CONTRACT CLEANING SERVICE and
COOK BUILDING MAINTENANCE, 1981-SCA-1431, 1981-SCA-1423, 1982-SCA-33 (Under Sec'y May 12, 1986)
CCASE:
CONTRACT CLEANING SERVICE
DDATE:
19860512
TTEXT:
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[1] THE UNDER SECRETARY OF LABOR
WASHINGTON, D.C.
20210
In the Matter of
AUBREY O. PRINCE, doing business as
CONTRACT CLEANING SERVICE; and Case No. 81-SCA-1431
LAWRENCE J. COOK, doing business as
COOK BUILDING MAINTENANCE,
Respondents.
In the Matter of
AUBREY O. PRINCE, doing business as Case No. 81-SCA-1423
CONTRACT CLEANING SERVICE,
Respondent.
In the Matter of
AUBREY O. PRINCE, doing business as Case No. 82-SCA-33
CONTRACT CLEANING SERVICE,
Respondent.
Decision of the Under Secretary
This matter is before me pursuant to the McNamara-O'Hara
Service Contract Act of 1965, as amended (SCA or the Act), 41
U.S.C. [secs] 351-358 (1982), and the rules and regulations
thereunder, 29 C.F.R. [secs] 6.15-6.21 and Part 8 (1985). /FN1/
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/FN1/ Section 8.0 of 29 C.F.R. (1985) provide , that the
Secretary's designee shall perform the functions of the Board of
Service Contract Appeals during the interim period prior to the
appointment of a duly constituted Board. On February 24, 1984, the
Secretary assigned this responsibility to the Under Secretary. [1]
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[2] The above captioned matters were consolidated for hearing
and heard on January 25, 1984, before Administrative Law Judge
(ALJ) Alexander Karst. Respondents are engaged in the performance
of janitorial services at Miramar Naval Air Station in California
and the Federal Building in Reno, Nevada. These actions were
brought by the Regional Solicitor of the United States Department
of Labor (Department), alleging that respondents had failed to pay
their employees the required minimum wages and fringe benefits, and
failed to maintain adequate and accurate records as required by 29
C.F.R. [sec] 4.6 (1985).
In his Decision and Order (D. & O.) of May 8, 1985, the ALJ
found that both monetary and recordkeeping violations had occurred.
He ordered respondents to pay $ 4,146.13 to 58 employees. This
consisted of $948.10 to three employees who were paid less than the
required minimum wage in Case No. 81-SCA-1423, and $3,198.03 to 55
employees for violations of the fringe benefit provisions in Case
No. 82-SCA-33. Respondents had stipulated to underpayments due one
employee in Case No. 81-SCA-1431 in the amount of $1,809.00. All
three cases involved recordkeeping violations. However, in
considering the debar-[2]
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/FN2/ Lawrence J. Cook, doing business as Cook Building
Maintenance, died on January 31, 1981, and the complaint in Case
No. 81-SCA-1431 was dismissed as to Cook. Supplemental Order for
Release of Funds and Distribution Thereof and Dismissal, February
12, 1982. Respondent Prince's counsel stipulated that the issue of
debarment in Case No. 81-SCA-1431 remained for determination.
Hearing Transcript (T.) at 7. [2]
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[3] ment issue, the ALJ found that unusual circumstances were
present and recommended that respondents be relieved from being
placed on the list of ineligible bidders as provided under [sec]
5(a) of the SCA. /FN3/
The Department appealed the ALJ's recoMmendation that
respondents be relieved from debarment. ThIs is the sole issue
before me since there was no appeal From the award of wage
underpayments. Respondents did not file a reply to the
Department's appeal.
The Department argues that there are no unusual circumstances
to relieve respondents from the ineligible list. Specifically, it
is contended that respondents must be judged against a higher level
of responsibility and standards because this represents the second
time they have been found in violation of the SCA.
In 1978, respondents were found to have violated the SCA's
minimum wage and recordkeeping provisions. The allegations were
admitted and the hearing was waived by stipulation. ALJ Alexander
Karst, who also decided the instant case, found that respondents
owed $3,636.37 in underpayments to 54 employees.
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/FN3/ Section 5 of the Act provides that "[t]he Comptroller General
is directed to distribute a list to all agencies of the Government
giving names of persons or firms that the Federal agencies or the
Secretary have found to have violated this Chapter. Unless the
Secretary otherwise recommends because of unusual circumstances, no
contract of the United States shall be awarded to the persons or
firms appearing on the list ... until three years have elapsed...."
41 U.S.C. [sec] 354(a). [3]
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[4] Those violations involved a failure to pay for a holiday,
failure to properly pay supervisory employees, whom respondents
erroneously considered to be exempt from the hourly wage and
recordkeeping provisions, and failure to maintain a record of hours
for such employees. In the Matter of Aubrey O. Prince d/b/a
Contract Cleaning Service, Case No. SCA-899, ALJ (1978). The ALJ
recommended relief from debarment in the 1978 case, finding that
the underpayments were insignificant, the violations were mitigated
by some misunderstanding and that the respondent appeared highly
motivated to comply with the Act in the future.
The Department is correct in its contention that respondents
must be judged against a higher level of responsibility and higher
standard as repeat violators. In Washington Moving and Storage
Co., No. SCA-168, March 12, 1974, the guidelines by which "unusual
circumstances" should be judged were established by the
Secretary:/FN4/
It is clear 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 ineligible list sanction. It
is also clear that a history of recurrent violations of
identical nature, such as repeated violations , of
identical minimum wage or recordkeeping provisions, does
not permit a finding of "unusual circumstances." []
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/FN4/ The establishment and application of these [guidelines] has
been explicitly endorsed by the courts. Federal Food Service, Inc.
v. Donovan, 658 F. 2d 830, 833 (1981); Mastercraft Flooring, Inc.
v. Donovan, 589 F. Supp. 258, 253 (1984). [4]
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[5] Respondents have steadfastly refused to maintain an accurate
record of hours and pay for each hour worked. Instead, they
applied a formula for determining the number of hours to be paid
for each employee's shift based on the number of square feet to be
cleaned, type of cleaning to be done, etc. When employees exceeded
the pre-determined number of hours allotted for the job, they were
still paid the same amount of wages. This resulted in a reduction
of the actual wage rate paid per hour.
ALJ Karst, after hearing testimony from employees who
explained that they would be fired if they worked more than the
allotted hours and attempted to be compensated for the extra hours,
articulated the inequity in respondents' pay scheme as follows:
Judge Karst: What troubles me about this, Mr. Prince, is
something along these lines: Obviously there are people
who are desperate for work for one reason or another, and
if the employer takes the position that you tell the
employee that you do this work in four hours or I will
replace you, the employee is then put to the choice of
working five hours and pretending or keeping quiet about
it or else getting fired.
T. at 75.
In cases such as this, where employees are working in
different locations spread over large areas, supervision required
to assure that employees are recording and being paid for their
true hours of work constitutes a management problem not encountered
in workplaces where employees can be supervised more readily or can
punch a time clock. However, we are not [5]
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[6] dealing with slight lapses in management in this case, but rather, a
firm policy to keep no record of actual hours and to refuse to consider
any variation from management's arbitrary formula. This was clearly
established when the ALJ posed a clarifying question to Mr. Prince as
follows:
Judge Karst: I think the question Ms. Gonzales was
wanting an answer to was the fact that you kept no
records of the actual time put on the job you only kept
records of the expected or assumed number of hours.
The Witness: That's correct.
T. at 79.
The violations in the 1978 case and the present case both
involved recordkeeping violations. Therefore, respondents were
specifically placed on notice in the 1978 proceeding of the
requirement to maintain accurate records of hours. In this case
the ALJ's recommendation for relief from debarment was influenced
by respondents' "good faith intent to comply with the Act," D. and
0. at 5, even though the record is clear that respondents have not
lived up to their commitment following the 1978 violations and
refused to keep an accurate record of hours worked. In fact, the
ALJ acknowledged that no record of hours was kept, yet found that
respondents acted in good faith by applying a practice which is
contrary to the law:
Respondent Prince has committed a previous violation of
the Act (Case No. SCA-899, 1978), yet in that case
respondent was relieved of the ineligibility list
sanction because of his good faith intent to comply with
the Act. Such is also the case here. [6]
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[7] Respondent acted in good faith when applying
industry-wide standards in formulating the number of
hours per shift he believed were necessary to complete
the task. Respondent at all times paid employees
according to these formulations.
D. and O. at 5.
In finding that the payment for a fixed number of hours
regardless of actual hours worked violated the SCA, the ALJ cited
In the Matter of Ernest Roman, Case No. 516-519 (1976). A nearly
identical wage scheme in that case resulted in a finding that no
unusual circumstances existed and that debarment was in order. As
pointed out in the Department's Petition for Review at 4-5, Roman
was a repeat violator, also, and was not only debarred for the
violations in the cited case, but for violations in the predecessor
Case No. SCA-275 (1974), as well. The Roman cases established not
only that arbitrarily assigned hours, regardless of hours worked,
constitute a violation, but that it is a violation warranting
imposition of the debarment sanction.
The ALJ based his finding of unusual circumstances on
respondent's alleged "good faith attempt" to comply with the SCA
and his view that the amount of underpayments was "insignificant
with regard to the contracts as a whole". D. and O. at 6. If this
were the first proceeding of this nature involving respondents, the
ALJ's rationale might be plausible, but in this case, where
respondents were specifically told how to comply in a previous case
and assured the [7]
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[8] ALJ that they would comply, there is no valid reason for not
technically complying with the requirements.
Respondents were aware of their obligations yet refused to
meet them, conduct which does not warrant a finding of unusual
circumstances. The record [in] this case does not support
the ALJ's finding that respondents acted in good faith in applying
a formula for a pre-determined number of hours regardless of
actual hours worked. Nor does the fact that the amount of the wage
violations is not great -- standing alone -- constitute a basis for
finding "unusual circumstances." The record shows 58 instances in
which employees who performed janitorial services were underpaid,
some by amounts that may be significant for those individuals.
These underpayments were the direct, not "inadvertent", /FN5/
consequences of respondent's improper wage scheme. Accordingly,
there is no basis for a finding of unusual circumstances.
In summary, respondents' failure to comply with the SCA's
monetary and recordkeeping provisions, in spite of their commitment
to do so in a previous case, and especially in light of their
experience and knowledge, prohibits a finding of unusual
circumstances.
I therefore REVERSE the ALJ's decision and order on the
debarment issue and find that unusual circumstances do not [8]
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/FN5/ See To Amend the Service Contract Act of 1965: Hearings on
H.R. 6244 and H.R. 6245 Before the Special Subcommittee on Labor of
the House Committee on Education and Labor, 92nd Cong., 1st Sess.
3 (1971) (statement of Rep. O'Hara). [8]
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[9] exist. Respondents shall be placed on the list of ineligible
bidders as provided in Section 5(a) of the SCA. The Comptroller
General shall be notified accordingly.
SO ORDERED.
[Dennis E. Whitfield]
Under Secretary of Labor
Dated: MAY 12 1986
Washington, D.C. [9]
