ED BIRD TRUCKING, INC., 1982-SCA-144 (Dep. Sec'y Apr. 20, 1987)
CCASE:
ED BIRD & ED BIRD TRUCKING INC.
DDATE:
19870420
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: April 20, 1987
CASE NO.: 82-SCA-144
IN THE MATTER OF
ED BIRD AND ED BIRD TRUCKING, INC.,
RESPONDENTS.
BEFORE: THE DEPUTY SECRETARY OF LABOR
DECISION AND ORDER OF THE DEPUTY 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 (1986). /FN1/
Respondent /FN2/ is a mail haul contra[c]tor operating under
contracts awarded by the United States Postal Service to pick up
and deliver mail on routes between Salt Lake City, Utah, and other
western cities. The Wage and Hour Division filed a complaint
charging that Respondent violated the provisions of the Act by
failing to pay service employees the approp[r]iate minimum wages
and fringe benefits, and by failing to maintain [1]
/FN1/ Section 8.0 of 29 C.F.R. (1986) provides 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, now Deputy
Secretary. Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [1]
/FN2/ For convenience, Respondents Ed Bird and Ed Bird Trucking
Company will be referred to in the singular in this decision. [1]
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[2] adequate and accurate records between June, 1981, and July,
1983. The parties stipulated that the amount of back wages due was
$14,424.97. Hearing Transcript (T.) at 4.
The Administrative Law Judge (ALJ) issued his decision on July
22, 1986 on the sole remaining issue, and recommended that
Respondent be relieved from the ineligible list provisions of
Section 5(a) of the Act. The Associate Solicitor for Fair Labor
Standards filed a Petition for Review, arguing that the record and
the law do not support the decision of the ALJ that Respondent
should be relieved from debarment. This is the question that is
before me for decision.
Section 5(a) of the Act provides that when it has been
established that violations of the Act have occurred, the
Comptroller General shall publish a list of contractors found in
violation, and that these contractors shall be ineligible to
receive Federal Contracts for three years unless the Secretary of
Labor "otherwise recommends because of unusual circumstances." 41
U.S.C. [sec] 354(a). Guidelines for determining what constitutes
"unusual circumstances" have been set forth in Washington Moving
and Storage Co., SCA-168, Decision of the Assistant Secretary,
affirmed by the Secretary (March 12, 1974), as follows:
Whether unusual circumstances are present in a case
within the meaning of the Act must be determined on the
basis of the facts and circumstances of the particular
case. Some of the principal factors which must be
considered in making this determination are whether there
is a history of repeated violations of the Act; the
nature, extent, and seriousness of past violations;
whether the violations were willful or the circumstances [2]
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[3] show there was culpable neglect to as[c]ertain
whether certain practices were in compliance or culpable
disregard of whether they were or not, or other culpable
conduct (such as deliberate falsification of records);
whether the Respondent's liability turned on bona fide
legal issues of doubtful certainty; whether the
Respondent has demonstrated good faith, cooperation in
the resolution of the issues, and the desire and
intention to comply with the requirements of the Acts;
and the promptness with which employees were paid the
sums determined to be due them. It is clear that the mere
payment of sums found due employees after an
Administrative proceeding, coupled with an assurance of
further compliance, is not in itself sufficient to
constitute unusual circumstances warranting relief from
the ineligible list sanction. It is also clear a history
of recurrent violations of identical minimum wage or
record keeping provisions does not permit a finding of
"unusual circumstances." On the other hand where a bona
fide legal question of doubtful certainty exists, and an
employer reasonably chooses to litigate such question in
order to resolve it, this should not prevent a finding of
"unusual circumstances."
That these guidelines provide a "rational and lawful approach
to a determination of whether 'unusual circumstances' exist" has
been affirmed by the courts. Federal Food Service, Inc. v.
Donovan, 658 F.2d 830, 833 (D.C. Cir. 1981). See also Mastercraft
Flooring, Inc. v. Donovan, 589 F. Supp. 258, 262, 263 (D.D.C.
1984).
In reaching his decision the ALJ measured Respondent's conduct
against applicable factors listed in the ALJ's decision in Donovan
v. Teddy L. Bradt, 21 Lab. L. Rep. (CCH) 43,744 (1984). The ALJ
found that here there were not "repeated violations, but rather a
single group of violations." D. and O. at 2. There had been an
audit begun in June of 1981 of Respondent's performance under the
Act for the two year period ending [3]
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[4] June, 1981. Pursuant to that audit back wages in the amount
of $41,000.00 were paid to forty-three of Respondent's service
employees. The second audit, that which is involved here, ran from
July, 1981, to June, 1983. Although there was an overlap period in
1981, prior to a final agreement being reached on the method for
wage payments, the preponder[a]nce of the record evidence does
not establish that there was a "single group of violations." In fact,
the amounts due for this period of time -- July, 1981 to October,
1981 []-- which Respondent's counsel estimated to be between $5,000.00 and
$6,000.00 dollars, out of the final violations totaling $14,000.00
dollars, is indicative of even greater culpability, because
Respondent had just completed a thorough review of the first audit.
He knew that he was not in compliance, T. at 101, and yet he
refused to pay his employees the correct wages they were due, T. at
120, until three years later, following completion of the second
audit. The evidence shows both culpability and the repeat nature of
Respondent's violation.
Respondent continued to underpay holiday pay, vacation, and
other fringe benefits, termed by the ALJ as "qualitatively serious
violations of the Act," D. and O. at 3, despite Respondent's having
been specifically reminded of his duties and responsibilities under
the Act following completion of the first audit in June, 1981.
The Department of Labor's regulations set out specific for
determining when there are "unusual circumstances" [4]
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[5] within the meaning of the Act and pursuant to Washington Moving
and Storage Company:
Thus, where the respondent's conduct in causing or
permitting violations of the Service Contract Act
provisions of the contract is willful, deliberate, or of
an aggravated nature or where the violations are a result
of culpable conduct such as culpable neglect to ascertain
whether the practices are in violation, culpable
disregard of whether they were in violation or not, or
culpable failure to comply with recordkeeping
requirements (such as falsification of records), relief
from the debarment sanction cannot be in order.
Furthermore, relief from debarment cannot be in order
when a contractor has a history of similar violations,
where a contractor has repeatedly violated the provisions
of the Act, or where previous violations were serious in
nature.
29 C.F.R. 4.188(b)(3)(i).
At the least, the violations from July, 1981, to June, 1983
were the result of culpable neglect to ascertain whether
Respondent's practices were in violation of the Act, which clearly
bars relief from the debarment sanction. In addition, Respondent
had a history, in fact a very recent history, of similar violations
which certainly must be considered "repeat violations." Finally,
Respondent's previous violations were certainly "serious in
nature."
The ALJ found the impact of violations disclosed by the second
audit to be "substantial" and he recounted that seven employees
were underpaid more than $1,000 each and that some 35 service
employees were affected by Respondent's violations. The record
supports his finding and I agree with the ALJ's analysis that these
violations had a substantial impact. [5]
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[6] However the ALJ moved beyond the criteria established in
the cases and the Department regulations under section 4.188 to
consider the "(i)mpact of debarment on employees." D. and O. at 3.
The ALJ accepted the testimony of Respondent that debarment would
result in the layoff of 21 of 27 drivers and found that to be "a
very severe impact." Id. In summation, the ALJ concluded that
"admittedly, some of the factors weighed above weigh in favor of
debarment. But weighing them all, [*] especially the factor of
impact on the remaining employees [*], pushes me to recommend an
exception." D. and O. at 4 [*](emphasis supplied)[*].
As noted above, the ALJ stated that he was following the
factors enumerated in Donovan v. Teddy L. Bradt. A review of the
Bradt decision and its lineage does not establish the doctrine the
ALJ would apply here, i.e., that the effect of debarment on
remaining employees is a proper criterion for consideration. The
ALJ decision in Bradt sets forth a listing of criteria allegedly
considered in earlier cases. Although there was no issue in Bradt
of the effect of debarment on remaining employees, the ALJ cited
one of his prior decisions for the propriety of considering the
"impact of debarment on employees (In re P. Clark SCA-1315 (1983)."
Bradt, 21 Lab. L. Rep. (CCH) 43,744, 43,745, (1984). In the P.
Clark decision this ALJ had noted that "it is well established that
the impact of the violation on the employees is a relevant
consideration." Slip op. at 3. He then concluded that "it
logically follows that the impact of the bar on those employees
also constitutes a pertinent consideration." Id. [6]
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[7] No authority is cited for this leap in analysis. The
lack of authority is not surprising, however, since it is not the
impact of the debarment which may properly be assessed in
determining whether unusual circumstances exist. Rather it is the
violations, and the consequence of the violations, that determines
whether or not a party may be relieved from the debarment sanction.
If they are severe, then Section 5(a) mandates imposition of the
sanction. Thus the ALJ erred in considering the impact of
debarment and that error was compounded when he relied on it as the
determinative criterion.
Respondent has failed to carry his burden of showing that
unusual circumstances exist, and the language of the Act makes it
clear that unless unusual circumstances are specifically found, no
relief from debarment is possible.
Accordingly, I find that there are no unusual circumstances
present to relieve Respondents Ed Bird and Ed Bird Trucking, Inc.
from the ineligible list provisions of Section 5(a) of the Service
Contract Act, and I reject the recommendation of the ALJ with
respect to debarment. The Comptroller General will be advised
accordingly.
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D. C. [7]
