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<![CDATA[
CCASE:
ELECTRO-SPRAY
DDATE:
19860508
TTEXT:
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[1] THE UNDER SECRETARY OF LABOR
WASHINGTON, D.C.
20210
In the Matter of
ELECTRO-SPRAY, INC., and
EDWARD ESPOSITO, an Individual Case No. SCA-1175
and SHIRLEY ESPOSITO, an
Individual
Respondents
FINAL DECISION OF THE UNDER SECRETARY /FN1/
The Respondents were charged /FN2/with violating the
provisiOns of the Service Contract Act of 1965, as amended, (SCA),
41 U.S.C. [secs] 351-358 (1982). After a hearing an administrative
law judge (ALJ) found that Respondents had violated the SCA by
underpaying wages, failing to pay fringe benefits and failing to
keep required records. /FN3/ The underpayments totaled $33,839.02.
The ALJ recommended, however, that Respondents not be placed on the
ineligible bidders list /FN4/in that unusual circumstances were
present. He noted that this was Respondents' first violation [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The Board of Service Contract Appeals has responsibility for
deciding appeals arising under the Service Contract Act. Pending
the appointment of a duly constituted Board, the Secretary has
designated the Under Secretary to perform the Board's functions. 29
C.F.R. [sec] 8.0 (1985).
/FN2/ The initial complaint was brought by the Regional Solicitor
and the Associate Solicitor for General Legal Services of the
Department of Labor (Department). Prosecution of the case is now
the responsibility of the Associate Solicitor for Fair Labor
Standards (Associate Solicitor).
/FN3/ Decision, Order and Recommendation of the Administrative Law
Judge, August 20, 1981 (D. and O.)
/FN4/ Section 5(a) of the SCA, 41 U.S.C. [sec] 354(a), requires
that a contractor who violates the provisions of the SCA be
debarred from receiving government contracts for a period of three
years unless the Secretary of Labor determines that there are
unusual circumstances to relieve the contractor from debarment.[1]
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[2] and that their position was based on an arguable legal theory.
D. and O. at 9.
The Associate Solicitor appealed the ALJ's recommendation that
respondents not be placed on the ineligible bidders list to the
Administrator, Wage and Hour Division. In a decision /FN5/
reversing the recommendation that Respondents be relieved from
debarment, the Administrator recounted Respondents' record of
failure found by the ALJ:
All of these employees received less than the minimum
required by the wage rate (Complainant Exh. 14) and were
not paid travel time nor early Monday time (T.166, 363,
D. 29-30). Further, the employees were not paid for
holidays (T. 143-166), vacations (T. 364) and travel (T.
166). The payroll records failed to record: employee's
complete name or address (T. 340, 351-352); health and
welfare fringe benefits; the hours employees spent
loading equipment at the shop or travelling to various
worksites (T. 363).
Admin. Dec. at 2, quoting D. and O. at 3.
The service contract involved was with the General Services
Administration and provided for electro-static painting of metal
office furniture and equipment. The work involved various steps of
preparation in addition to spray painting the furniture. The wage
determination attached to the contract required minimum wage and
fringe benefit payments to furniture refinishers, repairers and
upholsterers working on the contract. [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ Decision of the Administrator, June 3, 1985 (Admin. Dec.).[2]
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[3] The arguable legal theory the ALJ relied on to recommend
relief was the argument of Respondents that the wage determination
was not binding because it did not define refinisher and the
Dictionary of Occupational Titles only refers to a "wood"
refinisher rather than a metal refinisher. Thus, claimed
Respondents, the wage determination was ambiguous under 29 C.F.R.
[sec] 4.153. /FN6/
The ALJ concluded that "Respondents have unreasonably
stretched the meaning of Regulation 29 C.F.R. [sec] 4.153 to cover
any slight deviation from the job as described in the wage
determination.... [T]hose workers involved in activities of
preparing furniture for refinishing as well as those who do the
actual refinishing such as spray painting are reasonably considered
refinishers and covered by the wage determination here." D. and O.
at 5, 6. The ALJ also concluded that "[s]uch an interpretation of
29 C.F.R. [sec] 4.153 is not considered justified and would subvert
the purpose of the Act" and that "[u]nder the circumstances of this
case 29 C.F.R. [sec] 4.6(b)(2) applies". /FN7/ D. and O. at 6. [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN6/ At the time this contract was let and during the period of
investigation and consideration before the ALJ, 29 C.F.R. [sec]
4.153 provided in pertinent part that:
[t]here may be employees used ... in performing a service
contract ... whose services ... are not subject to
minimum monetary wage or fringe benefit provisions ....
This may occur ... because such employees do not come
within the classes of service employees, directly engaged
in performing the specified contract services ....
/FN7/ The regulation cited by the ALJ requires that any class of
service employees which is not listed in the wage determination,[3]
[FN7 CONTINUED ON PAGE 4] /FN7/ (continued) and which is to perform
under the contract, be classified by the contractor so as to
provide a reasonable relationship between the unlisted
classifications and those listed in the wage determination. 29
C.F.R. [sec] 6.6(b)(2) (1980). [4]
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[4] Having reached these factual and legal findings, all of which
are fully supported by the record, the ALJ, nevertheless
recommended that Respondents be excused from the ineligible list
sanction "not[ing] that this is their [*] first [*] violation of
the Act and their position is based on an arguable legal theory."
D. and O. at 9, emphasis by ALJ.
Although[] the ALJ referred to the decision in Washington
Moving and Storage Company, SCA 168, decision of the Assistant
Secretary (Aug. 16, 1973), aff'd, by Secretary (March 12, 1974),
which sets forth the guidelines for determining unusual
circumstances, it appears he did not consider the them except to
the extent he concluded that Respondents' position was based on an
arguable legal theory.
The Administrator, in considering the guidelines, found "the
violations to be broad ranging and serious and not the inadvertent
underpayment which could, in some cases, constitute excusable
neglect." Admin. Dec. at 9. He also held there was no bona fide
legal issue, and even if there had been, there was no basis for
underpaying wages and fringe benefits to those employees conceded
to be covered by the wage determination. Id. at 9-10. [4]
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[5] The final point made by the Administrator was that the
attitude of respondent Edward Esposito, reflected in his statement
to the compliance officer that "[i]f there's any money, any money
found due anyone he wouldn't pay anyone", /FN8/ demonstrates
neither the desire nor the intent to comply with the requirements
of the SCA. Therefore, the Administrator's decision recommended
that the Under Secretary reject the ALJ's recommendation and find
that no unusual circumstances exist to relieve Respondents from
debarment. Respondents did not appeal from the Administrator's
recommendation.
This record has been thoroughly reviewed as have the
recommendations of the ALJ and the Administrator, and the arguments
submitted by the parties. I agree with the recommendation of the
Administrator that no unusual circumstances exist to relieve
Respondents from being placed on the ineligible list as required by
Section 5(a) of the SCA. As the ALJ rightly concluded,
Respondents' interpretation of regulation 29 C.F.R. [sec] 4.153,
"unreasonably stretched the meaning of the Regulation", D. and O.
at 5, was not "justified and would subvert the purposes of the
Act." Id. at 6. This interpretation clearly did not constitute a
"bona fide legal question of doubtful certainty," which might
warrant a finding of unusual circumstances.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN8/ Respondents made no attempt to rebut the compliance officer's
testimony. [5]
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[6] Accordingly, the Comptroller General will be notified to
place Respondents' names on the list of ineligible bidders.
It is so ORDERED.
[Dennis E. Whitfield]
Under Secretary of Labor
Dated: MAY 8 1986
Washington, D.C. [6]
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