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<![CDATA[
CCASE:
Collectively-Bargained Premium Wage
DDATE:
19941031
TTEXT:
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[1] BOARD OF SERVICE CONTRACT APPEALS
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
Collectively-Bargained BSCA CASE NO. 94-07
Premium Wage Rates at Clear
Air Force Base, Alaska
BEFORE: David A. O'Brien, Chair
Ruth E. Peters, Member
Karl J. Sandstrom, Member
DATED: October 31, 1994
DECISION OF THE BOARD OF SERVICE CONTRACT APPEALS
This matter is before the Board of Service Contract Appeals
on the petitions for review filed by the Fairbanks Joint Crafts
Council and Teamsters Local 959 (collectively referred to as "the
Unions" or "Petitioners"), and by service employee Helaine
Michaels.<1> Petitioners' appeal is from an April 6, 1994
decision letter of the Administrator, Wage and Hour Division.
The Administrator ruled that the obligations of a successor
employer under the McNamara-O'Hara Service Contract Act of 1965,
as amended (41 U.S.C. [sec] 351 et seq.; "SCA"), and the
Department of Labor's implementing regulations do not include
payment of collectively-bargained overtime premium rates. For
the reasons set forth below, the Administrator's decision is
affirmed.[1]
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[2] I. BACKGROUND
Clear Air Force Base ("Clear AFB"), Alaska, is a remote
radar facility about 80 miles south of Fairbanks. The facility
is operated by private sector workers employed by service
contractors. The Fairbanks Joint Crafts Council is the
collective bargaining representative for a unit of about 100
operations and support personnel employed by ITT - Federal
Services Corporation ("ITT") on the Ballistic Missile Early
Warning System ("BMEWS") service contract at Clear AFB.
Teamsters Local 959 is the collective bargaining representative
for a unit of about 90 technicians employed on the BMEWS
contract.
Early in 1992, the United States Air Force invited
competitive bids for a new five-year base operations contract at
Clear AFB. At the time of the bid solicitation, each of the
Unions had a collective bargaining agreement with the incumbent
contractor, ITT. Both collective bargaining agreements had an
expiration date of September 30, 1992. According to the Unions,
long work schedules and premium pay rates for certain work hours
are a focus of collective bargaining negotiations in Alaska. For
example, in 1987 ITT (operating at that time as Federal Electric
Corporation ("FELEC")) and Teamsters Local 959 agreed to reduce
the regular work week for technicians at Clear AFB to 42 hours
(3 12-hour days plus a single 6-hour shift) from the previous
56-hour work week. At the same time, the parties to the
collective bargaining agreement also agreed to increase the
premium rate for all hours worked beyond the 12-hour shift to
double the basic rate of pay. Previously, the double time
premium had been paid only for hours worked in excess of 15 hours
in a day.
ITT was awarded the new 5-year contract on June 26, 1992,
with the contract term to begin on October 1, 1992. The contract
between the Air Force and ITT specified, among other things, that
the Air Force would not reimburse ITT for two items incorporated
in ITT's collective bargaining agreements with the Unions,
including "[e]mployee compensation for `high time' as defined in
the applicable union agreement(s)." ITT and the Unions held
collective bargaining negotiations during the summer and fall of
1992, but did not reach new labor agreements prior to October 1
-- the performance date of the new contract between the Air Force
and ITT. After October 1, ITT continued for a couple of months
to pay the service workers at Clear AFB the wages and fringe
benefits specified in the predecessor collective bargaining
agreements. In December 1992 ITT declared an impasse in
negotiations and unilaterally implemented certain reductions in
employee compensation. Among other things, ITT eliminated the
collectively-bargained overtime rates for excess work hours.<2>[2]
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[3] Several service workers at Clear AFB filed wage
underpayment complaints with the Seattle Regional Office of the
Wage and Hour Division in early 1993. Petitioners state
(Petition, at p. 7) that during the course of the investigation
counsel for the Unions was advised that Wage and Hour would not
require ITT to pay the negotiated overtime rates. Counsel for
the Unions then requested a final determination from the
Administrator as to whether collectively bargained overtime
provisions are enforceable under Section 4(c) of the SCA.
The Administrator issued her decision in this matter on
April 6, 1994. The Administrator noted the requirements of
Section 4(c) of the SCA, which provides that a successor to a
service contractor shall not pay any service worker employed
under the service 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 [3][4] were employed under the predecessor
contract." However, the Administrator also took note of the
provisions of the Department of Labor's regulations, which
provide (at 29 C.F.R. 4.163(a)), that the "obligation of the
successor contractor is limited to the wage rate and fringe
benefit requirements of the predecessor's collective bargaining
agreement and does not extend to other items such as seniority,
grievance procedures, work rules, overtime, etc." The
Administrator concluded that "[b]ecause SCA contains no overtime
provisions, a service employee's entitlement to premium overtime
compensation would depend upon coverage by other laws, namely the
Contract Work Hours and Safety Standards Act and the Fair Labor
Standards Act."
Petitioners then appealed to this Board from the
Administrator's ruling. The Administrator and ITT filed written
submissions in opposition to the Petitioners. The Board held a
hearing in this matter on September 29, 1994, at which counsel
for the Unions, the Administrator, and ITT, as well as the
president of the Contract Services Association of America,
presented oral argument.
II. DISCUSSION
The SCA (at Section 4(c) (41 U.S.C. [sec] 353(c)) sets forth
the obligations of a successor contractor. That provision
specifies that a successor contractor shall not pay service
employees less than the "wages and fringe benefits . . . provided
for in a collective bargaining agreement as a result of arms'
length negotiations, to which such service employees would have
been entitled if they [3]
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[4] were employed under the predecessor contract."<3> Petitioners
argue before this Board that the Administrator erred in ruling
that the duty of a successor contractor to pay the "wages and fringe
benefits " set forth in the predecessor contractor's collective
bargaining agreementwith its employees does not include an obligation
to pay collectively-bargained premium rates for overtime.
The Administrator and ITT argue that resolution of the issue
raised by Petitioners is squarely addressed by the Department of
Labor's SCA regulations, and that those regulations specify that
a successor's obligations under Section 4(c) do not extend to
overtime. Upon review, this Board concludes that -- as argued by
the Administrator and ITT -- the issue raised by Petitioners is
controlled by the Department's regulations, and that the decision
of the Administrator must be affirmed.
The regulation relied upon by the Administrator in her
decision is 29 C.F.R. 4.163(a), which describes a successor
contractor's obligation under the Section 4(c) of the SCA in the
following terms:
Under [Section 4(c)], the successor contractor's sole
obligation is to insure that all service employees are
paid no less than the wages and fringe benefits to
which such employees would have been entitled if
employed under the predecessor's collective bargaining
agreement (i.e., irrespective of whether the
successor's employees were or were not employed by the
predecessor contractor). [*]The obligation of the
successor contractor is limited to the wage and fringe
benefit requirements of the predecessor's collective
bargaining agreement and does not extend to other items
such as[*] seniority, grievance procedures, work rules,
[*]overtime[*], etc. [*](Emphasis supplied.)[*][4]
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[5]Thus, under the express terms of 29 C.F.R. 4.163(a), the
obligations of a successor contractor under 41 U.S.C. [sec]
353(c) do not extend to payment of collectively bargained
overtime wage rates. It is axiomatic that the provisions of
Section 4.163 are binding upon this Board. Ames Construction,
Inc., WAB Case No. 91-02 (Oct. 30, 1992), at p. 8, citing
California Human Development Corp. v. Brock, 762 F.2d 1044 (D.C.
Cir. 1985) (Department of Labor's actions must conform to its own
regulations). Indeed, the regulatory provisions (29 C.F.R. Part
8) regarding practice before this Board specify (at 29 C.F.R.
8.1(b)) that "[t]he Board shall not have jurisdiction to pass on
the validity of any portion of the Code of Federal Regulations
which has been duly promulgated through notice and comment by the
Department of Labor and shall observe the provisions thereof,
where pertinent, in its decisions."
Petitioners argue in their written submissions and at oral
argument that they are not requesting this Board to rule on the
validity of Section 4.163. Rather, they claim that Section
4.163(a) is ambiguous, and urge the Board to adopt Petitioners'
interpretation of that regulatory provision. According to
Petitioners, the term "overtime" in Section 4.163(a) does not
refer to premium pay for overtime, but instead refers to
"entitlement to an overtime work schedule." However, there is
substantial impediment to accepting the interpretation proffered
by Petitioners. First, the Administrator's interpretation is due
great weight, for it is an established principle of regulatory
construction that "considerable deference is generally accorded
to an agency's interpretation of its own regulations." A. Vento
Construction, WAB Case No. 87-51 (Oct. 17, 1990), citing Udall v.
Tallman, 380 U.S. 1, 16-17 (1965). See also, Titan IV Mobile
Service Tower, WAB Case No. 89-14 (May 10, 1991).
Second, the Administrator's interpretation of 29 C.F.R.
4.163(a) has been clear from the beginning, as seen by examining
the Department of Labor's response to the comments of various
labor unions after that regulatory provision was proposed. See
46 Fed. Reg. 4332 (Jan. 6, 1981). The unions "objected to
limiting the obligation of a successor contractor to the wage
and fringe benefit provisions of the predecessor contractor's
collective bargaining agreement because items excluded under this
proposed subsection, such as work rules, and overtime premiums
and other economic benefits, are negotiable under collective
bargaining . . . ." (Id.) (Emphasis supplied.) The Department
responded that Section 2(a)(2) of the SCA contains a list of bona
fide fringe benefits. The Department added that "[w]hile it is
recognized that there are other bona fide fringe benefits, it is
clear from section 2(a)(2) that items such as seniority, work
rules, guaranteed workweek, overtime premiums and other
collectively bargained provisions of an economic or noneconomic
nature which are not of the type enumerated in section 2(a)(2)
[*]are not wages or fringe benefits for purposes of the Act[*]."
(Id.) [*](Emphasis supplied[*]), citing Trinity Services, Inc.,
v. Marshall, 593 F.2d 1250 (D.C.Cir. 1978). The Department
additionally stated that "[d]aily or weekly premium [5]
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[6] overtime compensation benefits are provided by other statutes."
The Department declined to make any change in the proposed terms
of Section 4.163(a). (Id.)
In short, the Department of Labor's explanation of the terms
of Section 4.163(a) makes clear that the term "overtime," as used
in that regulatory provision, refers to overtime premium pay.
This further undercuts Petitioners' argument that the regulation
refers to an "entitlement to an overtime work schedule." Thus,
Section 4.163(a) provides that a successor contractor's
obligation under Section 4(c) of the SCA does not extend to
payment of collectively-bargained overtime pay rates. This
Board is bound by the terms of Section 4.163(a), and the ruling
of the Administrator in the instant matter must be affirmed.
BY ORDER OF THE BOARD:
David A. O'Brien, Chair
Ruth E. Peters, Member
Karl J. Sandstrom, Member
Gerald F. Krizan, Esq.
Executive Secretary[6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
<UL>FOOTNOTES</UL>
<1> Ms. Michaels submitted a letter dated May 26, 1994 in which
she expressed her desire to appeal the Administrator's ruling in
this matter, but she did not submit a written statement setting
forth her arguments in support of her petition for review. All
references in this decision to the arguments of "Petitioners" are
to the positions set forth by the Fairbanks Joint Crafts Council
and Teamsters Local 959 in their written submissions and at oral
argument.
<2> At the oral argument before this Board on September 29,
1994, the Unions and ITT stated that the they have entered into
new agreements that are retroactive to October 1, 1992. Those
agreements provide for an overtime premium of 1« times the basic
pay rate after 40 hours in a work week.
<3> Section 4(c) provides, in its entirety, as follows:
No contractor or subcontractor under a contract, which
succeeds a contract subject to this Act 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 fringes 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: Provided, That in any of the
foregoing circumstances such obligations shall not
apply if the Secretary finds after a hearing in
accordance with regulations adopted by the Secretary
that such wages and fringe benefits are substantially
at variance with those which prevail for services of a
character similar in the locality.
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