CCASE:
SEALTITE CORPORATION
DDATE:
19881030
TTEXT:
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[1] [87-06.WAB ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
(513) 684-3252 304A U.S. Post Office and Courthouse
Cincinnati, Ohio 45203
In the Matter of Date Issued: October 30, 1986
Disputes concerning the payment of
prevailing wage rates and overtime
and proper classification by:
SEALTITE CORPORATION, Contractor Case No. 85-DBA-136
Proposed debarment for labor
standards violations by:
SEALTITE CORPORATION, Contractor
and
MILES S. FIRNHABER, President
With respect to laborers and
mechanics employed by the contractor
under U.S. Army Corps of Engineers
Contract No. DACA45-83-C-0124
(Iowa Army Ammunition Plant)
Middleton, Iowa
DECISION AND RECOMMENDED ORDER
Pursuant to Notice, the above-captioned matter was scheduled
for hearing before the undersigned on July 29, 1986, at Burlington,
Iowa. After neither Sealtite Corporation, nor its President, Miles
S. Firnhaber, nor any representative thereof, appeared at the
scheduled hearing, the undersigned issued an order permitting
Sealtite Corporation and Miles S. Firnhaber to show cause why the
Secretary's Motion for Default Entry should not be granted. On
August 13, 1986, Miles S. Firnhaber, on behalf of himself and
Sealtite Corporation, responded that his failure to appear was due
to a severe illness suffered while on a business venture in
Florida. He requested a new hearing date.
On August 14, 1986, the undersigned issued an order permitting
the Secretary of Labor to comment on the request for a new hearing
date. Based on due consideration of the Secretary's response, on
September 12, 1986, the undersigned granted his Motion for Default
Entry. This order was issued in accordance with the applicable
regulations found in 29 C.F.R. [sec] 18.39(b) and [1]
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[2] [sec] 8.5(b). These regulations provide that a default decision may
be entered against a party failing, without good cause, to appear at a
scheduled hearing.
Upon granting of the Secretary's Motion for Default Entry,
the undersigned ordered that the Secretary submit, within 30 days,
a proposed Decision and Order, with findings of fact, conclusions
of law and recommended remedy. The Secretary submitted Proposed
Findings of Fact, Conclusions of Law and Order on October 6, 1986.
It was further ordered that the period of filing a Petition
for Review of that order be tolled, to commence on the date of
issuance of my recommended order so as to prevent multiple appeals.
On October 9, 1986, Sealtite Corporation and Miles S. Firnhaber
submitted their opposition to the Proposed Findings of Fact,
Conclusions of Law and Order.
Based on the entire record, including Request for Admissions
served on Respondents on May 27, 1986, and June 11, 1986, which
were not denied and by operation of 29 CFR [sec] 18.20 are deemed
admitted, evidence presented at the hearing, and with due
consideration to the arguments of the parties, applicable statutory
provision, regulations and relevant case law, I hereby make the
following:
FINDINGS OF FACT
Sealtite Corporation, through Miles Firnhaber, President, (the
"Contractor"), on or about July 6, 1983, entered into a contract
with the U.S. Government, Contract No. DACA45-C-0124, for the
insulation of buildings at the Iowa Army Ammunitions Plant,
Middleton, Iowa. The contract incorporated Wage Determination
IA82-4030, which includes negotiated wage rates for each of the
unions representing the listed job classifications in the wage
determination. There is no classification for insulation workers.
The Wage Determination specifies a rate of pay of $17.93 per hour
for employees performing carpenter's work in the area of Des Moines
County, Iowa, in which the Iowa Army Ammunitions Plant is located.
Prior to the bid opening and the contract award, the contractor did
not challenge the job classifications or wage rates contained in
Wage Determination IA82-4030. The Contractor did not submit a
Request for Authorization of Additional Classification and Rate,
although furnished with these forms.
The work on the project was in two phases. The first phase
consisted of blowing insulation into the attics of two wood frame
office buildings, cutting ridges in the roofs of these buildings
for installation of sheet metal ridge fences, and cutting slots
in the overhangs for the installation of soffit vents. The second
phase involved installation of wood railers, ridge insulation,
board plywood sheeting, felt paper and fiberglass [2]
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[3] shingles on the uninsulated roofs of production buildings. In the
geographic area of the project, the work in these two phases was
considered the work of carpenters. There is no recognized union for
insulators.
The Contractor had 13 employees performing the abovedescribed
work. The Contractor classified them as insulation workers at
hourly wage rates ranging from $6.00 to $8.50 per hour, instead of
the rate of $17.93 paid to carpenters under the Wage Determination.
These employees were misclassified as insulation workers when, in
fact, they performed carpenters' work and should have been paid at
the rate of $17.93 per hour. Two employees installed blown-in type
of insulation during part of the period. A conforming wage
classification of insulation worker for persons engaged in
blowing-in of insulation was added by letters dated November 30,
1984, signed by Raymond L. Kamrath, Chief, Branch of Construction
Contract Wage Determinations, and dated March 1, 1985, signed by
James Valin, Assistant Administrator. The conforming wage
classification provides for a rate of $15.20, that includes $13.50
plus $1.70 in fringe benefits for insulation workers. The
Contractor offered no objection to either the conforming wage
classification or its established rate of payment.
Based on the foregoing, the two employees who installed
blown-in insulation, Ronald Estes and Louis Fisher, should have
received $15.20 per hour instead of $6.00 per hour for their
work. Ronald Estes performed this work from October 6, 1983,
through October 21, 1983. Louis Fisher performed this work from
October 10, 1983, through October 21, 1983. In the work weeks
ending October 14, 1983, and October 21, 1983, Louis Fisher
worked 10-1/4 hours of overtime work and was underpaid for his
overtime hours by an amount of $38.44.
In addition, each of the following 13 employees were
misclassified as insulation workers when, in fact, they performed
carpenters' work and should have been paid at the rate of $17.93
per hour instead of at the rates of $6.00 through $8.50 per hour.
Included are:
Ronald Craver $6.00
Louis Fisher $6.00
Eugene Higdon $6.00
Walter Knotts $7.00
Allen Putnam $7.50
Ronald Estes $7.00
Robert Glick $6.00
Bud Hollenbeck $6.00
Fredric Odaffer $8.50
Rick Robinson $7.00 [3]
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[4] The above mentioned were underpaid for each work week from
October 3, 1983, to February 17, 1984.
A recalculation is necessary for the periods during which
the Compliance Officer calculated back wages at roofers' rates
set out in Wage Determination IA82-4030. Later testimony by the
carpenter's business agent established that all of the activities,
including installation of fiberglass shingles, were customarily
performed by carpenters. The Compliance Officer calculated back
wages for two of the above-mentioned employees based on roofers'
rates instead of carpenters' rates. Robert Glick worked 392-1/2
hours installing fiberglass shingles at the rate of $6.00 per hour
instead of $17.63 per hour from November 18, 1983, through February
17, 1984. Accordingly, he is entitled to a total of $6,069.39, not
the $4,577.89 calculated by the Compliance Officer. Similarly,
Armin Schafer worked 288-1/2 hours at the rate of $6.00 per hour
from November 11, 1983, through February 17, 1984. He is entitled
to $3,441.81, not the $2,345.50 calculated by the Compliance
Officer.
In total, Sealtite Corporation underpaid its employees for
their work on this project a total of $34,156.98. An amount of
$31,569.17 was withheld from the contract, as authorized under 40
U.S.C. [sec] 276a(a).
CONCLUSIONS OF LAW
Contract No. DACA45-83-C-0124 is subject to the Davis-Bacon Act, as
amended (40 U.S.C. 276a, et seq.), the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327 et seq.) and applicable
regulations issued thereunder. (29 CFR Part 5) The contract
contains an effective Wage Determination for the period covered
therein. On July 6, 1983, Sealtite Corporation and its President,
Miles Firnhaber, entered Contract No. DACA 45-83-C-0124. Sealtite
Corporation is bound by the Special Conditions Relating to Labor
incorporated in the contract and by the terms of the contract that
require Sealtite Corporation to comply with both the recordkeeping
regulations of 29 CFR Part 3 and the labor standards regulations of
29 CFR Part 5.
Incorporated in the contract is Wage Determination IA82-
4030, which reflects prevailing wages paid to various trades,
including carpenters and laborers, under negotiated arrangements
in the organized sector of the construction industry in the area
of Middleton, Iowa. Where the Secretary of Labor determines that
the prevailing wage for a particular craft is derived from
experience with negotiated arrangements, the Department of Labor
must classify work in the Wage Determination according to the job
content upon which the rates are based. A contractor is not free
to classify persons performing carpentry work as laborers on the
ground that such action is in accordance with local practice in
nonunion contracts. A challenge to the use of union rates must [4]
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[5] be raised before the enforcement stage of proceedings. See Fry
Brothers Corp., CCH Labor Law Rpts, Administrative Rulings
[par] 31,113 (1977). In that case, the agency found that a
contractor could not rely on an oral statement by a local official
of a contracting agency that a particular practice complied with
required labor standards. Similarly without merit is the
Contractor's position that it reached an accord and satisfaction
with a local official.
Based on the foregoing, I find that the Contractor
misclassified the 13 employees listed on payroll records as
"insulation workers" paid at rates from $%6.00 to $8.50 per hour.
Each of these employees engaged in work within the scope of the
carpenter's craft and are entitled to be paid at the rate of
$17.93 per hour, including fringe benefits. An exception to the
above is the time spent by two employees installing blown-in
insulation, which is to be paid at the rate of $15.20 per hour,
including fringe benefits, as provided by the two above discussed
letters of March 1, 1985, and November 30, 1984.
The Contractor's violation of labor standards has resulted
in an underpayment totalling $34,156.98 due to employees for work
on the project. As authorized under 40 U.S.C. [sec] 276a(a), a
total of $31,569.17 was withheld on the contract for payment of
back wages due to these employees. I hereby direct that these funds
be released for payment to the employees in accordance with the
amounts above set out.
The Contractor failed to comply with the recordkeeping
regulations of 29 CFR [sec] [5.5]. Subsection (b) of that section
requires that payroll records accurately and completely set out
the name and address of each employee, the correct classification
and the correct rate of pay. The contractor also failed to
comply with the Contract Work Hours and Safety Standards Act by
failing to pay appropriate amounts to Louis Fisher for overtime
work.
Debarment sanctions may be applied against a contractor for
repeated and willful violations of the law. Failure to submit
certified payroll records and repeated underpayment of employees
provides a sufficient basis for debarment, despite a contractor's
claims of inexperience in government contract matters and his
cooperation in a wage underpayment investigation. Matter of
National Electro-Coatings, Inc., Labor Law Rptr., CCH [par] 31,455,
Wage-Hour Administrator, 1985.
Two prior cases are pending against the Contractor in this
case, in which he is alleged to have misclassified employees as
~insulation workers" and to have paid rates not contained in and
far below the applicable wage determinations. (Nos. 84-DBA-48,
85-DBA-54). This Contractor has had extensive experience with
government contracts and cannot claim a lack of familiarity with
the requirements and terms of Contract No. DACA45-83-C-0124. [5]
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[6] RECOMMENDED ORDER
Based upon the foregoing Findings of Fact and Conclusions of
Law, I hereby ORDER the following:
1. That Sealtite Corporation and its President, Miles S.
Firnhaber, have their names forwarded to the Comptroller General
of the United States and placed on the list of ineligible bidders
on government contracts for a three year period.
2. That the Department of Labor recover from Sealtite
Corporation the amount of $34,156.98 in back wages owed to the
above-named employees.
3. That the Department of Labor distribute the recovered
funds as follows:
Ronald Craver $4,449.89
Ronald Estes 760.55
Louis Fisher 5,441.88
Robert Glick 6,069.39
Eugene Higdon, Jr. 1,550.90
Bud Hollenbeck 662.12
Walter Knotts 579.29
Frederic Odaffer 3,098.37
Allen Putnam 3,780.33
Rick Robinson 120.23
Armin Schafer 3,441.81
Charles Wasson 3,972.69
Rod Whitaker 229.53
Total $34,156.98
DANIEL J. ROKETENETZ
Administrative Law Judge pal [6]
