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<![CDATA[
CCASE:
JAMES B. HEWETTE
DDATE:
19890119
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: January 19, 1989
CASE NO. SCA-1229
IN THE MATTER OF
JAMES B. HEWETTE, INDIVIDUALLY
AND DOING BUSINESS AS JAMES HEWETTE MAILER HAULER,
RESPONDENT.
BEFORE: THE DEPUTY SECRETARY OF LABOR
FINAL DECISION AND ORDER
This case comes before me /FN1/ pursuant to the provisions of
the Service Contract Act of 1965, as amended (SCA or the Act), 41
U.S.C. [secs] 351-358 (1982), and the implementing regulations
promulgated and issued thereunder at 29 C.F.R. Parts 4, 6 and 8
(1988). In the previous decisions on this matter, prior provisions
of 29 C.F.R. Part 6 (1983) were also relied upon.
The case arose from a 1980 administrative complaint filed
against the Respondent by the Regional Solicitor of Labor in
Chicago. Respondent was charged with violations of the minimum
wage and fringe benefit provisions at section 2(a)(1) and (2) of
the Act, 41 U.S.C. [sec] 351(a)(1) and (2), and 29 C.F.R. [sec]
4.6 of the regulations incidental to Respondent's performance of
five [1]
/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] 4.6 (1987); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [1]
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[2] mail hauling contracts with the United States Postal Service
during the period of time from June 1, 1978, until August 12, 1979.
On January 19, 1981, Respondent stipulated to having committed
these violations of the Act in addition to a further violation
resulting from his failure to keep and maintain an accurate set of
payroll records. 29 C.F.R. [sec] 4.6(g). Respondent further
stipulated to underpaying twenty of his service employees, who
performed work on the various contracts, by $20,101.25 from what
they were properly entitled to receive as compensation under the
Act. The parties briefed the issue of debarment /FN2/ but
Respondent submitted no independent testimony or evidence on the
subject. The Administrative Law Judge (ALJ) relied upon
Respondent's admitted violative conduct, as evidenced by the
stipulation, in reaching his recommendation in his March 31, 1981,
Decision and Order (ALJ's D. and O.), that the Secretary of Labor
take no action to relieve Respondent from the debarment sanction.
ALJ's D. and O. generally and at 1 and 6.
The ALJ's initial determination that the facts and
circumstances presented by the record in this case do not present
sufficient evidence of or support for a finding of unusual
circumstances sufficient to relieve Respondent from the debarment
sanction has twice been reviewed and affirmed: see Decision of the
Deputy Administrator (D.A. Decision) issued May 20, 1985, and [2]
/FN2/ Debarment is the sanction prescribed in the SCA for those
employers who violate its provisions and are unable to prove the
existence of "unusual circumstances" which warrant relief from
imposition of the sanction. 41 U.S.C. [sec] 354(a). [2]
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[3] letter of July 30, 1985, from the Under, now Deputy, Secretary
of Labor to the Comptroller General. 41 U.S.C. [sec] 354(a).
However, because the Under Secretary's determination apparently was
not served on Respondent as required by the then applicable
regulation at 29 C.F.R. [sec] 6.12(a) (1983), I issued an Order of
the Under Secretary Reopening Case (Reopening Order), on September
25, 1986, and afforded the parties a final opportunity to brief the
dispute surrounding the imposition of the debarment sanction. As
the Reopening Order provided, at 4, the Comptroller General was
notified to suspend Respondent's debarment term during the pendency
of this review.
Counsel for the Respondent, on November 25, 1986, submitted a
Request For Relief From Debarment with supporting memorandum (R.M.)
and the Department, on January 15, 1987, submitted the
Administrator's Reply to Respondent's Memorandum Supporting Request
For Relief From Debarment (Admin. Reply). These pleadings have
been accepted and made part of the case record.
In Washington Moving and Storage Co., Case No. SCA-176,
Decision of the Secretary issued on March 12, 1974, relied upon by
the ALJ, a contractor was found to have violated certain of the
Act's provisions and had applied to the Secretary for relief from
the debarment list/ineligibility sanction on the basis of "unusual
circumstances." The Secretary approved the proposition that the
presence or lack of unusual circumstances within the meaning of the
Act must be determined on the basis of the facts and circumstances
of each particular case. The decision [3]
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[4] established the "principal factors" which must be considered before
a finding of unusual circumstances sufficient to support an order for
relief from the debarment sanction can be made. Since the Respondent
here has been found by both the ALJ and the Deputy Administrator to have
violated the Act in a number of respects, this case is controlled by the
same factors as were set forth in Washington Moving and Storage. The
factors set forth in that case are:
1) Whether there was a history of repeated violations of
the Act;
2) The nature, extent and seriousness of the past or
present violations;
3) Whether the violations were willful or the
circumstances show that there was a culpable disregard by
the respondent to ascertain whether certain practices
were in compliance or culpable disregard of whether they
were or not, or, some other type of culpable conduct
(i.e. deliberate record falsification);
4) Whether respondent's liability turned on bona fide
legal issues of doubtful certainty;
5) Whether respondent has demonstrated good faith
cooperation in the resolution of issues and a desire and
intention to comply with the requirements of the Act; and
6) The promptness with which employees were paid the sums
determined to be due them.
The decision in Washington Moving and Storage also noted that
the mere payment of sums found due employees after an
administrative proceeding, coupled with an assurance of future
compliance is not, in itself, sufficient to constitute unusual
circumstances warranting relief from the ineligibility sanction. [4]
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[5] In addition, the decision held that it was "clear" that a
history of recurrent violations of an identical nature, such as
repeated violations of identical minimum wage or recordkeeping
provisions, does not permit a finding of unusual circumstances. In
addition to the guidance provided by the Washington Moving and
Storage case, I also am constrained by the October 9, 1972,
amendments to section 5(a) of the Act, which require the ineligible
list sanction to be applied to a violator unless "unusual
circumstances" can be established by the violator which warrant the
granting of relief. As the Administrator notes in her brief, these
amendments were intended to limit the Secretary's discretion to
relieve violators through the establishment of strict standards of
adjudication and review. Admin. Reply at 7-8. The regulations
recognize this concern and include the comments of Congressman
O'Hara, one the Act's co-sponsors that:
Restoration * * * [of wages and benefits] is not in and
of itself a penalty. The penalty for violation is
suspension from the right to bid on government contracts
* * *. The authority [to relieve from blacklisting] was
intended to be used in situations where the violation was
a minor one, or an inadvertent one, or one in which
disbarment * * * would have been wholly disproportionate
to the offense. House Committee on Education and Labor,
Special Subcommittee on Labor, Hearings on H.R. 6244 and
H.R. 6245, 92d Cong., 1st Sess. 3 (1971).
29 C.F.R. [sec] 4.188(b)(2).
In his request for relief, the Respondent relies upon four
basic contentions: [5]
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[6] (1) His history of violation-free performance as a
contractor; his compliance with the Act. R.M. at 3
and 4;
(2) His position that the admitted violations in this
instance were not willful or deliberate. The
underpayments in this case, says Respondent, resulted
from his misinterpretation of the applicable wage and
benefit requirements. R.M. at 7;
(3) The nature, extent and seriousness of the violations
coupled with the fact that they occurred years ago
compels a finding of unusual circumstances. R.M. at 4, 5
and 6; and
(4) His good faith cooperation in the resolution of the
issues and his desire and intention to comply with the
Act. R.M. at 9.
The ALJ found, and the Deputy Administrator affirmed, that this
case is controlled by the rule of law which prohibits contractors
who have violated the Act from asserting that such violations
result from confusion or misunderstanding of their
contractual/legal obligations under the Act. Minute Man Transit,
Inc., SCA-1241 (February 13, 1981) (as cited by the ALJ in his D.
and O. at 5). While the Respondent here does not have a history of
violating the Act, as long as he is a government contractor, he has
what the Secretary in Washington Moving and Storage called an
"obligation to ascertain" whether his payment and recordkeeping
practices are in compliance with the Act.
With regard to Respondent's contention that his admitted
violations were not the result of a willful disregard of his
obligations, it must be noted that the decisions appealed from did
not judge him by resort to the willfulness standard. The ALJ
clearly characterized his actions as culpably neglectful, ALJ's
[6]
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[7] D. and O. at 5, rather than willful. Neglectful and
inattentive pay practices cannot be grounds for relief, the
Administrator contends, since such negligent behavior is expressly
addressed and proscribed at [sec] 4.188(b)(6) of the regulations:
Negligence per se does not constitute unusual
circumstances. Relief on no basis other that negligence
would render the effect of section 5(a) a nullity, since
it was intended that only responsible bidders be awarded
Government contracts. Greenwood's Transfer & Storage.
Inc., Decision of the Secretary, SCA-1326, June 1, 1976;
Ventilation & Cleaning Engineers, Inc., Decision of the
Secretary, SCA-176, September 27, 1974.
Moreover, the absence from the record of a finding of willfulness
on Respondent's part is, "irrelevant since willfulness is not a
sine qua non to debarment." Admin. Reply at 13.
While the Respondent now argues that the ALJ's finding of
"culpable neglect" is based primarily upon the amount of its
underpayment in the case, and is, thus, an improper and unfair
conclusion, R.M. at 8, both the ALJ and the Deputy Administrator
noted and considered a number of factors which prove that
Respondent's violations cover the entire spectrum of possible
violations under the Act. ALJ's D. and O. at 4-5; D.A. Decision at
5-7. Respondent's stipulation to recordkeeping violations (a
failure to record all of his employees' hours of work); fringe
benefit violations (a failure to pay holiday benefits to certain
employees) and wage rate violations show ample bases for the
finding of culpable negligence reached by the ALJ and adopted by
the Deputy Administrator. The substantial amount of back wages
[7]
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[8] found to be due /FN3/ was, merely, an additional factor that
weighed against finding unusual circumstances. Respondent's
additional arguments -- that the violations were not extensive
and/or serious, that they happened long ago and, that he has
exhibited both a good faith cooperation in the resolution of this
matter and a desire to comply with the Act in the future -- were
all considered and, review of the record indicates, properly
disposed of by the decision makers below. They determined, and I
agree, that monetary violations which constituted one fifth of the
value of the contracts at issue and included violations of all of
the Act's significant employee protection provisions were extensive
and serious and would not permit a finding of unusual
circumstances. Respondent's cooperation and his contracting
experience also were fairly considered by both the ALJ and the
Deputy Administrator and they found culpable violations in spite of
such potentially mitigating considerations. ALJ's D. and O. at 4.
As discussed supra at 5, violators of this Act are to be judged
under a strict standard of compliance. /FN4/ [8]
/FN3/ Respondent was found to owe in excess of $20,000 to its
employees, a figure comprising twenty percent of the five contracts
Respondent held, as Respondent concedes. R.M. at 5.
FN4/ It is also clear that unusual circumstances do not
include any circumstances which would have been
insufficient to relieve a contractor from the ineligible
list prior to the 1972 amendments, [*] or those
circumstances which commonly exist in cases where
violations are found, such as negligent or willful
disregard of the contract requirements and of the Act and
regulations, including a contractor's plea of ignorance
of the Act's requirements where the [FN4 CONTINUED ON
PAGE 9] obligation to comply with the Act is plain from
the contract, failure to keep necessary records and the
like [*]. Emerald Maintenance Inc., Supplemental
Decision of the ALJ, SCA-153, April 5, 1973.
29 C.F.R. [sec] 4.188(b)(1) [*](emphasis supplied)[*]. [9]
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[9] In a situation where the Respondent must carry the burden of
proving the existence of "unusual circumstance", 29 C.F.R. [sec]
4.188(b)(1), and where he has admitted to violations of the key
protective provisions of the Act with no justification other than
business expansion, confusion and misunderstanding, the record
supports the characterization - and indeed, allows no other - of
Respondent's conduct made by both the ALJ and the Deputy
Administrator, i.e. culpable neglect.
Given the aggravated and neglectful nature of the violations
presented by this case, I find that the decisions of the ALJ and
the Deputy Administrator have properly considered and applied the
significant criteria set forth in Washington Moving and Storage Co.
to this case. Accordingly, I decline to disturb the July 30, 1985,
determination of the Under Secretary that Respondent has not
established unusual circumstances. Respondent's request for relief
from the debarment sanction is, hereby, DENIED.
The Comptroller General will be notified to return the names
of Respondent and his firm to the ineligible bidders' list for the
completion of the three year term. Respondent shall be given
[9]
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[10] full credit for the period from August 15, 1985, through
October 27, 1986, during which his name appeared on the list.
SO ORDERED.
[Dennis Whitfield]
Deputy Secretary of Labor
Washington, D.C. [10]
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