MELDICK SERVICES, INC., 1987-CBV-07 (Dep. Sec'y Mar. 23, 1990)
CCASE:
MELDICK SERVICES, INC.
DDATE:
19900323
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: March 23, 1990
CASE NO. 87-CBV-07
IN THE MATTER OF
APPLICABILITY OF WAGE RATES COLLECTIVELY
BARGAINED BY MELDICK SERVICES, INC., AND
THE NATIONAL MARITIME UNION TO EMPLOYMENT OF
SERVICE EMPLOYEES UNDER A CONTRACT FOR MESS
ATTENDANT SERVICES AT BERGSTROM AIR FORCE
BASE, TEXAS.
BEFORE: THE DEPUTY SECRETARY OF LABOR
FINAL DECISION AND ORDER
This matter is before the Deputy Secretary /FN1/ pursuant to
the McNamara-O'Hara Service Contract Act of 1965, as amended (SCA
or the Act), 41 U.S.C. [sec] 351-358 (1982), and regulations
promulgated thereunder at 29 C.F.R. Parts 4, 6 and 8 (1989). On
May 31, 1988, the Unlicensed Division of District No. 1 -- MEBA/NMU
AFL-CIO (Union), the successor to the National Maritime Union of
America, AFL-CIO (NMU), filed exceptions April 19, 1988, Decision
and Order (D. and O.) of Administrative Law Judge (ALJ) Theodor P.
von Brand in the above-captioned action. The ALJ found that a
substantial variance exists between the collectively bargained wage
and the prevailing wage rate for [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The Deputy Secretary has been designated by the Secretary to
perform the functions of the Board of Service Contract Appeals
pending the appointment of a duly constituted board. 29 C.F.R.
[sec] 8.0 (1989). [1]
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[2] mess attendants at Bergstrom Air Force Base, Texas (Bergstrom),
and ordered the Wage and Hour Administrator to issue a new wage
determination pertaining to mess attendants employed by Meldick
Services, Inc., at Bergstrom.
The Union filed exceptions to the ALJ's rulings, findings of
fact and conclusions, contending that the Air Force failed to prove
that a substantial variance exists and that the ALJ's D. and O.
should be reversed. The Administrator has filed a statement taking
no position regarding the ALJ's ultimate conclusion that a
substantial variance exists, but urging the Deputy Secretary to
make clear that the party who asserts the existence of a
substantial variance bears the burden of affirmatively
demonstrating that such a variance exists, and to "correct" what
the Administrator views as an erroneous interpretation of 29 C.F.R.
[sec] 4.51(c).
The Air Force filed a response to the Union's exceptions and
a response to the statement of the Administrator. The Union moved
to strike the Air Force's response to the Administrator's
statement, claiming that there is no authority in the regulations
for such a filing. In the interest of having a full briefing of
the issues and facts in this wage determination case, the Air
Force's response to the Administrator's statement is received and
the motion to strike is denied. The additional portions of the
transcript in Kirtland Air Force Base, Case No. 87-CBV-3, submitted
with the Union's motion to strike also are received. (The Laborers
International Union of North America, AFL-CIO, [2]
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[3] Local 16, (LIUNA), filed a petition for review of the ALJ's decision
of August 30, 1988, in Case No. 87-CBV-3 and that matter is pending
before me.)
This case arose when the United States Air Force (AF) on
September 30, 1986, requested a variance hearing pursuant to
Section 4(c) of the Service Contract Act, 41 U.S.C. [sec] 353(c),
/FN2/ to determine whether collectively bargained wages required to
be paid under that section were substantially at variance with
those prevailing in the locality for services of a similar
character. On June 26, 1987, the Administrator, Wage and Hour
Division, issued an order of reference granting the request for a
hearing and limiting the issues to the question of wages. After
a [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Section 4(c) provides:
No contractor or subcontractor under a contract, which
succeeds a contract subject to this chapter and under
which substantially the same services are furnished,
shall pay any service employee under such contract less
than the wages and fringe benefits, including accrued
wages and fringe benefits, and any prospective increases
in wages and fringe benefits provided for in a
collective-bargaining agreement as a result of
arm's-length negotiations, to which such service
employees would have been entitled if they were employed
under the predecessor contract: Provided, That in any of
the foregoing circumstances such obligations shall not
apply if the Secretary finds after a hearing in
accordance with regulations adopted by the Secretary that
such wages and fringe benefits are substantially at
variance with those which prevail for services of a
character similar in the locality. [3]
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[4] hearing the ALJ determined that the collectively bargained
rates were substantially at variance with those prevailing locally
for similar services.
The contractor, Meldick Services, Inc., (Meldick) was a
successor to a previous contractor which had a collective
bargaining agreement (CBA) with the Union governing the contract
for mess attendant services at Bergstrom. Therefore, as required
by section 4(c) of the Act, when Meldick took over the contract and
the AF requested a new wage determination (WD) from the Wage and
Hour Division (WH) for that contract, WH issued a WD for the mess
attendant services contract which utilized the CBA rates. The WD,
AF Exhibit 26, contained a wage rate for mess attendants of $6.21
per hour plus fringe benefits.
The AF relies principally on AF Exhibit 20. This is a WD
issued not for any specific contract, but one which provides rates
for job classifications over an entire locality. AF Exhibit 20
contains a wage rate for mess attendants of $4.28 per hour. That
area-wide WD was based on a survey performed for WH by the Bureau
of Labor Statistics (BLS) of janitors, porters and cleaners.
According to the Administrator's statement:
The BLS survey, Department of Labor (DOL) Exhibit 1, did
not include the classification of mess attendants.
Consistent with the example of "slotting" provided in 29
C.F.R. 4.51(c), because Wage-Hour did not have wage data
for the mess attendant classification, it "adopted" the
wage rate found prevailing for the janitors, porters, and
cleaners classification since the skills and duties of
these two classifications are rated the same [4]
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[5] under the Coordinated Federal Wage System and both are
paid at the WG-2 level if employed by a Federal agency.
Statement of the Administrator at 3. The ALJ found that the
"slotting" procedure used by WH was appropriate. D. and O. at 7.
He also found that the wage data used did not refer to areas
irrelevant to the proceeding; rather the December 1985 BLS survey,
Government's Exhibit 1, on which the WD in Exhibit No. 20 was based
was confined to Hays and Travis counties, the location of Bergstrom
AF Base, and the parties had stipulated that those counties
constituted the relevant locality. D. and O. at 8. Citing the
absence of specific data concretely invalidating the 1985 BLS
survey, the ALJ found that there was a substantial variance between
the collectively bargained wage of $6.21 per hour and $4.28 per
hour wage prevailing for mess attendants in the relevant locality.
He ordered the Administrator to issue a new WD pertaining to mess
attendants employed by Meldick Services, Inc., at Bergstrom Air
Force Base, Texas.
The Union excepts to the ALJ's specific rulings, findings of
fact, and conclusions of law as follows:
(1) The failure to include certain duties of the
Bergstrom mess attendants in Finding of Fact 25;
(2) The determination that 29 C.F.R. [sec] 4.51(c)
precludes a finding that the work of janitors, porters
and cleaners is not of a similar character to that of the
Bergstrom mess attendants despite evidence that dictates
such a finding; [5]
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[6] (3) The finding that the job functions of the Bergstrom
mess attendants are "reasonably consistent" with the
definition of the duties of mess attendants in the
Service Contract Act Directory of Occupations;
(4) The finding that the data set forth in the "area-wide
wage determination" is for the relevant locality;
(5) The determination that data which excludes government
employees can constitute a reliable indicator of the
prevailing wage in the locality of Austin, Texas;
(6) The determination that two year old wage data
relating to janitors, porters and cleaners can constitute
a reliable indicator of the current prevailing wage of
the Bergstrom mess attendants;
(7) The allocation of the burden of proof;
(8) The ruling that the Union's exhibit was not
admissible because no one who had been personally
involved in the referenced survey was available to
testify and that the Union's expert could not refer to
said document as one on which he relied in forming his
opinion; and
(9) The ruling that evidence regarding the job duties and
wage rates for "mess man/utility man/galley utility
man/steward assistant" was not admissible.
The BLS survey on which the Administrator relied in
determining the prevailing rate for mess attendants was conducted
in the Austin, Texas, Standard Metropolitan Area which "consists of
Hays and Travis Counties." Government Exhibit 1 at 1. The [6]
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[7] survey did not include mess attendants but did include the
classification of "janitors, porters and cleaners." Id. at 2. When
a specific job classification is not included in a survey,
Department of Labor regulations provide a method for dealing with
this omission called "slotting". 29 C.F.R. [sec] 4.51(c). The
regulation states:
(c) Slotting wage rates. In some instances, a wage
survey for a particular locality may result in
insufficient data for one or more job classifications
that are required in the performance of a contract.
Establishment of a prevailing wage rate for certain such
classifications may be accomplished through a "slotting"
procedure, such as that used under the Federal pay
system. Under this procedure, wage rates are derived for
a classification based on a comparison of equivalent or
similar job duty and skill characteristics between the
classifications studied and available. [*] As an
example, a wage rate found prevailing for the janitorial
classification may be adopted for the classification of
mess attendant if the skill and duties attributed to each
classification are known to be rated similarly under pay
classification schemes. (Both classifications are
assigned the same wage grade under the Coordinated
Federal Wage System and are paid at the Wage Board grade
2 when hired directly by a Federal agency.)
[*](Emphasis added.) [*] Thus, in describing the general
principles of the slotting procedure, the regulations provide as an
example the exact situation confronted in this case. The
classifications are assigned the same wage grade when employees
performing this work are hired directly by a Federal agency.
Michelle Bechtoldt, Supervisory Salary and Wage Analyst, Branch of
Service Contract Wage Determinations, Wage and Hour Division,
testified as follows:
In this particular case, the janitor, porter and cleaner
and the mess attendant both are rated at the Wage grade
- 2 level under the Federal Wage Board pay [7]
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[8] system. And for that reason, we determined that the
rate of $4.28 as found prevailing under the area-wide
survey for janitor, porter and cleaner would be appropriate
for the mess attendant.
Hearing Transcript (T.) at 148.
Concerning the Union's Exceptions (1) and (3), supra, the ALJ
enumerated most, if not all of the food preparation duties
performed by the mess attendants. D. and O. at 5-6. Failure to
describe all duties of mess attendants does not substantiate that
all duties were not taken into consideration nor does it constitute
error on the ALJ's part. The ALJ found that the slotting procedure
used by WH was appropriate based on the consistency of the actual
job functions of mess attendants and the definition of mess
attendant duties in the Service Contract Act Directory of
Occupations, as well as the wording of [sec] 4.51(c) which uses as
an example for slotting the identical situation presented in this
case. D. and O. at 7. The ALJ, in utilizing the $4.28 rate for
purposes of making the ultimate Section 4(c) finding, rationally
relied upon the administrative determination of comparability. See
In the Matter of Applicability of Wage Rates Collectively Bargained
by Big Boy Facilities Inc., and the National Maritime Union to
Employment of Service Employees Under a Contract for Mess Attendant
Services at Fort Richardson, Alaska (Fort Richardson), Decision of
the Deputy Secretary, Case No. 88-CBV-7, January 3, 1989, slip op.
at 14-15. [8]
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[9] Exception (2) objects to the ALJ's finding that 29 C.F.R.
[sec] 4.51(c) precludes a finding that the work of janitors,
porters and cleaners is not of a character similar to that of
Bergstrom mess attendants. The Administrator asserts that [sec]
4.51(c) does not preclude the ALJ from finding that "the work of
janitors, porters and cleaners and mess attendants is too
dissimilar for the purpose of slotting procedure" since the plain
reading of the section states that it is an example and that the
rate may be adopted rather than must be adopted. The
Administrator's Statement provides background regarding section
4.51, pointing out that in drafting the regulations, Wage and Hour
used the mess attendant and janitor/porter/cleaner classifications
as an example because the question of proper rates for mess
attendants frequently crops up in different parts of the country,
and Wage and Hour often utilizes the janitors, porters and
cleaners' rate in such a situation. I agree that
[n]othing in the Service Contract Act or regulations
precludes the ALJ from finding, based on the totality of
the evidence in this matter, that the wage rates in the
area-wide wage determination issued by Wage and Hour are
not sufficiently current or precise to carry the moving
party's burden of proving a substantial variance.
Statement of the Administrator at 7.
However, the fact that both classifications are rated at WG-
2 and that the comparison is so common as to be used as an example
in the regulations supports the ALJ's finding, even though a
contrary finding is not expressly precluded. Thus, I find that the
appropriateness of the slotting procedure in [9]
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[10] addition to the ALJ's determination that the WD was sufficiently
current and precise to carry the AF's burden, supports the ALJ's
decision that a substantial variance exists.
Exception (4) objects to the ALJ's finding that the data set
forth in the area-wide wage determination is for the relevant
locality. The ALJ said that
[t]he parties have stipulated that Hays and Travis
Counties are the relevant locality for the purposes of
this proceeding. It should further be noted that the BLS
survey on which the wage determination in question is
based is confined to Hays and Travis Counties.
Union argues that the $4.28 per hour wage determination,
derived from the BLS survey which was limited to Hays and Travis
Counties, somehow is rendered irrelevant to the stipulated
"relevant locality" because that wage determination is used for a
wider range of counties. This argument is without merit. To the
contrary, the fact that the BLS survey was confined to only two
counties, one of which, Travis, contains the location of Bergstrom
AFB, supports the validity of the wage determination since it was
derived directly from the BLS data.
Union's exception (5) also fails. Union argues that data
which excludes [state and local] government employees cannot
constitute a reliable indicator of the prevailing wage in the
locality of Austin, Texas. A similar argument was raised by this [10]
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[11] Union and rejected in the Fort Richardson decision. There
the Deputy Secretary was
not persuaded by the Union's argument . . . that wage
rates applicable to 'public sector' employees of state
and local governments must be considered in order for
surveys reliably to indicate a prevailing rate in the
locality. The SCA affords wage standards protection to
employees working for contractors under Government
service contracts. Because of the legal stricture that
Federal contracts be awarded to the lowest bidder,
successful bidders often were those paying substandard
wages, i.e., wages below those tolerated in the local
private market. The SCA House Report states: Contractors
who wish to maintain an enlightened wage policy may find
it almost impossible to compete for Government service
contracts with those who pay wages to their employees at
or below the subsistence level. H.R. Rep. No. 948, 89th
Cong., 1st Sess. at 2 (1965). An object of the
legislation was to ensure that contractors would not
undercut the local private labor market by importing
cheap labor. Accordingly, in identifying locally
prevailing wages, the primary focus is compensation for
similar services in the private sector. Cf. Bldg. &
Const. Trades' Dept. AFL-CIO v. Donovan, supra, 712 F.2d
at 619-622. The fact that the pertinent BLS surveys in
the instant case do not incorporate public sector data
does not diminish their reliability and usefulness in
gauging prevailing wages under the SCA.
Slip op. at 18-19 (footnote omitted).
Here, the ALJ articulated the need to demonstrate concretely
that non-federal government /FN3/ wage data had a significant
impact [11]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ Federal wages rates, as required by Section 2(a)(5) of the
Act, already have been given "due consideration" in arriving at the
area-wide wage determination. That section requires that a
contracting agency when requesting a wage determination from the
Department of Labor must provide a statement of the rates that
would be paid by the Federal agency to the various classes of
service employees if employed directly and that "[t]he Secretary
[FN3 CONTINUED ON PAGE 12] (cont'd) shall give due consideration
to such rates in making the wage and fringe benefit determinations
specified in this section." 41 U.S.C. [sec] 351(a)(5). [11]
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[12] on the prevailing wage for mess attendants. The ALJ found
that the regulations designated the BLS survey as the most
frequently used source for prevailing wage rates and that these
regulations were formulated with knowledge that governmental data
is excluded from BLS surveys. D. and O. at 8. Thus, it became the
Union's obligation to explain why this excluded data invalidated
the wage determination which derived from the survey. The ALJ
found, /FN4/ and I agree, that the Union failed to demonstrate
this.
Exception (6) questions the ALJ 's determination that the BLS
survey wage data, which was two years old at the date of the [12]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ The ALJ excluded a document entitled "Wage and Salaries Paid
Support Personnel in Public Schools 1986-87" on the basis that the
Union failed to provide a witness with first hand knowledge of the
survey. D. and O. at 8. The Union in its 8th exception argues
that Rule 703 of the Federal Rules of Evidence permits such a
document to be accepted for the record. Rule 703 provides that
hearsay material may be admitted if the evidence is "of a type
reasonably relied upon by experts in the particular field in
forming opinions or inferences upon the subject." The record does
not make clear that the proffered survey meets this provision.
Accordingly, I will not disturb the ALJ's ruling on this. Neither
will I disturb his rejection of a BLS survey, the Union's 9th
exception, which was the basis for a DOL wage determination
applicable to the Military Sealift Command's contracts for
employees on ocean going vessels. The record demonstrates that the
job duties and wage rates for the classification "mess man/utility
man/gallery utility man/steward assistant" apply only to jobs on
ocean going vessels and are not relevant to this proceeding. T. at
179. [12]
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[13] hearing, /FN5/ could be a reliable indicator of the current
prevailing wage. The ALJ listened to the Union's expert witness,
economist Dr. Brian Sullivan, and concluded that the record was
silent as to what effect, if any, the Consumer Price Index or the
rate of inflation had on the relevant wage rates in the Austin area
for the two year period in question. The ALJ also noted,
significantly, that even assuming a 15% inflation factor on the
$4.28 rate over the two year period, the rate would be increased to
$4.92 which still represents a substantial variance from the $6.21
CBA rate. D. and O. at 9. I agree with the ALJ's conclusion.
In exception (7) the Union claims that the ALJ placed the
burden of proof on the Union rather than on the Air Force. The
Administrator asks that I rule that the moving party, i.e. the Air
Force, has the burden of affirmatively demonstrating that a
substantial variance exists. Upon review of the record and the
ALJ's decision, there appears no real disagreement as to which
party had the burden of proof; there was only disagreement on the
Union's part as to whether or not that burden was met. In its
response to the Administrator's statement the Air Force presents
the following analysis
First, the Administrator points out that the burden of
proof in a substantial variance proceeding is on the
petitioner, in this case the Air Force. The Air Force
does not [13]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ The Air Force points out that the December 1985 survey was
not two years old when WD-86-960 (Rev. 1) was made on December 9,
1986. Air Force Response at 25, n. 16; A.F. Exhibit 20, Government
Exhibit 1. [13]
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[14] contest that point. Rather, as argued in all prior
submissions, the Air Force contends that it has satisfied
its burden by presenting evidence that: (1) the character
of the work performed by the Bergstrom mess attendants is
similar to that described in the Service Contract Act
Directory of occupations for "mess attendants;" (2) the
Secretary has determined the prevailing rate for "mess
attendants," as described in the Service Contract Act
Directory of Occupations, to be $4.28 per hour in the
area of applicability of Wage Determination 86-960 (Rev.
1); (3) the area of applicability of the wage
determination includes the "locality" surrounding
Bergstrom AFB, Texas; and (4) the variance between the
prevailing rate of $4.28 and the negotiated rate of $6.21
is substantial. The Union has not, as noted by Judge Von
Brand, presented credible evidence to rebut or otherwise
undermine the Air Force evidence; it must bear the
consequences of such failure. That does not mean,
however, that the burden of proof has ever shifted to the
Union.
AF Response to the Statement of the Administrator at 3-4.
The AF relied on the information derived from area surveys
made by the Bureau of Labor Statistics, U.S. Department of Labor,
to meet the evidence standard and its burden of proof. This
comports with the conclusion in Fort Richardson, slip op. at 10,
that this type of evidence satisfies a "clear showing" standard.
Accordingly, I conclude that the Air Force, as the moving party,
bears the burden of demonstrating that a substantial variance
exists and that the record in this case establishes that the Air
Force has carried its burden.
For the reasons described herein, I AFFIRM the ALJ's finding
that the wages for mess attendant services at Bergstrom Air Force
Base, Texas, collectively bargained by Meldick Services, Inc., [14]
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[15] and the National Maritime Union are substantially at
variance with those prevailing in the locality for services of a
similar character. The Acting Administrator /FN6/ of the Wage and
Hour Division shall issue a new wage determination setting wages
for mess attendants employed by Meldick Services, Inc., at
Bergstrom Air Force Base, Texas.
SO ORDERED.
[Roderick DeArment]
Deputy Secretary of Labor
Washington, D.C. [15]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN6/ There is presently a vacancy in the position of Administrator
of the Wage and Hour Division. [15]
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