MARTELL CONSTRUCTION CO. INC., 1986-DBA-32 (ALJ Aug. 7, 1986)
CCASE:
MARTELL CONSTRUCTION CO. INC.
DDATE:
19860807
TTEXT:
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[1 -- WAB 86-26 ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
2600 Mt. Ephraim Avenue
Camden, New Jersey 08104
Telephone (609) 757-5312
In the matter of
Disputes concerning the payment
of prevailing wage rates and overtime
and proper classifications by:
MARTELL CONSTRUCTION CO., INC.,
Prime Contractor
and Case No. 86-DBA-32
J.E.M. CONTRACTORS,
Subcontractor
and
Proposed debarment for labor
standards violations by:
MARTELL CONSTRUCTION CO., INC.
FRANK SANTUCCI, Vice President
EUGENE MARTELL, Secretary-Treasurer
and
J.E.M. CONTRACTORS
JOSEPH E. MICELI, Owner
With respect to laborers and
mechanics employed by the
subcontractor under Department of the
Navy Contract No. N62472-80-C-5030
(Repairs to Road & Drainage) Naval
Air Engineering-Center, Lakehurst,
New Jersey [1]
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[2] DECISION AND ORDER
This is a proceeding arising under the Davis-Bacon Act, as
amended, 40 U.S.C. Section 276(a), et seq. and implementing rules
and regulations promulgated thereunder, 29 C.F.R. Parts 5 and 6.
The Davis-Bacon Act governs the rate and wages paid to laborers and
mechanics of private contractors for every contract in excess of
$2,000 to which the United States or District of Columbia is a
party, for construction, alteration or repair of public buildings
or public works within the geographical limits of the United States
or District of Columbia.
Following the investigation conducted by the Wage and Hour
Division of the Employment Standards Administration of the United
States Department of Labor, the prime contractor, Martell
Construction Company, Inc., and a subcontractor, J.E.M.
Contractors, and the responsible officers were notified of alleged
violations of the Davis-Bacon Act and the Contract Work Hours and
Safety Standards Act. J.E.M. Contractors and its owner, Joseph E.
Miceli, were notified on August 9, 1983 by letter that an
investigation had disclosed that J.E.M. Contractors failed to pay
certain of its employees the required prevailing wage rates and had
failed to pay overtime compensation to employees who worked in
excess of eight hours a day or 40 hours a week. Furthermore, the
investigation disclosed that the firm had manipulated a certified
payroll submitted in compliance with the Acts to make it appear
that the required wage rates had been paid. J.E.M. Contractors was
also notified that there was reasonable cause to believe that the
violations of the Davis-Bacon Act constituted a disregard of
obligations to employees under Section 3(a) of the Act and would
subject the firm to debarment proceedings. Martell Construction
Company, Inc. and responsible operators, Frank Santucci and Eugene
Martell, were notified by letter dated December 13, 1983 that the
investigation had disclosed that the subcontractor had failed to
pay certain of its employees the required prevailing wage rates and
overtime compensation. Furthermore, the investigation found that
certified payrolls submitted by Martell Construction Company
falsely reflected compliance with the required prevailing wage
rates. Martell was further notified that reasonable cause existed
to believe that its submission of certified payrolls, which were
false, constituted a disregard of obligations under Section 3(a) of
the Act and was subjected to d[e]barment pr[o]ceedings.
Martell Construction Company responded to the notification by
letter dated January 12, 1985 denying the allegations in question.
J.E.M. Contractors also responded to the notification and asked for
administrative review of the decision. By Order of Reference,
dated May 3, 1984, the Administrator of Wage and Hour Divisions,
U. S. Department of Labor, referred the dispute to the Chief
Administrative Law Judge for disposition in accordance with the
law. A hearing was [2]
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[3] held on April 10 and 11, 1986 in Toms River, New Jersey, at which
all parties were present and were afforded full opportunity to be heard.
At the close of the government's case in chief, the plaintiff moved for
leave to amend the complaint to add Silvio Martell as a party and
responsible officer in the case. The court reserved ruling on the
government's motion and directed that the parties submit written
memoranda supporting or opposing the motion to amend. The record was
left open for 30 days to receive briefs on the motion to amend and
propose findings of fact and conclusions of law. By subsequent order of
the court, the parties were granted additional time, until June 13,
1986, to submit briefs and propose findings of fact and conclusions of
law.
QUESTIONS PRESENTED
1. Whether the addition of Silvio Martell as a party to the
proceedings on the last day of hearings, would cause an
unnecessary delay, or prejudice his ability to adequately
defend his interests.
2. Whether the statute of limitations contained in the Portal
to Portal Act, 29 U.S.C. 255, prevents the initiation of
administrative proceedings against a contractor for negligent
violations of the Davis-Bacon Act after two years from the date of
termination of the contract.
3. Whether a prime contractor's certification of payrolls for
a subcontractor, submitted to the government without any effort
to verify or substantiate the amounts and figures certified,
and its failure to investigate the reporting by the subcontractor
of unusual and odd fractions of hours worked constitute a disregard
of its obligations to its employees, thereby, subjecting it to
debarment.
4. Whether a subcontractor's willful and repeated underpaying
of employees and submission of manipulated and falsified records
reflecting compliance with federal minimum wage requirements,
constituted a disregard of its obligations to its employees so as
to subject it to debarment. [3]
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[4] STATEMENT OF THE CASE
On September 29, 1980, Martell Construction Company, Inc.
entered into contract number N62472-80-C-5030 with the United
States Department of the Navy. (Exhibit J-3a). The contract
provided that in return for $204,000, Martell Construction Company,
Inc. would repair roads and drainage areas at the Naval Facilities
Engineering Command in Lakehurst, New Jersey. (Exhibit J-2). It
was further required that Martell Construction Company perform no
less than 20 percent of the work on the contract. (Tr. page 15).
The contract was subject to the Davis-Bacon Act, the Contract Work
Hours and Safety Standards Act, and the applicable regulations
issued thereunder.
Subsequent to obtaining the contract with the United States
Department of the Navy, Martell Construction Company, Inc. entered
into a subcontract in the amount $159,540 with J.E.M. Contractors
for the performance of all of Martell Construction Company's
contractual duties under its contract with the federal government.
The contract was duly signed by Silvio Martell, President of
Martell Construction Company, Inc., and Joseph E. Miceli, Owner of
J.E.M. Contractors. (Exhibit J-3c). This subcontract was also
subject to the Davis-Bacon Act, the Contract Work Hours and Safety
Standards Act and applicable regulations.
J.E.M. Contractors and its employees performed all of the work
required by the contract. (Tr. page 139). In order to comply with
the 20 percent requirement, Martell Construction Company, Inc.
submitted certified payroll records for the period November 11,
1980 through February 31, 1981 (Payroll records 1-16), under the
signature of Eugene Martell, Secretary-Treasurer of Martell
Construction Company, Inc. J.E.M. was responsible for submission of
the remaining payrolls. However, because of delays in payroll
certification, Martell's field supervisor, Placido Arena, assisted
J.E.M. in completion of payroll forms. At our near the time of the
completion of the contract, Martell Construction Company, Inc.
submitted certified payroll records for the period March 3, 1981
through November 7, 1981 (Payroll records 17-52) on behalf of
J.E.M. Contractors, entered under the signature of Joseph E.
Miceli.
Subsequent to the completion of the contract, an investigation
was conducted by the Wage and Hour Division of the Employment
Standards Administration of the U.S. Department of Labor into
compliance by the prime and subcontractor with federal laws and
regulations governing the determination and payment of wages and
overtime. The investigation concluded that both prime and
subcontractor had committed certain violations of the Davis-Bacon
and Contract Work Hours and Safety Standards Acts. [4]
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[5] The investigation revealed that J.E.M. Contractors had failed
to pay certain of its employees required prevailing wage rates.
According to Wage Decision No. NJ-80-3013, J.E.M. was required to
pay hourly rates of $11.20 to laborers, $11.35 to truck drivers,
$13.89 to operators of front loaders and $16.88 to operators of
backhoes. The investigation disclosed that J.E.M. Contractors had
paid laborers wages ranging from $7.00 to $8.00 an hour, equipment
operators wage ranging from $7.00 to $12.00 an hour and truck
drivers, $11.21 an hour. Furthermore, it was evident from the
investigation that J.E.M. Contractors had manipulated and falsified
certified payrolls to falsely reflect compliance with the
prevailing wage. In addition, it was discovered that the firm had
failed to pay overtime compensation to certain employees who worked
in excess of eight hours a day or 40 hours a week. The
investigation, furthermore, disclosed the certified payrolls turned
in and certified by Martell Construction Company, Inc., for payroll
periods 1 through 16, falsely reflected compliance with the
required prevailing wage rates. Back wages were computed by the
compliance specialist, Enrique Lopez-Mena, to be $28,707.10 in
prevailing wages and $285.23 in overtime compensation. (Government
Exhibit 6).
FINDINGS OF FACTS AND CONCLUSIONS OF LAW
I.
Before dealing with the merits of arguments on debarment of
the prime and subcontractors and their responsible officers, we
must first address the government's motion to add a party
defendant. On April 11, 1986, at the completion of the
government's case in chief, the plaintiff moved to add Silvio
Martell as a defendant and responsible operator in the case. As
reason for making a motion to add a party at such a late date,
plaintiff argued that its compliance officer, Enrique Lopez-Mena,
had been mislead by Martell Construction Company, Inc. as to the
participation and activity of Silvio Martell in conjunction with
the contracted question. (Tr. page 212). The government claimed
that until the testimony of Joseph Miceli the previous day, it had
been unaware that Silvio Martell had taken an active part in
contract negotiation.
The plaintiff argues that it should be allowed to amend the
caption in the case to include Silvio Martell pursuant to Rule 15b
of the Federal Rules of [Civil] Procedure. However, Rule 15b deals
with amendments to complaints in order to conform with the evidence
produced at trial. The motion before this court is more correctly
characterized as a motion to amend the complaint adding a party
defendant, found at Rule 21 of the Federal Rules of Procedure.
Rule 21 provides in pertinent part that "parties may be dropped or
added by [5]
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[6] order of the court on motion of any party or of its own initiative
at any stage of the action and on su[]ch terms as are just."
Consequently, Rule 21 authorizes the addition of a party or person who
through inadvertence mistake or other reason, had not originally been
made a party and whose presence in the action is later found necessary
or desirable. Truncale v. Universal Pictures Co., 82 F.Supp. 576, 578
(DCNY 1949). Rule 21, by its terms, allows parties to be added or
dropped by order of the court at any stage of the proceedings. Hayward
v. Clay, 456 F.Supp. 1156, 1161 (SDSC 1977). It has even been held that
a court can properly add a defendant after a trial or when a case is up
on appeal. See, Aerol Corp. v. Department of the Navy, 493 F.Supp. 558
(DC 1981); Hayward, 456 F.Supp. at 1161.
A decision to grant or deny leave to amend a complaint adding
or dropping party defendants or plaintiffs is solely within the
discretion of the court. Intercon Research Assoc., Ltd. v. Dresser
Industry, Inc., 696 F.2d 53 (7th Cir. 1982); U.S. v. Wyoming
National Bank of Casper, 505 F.2d 1064 (1Oth Cir.). In determining
whether or not to grant a motion to add or drop a party from the
action, the court should take into consideration whether granting
the motion would allow "maximum effective relief with minimum
expenditures of judicial energy". Gentry v. Smith, 487 F.2d 571,
580 (5th Cir. 1973). The court should consider such factors as
delay in the action and prejudice to the parties' ability to
adequately defend its interests. See Bar Rubber Products Co. v.
Sun Rubber Co., 425 F.2d 1114 (2nd Cir. 1970) cert. denied 400 U.S.
878; McLouth Still Corp. v. Nesta Mach. Company, 116 F.Supp. 689
(D.C. PA 1953) affir'd 214 F.2d 608 (3rd Cir. 1954) cert. denied
348 U.[].S. 873./FN1/ See also Sarne v. Fiesta Motel, 79 F.R.D.
567 (D.C. PA 1978); Jentry, 487 F.2d at 580. [6]
/FN1/ In McLouth the defendant moved to add the factory owner's
insurer after two years of pretrial maneuvering and only four days
before the case was set for hearing. The court found that
defendant's motion was not timely, and since the parties were
prepared for trial, and witnesses had been brought from
considerable distance, a motion to amend to amend the complaint was
denied. [6]
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[7] The regulations governing the proceedings under the
Davis-Bacon and related prevailing wage statutes contain similar
concerns and standards as applied to Rule 21. 29 C.F.R. 6.31
provides that a complaint may be amended with the permission of the
Administrative Law Judge at any time prior to the closing of the
hearing record. It further stipulates that amendments shall be
allowed "justice and the presentation of the merits are served
thereby, provided there is no prejudice to the objecting party's
presentation on the merits." Therefore, when considering a motion
to amend the pleadings, the Administrative Law Judge must take into
consideration justice and the presentation of the merits. However,
the proviso of Section 6.31 limits granting of motions to amend to
cases where the Administrative Law Judge determines that there will
be no prejudice to the objecting party's presentation on the
merits.
Pr[o]ceedings were begun against Martell Construction Company,
Inc., J.E.M. Contractors and their responsible officers in late
1983. A hearing was originally scheduled on August 15, 1984 and,
at the request of the prime contractor and the Office of the
Solicitor, U.S. Department of Labor, the matter was adjourned
without date. The hearing was rescheduled and held April 10 and
11, 1986, almost three years after instigation of the action. All
parties and witnesses were present and were afforded full
opportunity to testify. It is the opinion of this court that to
grant leave to the plaintiff to amend the complaint to add Silvio
Martell would cause unreasonable and unnecessary delay to a
decision on the merits as to J.E.M. Contractors, Martell
Construction Company, Inc. and the presently named responsible
officers. Granting a motion to amend, to add a party at this late
date, without continuing the hearing would seriously prejudice the
proposed added party's ability to defend his interests. While
granting the motion would cause delay, and would prejudice the
proposed party's interests; denying the motion would result in no
serious injustice or prejudice to the interests of the government.
Although the government is prevented at this time from adding
Silvio Martell as a defendant in this action, nothing would inhibit
or prevent it from commencing subsequent pr[o]ceedings to determine
the role of the proposed defendant in the contracting question or
the merits of debarment as to him in particular.
II.
Another threshold question which must be dealt with is whether or
not the government was prevented from seeking debarment of the
prime contractor and its responsible officers by the statute of
limitations contained in the Portal to Portal Act. The prime
contractor argued in its Brief Offered in Opposition to Plaintiff's
Motion to Amend Complaint that the statute of limitations of the
Portal to Portal Act contained in USC Section 255 prohibited the
government from taking any action under the Davis-Bacon Act against
Martell Construction Company, Inc. and its responsible officers. 29
USC Section 255 provides in pertinent part: [7]
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[8] Any action commenced on or after May 14, 1947,
to enforce any cause of action for unpaid minimum
wages, unpaid overtime compensation, or liquidated
damages, under the Fair Labor Standards Act of 1938
as amended (29 U.S.C.A. Section 201 et seq.), the
Walsh-Healey Act (41 U.S.C.A. Section 35 et seq.),
or the Davis-Bacon Act (40 U.S.C.A. Section 276A et
seq.) -
(a) If the cause of action accrues on or after
May 14, 1947 - may be commenced within two years
after the cause of action accrued, and every such
action shall be forever barred unless commenced
within two years after the cause of action accrued,
except that a cause of action arising out of a
willful violation may be commenced within three
years after the cause of action accrued.
The statute, in essence, provides two different statutes of
limitations: (1) a three year limitation on actions arising out of
willful violation of the pertinent acts, and (2) a two year
limitation for all other violations. The prime contractor argued
in its brief that the two year statute of limitations of the Portal
to Portal Act was applicable to the present case since they
contended that they had no knowledge of J.E.M.'s failure to pay
workers the prevailing wages and hence the two year statute of
limitations applied absent evidence of intentional or willful
violations of the Davis-Bacon Act. Martell further argued that
since construction on the contract ended with the payroll submitted
on the week ending November 7, 1981, the two year statute of
limitations had run by November 7, 1983, one month before the
Department of Labor notified Martell of the alleged violations on
December 13, 1983. However, I find that the defendant's argument
has no merit as the statute of limitations contained at 29 USC 255
is inapplicable to administrative proceedings initiated by the
Department of Labor before an Administrative Law Judge.
The statute of limitations of the Portal to Portal Act is
specifically applicable to only three types of actions: (1) An
action for unpaid minimum wages, (2) An action for unpaid overtime
compensation or, (3) An action for liquidated damages. See 29 USC
Section 255; Unexcelled Chemical Corp. v. United States, 345 US 59,
63 (1953). An administrative action for debarment is not
prohibited by the statutory language. Furthermore, when Congress
enacted 29 USC Section 255, it was addressing itself to
conventional law suits and not administrative proceedings. See,
Unexcelled Chemical Corp., 345 US at 66. The Wage Appeals Board has
consistently held that [8]
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[9] administrative proceedings before an administrative law judge and
before the Board are not barred by the statute of limitations contained
in the Portal to Portal act. J. Slotnik Co., WAB Case Number 80-5
(March 22, 1983); Glen Electric Company, Inc., WAB Case Number 79-21
(March 22, 1983). Consequently, I find that these proceedings are not
barred as to Martell Construction or its responsible officers.
III.
In cases where a prime contractor or subcontractor has
violated a statutory duty to pay laborers or mechanics the
prevailing wage as determined by the Secretary of Labor, Congress
has authorized the government to terminate all or part of the work,
withhold accrued payments, or debar the offending contractor from
receiving future contracts. 40 U.S.C. Sections 276A-l, 276A-2. The
Act advises and directs the Controller General of the United States
to compile and distribute a list of persons or firms whom he has
found to have disregarded their obligations to employees and
subcontractors to all departments of the government. 40 U.S.C.
Section 276A-2; 29 C.F.R. 5.12(2). The Act and regulations further
provide that no government contract shall be awarded to any persons
or firms appearing on the list for a period of at least three
years. Id. Under the regulations, the Administrator of the Wage and
Hour Division, Employment Standards Administration, of the U.S.
Department of Labor is directed to notify any firm or person who,
he finds reasonable cause to believe, has committed violations of
the Davis-Bacon Act which constitute a disregard of his obligations
to employees or subcontractors. 29 C.F.R. Section 5.12(b)(1). Any
of the notified parties may then request a hearing before an
administrative law judge as to whether debarment action should be
taken. The Administrator then refers the case to the Chief
Administrative Law Judge of the Department of Labor, who designates
an administrative law judge to conduct a hearing as may be
necessary. After the hearing, the administrative law judge then
issues a recommendation to the Controller General as to whether the
contractor or subcontractor should be debarred under Section 3A of
the Act. 29 C.F.R. Section 5.12(b)(1).
The standard for determining debarment is whether or not the
defendant(s) is "...found to have disregarded...obligations to
employees and subcontractors." 40 U.S.C. Section 276A-2. However,
the phrase "disregarded their obligations to employees and
subcontractors" is not defined any where in the Act or regulations.
It seems to be left to the discretion of the administrative law
judge, and the Controller General. Although there are few
statutory guidelines as to the interpretation of these terms, it
has been [9]
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[10] consistently held by the Wage Appeals Board that willful and
repeated failure to pay the prevailing wage, falsification of payroll
records and misclassifications of workers is a disregard of the
contractor's obligation to its employees within the meaning of Section
3A of the Davis-Bacon Act. Vicon Corporation, WAB Case Number 65-3,
December 15, 1965; see also Cosmic Construction Co., Inc., WAB Case
Number 79-19, September 2, 1980.
The evidence in the record establishes that J.E.M. Contractors
and its owner, Joseph Miceli, although not aware of the specific
rates, were fully aware at the time they entered into contract with
Martell Construction Company that said contract was subject to
prevailing wage determinations. (Tr. page 157 through 158).
Although Mr. Miceli did not know the exact amount that was required
to be paid to each worker, the record establishes that he was fully
aware from the onset of the contract that he was not paying the
prevailing wage. As has been stipulated by the parties, wage
decision number NJ-80-3013 was applicable to the contract in
question. According to this wage decision, J.E.M. and Martell
Construction were required to pay hourly rates of $11.20 to
laborers, $11.35 to truck drivers, $13.89 to operators of front
loaders and $16.88 to operators of backhoes. The record at the
hearing amply demonstrates that J.E.M. Contractors, without
exception, paid its employee's wages far below the required
prevailing wage. Laborers were paid rates ranging from $7.00 to
$8.00 an hour, equipment operators rates between $7.00 to $12.00 an
hour, and truck drivers $11.21 an hour. Toward the end of the
contract, when the government began investigation into compliance
with the prevailing wage rates, Joseph Miceli and J.E.M.
Contractors deliberately falsified certified payrolls by adjusting
employee hours so as to make it appear that J.E.M. was in
compliance with the prevailing wage rates. (Tr. page 70 through
73). None of the allegations against J.E.M. Contractors was
disputed by any of the parties during the course of the
proceedings. In light of J.E.M. Contractors and Joseph Miceli's
failure to comply with prevailing wage and overtime regulations and
the calculated falsification of certified payrolls, I find they
have disregarded their obligations to employees as defined by the
Act and regulations. I, therefore, recommend[] their debarment by
the Controller General of the United States.
Although the charged violations of the Davis-Bacon and
applicable regulations by Martell and its responsible officers are
not as gross or open as J.E.M.'s, I find that they, nevertheless,
constitute a disregard of their obligations to employees under the
Davis-Bacon Act. In its brief, Martell urges the court not to
recommend debarment, on the ground that the facts and evidence
establish that [10]
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[11] the contractor (Martell) was not actually involved in the
underpayment of wages to employees. Martell also argues that in
determining whether to recommend the penalty of debarment, the Secretary
of Labor must find that the contractor deliberately or willfully
violated the Act. (Defendant's Brief, proposed findings of fact and
conclusions of law at 6).
The defendant's argument has no merit. Nowhere in the
statute, regulations or caselaw is any requirement of willful or
deliberate violation imposed on debarment under the Davis-Bacon
Act. The Act simply requires that in the discretion of the
Controller General or Secretary of Labor, the persons or firm be
found to have disregarded their obligations to employees and
subcontractors. See 40 U.S.C. Section 276A-2(a). Cases of willful
or deliberate falsification of records or underpayment of employees
are clear cut cases of disregard of obligations to employees under
the Act. That, however, does not prohibit a contractor from being
debarred for violations of the Act which are not open and
deliberate. In In re Bone, 23 WH 1054 (1978), a contractor whose
secretary/bookkeeper failed to pay employees in accordance with the
prevailing wage was found to have disregarded his obligations to
employees, and was recommended for debarment under the Act. The
Wage and Appeals Board specifically held that a contractor was
responsible for work performed by clerical employees. They,
furthermore, upheld the administrative law judge's determination of
debarment on the ground that "failure to properly instruct the
secretary/bookkeeper in the preparation of the payrolls seems...to
indicate that there was not only a disregard of petitioner's
obligations to the contracting agency but also to his employees."
Id.
The alleged violations of the Davis-Bacon and related acts by
Martell and its responsible officers in this case are, if anything,
more egregious than those by the debarred contractor in In re Bone.
From the outset of the contract, the actions and undertakings of
Martell Construction Company have evinced a reckless disregard of
its obligations to employees and subcontractors under the Act.
Although clearly required by 29 C.F.R. Section 5.5(a)(6) to insert
in any subcontracts various paragraphs from the regulations,
setting forth minimum wage and overtime requirements of a contract
subject to the Davis-Bacon Act, the subcontract between Martell
Construction Company and J.E.M. Contractors contained no reference
to Davis-Bacon or the Contract Work Hours and Safety Standards Act.
(Tr. page 262). Martell's certification of payrolls was completely
irresponsible. Under the terms of the contract, Martell
Construction Company was obligated to perform themselves 20 percent
of the work at Lakehurst Naval Air Engineering Center. (Tr. pages
15, 19). In an effort to show compliance with the 20 percent
requirement, Martell Construction Company submitted certified
payrolls 1 through 16 for the employees of J.E.M. Contractors, in
essence placing J.E.M. employees on their [11]
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[12] payroll. (Tr. page 15, Joint Exhibit 1). Although Martell
submitted certified payrolls with the names of J.E.M. contractor's
employees, J.E.M. itself was responsible for paying the wages of the
employees whose names were submitted. This was accomplished by
Martell's field supervisor, Placido Arena, obtaining by telephone from
Frank Medozzi, a J.E.M. supervisor, the names and days employees had
worked on the site during the pay period in question. (Tr. page 78).
Mr. Arena would then determine from the applicable wage determination
the amount of money each employee should legally be paid. (Tr. page
78). He then entered that figure as the amount paid to each worker
during the previous pay period. An employee in Martell's office would
then figure out the amount of deductions, FICA, federal and state tax,
etc. which should be withheld from each J.E.M. employee's paycheck.
These deductions were then listed in the payroll submitted by Martell as
deductions actually withheld from employee's paychecks. The payrolls
were then certified and sent to the government under the signature of
Eugene Martell, Secretary/Treasurer of Martell Construction Company,as
evidence of Martell's compliance with the Davis-Bacon and related acts.
This was all accomplished in total disregard to what J.E.M. was actually
paying the employees. At no time was any effort made on the part of
either Eugene Martell or Placido Arena to determine the actual amount of
wages paid and deductions withheld to the employees for whom they had
submitted certified payrolls. (Tr. page 80).
After Martell had submitted certified payrolls 1 through 16 to
the government, they had, for all appearances, satisfied the 20
percent requirement in their contract. Therefore, J.E.M.
Contractors was responsible for the submission of the remaining
payrolls. However, because of J.E.M.'s inability and inaction with
submission of the remaining of the certified payrolls, Martell
Construction Company, through its field supervisor, Placido Arena,
assisted J.E.M. in the submission of certified payrolls, later
found to be falsified, to the responsible government agency. Mr.
Arena testified that he assisted the J.E.M. supervisor in
submitting the certified payrolls by putting in the proper heading
and employee's name, etc. on the proper government forms, while
J.E.M. filled in the hours, numbers and wages. (Tr. page 84). When
J.E.M. began submitting certified payrolls with fractions and odd
numbers of hours worked, Martell Construction Company failed to
investigate or question J.E.M. about the irregularities although
they found the hours reported unusual. (Tr. page 106).
Furthermore, it was the testimony of J.E.M.'s owner, Joseph E.
Miceli that he told Placido Arena of the plan to falsify the
records to show compliance with the prevailing wage. (Tr. page
173). [12]
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[13] I find the evidence in the record sufficient to establish
disregard of its obligations to its employees by Martell
Construction Company and its responsible officers. The actions of
Martell and its officers to submit certified payrolls 1 through 16
without any effort on their part to substantiate the correct number
of hours, amount of wages and deductions is, at best, reckless
disregard of employee's rights and, at worst, conscious and
willful.
I also find that Martell Construction Company's failure to
investigate or question J.E.M. Contractors on the irregular hours
reported on certified payrolls which it submitted, constitute a
blat[a]nt disregard of its obligations under the Act. 29 C.F.R.
Section 5.5(a)(6) specifically states that the prime contractor
"shall be responsible for the compliance by the subcontractor or
lower tier subcontractor with all the contract clauses in 29 C.F.R.
5.5". In essence, this section of the regulations imposes a duty
upon the prime contractor to assure that any subcontractors are in
full compliance with the prevailing wages and standards required by
the Act. The burden is, therefore, on the prime contractor to act
on or investigate irregular or suspicious situations as necessary
to assure that its subcontractors are in compliance with the
applicable sections of the regulations. Cf. B&W Sportswear Inc.,
6 Wage and Hour case, 1224 (1947).1 [sic] /FN2/
Considering all of the facts and evidence in the case at hand,
I find that J.E.M. Contractors and Martell Construction Company and
their responsible officers have disregarded their obligations to
employees and subcontractors under the Act. I, therefore, find
adequate reason to recommend to the Controller General debarment of
the prime and subcontractor and their responsible officers. [13]
1 [sic] /FN2/ While B&W Sportswear is a case arising under an
alleged violation of the Child Labor Law, it is analogous to the
particular regulation in question. Child Labor Law makes it a
violation of the law to hire under age minors for certain jobs. In
B&W Sportswear, the Secretary of Labor found that, even though the
employer did not know the age of the minor it had hired, it had,
nevertheless, "knowingly" hired an under age minor where it failed
to ascertain her age despite her youthful appearance. The
Secretary reasoned that the Act imposes an obligation on government
contractors to adopt such measures as may be necessary to avoid
hiring child labor.[13]
~14
[14] IV.
The Compliance Officer, Enrique Lopez-Mena, computed the back
wages owing to employees to be $28,707.10 in prevailing wages and
$285.23 in overtime compensation. (G-6). The money due the
employees was subsequently withheld from the contract payments to
Martell. Martell then agreed to authorize disbursement of the
withheld money to the proper employees. I find the $285.23 of back
wages for overtime compensation to be accurately computed and owing
to the specified employees. The $28,707.10 computed to be due the
employees to meet the prevailing wage rates is correct and accurate
except for 16 hou[rs] of work performed by Tony Mussaro which were
not included in the computation. Joint Exhibit 1, certified
payroll #1, shows Tony Mussaro having worked 16 hours during the
pay period which ended November 16, 1980. The certified payrolls
then show that Mr. Mussaro did not work again on the Lakehurst
project until the pay period ending February 14, 1981. However,
the Wage Transcription and Computation Sheet for Tony Mussaro
filled out by the compliance officer incorrectly shows Mr.
Mussaro's first employment at Lakehurst as beginning with the pay
period ending February 14, 1981. It therefore appears from the
record that the 16 hours worked by Mr. Mussaro during pay period 1
were not accounted for in the wage computation. The record shows
that Mr. Mussaro was paid $7.00 an hour by J.E.M., and that the
prevailing wage rate for his position as a laborer was $11.20 an
hour. (G-l). I therefore find that J.E.M. owes Tony Mussaro an
additional $67.20 above and beyond the amount found by the
compliance officer.
ORDER
1. I hereby recommend to the Controller General of the United
States that J.E.M. Contractors and its responsible officer, Joseph
E. Miceli, as well as Martell Construction Company, Inc. and its
responsible officer, Frank Santucci and Eugene Martell, be
debarred and placed on the list containing the names of persons or
firms whom he has found to have disregarded their obligations to
employees and subcontractors.
2. It is ordered that all monies found by the Employment
Standards Administration to be due and owing employees of the
subcontractor and withheld from the contract be paid to those
employees.
3. J.E.M. Contractors is hereby ordered to pay Tony Mussaro an
additional $67.20 in back wages above the amount computed and
withheld by the Employment Standards Administration.
PAUL H. TEITLER
District Chief Judge
DATED: August 7, 1986
