Safety failed to pay
apprentices as journeymen while they were working alone or while
there was not a 1:1 ratio of apprentices to journeymen. (See,
e.g., Tr. 602-06; 614-15, 672) This had to be done even if
it meant paying a different salary if the apprentice was alone
for twenty minutes or so because the journeyman was away from the
work site on personal matters.
Safety also submits that while its certified payrolls may
have been sloppy, they were certainly not falsified. Any
errors or inaccuracies came about because of a lack of
sophistication in business dealings and without any intent to
deceive. With reference to the fringe benefits packages, Mr.
Gloria had informally estimated the value of the benefits package
from the information available to him and after a call to an
insurance agent. (Tr. 772-74, 823-25) The figures given are all
averages, not payments to a single person, and Mr. Gloria never
intended them to be otherwise. (Tr. 826-28; 834, 1036, 993)
Moreover, much of the confusion about who did or did not
have medical insurance can be attributed to the waiting period.
Mr. Gloria testified that he believed that Safety s medical
insurance had a three month waiting period. (Tr. 773-74, 826-27)
During that time Safety was providing the benefit within the
meaning of its contract, though the employee could not collect.
(Tr. 774-77) The Department investigator testified that Safety
should not have taken the credit for that period since it was not
adjusted for individual employees. (Tr. 692-94) Mr. Gloria said
that he used the cost of insurance as an average figure. (Tr.
827) The Department may have a better interpretation of the
regulations, but Mr. Gloria s view is not fraudulent.
(See Tr. 777 Mr. Gloria always intended employees to be
covered after waiting period)
The Department assumed that if an employee was not paid for
a sick day, the claim that sick days were provided must have been
fraudulent. (McFarren, Tr. 597-98) The Department never asked
if there was a reason not to pay. (See e.g., McFarren,
Tr. 706-07)
The Department assumed that Mr. Gloria intended to defraud
and looked only for evidence to support that assumption. This
court has heard the evidence, including testimony from Rui
Gloria, who was never interviewed by the Department, and can
decide that the Department s assumption of fraud is incorrect.
Respondents also submit that the time cards were not forged,
that the different hand writings, cross outs, erasures and the
like on the cards were the result of normal business activity.
(Tr. 840-41, 843-45, 1039-44, 1012-14) Respondents also posit
that it should not be debarred because it did not obstruct the
investigation, contrary to Complainant s thesis. The more
credible evidence is that Safety did cooperate with the
Department s investigator, that the time cards were misplaced
through inadvertence in the trunk of an automobile (Tr. 999-1004)
and that they were immediately made available to the investigator
upon their discovery.
The worksheets also rebut the investigator s claim. If what
the Department is saying is true, the worksheets completed in
November and December, 1991, would have no references to time
cards. Some of the worksheets, however, are dated November and
December, 1991, and have columns headed T/C, for Time Card.
How did the Investigator pull figures off of time cards in those
months if she did not have any? These cards, copies of which are
attached for ease of reference as Exhibit A hereto, support Mr.
Gloria s testimony that time cards were made available at an
early date and that the only cards produced in 1992 were those
discovered in the car trunk, according to Respondents.
None of the other evidence of obstruction holds water. Ms.
McFarren claimed that Safety issued two checks, one for straight
time and one for overtime, and this was an attempt to obstruct
the investigation. (Tr. 629) Mr. Gloria denied issuing such
checks (Tr. 787-88), which are not shown in Safety s pay records,
unless there was an error in issuing a payroll check. (Tr. 838)
The Department tried to make it appear that Safety created
false records. During the investigation Americo Gloria
reconstructed the hours worked and payments made to employees so
that he could correct the breakdowns prepared by the Department
investigator. (Tr. 789-90, 1069) Mr. Gloria decided to review
his worksheets with the employees involved (Tr. 790), naively
assuming that they would approve the figures if they were
correct. Mr. Gloria did not take into account the employee s
financial incentive for refusing to cooperate.
Respondents submit that the testimony of the former
employees against Mr. Gloria is not credible and should be
rejected because they have a powerful motive to lie, i.e.,
they know that they could collect a substantial sum of money
if, as a result of their testimony, the Administrator prevails at
the hearing. They also know that they get nothing if the
Administrator does not prevail herein.
Moreover, most of the former employees had no clear
recollection of what days, weeks or months they worked. They
acknowledged that the time records would be more accurate than
their memories. See, e.g., Almarindo Alves (Tr. 63-64);
Edwin Cruz, (Tr. 75-76); Rocco Cuscuna (Tr. 335); Anthony Pavone
(Tr. 367-68); Frank Pelaggi (Tr. 390) Edwin Cruz said that he had
records - but they were burned in a fire. (Tr. 82) Rocco
Cuscuna said that he had a log book that would be more accurate
than his memory but did not bring it to court; I just didn t
feel I needed it. (Tr. 331) Of course, within a few minutes,
Cuscuna was admitting that without records he could not remember
what he did on any day. (Tr. 336) Custodio Ramos insisted that
he finished work on the Bridgeport Courthouse in February, 1993 -
a year after the job was over. (Tr. 86-88) See also
Allan Peck (Tr. 187-88) (need to see time cards); Anthony
Pavone (Tr. 381) (same). Some, like Rocco Cuscuna, were very
positive on direct, but without records, like the log book he did
not bring, could not be sure of anything on cross. (Tr. 323-24)
Respondents also point to the contradictory testimony given
by these former employees as another reason to reject their
testimony. In conclusion, Respondents posit that the credible
evidence presented at the hearing does not show willful
falsification. Any errors or omissions were corrected.
Accordingly, Debarment is not appropriate herein.
On the other hand, Plaintiff submits that the evidence
provides strong bases for issuance of a debarment order under 29
C.F.R. 5.12(a)(1) against Safety Electric, its affiliated
corporations and Americo Gloria, their principal (herein jointly
Respondents). Respondents engaged in courses of action which
alone, and taken together, necessitate debarment. As the record
establishes that:
1. Respondents were involved in two federally-funded projects
at the Federal Building and Courthouse in Bridgeport,
Connecticut and the Wastewater Treatment Facility at
Ridgefield, Connecticut.
2. Respondents did not pay to certain of its employees the
appropriate prevailing wages, as well as appropriate
overtime and fringe benefits, as required by the Davis-Bacon
Act, the Davis Bacon Related Acts and the Contract Work
Hours and Safety Standards Act.
3. Respondents knew of its obligations under the statutes and
deliberately and intentionally failed to carry out their
obligations.
4. Respondents filed false certified payrolls to the Department
in an attempt to feign compliance with these statutes.
5. Respondents did not cooperate with the investigation and, in
fact, delayed and impeded the investigation by withholding
most important documents such as the time cards.
6. Respondents should be debarred for the appropriate amount of
time as permitted by the statutes involved herein.
According to Complainant, under 29 C.F.R. § 5.12(a)(1),
a contractor, its officers and any entity in which the contractor
has a substantial interest are subject to debarment for willful
or aggravated violations.
As noted in In Re Schnabel Assoc., CCH LLR WH Ad.
Rulings, 4-89/7-90, ¶ 31,798 at p. 43,268, the regulations
do not define willful. However, reference to recent pertinent
decisions provides guidance. The Supreme Court has held that a
violation of the Fair Labor Standards Act is willful if the
employer knew or showed reckless disregard for the matter of
whether its conduct was prohibited. McLaughlin v. Richland
Show Corp., 486 U.S. 128, 133 (1988). The First Circuit
Court of Appeals has adopted this test for use in Age
Discrimination in Employment Act cases. Biggins v. Hazen
Paper Co., 953 F.2d 1405, 1415 (1st Cir. 1992), cert.
granted, 112 S. Ct. 2990, 112 S. Ct. 3035, 113 S. Ct. 38
(1992). These tests provide useful guides in evaluating
Respondents actions.
Respondents conduct was willful under the
Richland/Biggins standard because certain of the acts were
plainly intentional, e.g., failure to pay correct wages
and failure to maintain proper payroll records. These acts alone
warrant debarment, according to Plaintiff. Compare A. Vento
Construction, CCH LLR WH Ad. Rulings, ¶ 31,987 (WAB
1990), at p. 43,696.
Complainant submits that such action constitutes a reckless
disregard for the law. In Petteruti v. Atwood Motors, 102
CCH L.C. ¶ 34,631 (D. RI 1983), the court, at p. 46,634,
held that where an employer made no effort to ascertain and
follow the dictates of a statute (the Fair Labor Standards Act),
such employer failed to act in good faith and reasonably.
Likewise, in Doty v. Elias, 733 F.2d 720, 726 (10th Cir.
1984), the court held that where an employer never sought an
opinion from an attorney or the relevant government agency
concerning the legality of his pay practices, he had failed to
act in good faith or reasonably. Respondents failure to consult
the Department of Labor concerning its practices demonstrates
reckless disregard.
Moreover, the violations were plainly not only willful, but
were also aggravated. In contrast to willfulness, the term
aggravated is not clearly addressed in cases. However, the
concept of aggravation bespeaks enhanced gravity. See
Ballantine s Law Dictionary, 3d Ed., The Lawyers Cooperative
Publishing Co., Rochester, NY, 1969, p. 51. The gravity of
Safety s conduct was severe in both scope and effect. Numerous
employees were deprived of their wages and suffered serious
financial repercussions.
Thus, Safety, having acted willfully and in a manner
exemplifying aggravation, cannot establish a valid contest
regarding debarment. There is no question that failure to pay
appropriate wages or the prevailing wage warrants debarment. It
is precisely the type of conduct condemned in Labor Servs.
supra, and in In Re Richard K. W. Tomn, supra.
Safety s failure to pay employees at the correct rate for
all time worked is likewise a debarment offense.
In summary, Complainant submits that Respondents actions,
taken separately and as a comprehensive program of pay practices,
exemplify the type of misconduct which Congress sought to
address by debarment. See Janik Paving & Const., Inc. v.
Brock, 828 F.2d 84, 90-91 (2d Cir. 1987)(debarment can be a
serious blow to firms specializing in government business but it
may be the only realistic way to deter contractors from willfully
violating the law, based on a cold weighing of costs and
benefits).
On the other hand, Respondents argue that Plaintiff has
failed to establish that any alleged or admitted violations of
the Davis-Bacon or related acts were aggravated or willful
violations and that the request to debar Mr. Gloria and any
affiliated corporations should be denied.
While Respondents have conceded that violations of the Act
and regulations have occurred, Respondents argue that there is no
evidence that these were willful and the totality of the
circumstances is such that debarment is not warranted. A review
of all of the facts and circumstances in this case will show that
there were systems in place designed to comply with the statute
and regulations and that any violations were inadvertent and not
the result of willful action, according to Respondents.
As already noted above, the term willful is not defined in
the regulations but has been interpreted to mean . . .
intentional or knowing violation of the applicable act . . . or
. . . voluntary intentional violation of a legal duty . . .
U.S. v. Bishop, 412 U.S. 346, 356; U.S. v. Drape,
668 F.2d 22, 26 (1st Cir. 1982) as cited in In Re M.G.
Allen & Assoc., 29 W.H. cases at 388, 189. In providing some
definition to the terms willful and aggravated, factors to be
considered include: the nature, extent and seriousness of past
violations; the nature, extent and seriousness of the present
violations; the presence of any culpable conduct, such as
deliberate falsification of records; the presence of bona fide
legal issues of dispute; the cooperation of the respondent in the
resolution of issues and the demonstration of a desire and
intention to comply with the Act; and the payment of such sums
admittedly owed to employees.
I have extensively summarized the parties positions to put
this issue in proper perspective.
In the case at bar, Complainant has requested debarment of
Respondents for the full three years permitted by Section 5.12.
As extensively summarized above, Complainant submits that
debarment for the full term is applicable because Respondents
actions were aggravated or willful and Respondents argue that
any violations resulted from honest mistakes and just plain
confusion.
On the basis of my reading of Section 5.12 and pertinent
case law, I find and conclude that the word willful means an
intentional or knowing violation of the applicable acts. The
term willfully simply means a voluntary, intentional violation
of a known legal duty. U.S. Drape, 668 F.2d 22, 26 (1st
Cir. 1982), citing U.S. v. Pompanio, 429 U.S. 10, 12
(1976). Moreover, a willful violation is one done either with
an intentional disregard of, or plain indifference to, the
statute. A. Schonbek & Co. v. Donovan, 646 F.2d 799 (4th
Cir. 1975); Inter County Const. Co. v. OSHRC, 4522 F.2d
777, 779 (4th Cir. 1975)( willful means action taken
knowledgeably); Boston & M.R.R. v. U.S., 142 F.2d 132, 137
(1st Cir. 1944)( willful means knowingly and deliberately).
After an analysis of the regulations and pertinent cases
dealing with the term willful, I find and conclude that the
term willful as used in the regulations means an intentional or
knowing violation of the applicable acts.
The criteria for debarment under a Davis-Bacon Related Act
case is whether a contractor has committed willful or aggravated
violations of the labor standards provisions of any of the
applicable statutes under Section 5.1. If a contractor is found
to be in willful or aggravated violation of the provisions, such
contractor shall be ineligible to receive any contracts subject
to the statues listed in § 5.1 for a period not to exceed
three years.
In their reply brief (RX 14), Respondents submit that
Complainant s revised wage calculations (CX 25) are erroneous as
based on the fact that the Department uncritically accepted the
statements of Respondents employees, Respondents essentially
submitting that the testimony of these individuals should not be
believed. Moreover, Respondents have submitted as Exhibit A to
RX 14 their own wage calculations based on the certified payroll
records and the time cards. (RX 14)
I would simply note at this point that Respondents
employees presented by the Complainant testified credibly before
me and their testimony withstood intense cross-examination by
Respondents counsel. I simply place little or no credence on
Respondents certified payroll records or the time cards as they
were uniformly falsified to feign compliance with the statutes
and which documents bear little resemblance to reality.
Respondents actions brought about this situation and
Respondents, not the employees for whose benefit the statutes
were passed, should bear responsibility herein.
As already noted above, Respondents documents are certainly
unreliable and the Administrator has reconstructed the back wages
due herein based on those employees who testified credibly, under
oath, before me. Such reconstruction was necessitated by
Respondents unreliable and falsified certified payroll records
and it is certainly disingenuous for Respondents to now request
that I accept their wage calculations based on fraudulent
certified payroll records, time cards containing erasures,
different hand writing, etc., as well as Mr. Gloria s self-
serving statements. This I cannot do because Respondents have
brought about this situation. Respondents who have failed to
keep accurate records of employees hours worked may not complain
that the Administrator s back wage computations are imprecise.
Thus, Respondents, in my judgment, should bear the burden of any
imprecise back wage calculations.
In the instant case, based upon the totality of this closed
record, I find the record supports the conclusion that
Respondents and their principals violated the Act willfully and
in an aggravated manner. Therefore, the sanction of debarment is
appropriate.
As mentioned earlier, this Court, in examining the facts and
circumstances surrounding the violative practices in debarment
practices, must also consider other significant factors such as
the severity of the violations, the presence of any culpable
conduct, such as deliberate falsification of records, the
presence of bona fide legal issues of dispute,
Respondents cooperation in the resolution of the issues, their
attitude toward compliance, and past compliance. These factors
must be considered because, in my judgment, they are relevant to
the willful or aggravated provisions of Section 5.12. This
closed record leads to the conclusion that Mr. Gloria fully
engaged in a pattern of activity to evade the Act by engaging in
the practices challenged herein by Complainant. Those practices
have already been summarized at length above and will be briefly
reiterated at this point in the next section.
TIG Insurance Company, as the assignee of North American
Construction Corporation s interest in $49,686.95 which was paid
by the latter firm and is currently being held in escrow by the
Department of Labor, has been granted status as an intervenor as
there was no objection to the motion filed by counsel by letter
dated February 20, 1996. (TIGX 1) TIG s claim should be
presented to the Wage and Hour Division for consideration and
resolution.
I have considered the parties respective positions as
represented by their documentary exhibits and testimonial
evidence in the closed record before me. I have accepted the
Complainant s position as it is supported by the credible,
probative and persuasive evidence. I have also accepted the
testimony offered by Complainant s witnesses as being more
credible and such testimony leads to the conclusion that
Respondents have established a pattern of activity which
contravenes the Act and, therefore, I issue the following:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Respondent Americo Gloria formed and operated a firm
under the name of Safety Electric Construction Co.,
Inc. (jointly referred to as Respondents).
2. At all times relevant herein, Respondents have been subject
to the provisions of the Act while working on and providing
services at the federally-funded projects which are
identified in the caption of this proceeding.
3. Respondents employed certain individuals to perform services
at those federally-funded projects.
4. Respondents are subject to the provisions of the statutes
involved in this proceeding, i.e., the Davis-Bacon
Act, 40 U.S.C. § 276(a), et seq., the Davis Bacon
Related Acts, as denoted at 29 C.F.R. Part 5, the Contract
Work Hours and Safety Standards Act, 40 U.S.C. § 327,
et seq., and the applicable implementing regulations issued
thereunder at 29 C.F.R. Part 5, Sections 5.11(b) and 5.12
(herein jointly referred to as the Act).
5. Respondents knew their obligations under the Act to pay
their employees on those projects the prevailing wage rates,
appropriate fringe benefits and overtime.
6. Respondents knew that the wages being paid to the employees
did not satisfy their obligations under the Act.
7. Respondents pattern of business projects on those projects
violated the provisions of the Act.
8. Respondents certified payroll records were not in
compliance with the requirements of the Act.
9. Respondents have also misclassified certain employees on
those projects.
10. Respondents actions herein constituted willful or
aggravated violations of the labor standards of the Acts
involved herein.
11. Respondents actions warrant debarment for the full three
year period of time, pursuant to 29 C.F.R. § 5.12(a)(1)
and an appropriate ORDER shall be entered.
The Respondents further submit that the workers agreed to
work for certain wages per hour, that this proceeding has brought
out their greed, that the workers have greatly exaggerated their
hours worked and that this proceeding, if successfully prosecuted
by Complainant, will result in an unconscionable windfall to the
employees.
I reject that argument and I accept Complainant s wage
reconstructions because the Respondents have brought about this
situation by maintaining incomplete, inadequate and inaccurate
records and it is well-settled that Respondents, having brought
about this situation, cannot benefit from such bookkeeping
practices to the detriment of their workers, as already noted
above.
As has been stated many times, back wages were due employees
of a motel and restaurant and the back wage calculations were
based on just and reasonable inferences since the employer failed
to prove the precise amount of work performed to negate the
inferred amounts. See e.g., Martin v. Deiriggi d/b/a Belmont
Motor Inn and Caesar s Supper Club, 120 L.C. ¶ 35,578
(N.D. W. VA. 1991).
Therefore, in conclusion, I find and conclude that the ACT
has been violated as alleged by Complainant, that the employees
as identified in the Complainant s Revised Summary of Unpaid
wages (Form WH-56) (CX 25) are entitled to the back wages as
calculated by Complainant, that such unpaid wage calculations are
incorporated herein by reference and that the above-named
Respondents shall be debarred for the full three year period.
ORDER
1. The Administrator shall pay the amount of back wages
due the employees who are identified in the Summary of Back Wages
(Form WH-5), as reflected in the revised Form WH-56 in evidence
as CX 25.
2. Americo Gloria, Safety Electric Construction Co., Inc.,
including any firm in which the named individual has a
substantial interest, shall be debarred in accordance with the
provisions of 29 C.F.R. § 5.12(a)(1) for a period of three
years and shall be ineligible to receive any contract or
subcontract subject to any of the statutes listed in 29 C.F.R.
§ 5.1
3. As TIG Insurance company has been granted status as an
intervenor herein, the firm, as assignee of North American
Construction Corporation, shall submit its claim to and for
consideration by the Wage and Hour Division, U.S. Department of
Labor, for any monies which may be remaining after the named
employees are paid their appropriate back wage, a claim over
which I render no opinion herein.
DAVID W. DI NARDI
Administrative Law Judge
Dated:
Boston, Massachusetts
DWD:gcb
