CCASE:
A.D. ROE, INC
DDATE:
19840411
TTEXT:
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[1] [84-11.WAB ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
1111 20th Street, N.W.
Washington, D.C. 20036
In the Matter of:
Disputes concerning the payment
of prevailing wage rates and
overtime pay, and proper
classifications by:
A.D. ROE, INC. No. 83-DBA-15
Contractor
FOX PAINTING AND DECORATING,
INC.
Subcontractor
with respect to laborer[]s
and mechanics employed by the
above subcontra[c]tor under U.S.
Army Corps of Engineers
Contract No. DACA31-78-C-0091
T[]actical Equipment Shops and
Facilities, Fort Knox, Kentucky;
AND BY
HALL CONTRACTING CORPORATION,
Prime Contractor
FOX PAINTING AND DECORATING, INC.
Subcontractor
with respect to laborers and
mechanics employed by the above
subcontractor under Environmental
Prote[c]tion Agency Contract Nos. CR
10365030, CZ 10374030, Waste Water
Treatment Plants, Bardstown and
Leitchfield, Kentucky;
AND BY
ADRIAN CONSTRUCTION CO. INC.
Prime Contractor
FOX PAINTING AND DECORATING, INC.
Subcontractor [1]
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[2] with resp[e]ct to laborers and
mechanics employed by the
aforemen[]tion[ed] subcontractor
on Environment Protection
Agency Contract No. CZ10349030,
Waste Water Treatment Plant,
Danville, Kentucky;
AND BY
JONES, NANCE AND STEINEMAN
Prime Contractor
FOX PAINTING AND DECORATOR, INC.
Subcontractor
with respect to laborers and
mechanics employed by the above
subcontractor under State of
Kentucky Contract NO. CT-092053,
National Guard Armory, Sprin[g]field,
Kentucky;
AND BY
BLUEGRASS CONSTRUCTION CO.
Prime Contractor
FOX PAINTING AND DECORATING, INC.
Subcontractor
with respect to laborers and
mechanics employed by the
aforementioned subcontractor on
U.S. Department of Housing and
Urban Project No.: B-77-ON-21-0131
Carl Perkins Community Center,
Morehead, Kentucky
AND
Proposed debarment for labor
standards violations by:
FOX PAINTING AND DECORATING, INC.
Subcontractor
JOHN P. FOX, PRESIDENT
with respect to laborer[]s
and mechanics employed by the
above subcontractor on the above
projects. [2]
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[3] On behalf of the Government: FRANK STEINER, ESQ.,
United States Department of Labor
Office of the Solicitor
280 United States Courthouse
801 Broadway
Nashville, Tennessee
On behalf of the Respondent Fox: C. WAYNE SHEPHERD, ESQ.
171 N. Upper Street
Lexington, Kentucky 40507
On behalf of the Respondent Roe: CHARLENE HALL JONES
Parker and Partin
Stark Building, Suite 510
455 Fourth Avenue
Louisville, Kentucky 40202
Before: GLENN ROBERT LAWRENCE
Administrative Law Judge
DECISION AND ORDER
Background
This matter, having been duly referred to this Office, came
on for hearing in Louisville, Kentucky, on September 30, 1983.
After having considered the testimony and complete record the
undersigned makes the following findings of fact and conclusions
of law.
FINDINGS OF FACT
1. Jurisdiction of this action is conferred under
Reorganization Plan No. 14 of 1950 (64 Stat. 1267), Davis-Bacon
Act (40 U.S.C. 276a, et seq.), the Housing and Community [3]
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[4] Development Act of 1974 (42 U.S.C. 5310, 1440(g)), the Federal
Water Pollution Control Act (33 U.S.C. 1372), the Contract Work
Hours and Safety Standards Act (40 U.S.C. 327, et seq.) and the
applicable regulations issued thereunder at 29 C.F.R. Part 5,
section 5.11(b) (Tr. 23, 25, 26; Answers of Hall Contracting
Corporation and A. D. Roe, Inc.; GX 24).
2. The following government contracts and subcontracts
were awarded and performed as listed:
GOVERNMENT CONTRACT LOCATION PRIME CON- SUBCON-
AGENCY NO. TRACTOR TRACTOR
U. S. Army DACA 31-78 Tactical A.D. Roe, John P. Fox,
Corps of -C-0091 Equipment Inc. d/b/a Fox
Engineers Shops and Painting &
Facilities Decorating
Ft. Knox, KY
Environ- CR 10365030 Waste Water Hall Con- [Same]
mental Treatment tracting
Protection Bardstown Corp.
Agency
Environ- CZ 10374030 Waste Water [Same] [Same]
mental Treatment
Protection Plant,
Agency Leitchfield,
KY
Environ- CZ 10349030 Waste Water Adrian [Same]
mental Treatment Construc-
Protection Plant tion Co.,
Agency Danville, Inc.
KY
State of CT-092053 National Jones [Same]
Kentucky Guard Nance and
Armory Steineman
Springfield,
KY [4]
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[5]
Housing B-77-0N-21 Carl Bluegrass [Same]
and Urban 0131 Perkins Const. Co.
Development Community
Center
Morehead, KY
(Tr. 23, 25, 26; Answers of Hall Contracting Corporation and A. D.
Roe, Inc.; GX 24).
3. The contracts and subcontracts listed in Finding No.
2 were subject to the statutes listed in Finding No. 1 and contain
the stipulations required by the above-cited statutes and 29 C.F.R.
Part 5, concerning wages, records and classifications of employees
and obligations of the employers. Employees of the subcontractor,
John P. Fox, worked on each of the said contracts and during the
time of such work were subject to the wage requirements and
conditions of the said contracts, statutes and regulations (Tr. 23,
25, 26; Answers of Hall Contracting Corporation and A. D. Roe,
Inc.; GX 24).
4. The respondent, John P. Fox, during the period of
time he worked on the government contracts, operated as an
individual proprietor, engaged in the painting business under the
trade name of Fox Painting and Decorating. The office of the
business is located in Lexington, Kentucky. Recently, he
incorporated the business as Fox Painting and Decorating, Inc. [5]
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[6] John P. Fox is Secretary/Treasurer of the new corporation and
engages in the daily management of the firm. Close to 100% of
the stock of the new corporation is in the name of Mary V. Fox,
the unmarried sister of John P. Fox. Mary V. Fox lives in
Holland, Michigan. Robert C. Fox, who lives in Keokuk, Iowa, and
is the brother of John P. Fox, has an interest in the corporation.
The stockholders assist John P. Fox in planning. Current
employees who testified identified John P. Fox as their employer
(Tr. 36, 74, 220, 226, 241, 272-276).
5. Under the contracts and regulations, the respondent,
John P. Fox was required to submit weekly payroll records certified
to be complete and correct. The respondent, John P. Fox, submitted
false certified payroll records on the said contracts. The
certified payrolls were falsified in that John P. Fox (1) failed to
include all employees working on the job on a particular day; (2)
listed employees as working who were not present on that specific
job site on that day; (3) listed rates of pay which indicated
compliance with the contract when, in fact, the employee was being
paid a lower rate of pay; (4) shifted hours of employees from one
day to another to indicate that the employee had not worked in
excess of eight hours per day when, in fact, he did; (5) cut the
overtime hours in excess of 40 per week by one-half and showed the
overtime hours as being paid at double time, thus making it appear
they had been paid proper overtime when, in fact, they were paid
straight-time rates only; and (6) failed to [6]
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[7] list all hours worked (Tr. 37-42, 58, 60, 75-83, 141, 144, 95, 98,
99, 228, 231-238; GX 20, 21, 28, 32, 33, 38, 42, 43, 51, 52, 53).
6. Buster Turner worked for John P. Fox on the
Leitchfield and Bardstown contracts and was paid $8.50 an hour
which is confirmed by his check stubs (GX 45). The certified
payrolls for the Leitchfield contract shows Buster Turner's regular
rate as $9.75 and his overtime rate as $19.50 (GX 42) for the same
weeks covered by the check stubs. The certified payrolls also show
less hours than shown on the check stubs. The check stub for the
week of September 17, 1980, shows he worked 40 hours with total
earnings of $340.00. The certified payroll for the workweek of
September 17, 1980, states Buster Turner worked 32 straight-time
hours at $9.75 an hour and one overtime hour at $19.50, for a
total of $331.50. Mr. Fox indicated in his testimony that Buster
Turner worked elsewhere one hour but did not explain where this
hour was or the inconsistency between the hours shown on the check
stubs and certified payrolls. The same inconsistencies are
apparent on the three check stubs for Buster Turner's work at
Bardstown. In particular, for the week of October 29, 1980, the
certified payroll (GX 51) has him working eight hours at $10.00
per hour with $80.00 on the Bardstown project. The certified
payroll also indicates that his total pay for that week when you
add the total deductions and net amount columns was $340.00, the
same as shown on the check stub. For the week of November 19,
1980, the certified payroll shows Buster Turner working 28 hours [7]
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[8] on the Bardstown project at $9.75 an hour. Again, the
certified payroll indicates that his total pay including work
elsewhere was $340.00, the same amount shown on the check stub.
Finally, the certified payroll for the pay period ending November
26, 1980, shows Buster Turner working 28 hours at $9.75 an hour,
for a total pay of $273.00. However, the certified payroll also
shows in the total deduction columns and net amount paid columns
that the employee was actually paid $272.00. The check stub
indicates 32 hours with total earnings of $272.00, which is
consistent with the fact that the employees' real rate of pay was
$8.50 an hour, rather than the $9.75 an hour listed on the
certified payroll (Tr. 108-110, 113, 286-290; GX 45, 42, 51).
7. The certified payrolls submitted by John P. Fox for
the Fort Knox contract showed Joe Rearden working on that job on
February 7, 18 and 19 and April 24 of 1980 (GX 52, 20). Yet, the
telephone bill of Mr. Rearden (GX 54) shows that he was in Virgie,
Kentucky, on February 7, in Fallsburg, Kentucky on February 18 and
in Peoria, Illinois on April 24. Mr. Rearden testified that he
was in those other cities at the time and could not have been at
Fort Knox on those same dates. The few motel records produced by
John P. Fox (GX 55) have charge slips for June 2, 3 and 4 and
March 25, 26 and 28 for Joe Rearden at Ratcliff, Kentucky, which
was for the Fort Knox job. On the certified payroll for the week
ending June 4, 1980, Mr. Rearden was not listed as working on the
second, third and fourth. He also was not listed on the certified
payroll for March 26 or 28 (GX 52, 20; Tr. 42-48, 66, 284). [8]
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[9] 8. Donnie Shore testified he was employed by John P. Fox
at the Fort Knox job in the period from January to May, 1980. He
does not appear on the certified payroll for Fort Knox until: March
10, 1980 (GX 20). Yet a printout sheet from the Department of
Kentucky Unemployment Insurance Benefits Office shows he received
wages from Fox Painting and Decorating in January, 1980 and
February, 1980 (GX 17). Donnie Short also testified that John P.
Fox told him he did not pay overtime and that he was given checks
marked expenses to pay for hours of overtime work at his
straight-time rate only. He produced the check stubs (GX 16)
showing his regular paycheck and expense check for three weeks. His
hourly rate of pay was $11.40 and each expense check totalled
$68.40, which would be six times his hourly rate (Tr. 119-27, 232).
9. Check stubs from Ernest Gray (GX 44) for his work
on the Leitchfield contract show that for the workweek ending
September 10, 1980, he worked 55 hours at $4.00 an hour. For the
workweek ending September 17, 1980, he worked 53 hours at $5.00
per hour; for the workweek ending September 24, 1980, he worked
50 hours at $5.50 per hour; for the workweek ending October 1,
1980, he worked 47 hours at $5.50 per hour; for tho workweek
ending October 8, 1980, he worked 49 hours at $5.50 per hour;
for the workweek ending October 15, 1980, he worked 51 hours at
$5.50 per hour for the workweek ending October 22, 1980, he
worked 53 1/2 hours at $5.50 per hour and for the workweek [9]
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[10] ending October 29, 1980, he worked 45 hours at $5.50 per hour.
The certified payroll for the Leitchfield contract (GX 42) failed
to reflect the true hours and pay of Ernest Gray. For example,
for the workweek ending September 10, 1980, the certified payroll
showed Ernest Gray working 40 hours at a straight-time pay of
$5.00 and one overtime hour at an overtime rate of $10.00
(Tr. 136-138).
10. On the Fort Knox contract the Corps of Engineers
required a daily quality control report. These were reports from
the subcontractor to the prime contractor who then reported to
the Corps of Engineers which reports included the number of
employees working on that particular day. There are substantial
conflicts between these daily reports (GX 19) and the weekly
certified payroll submitted by John P. Fox. There are numerous
conflicts in the number of employees shown for certain days.
In some instances the certified payrolls indicate that employees
were working when the daily quality reports show no employees
working on that date. There are also instances where the certified
employees show no employees working whereas the daily quality
reports show employees working. An example is the daily quality
control report for 5-19-80 (GX 53) which showed one superintendent
and four workers for a total of five . The certified payroll for
that same date (GX 20) shows only a total of four. On that same
date, Henry Pike, the construction representative of the Corps of
Engineers, interviewed four employees who [10]
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[11] were working on the job that day for John Fox (GX 21). He did not
interview Tom Cannon, who is listed on the interview forms as the
supervisor for that date and listed on the certified payroll. He did
interview Robert Spurlock who was on the job at a rate of $4.00 per hour
which is substantially lower than the minimum rate required by the
contract. Robert Spurlock was not listed on the certified payroll (Tr.
170-181; GX 21, 20, 52, 53).
11. To employ apprentices at the reduced rate the
contractor was required if he had one employee on the job to
employ at least one journeyman at the journeyman rate. To employ
two apprentices on the job, the contractor was required to employ
at least three journeymen at the journeyman rate. John P. Fox
had five registered apprentices, Ernest Gray, Stanley King,
Ricky Gayheart, Billy Jo Sumpter and Merle Tussey working on
the said government contracts. These apprentices frequently
worked on the jobs where there were no journeymen present or they
would work with Buster Turner who was not paid the journeyman
rate. Buster Turner's rate was $8.50 an hour whereas the journeyman
rate on the Leitchfield and Danville contracts was $9.20 an hour
and on the Bardstown contract was $9.57 an hour (Tr. 38, 139-143,
155-166, 186-190, 205, 206, 266, 267; GX 23, 31, 41, 50; see also
Finding No. 6).
12. John P. Fox failed to pay his employees working on
the said government contracts overtime at the rate of one and
one-half times the regular rate of pay for hours worked in excess
of eight per day and 40 per week (Tr. 112, 113, 120-128, 131, [11]
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[12] 133, 134, 137, 138, 141, 186-190, 231-238; see also
preceding Finding). John P. Fox: also failed to pay certain
employees working on the said government contracts the rate
required by those contracts (Tr. 108, 137, 287, 288, 186-190; GX 21
(Robert Spurlock), 44; see also Findings Nos. 9 and 11). The
following summaries show the total amount of unpaid wages by
individual employees and by project:
NAMES TOTALS
Charles Bailey $ 216.00
Homer Barker 98.00
Charles Burgess 392.00
Ronnie Cannon 465.75
Tommy Cannon 303.80
Grant Conley 45.92
Jimmy Davis 289.80
James Faircloth 274.30
Ricky Gayheart 791.52
Claude Gilbert, Jr. 362.60
Ernest Gray 1,803.52
Edward Hood 506.91
Lannie Kidwell 1,191.05
Stanley King 226.52
Earl Lucas 274.40
Doug Lunch 93.44 [12]
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[13]Grover McGuire 413.40
Tim Petit 35.20
Donald Sexton 167.84
Gary Sharfe 310.50
Donnie Short 745.96
Robert Spurlock 50.75
Billy Joe Sumpter 292.80
Larry Sumpter 22.40
Buster Turner 1,004.80
Merle Tussey 789.08
John Westerfield 166.20
John Young 616.00
TOTAL $11,950.46
PROJECT TOTALS
Tactical Equipment Shops & Facilities - $ 4,581.95
Fort Knox - DACA 31-78-C-0091
Waste Water Treatment Plant - $ 2,522.80
Leitchfield - CZ 10374030
Waste Water Treatment Plant - $ 1,111.36
Danville - CZ 10349030
Waste Water Treatment Plant - $ 1,261.83
Bardstown - CZ 10365030
National Guard Armory - $ 1,265.12
Springfield - CT 092053
Carl Perkins Community Center - $ 1,207.40
Morehead -- B-77-0N-21-0131 [13]
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[14] 13. Elizabeth Rearden, who is employed as a secretary by
John P. Fox, handled the payroll records. She testified it was her
practice to keep timecards which showed the job and hours worked by
the employees as reported by them and best of her knowledge they
were still available. She also testified she kept motel bills
which would have listed the individuals at particular jobs which
required overnight stays. John P. Fox produced at the hearing only
a very few timecards for one employee (Employer's Exhibit 1). /FN1/
John P. Fox also produced only a very few of the motel bills (GX
55; Tr. 72, 82, 93, 94, 100, 101, 277, 278, 284, 285, 288).
CONCLUSIONS OF LAW
1. The respondent, John P. Fox, willfully violated the
said contracts, statutes and regulations by failing to pay proper
overtime, by paying less than the required rates, by submitting
inaccurate records to the government and by failing to preserve and
produce basic records relating to the payrolls. 29 Code of Federal
Regulations 5.5.
2. Although not aware of the willful violations by the
subcontractor, John P. Fox, the prime contractors, A.D. Roe,
Inc., Hall Contracting Corporation, Adrian Construction Company,
Inc., Jones, Nance and Steineman and Bluegrass Construction
Company are contractually obligated for the damages arising from
the violations. 29 Code of Federal Regulations 5.5.
3. The respondent, Fox P[a]inting and Decorating, Inc., is
subject to debarment along with the respondent, John P. Fox, since
the new corporation is a continuation of the old business [14]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ One of the produced cards had a written notation by John
P. Fox concerning travel time which could arguably support one of
his positions; however, there is no credible evidence as to when
this self-serving notation was made on the timecard (Tr. 98). [14]
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[15] and John P. Fox is actively engaged in the management of the
new corporation and is also an officer in that corporation. Etowah
Garment Co. Hearing Examiner, PC-632, 13 WH Cases 482 (August 9,
1957), Gearcraft, Inc., ALJ PCX-1, 20 WH Cases 744 (May 3, 1972);
Federal Food Services, Inc. ALJ, SCA 585-592, CCH Wages-Hours
[par] 32,154 (November 22, 1977), supplementary decision of ALJ,
CCH Wages-Hours, [par] 31,265 (February 23, 1979).
4. Exact measurement of damages is not required where the
employer fails to maintain the accurate records of hours required
by the law. The evidence in this case is sufficient to support as
a matter of just and reasonable inference that the employees were
underpaid in the amount specified for each. Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680 (1946); Donovan v. Williams Oil
Co., 98 Lab. Cas. (CCH) 34, 441 (10th Cir. 9-7-83 - copy [NOT]
attached); Donovan v. Grantham, 690 F.2d 453 (5th Cir. 1983);
Reeves v. International Telephone and Telegraph, 616 F.2d 1342 (5th
Cir. 1980), cert. den. 449 U.S. 1077 (1981).
5. The provisions authorizing the payment of reduced rates
to registered apprentices are exceptions to the general remedial
purpose of the statute to require the payment of full wages and as
such they must be strictly construed against the employer. Arnold
v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); Phillips v.
Walling, 324 U.S. 490, 493 (1945); Sutton v. Engineered Systems,
Inc., 598 F.2d 1134, 1135, n. 3 (8th Cir. 1979); Hodgson v. Elk
Garden Corp., 482 F.2d 529 (4th Cir. 1973).
ORDER
1. The respondents, John P. Fox and Fox Painting and
Decorating, Inc., are liable and shall pay to the Government in
the total amount of $11,950.46 for unpaid wages under the said
contracts. [15]
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[16] 2. The respondents, A. D. Roe, Inc., Hall Contracting
Corporation, Adrian Construction Company, Inc., Jones, Nance and
Steineman, Bluegrass Construction Company, are jointly liable
with John P. Fox and Fox Painting and Decorating, Inc. and shall
pay to the Government for the portion of the total attributable
to their prime contract which amount for A.D. Roe, Inc., is
$4,581.95; for Hall Contracting Corporation is $3,784.63; for
Adrian Construction Company, Inc. is $l,111.36; for Jones, Nance
and Steineman is $1,265.12; and for Bluegrass Construction
Company is $1,207.04.
3. The respondents, John P. Fox and Fox Painting and
Decorating, Inc., shall be debarred from receiving any contracts
subject to any of the statutes listed in 29 Code of Federal
Regulations 5.1, for a period of three years from the date of
publication of the ineligible list containing their names. 29
Code of Federal Regulations 5.6(c)(1) and 5.11(b).
4. Any amounts withheld to satisfy any of the liabilities
on the said contracts by either the prime contractor or the
government may be paid to satisfy all or any portion of the
total amount held due herein. 29 Code of Federal Regulations 5.5.
GLENN ROBERT LAWRENCE
Administrative Law Judge
Dated: APR 11 1984
Washington, D.C.
GRL:crg [16]
