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<![CDATA[
CCASE:
CHARLES SAUNDERS
DDATE:
19930527
TTEXT:
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[1] BOARD OF SERVICE CONTRACT APPEALS
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
CHARLES SAUNDERS, BSCA Case No. 92-31
an Individual d/b/a
AMERICAN SHAMROCK BUILDING
MAINTENANCE
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: May 27, 1993
DECISION OF THE BOARD OF SERVICE CONTRACT APPEALS
This case is before the Board of Service Contract Appeals on
the petition of the Acting Administrator, Wage and Hour Division
("Acting Administrator" or "Petitioner"), seeking review of the
February 27, 1992 Decision and Order ("ALJD") issued pursuant to
the McNamara-O'Hara Service Contract Act of 1965, as amended (41
U.S.C. [sec] 351 et seq.; "SCA") by Administrative Law Judge
("ALJ") Jeffrey Tureck. Petitioner has first excepted to the ALJ's
ruling limiting the scope of the complaint to a single issue and
precluding presentation of evidence concerning fringe benefit
(holiday pay), "hours worked," and recordkeeping violations.
Petitioner's second exception is that the ALJ erred in refusing to
give any weight to Wage and Hour Division wage transcriptions and
in determining that the Acting Administrator had the burden of
producing the employer's payroll records. For the reasons stated
below, the ALJ's decision and order is reversed in part and
affirmed in part. [1]
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[2] I. BACKGROUND
Charles Saunders is the owner of American Shamrock Building
Maintenance (collectively "Shamrock" or "Respondents"), "which
apparently was an unincorporated entity which has been out of
business since 1987." ALJD at p. 2. Shamrock performed as a
subcontractor to the Small Business Administration under Contract
No. SBA 6842-4509, which was a contract to perform shelf stocking
and custodial services at the Dyess Air Force Base Commissary in
Abilene, Texas. Contract performance was during the period October
1, 1984 through September 30, 1986. Id.
In January 1986, an investigation of Shamrock's SCA compliance
under the contract was commenced by the Wage and Hour Division's
compliance officer ("CO") Frank Carmichael -- stationed in Abilene,
Texas -- who interviewed current and former Shamrock employees and
determined from those interviews that certain employees were
misclassified as janitors while performing the duties of shelf
stockers. (The applicable wage determination required higher
hourly wages for shelf stockers than for janitors.) Some employees
also reported during the investigation that they were not paid
proper holiday pay.
CO Carmichael sought to examine and transcribe Shamrock's
payroll records. The records, however were maintained in
Shamrock's home office in Lubbock, Texas and another investigator
(CO Thomas Button) visited Shamrock's Lubbock office to check the
payroll records. CO Button was given access to the computerized
payroll system and employee time cards, distinguished the two
employee classifications by their rates of pay, and transcribed the
payroll records onto Wage and Hour Division forms, known as wage
transcription sheets or Forms WH-55. During the payroll
transcription, CO Button informed Mr. Saunders that there were
"apparent problems" with Shamrock's holiday pay practices; the CO's
wage transcriptions indicated that Shamrock did not pay holiday pay
during the first 90 days of employment or if the employee did not
work the day before and after a holiday. Transcript 78-79; 39-40.
Once transcribed, Shamrock's payroll information was sent to
CO Carmichael who alleged that Shamrock had committed SCA wage
violations and prepared back wage computations based on his
findings and conclusions. A Wage and Hour official wrote to
Shamrock on May 20, 1986, notifying Respondents of the results of
the investigation. Exhibit GX-4 /FN1/. The CO's findings were
that Shamrock stockers were misclassified and underpaid as
janitors; that Shamrock "rounded down" actual hours worked and
thereby underpaid employees; and that Shamrock failed to pay
correct amounts due as holiday pay. A meeting between the Wage and
Hour official and Mr. Saunders [2] /FN1/ Government exhibit;
additional references to ALJ exhibit: "ALJX;" transcript: "Tr.
p.__."
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[3] (at Shamrock's office) was scheduled in the letter, but Mr.
Saunders was not in the office on the scheduled date for the
conference.
Shamrock had no further contact with the Wage and Hour
Division until nearly four years later when, on March 9, 1990, the
Department of Labor's Regional Solicitor filed an SCA complaint
against Shamrock, seeking a total of $6,929.83 in SCA back wages
and an order recommending debarment under Section 5(a) of the SCA.
Shamrock did not obtain counsel for representation against the
complaint; Mr. Saunders appeared pro se on behalf of the
Respondents. On April 26, 1990, the Office of Administrative Law
Judges issued a prehearing order, directing the Acting
Administrator to furnish information to Shamrock, including, inter
alia, the nature of the alleged violations and a statement of the
issues to be tried and decided at hearing. ALJX 2.
On May 16, 1990, the Acting Administrator's response to the
prehearing order was filed. ALJX 3. Only one issue was identified
for trial: "Misclassification: Respondent held a military
commissary consession [sic] and paid `janitorial' rates for certain
higher scaled `stocking' work." Id. at p. 1. The Acting
Administrator also stated in this prehearing response that
"[c]omplainant seeks backpay and debarment for respondent paying
custodial rates to employees engaged in stocking. The only issue
is whether the work at issue was stocking or janitorial." Id. at
p. 2. Limited discovery was conducted and the ALJ issued a second
prehearing order on September 4, 1991, directing that each party
file a prehearing statement which was to include "a comprehensive
statement of the legal and factual issues in contention and the
relief or remedy sought." The Acting Administrator responded to
the second prehearing order on September 23, 1991, stating:
This is a Service Contract Act (SCA) case involving
misclassification of employees, underpayment of fringe
benefits, and other underpayments.
. . . . Respondent had janitorial employees engaged
[sic] higher paid shelf-stocking work, but did not pay
them at the higher shelf-stocking rate. Respondent
always rounded down timecards resulting in underpayment
of approximately .6428 [sic] hours for each employee.
Finally, respondent did not pay the full amount of
holiday pay required under the contract.
ALJX 4, p. 1. Shamrock filed no objection to this prehearing
response; nevertheless, on the first day of the hearing (October
30, 1991), ALJ Tureck struck the holiday pay claim as an issue. On
the following day, the ALJ struck all issues other than the
janitor/shelf stocker misclassification question, reasoning that "a
month prior to the hearing was too late to raise new issues...."
ALJD at p. 3. [3]
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[4] Two compliance officers, a local retail food and drug store
manager, and five former Shamrock employees testified for the
Acting Administrator. Mr. Saunders did not testify but Respondents
called a Small Business Administration official to testify.
On February 27, 1992, the ALJ issued his decision, holding
that the Acting Administrator failed to establish any SCA
misclassification violations. In the petition for review of the
ALJ's decision, the Acting Administrator did not except to this
finding. The ALJ ordered that all contract funds withheld from
Shamrock under the contract be released within 30 days. A motion
for extension of time to file a petition for review was filed by
the Acting Administrator on April 6, 1992. Shamrock filed an
opposition to the request for an extension on April 27, 1992;
however, the request had been granted on April 23, 1992. /FN2/ The
Acting Administrator filed a statement in support of the petition
for review on May 6, 1992. As noted, the petition does not
challenge the denial of back wages for the misclassification claim.
No further filings have been received from Respondents.
II. DISCUSSION
In rulings issued from the bench and restated in the decision
and order, ALJ Tureck precluded the Acting Administrator from fully
presenting his case concerning the questions of holiday pay and
rounding down of hours. The ALJ held that
neither the holiday pay or the rounding off of hours
allegations are reasonably within the scope of the
complaint. Although the complaint itself is broad enough
to encompass any violation of the [SCA], the only issue
actually intended to be raised by DOL though that
complaint was the misclassification issue [record
citations omitted].
ALJD pp. 3-4. The Board hereby reverses the ALJ's holding
concerning the scope of the complaint.
As the ALJ himself noted, the complaint was drafted in such a
manner as "to encompass any violation of the [SCA]." Id.
Pleadings under the Federal Rules of Civil Procedure and the
Department of Labor's rules governing administrative proceedings
are to be construed liberally. See F.R.C.P. 8; 29 C.F.R. 6.17. In
this case, the complaint alleged underpayment of SCA minimum wages
[4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Prior to establishment of the Board of Service Contract
Appeals, SCA appeals were processed by the Office of Administrative
Appeals, Office of the Deputy Secretary, U.S. Department of Labor.
Secretary's Order 3-92 (July 10, 1992). [4]
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[5] and fringe benefits under SCA Sections 2(a)(1) and (a)(2),
respectively. The Board concludes that such broad "notice"
pleading under the SCA is permissible and suffices to "give the
[Respondents] fair notice of what the [government's] claim is and
the grounds upon which it rests." Conly v. Gibson, 355 U.S. 41,
45-48 (1957). SCA "minimum wage" violations reasonably encompass
the allegations of rounding down hours paid, as well as the
misclassification issue which was fully tried in this case.
Further, "fringe benefit" violations reasonably include the alleged
failure to pay holiday pay. See 29 C.F.R. 4.174, 4.176.
Therefore, the ALJ's ruling that the scope of the complaint was not
"intended" to encompass holiday pay and rounding down violations is
reversed.
Furthermore, the Board disagrees with the ALJ's conclusion
that the Acting Administrator's September 23, 1990 response to the
second prehearing order was too late to raise the issues concerning
holiday pay and rounding down of hours. This response -- and the
notice provided thereby -- allowed five weeks prior to commencement
of the hearing for Respondents to prepare a defense to the
allegations. Respondent Saunders raised no objection to the
introduction of additional issues. If the ALJ believed that the
five-week notice provided Respondents was too short to allow for
preparation of an adequate defense against the allegations, the
appropriate remedy should have been to order a postponement of the
hearing, not to strike the Acting Administrator's allegations.
That Respondents were represented by the owner pro se, does not
persuade the Board that the ALJ acted within reasonable bounds of
the discretion allowed a trier-of-fact.
The Board does not reach the Acting Administrator's exception
concerning which party had the burden of proof to produce
Respondents' payroll records. As noted, CO Button was granted
access to Respondents' payroll records and transcribed them in
early 1986. SCA regulations require contractors to maintain and
make available such records to the Department of Labor for a period
of three years after the conclusion of a contract. 29 C.F.R.
4.185. The Department requested copies of the payroll records --
more than three years after the contract was completed -- during
discovery. At hearing, Respondent Saunders stated that the records
were destroyed sometime in 1987, but that the records might still
be retrievable from Respondents' broken computer. Whether
Respondents had an obligation (or a self-interest) in preserving
payroll records for more than the required three-years where their
SCA compliance had been brought into question by an investigation
would appear to be a question of first impression and the Board
declines to address it at this time.
Finally, with respect to the Wage and Hour CO's wage
transcriptions, it is noted that the ALJ expressed the opinion
that: [5]
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[6] [W]age transcriptions forms are not business records,
which are assumed to be reliable and thus are admissible
as an exception to the hearsay rule. They are nothing
more than the investigators' notes. They would not be
admissible even under DOL's recently enacted Rules of
Evidence (29 C.F.R. [sec] 18.[1] et seq.), which are more
permissive than the Federal Rules of Evidence. It was
error for me not to exclude all of these documents from
evidence.
ALJD at p. 6. The Board emphatically disagrees with this
reasoning. It is well established that hearsay evidence is
admissible in administrative proceedings arising under prevailing
wage statutes. James Bishop d/b/a Safeway Moving & Storage, BSCA
Case No. 92-12 (Nov. 30, 1992) (SCA); accord, M. C. Lazzinnaro
Construction Corp., WAB Case No. 88-08 (Mar. 11, 1991) (Davis-Bacon
and Related Acts). Moreover, a CO's testimony -- even standing
alone --is sufficient evidence to support an award of back wages
under the appropriate circumstances. Apollo Mechanical, Inc., WAB
Case No. 90-42 (Mar. 13, 1991). The weight to be given a CO's wage
transcriptions and testimony is another question entirely -- one
that is within the ALJ's discretion, if such discretion is
reasonably exercised. /FN3/
For the foregoing reasons, the ALJ's decision and order is
reversed. This case is hereby remanded to the Office of
Administrative Law Judges for hearing on the issues of holiday pay,
rounding down of hours, and a recommended decision on the question
of debarment pursuant to Section 5(a) of the SCA.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ Of the wage transcriptions in this case, the ALJ also stated,
"[r]egardless, they are inherently unreliable and are not entitled
to any weight." ALJD at p. 6. This conclusion was based on the
testimony of CO Carmichael, who stated that information which would
have been included in Respondents' payroll records and which were
necessary for his back wage calculations was not included in CO
Button's wage data transcriptions. The deficiency apparently
related only to the rounding down allegations. [6]
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