NEEB-KEARNEY AND CO., INC., 1990-SCA-OM-1 (Dep. Sec'y Dec. 2, 1991)
CCASE:
NEEB-KEARNEY AND COMPANY
DDATE:
19911202
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: December 2, 1991
CASE NO. 90-SCA-OM-1
IN THE MATTER OF
NEEB-KEARNEY AND COMPANY, INC.,
and
ADMINISTRATOR, WAGE AND HOUR DIVISION,
EMPLOYMENT STANDARDS ADMINISTRATION,
UNITED STATES DEPARTMENT OF LABOR.
BEFORE: THE DEPUTY SECRETARY OF LABOR /FN1/
FINAL DECISION AND ORDER
This case is before me pursuant to the McNamara-O'Hara
Service Contract Act of 1965, as amended (MOSCA or the Act), 41
U.-S.C. 351-358 (1988), and implementing regulations, 29 C.F.R.
Parts 4, 6, and 8 (1991). At issue is whether the Acting
Administrator, ~ Wage and Hour Division, Employment Standards
Administration, reasonably denied a request for a hearing under
Section 4(c) of the Act, 41 U.S.C. [sec] 353(c), and 29 C.F.R.
[sec] 4.10.
STATEMENT
Under the MOSCA, successor service contractors are obligated
to pay wages and furnish fringe benefits not less than those [1]
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/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 (1991).
/FN2/ At the time of the challenged action, the position of
Administrator, Wage and Hour Division, was vacant, and Nancy M.
Flynn was the Acting Administrator. [1]
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[2] provided under a predecessor contract subject to a collective
bargaining agreement unless the Secretary finds that the wages and
benefits "are substantially at variance with those which prevail
for services of a character similar in the locality." Section
4(c), 41 U.S.C. [sec] 353(c). /FN3/ A finding of substantial
variance may be entered "after a hearing in accordance with
regulations adopted by the Secretary . . . ." Id. Although the
contracting agency or other "affected or interested" persons, such
as contractors or prospective contractors, may request that the
Administrator refer a matter for a hearing, 29 C.F.R. [sec]
4.10(b)(l)(i),
[n]o hearing will be provided . . . unless the
Administrator determines from information available or
submitted with a [hearing] request . . . that there may
be a substantial variance between some or all of the wage
rates and/or fringe benefits provided for in a collective
bargaining agreement to which the service employees would
otherwise be entitled by virtue of the provisions of
section 4(c) of the Act, and those which prevail for
services of a character similar in the locality.
29 C.F.R. [sec] 4.10(b)(ii)(2). Here, the Administrator denied a
hearing request by Neeb-Kearney and Company, Inc. (Neeb-Kearney),
citing the absence of convincing evidence that a variance existed.
Administrative Record (R.), Tab A at 2.
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/FN3/ In enacting a successorship provision, Congress sought to
"decasualize" the service contract industry so that workers could
preserve gains previously achieved. In the Matter of Wage Rates
Collectively Bargained by United Healthserv, Inc., etc. (United
Healthserv), Case Nos. 89-CBV-1, et al., Dec. and Remand Order,
Feb. 4, 1991, slip op. at 9-10, 19, 21 (Section 4(c) was directed
at achieving a degree of labor stability and economic security for
employees by maintaining bargained-for wage levels in providing
ongoing services in the peculiar circumstance of successive
contracts and employers). [2]
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[3] Statutory Framework
MOSCA Section 2 requires every Federal government service
contract to contain a provision specifying minimum monetary wages
to be paid and fringe benefits to be furnished to the various
classes of service employees engaged in performing the contract.
The [*] wages [*] are "determined by the Secretary . . . in
accordance with prevailing rates for such employees in the locality
. . . ." The [*] benefits [*] specified are those determined by
the Secretary "to be prevailing . . . ." 41 U.S.C. [sec] 351(a)(1)
and (2). In addition, the contract must state, inter alia, the
Federal wage board rates which would be paid to the classes of
employees under the Prevailing Rate Systems Act, 5 U.S.C. [secs]
5341-5349 (1988), and the Secretary must "give due consideration to
[these] rates in making the wage and fringe benefit determinations
specified in this section." 41 U.S.C. [sec] 351(a)(5). However,
in the event that the service employees performing the contract are
covered by an arm's-length collective bargaining agreement, this
"prevailing rate" procedure does not apply. Instead, the wage
determination would specify the negotiated wages and fringe
benefits, including any prospective increases, provided by the
collective bargaining agreement. 41 U.S.C. [sec] 351(1)(1) and
(2).
MOSCA Section 4(c), 41 U.S.C. [sec] 353(c), imposes on
successor contracts an obligatory floor for wages and fringe
benefits in the event that the predecessor contract has specified
collectively-bargained rates. Wages paid and benefits furnished
under a successor contract must be greater than or equal to those [3]
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[4] provided under the predecessor contract. The employer
obligation reads:
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 . . . .
Section 4(c) also contemplates circumstances in which the
obligation may be suspended. Its proviso specifies that the
successorship obligations do not apply "if the Secretary finds
after a hearing . . . that such wage and fringe benefits are
[*] substantially at variance [*] with those which prevail for
services of a character similar in the locality." [*] (Emphasis
added.) [*]
The collective-bargaining rate alternatives were incorporated
into Section 2(a)(1) and (2) through the MOSCA's 1972 amendment,
and Section 4(c) also was enacted at that time. The Senate Report
explains:
Section 2(a)(1) and 2(a)(2) of the act have been amended,
and a new subsection (c) has been added to section 4 to
explicate the degree of recognition to be accorded
collective bargaining agreements covering service
employees, in the predetermination of prevailing wages
and fringe benefits for future such contracts for
services at the same location. . . . The committee
appreciates the importance of decasualizing the service
contract industry -- a labor intensive and otherwise
casual and transient industry.
S. Rep. No. 1131, 92nd Cong., 2d Sess., reprinted in 1972 U.S. Code
Cong. & Admin. News (USCAN) at 3537 (emphasis omitted). [4]
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[5] Thus wages and benefits in effect as the result of arm's-length
negotiation initially govern Section 2(a) wage predeterminations.
The Senate Report also makes clear that Congress intended that
the successorship obligation would attach in the usual
circumstance.
Ordinarily, where service employees are covered by a
collective bargaining agreement, a successor contractor
furnishing substantially the same services at the same
location will be obligated to pay to such service
employees no less than wages and fringe benefits required
by such agreement. This requirement would likewise apply
to prospective wages and fringe benefits.
The term "accrued . . . fringe benefits" is interpreted
to mean those benefits, such as accrued vacation pay or
sick leave, to which an employee has become entitled by
virtue of employment on predecessor contracts . . . .
There are certain [*] unusual circumstances [*] where
predetermination of wages and fringe benefits contained
in such a collective agreement might not be in the best
interest of the worker or the public.
Thus, service employees should be protected against
instances where the parties may not negotiate at arms
length.
Id. [*](Emphasis added.[*]) The report thereafter cites
circumstances resulting from collusion or unequal bargaining power
and observes that predetermined rates possibly might tend to
deviate substantially from actual prevailing rates "over a long
period of time . . . ." It concludes by stating that the dual
objectives of protecting service contract workers and safeguarding
other legitimate government interests is best achieved by requiring
the Secretary to predetermine collectively-bargained wage and
fringe benefits, except where she finds, after notice to interested
parties and a hearing, a "clear showing" of substantial variance. [5]
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[6] In the Matter of Applicability of Wage Rates Collectively
Bargained by Big Boy Facilities, Inc., etc., Case No. 88-CBV-7,
Dep. Sec. Dec., Jan. 3, 1989, slip op. at 3-10.
B. Facts
The instant case concerns the Military Traffic Management
Command (MTMC) /FN4/ Solicitation No. DAHC24-89-R-0006 of a
contract for the provision of stevedoring and related terminal
services at the MTMC Gulf Outport, New Orleans, Louisiana, for the
period August 1, 1989, through July 31, 1990. Neeb-Kearney, a
prospective contractor, asserts that the collectively-bargained
wages and benefits for longshoremen incorporated in Wage
Determination No. 73-71 (Rev. 10) /FN5/ are substantially at
variance with those prevailing for similar services in the
locality. Neeb-Kearney's evidence of comparative prevailing wages
consists of the Bureau of Labor Statistics (BLS) Area Wage Survey
for the New Orleans, Louisiana, Metropolitan Area. Neeb-Kearney
cites particularly to the BLS data for employment classifications
engaged in material movement. See R., Tab. I at 33-34. [6]
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/FN4/ The MTMC constitutes "the single manager operating agency for
military traffic, land transportation, and common-user ocean
terminals." R., Tab C at C-21. "Military traffic" is Department
of Defense (DOD) "personnel and material to be transported." Id.
/FN5/ The wage determination incorporates the wages and benefits
negotiated in the collective bargaining agreement between the
International Longshoremen's Association (ILA) and Ryan-Walsh
Stevedoring, Inc. (Ryan-Walsh), the incumbent contractor. Since
1973, the contracting agency's request for services has been
submitted each year with reference to the ILA's collective
bargaining agreement, and Wage Determination 73-71 with revisions
has been issued each year in accordance with the successorship
provisions of Section 4(c). R., Tab A at 1. [6]
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[7] 1. The Contract Services
Longshoremen generally service either "conventional" or
"container" ships. Breakbulk (loose) cargo is loaded onto and
unloaded from conventional ships at the pier. In servicing
container ships, workers move large unopened containers, packed
with cargo, on and off ships at the pier. /FN6/ "Stuffing"
(loading) and "stripping" (unloading) the containers may be
performed either at the pier or elsewhere. Containers may be
attached to a truck chassis or railcar for transport to and from
the pier. At the MTMC Gulf outport, longshoremen perform the
container stuffing and stripping portions of the sequence. They
also load breakbulk cargo onto and unload breakbulk cargo from
trucks /FN7/ and railcars. [7]
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/FN6/ The ILA describes the processes as follows:
Containers are large, reusable metal receptacles . . .
capable of carrying upwards of thirty thousand pounds of
freight, which can be moved on and off an ocean vessel
unopened. Container ships are specially designed and
constructed to carry the containers, which are affixed to
the ship's hold . . . . Before the introduction of
container ships, and as is still the case with
conventional vessels, trucks delivered loose . . .
"break-bulk" cargo to the head of the pier. The cargo
was then transferred piece by piece from the truck's
tailgate to the ship by longshoremen [who] checked the
cargo, sorted it, placed it on pallets and moved it by
forklift to the side of the ship, and, lifted it by means
of a sling or hook into the ship's hold. This process
was reversed for cargo taken off incoming ships.
R., Tab L at 2.
/FN7/ For example, longshoremen may load and secure export
breakbulk cargo to be shipped on an ocean carrier's flatbed trucks.
R., Tab C at C-64, No. C.9.1.7. [7]
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[8] The ILA explains the evolution of longshore work at the MTMC
Gulf Outport as follows:
Originally, ships owned by the federal government would
dock at the MTMC waterfront pier, and cargo would be
unloaded, checked and warehoused by longshoremen. The
vessels would also be loaded by longshoremen . . . .
Trucks would be brought up to the ship, the cargo would
be removed from the trucks and placed onto pallets ...
and then lifted on board the government ships for
placement in [the] hold. In . . . the late 1970's, the
federal government ... began shipping . . . goods in
containers. [C]ontainer carriers are docked at the
France Road wharf in the Port of New Orleans, where the
containers are thereafter lifted to and from the ships by
ILA labor. The containers are transported to the MTMC
waterfront facility [where longshoremen] strip or stuff
the containers [and] check . . . and . . . warehouse the
goods.
Materials loaded on and discharged from railcars and trucks
at the MTMC Gulf outport include small arms and ammunition;
hazardous cargo; piling, poles and logs; lumber; metal products,
e.g., propellers, anchors, tank and tractor treads, bulldozer
blades, pontoons, revetments; household goods; government vehicles
including ambulances, tractors, construction equipment, personnel
carriers, boats, trailer-mounted machinery; privately-owned
vehicles (POVs); and cargo transporters, e.g., SEAVANS, MILVANS.
R., Tab C at B-1 through B-4. Materials loaded into and unloaded
from cargo transporters include palletized and unitized cargo,
government vehicles, POVs, and household goods. R., Tab C at B-5.
In loading and discharging these materials, longshoremen employ
trucks; forklifts; tractors; toploaders, e.a., for SEAVANS and
MILVANS; and cranes. R., Tab C at 4-8. [8]
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[9] Detailed performance and management criteria apply to
loading and unloading operations. See R., Tab C at C-52 through
C-57 (railcars); C-58 through C-64 (trucks); C-65 through C-75
(container freight station; distinct processes for SEAVAN, MILVAN,
CONEX, and MULTIWALL transporters). Vehicles are processed
according to specific criteria addressing security, maintenance,
time frames, recordkeeping, inspection, defueling, depowering, and
blocking. R., Tab C at C-76 through C-87 and Figures 3 and 4.
Handling and security restrictions apply to arms, ammunition, and
explosives, e.g., antitank and antipersonnel landmines, hand
grenades, grenade launchers, demolition equipment, incendiary
destroyers, fuel thickening compound, missiles and rockets, rocket
launchers, riot control agent, mortars. R., Tab C at C-7 through
C-12, C-15 through C-17. Longshoremen receive straight time hourly
rates of $12.00, $14.00, or $18.00, depending on the particular
work performed. Fringe benefits are paid at $6.615, $6.70, or
$7.065. Tabs H and M.
2. The BLS Data
Neeb-Kearney posits the October 1988 BLS Area Wage Survey for
the New Orleans, Louisiana, Metropolitan Area as evidence that a
substantial variance exists. The survey lists descriptions for
work performed by the following material movement classifications:
truckdriver, shipper/receiver, warehouseman, order filler, shipping
packer, material handling laborer, and power-truck operator. R.,
Tab I at 33-34. Data are [9]
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[10] obtained from a sampling of employers in six industry divisions:
"Manufacturing; transportation, communication, and other public
utilities; wholesale trade; retail trade; finance, insurance, and real
estate; and services. Government operations and the construction and
extractive industries are excluded." R., Tab I at 17. Wage and benefit
data from companies performing stevedoring and related terminal services
also are excluded from consideration under the material movement
classifications. R., Tab A at 2, Tab I at 34. The BLS data show that
the mean hourly wage rate for truckdrivers is $9.17; for receivers --
$6.82; for warehousemen -- $9.56; for warehousemen in the manufacturing
industry -- $11.63; for order fillers -- $5.97; for material handling
labors -- $8.78; and for forklift operators -- $8.57.
ANALYSIS
The Administrator denied Neeb-Kearney's hearing request due to
its failure to show that a substantial variance may exist. 29
C.F.R. [sec] 4.10(c). The Administrator found the BLS survey
unconvincing because it excluded data from companies performing
stevedoring and related terminal services. R., Tab A at 2.
Neeb-Kearney also failed to show that such services were performed
by nonunion and International Brotherhood of Teamsters labor, a
factor which similarly influenced the Administrator in denying the
hearing request. Id. In reviewing the Administrator's
determination not to refer the matter for hearing, I "may affirm,
modify or set aside, in whole or in part, the decision under
review. . . ." 29 C.F.R. [sec] 8.9(b). I may [10]
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[11] modify or set aside findings of fact only when they are not
supported by a preponderance of the evidence. Id. Upon consideration,
I am not persuaded that the Administrator acted unreasonably.
MOSCA Section 4(c) requires a comparison of negotiated rates
with those which prevail in the locality for work of similar
character. No discrete comparison rate is conclusive. "Federal
wage board rates and surveys represent an important measure in
gauging whether a given variance is 'substantial,' as do the BLS
surveys and other relevant data, including evidence of other
collectively-bargained wages and fringe benefits." United
Healthserv, slip op. at 19. /FN8/ Here, Neeb-Kearney offered only
the BLS survey for purposes of comparison. That survey expressly
excluded data from employers performing the breakbulk and container
loading and unloading services comprising "stevedoring and related
terminal services." The record shows a significant portion of
these services to be provided by ILA labor. Approximately 90
percent of all cargo in the Port of New Orleans is handled by ILA
Local 3000's longshoremen and related ILA locals including clerks
and checkers. R., Tab L at 2. Moreover, Local 3000's members
handle 90 percent of all cargo containers at the Port. Id.
Documentation is lacking that nonILA labor performs significantly
in supplying any portion of the type of services required under the
contract in the New Orleans [11]
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/FN8/ See id. at 2-3 n.3, 16-22 and n.9 for discussion of the
various rates. [11]
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[12] metropolitan area. As the party requesting that the matter be
referred to the Chief Administrative Law Judge for a hearing,
Neeb-Kearney assumed the burden of showing a possible substantial
variance. A mere piece of a frame of reference and subject to
shortcomings in the particular circumstances, the BLS survey alone
simply was inadequate to meet the requisite showing.
Accordingly, I decline to direct that the Administrator refer
the issue for a hearing. 29 C.F.R. [sec] 4.10(c). Neeb-Kearney's
petition hereby IS DISMISSED.
SO ORDERED.
[Delbert L. Spurlock, Jr.]
Deputy Secretary of Labor
Washington, D.C. [12]