CCASE:
BRIGHTON PAINTING COMPANY
DDATE:
19870128
TTEXT:
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[1] [87-09.WAB ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
304A U.S. Post Office and Courthouse
Cincinnati, Ohio 45202
DATE: JANUARY 28, 1987
CASE NO. 85-DBA-147
IN THE MATTER OF
DISPUTES CONCERNING THE PAYMENT OF
PREVAILING WAGE RATES AND OVERTIME BY:
BRIGHTON PAINTING COMPANY, INC., CONTRACTOR
AND
PROPOSED DEBARMENT FOR LABOR
STANDARDS VIOLATIONS BY:
BRIGHTON PAINTING COMPANY, INC.
RONNIE EVEANS, OWNER
JANET EVEANS, SECRETARY-TREASURER
WITH RESPECT TO LABORERS AND
MECHANICS EMPLOYED BY THE CONTRACTOR
UNDER CONTRACT NOS. N62467-82-C-9028
(CORPUS CHRISTI, TEXAS), F41612-81-D-
0013 (SHEPPARD AFB, TEXAS,
F41652-82-C-0018 (DYESS AFB, TEXAS).
Appearances: Sally Blackmun, Esq., For the Respondents
Robert A. Fitz, Esq., For the Complainant
Before: C. Richard Avery
Administrative Law Judge
DECISION AND ORDER
BACKGROUND
This proceeding involves disputes concerning the payment of
prevailing wage rates and overtime and proposed debarment of
Respondents. The proceeding arises under the Davis-Bacon Act (40
U.S.C. Section 276) Reorganization Plan No. 14 of 1950 (64 STAT.
1267), the Contract Work Hours and Safety Standards Act (40
U.S.C. Section 327 et seq.) and the applicable regulations
promulgated thereunder at 29 C.F.R. Part [5], Sections 5.11(b) and
5.12(b). [1]
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[2] The Administrator, Wage and Hour Division, Employment
Standards Administration, United States Department of Labor,
(hereinafter "complainant") alleged in the Order of Reference dated
September 17, 1985, that Brighton Painting Company, Inc., its
owner-president, Ronnie Eveans, and its Secretary-Treasurer, Janet
Eveans, (hereinafter "Brighton" or "Respondents") violated certain
provisions of the above-stated Acts by failing to pay employees the
applicable prevailing wage rates and overtime pay. Complainant
also alleged that such actions taken by Respondents, together with
the alleged falsification of certain payroll records, justify their
debarment under 29 CFR Section 5.12. By letter dated April 9, 1985,
Respondents requested a hearing on the alleged violations.
A formal hearing was held on April 9, and 10, 1986, at Wichita
Falls, Texas. At that hearing, the parties were given full
opportunity to present evidence and to examine and cross-examine
witnesses. In July, 1986, both parties submitted post-hearing
briefs. The parties agreed that the case involved three contracts
for painting entered into by Respondents and the Federal
government. Two of these contracts were with the U.S. Air Force for
work to be performed at Sheppard Air Force Base and Dyess Air Force
Base. The other contract was with the U.S. Navy for work to be
performed at Corpus Christi Naval Air Station.
ISSUES
The issues presented at the hearing were:
(1) whether Brighton failed to pay certain of its employees
the prevailing wage rates contained in the three contracts for all
regular hours worked;
(2) whether Brighton failed to pay certain of its employees
covered by the three contracts at a rate equal to time and
one-half of their regular hourly wage rate for all hours worked
in excess of eight per day and forty per week; and
(3) whether or not Brighton and Ronnie Eveans and Janet
Eveans committed willful and aggravated violations of the
Davis-Bacon Act ("DBA"), sufficient to justify their debarment from
eligibility to bid on further government contracts, in accordance
with 29 C.F.R. Part 5.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The findings and conclusions that follow are based upon my
observation of the appearance and demeanor of the witnesses who
testified at the hearing and upon an analysis of the entire record
in light of the arguments of the parties, applicable statutory
provisions, regulations, and pertinent case law. [2]
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[3] I find that Respondents did fail to pay certain employees at
the prevailing wage rates contained in the three contracts for
all regular hours worked, and that Respondents also failed to pay
certain of the contract employees at the rate of time and
one-half their regular hourly wage rate for all hours worked in
excess of eight per day and forty per week.
Moreover, for reasons that are hereinafter discussed, I find
that all three of the Respondents' conduct in all three contracts
constituted willful and aggravated violations of the Davis-Bacon
Act (DBA) and the Contract Work Hours [and] Safety Standards Act
(C[W]HSSA), evidencing a serious and obvious disregard of the
Respondents' obligations to their employees, justifying the
imposition of the penalty of debarment.
I. DBA and CWHSSA Violations
With some minor variations, the conduct alleged to be
violative of the Acts was the same under all three contracts.
This conduct consisted mostly of paying painters at a piece rate
wage based upon square footage painted, rather than paying the
painters at the prevailing wage rates mandated by the Acts and
agreed upon in the contracts. Respondents kept inaccurate
records of the hours actually worked, and used a record keeping
system designed to conceal Respondents' failure to comply with
the Acts. Because this approach was common to all three of the
contracts in question, the same legal ana[ly]sis applies to the
violations committed under each contract.
The testimony demonstrates that Brighton determined the
amount of pay each worker was to receive based upon the painter's
square footage output, divided that amount by the contract hourly
rate and used the result as the number of hours worked (Tr.
26-27, 269-278; GX 2, 3, 4, 5, 8, 10). This intentional
manipulation of the records had the effect of causing the records
to erroneously reflect that the prevailing wage rate was in fact
being paid (Tr. 27, 39, 69), when in fact the actual rate of pay
was sometimes lower than the prevailing wage rate (TR. 27, 69,
76, 105) Respondents admitted that they paid six employees at
rates significantly below the prevailing wage rates (TR.
317-321), but two compliance officers' independent workups of
Brighton payrolls, based upon interviews with employees at the
time of the projects, substantiated that the charges of
non-compliance and a pattern of intentional falsification of
records was much more wide-spread than among just six employees.
Twenty nine C.F.R. Section 5.5(a)(1)(i) provides that
workers must be paid unconditionally, without subsequent
deductions or rebates (See Tr. 76), the full amounts of wages due
under the contract prevailing wage determination. Additionally,
29 C.F.R. Section 5.5(a)(1)(i) provides that these wages must be [3]
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[4] paid, without regard to employee skill, except for certain
exceptions not relevant here, and 29 C.F.R. Section 5.5(a)(3)(1)
provides that accurate records must be kept, including accurate
records of the daily and weekly hours worked by each employee.
Respondents have violated the regulations by their failure to
take these steps. Additionally, workers were not paid overtime
wages for overtime worked (Tr 272), and the time recording
system used by Brighton conceals this fact, because the actual
hours worked by employees bore no relation to the hours recorded
and certified by the Respondents (Tr 269).
Paying employees at proper rates and maintaining accurate
records of such wages are legal obligations imposed upon
contractors by the DBA and CWHSSA. Those contractors who choose
to engage in the business of contracting with the federal
government must comply with these Acts and the regulations
promulgated thereunder, as well as the terms of the contracts
they entered into. The purpose of all of this, is to use the
immense purchasing power of the Federal Government as leverage to
raise labor standards and alleviate the possibility that any part
of the tremendous National expenditures should go to forces
tending to depress wages and purchase power and offending fair
social standards of employment. See Perkins v. Lukens Steel Co ,
310 U.S. 113, 128 (1940); Endicott-Johnson Corporation v.
Perkins, 317 U.S. 501, 507 (1943); and U.S. Code Cong and Adm.
News, 1765, pp. 3737-3739. Respondents' actions run completely
counter to such policy.
Contractors and subcontractors who undertake contracts
covered by the Davis-Bacon and related Acts have an obligation to
keep accurate records of wages, overtime, and fringe benefits.
Failure to keep such records is done at their peril. Without
proper payroll records, Wage and Hour Compliance Officers are
compelled to invoke the criteria set forth in Anderson v. Mt.
Clemens Pottery Co., 328 U S. 680 (1946), which requires the
employer to produce evidence of the amount of work performed or
evidence to rebut the reasonableness of the inferred extent of
the violations; otherwise, employees may be awarded back wages even
though the result can only be approximated. The Government's
burden of proving its claims in these instances is carried if the
Government proves that the involved employees have performed work
for the employer for which they were improperly paid and
sufficient evidence is produced to show a reasonable
approximation of the amounts due employees. See, e.g., Mitchell
v. Williams, 211 F.Supp 860 (E.D La. 1962).
In this case, I find the burden has shifted to Respondents.
The violations here were not ordinary because of the false nature
of the record keeping system adopted by Brighton. When a
contractor fails to keep accurate payroll records and time cards
as required by the contract provisions then it cannot rely on
its inaccurate record keeping to dispute the Government's method
of reconstructing records for purposes of investigation. [4]
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[5] It would be inequitable to allow Brighton to use the fact
that it maintained inaccurate records to defeat the constructions
of the compliance officers. It is the duty of the employer to
maintain the necessary records. It is not sufficient for a
contractor to simply contend that the Government's backwage
computations are wrong. Respondents at the very least have a
correlative responsibility to explain what it believes to be the
right computation.
Based upon the foregoing, I find that the following
employees are due the following amounts which includes both DBA
and CWHSSA wages where appropriate.
A. SHEPPARD AIR BASE CONTRACT
1. Kenneth Burch $ 346.88
2. George Callejas $ 982.57
3. Robert Callejas $ 340.72
4. Steve Caseau $ 161.09
5. Lewis Collins $ 183.75
6. Greg Emmons $ 1,080.15
7. Jerry Ford $ 781.87
8. David Garshe $ 308.39
9. Donald Johnson $ 263.47
10. Wesley Lake $ 2,628.25
11. Sandra Melton $ 3,788.04
12. Paul Newman $ 2,307.80
13. Chester Powell $ 78.74
14. Richard Smith $ 1,330.24
15. Richard Walker $ 373.19
16. Keith Watts $ 841.88
17. Gina Eveans $ 534.38
SHEPPARD TOTAL $ 16,331.41
B. DYESS AIR BASE CONTRACT
1. Steve Caseau $ 1,285.22
2. Greg Emmons $ 140.63
3. David Pickett $ 821.12
4. David Garshe $ 234.95
5. Wesley E. Lake, Jr. $ 126.22
6. David Mackey $ 110.60
7. Steve Mackey $ 370.71
8. Sandra Melton $ 207.51
9. Keither Watts $ 2,777.38
DYESS TOTAL $ 6,074.34 [5]
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C. CORPUS CHRISTI NAS CONTRACT
1. George Callejas $ 1,438.62
2. Robert Callejas $ 430.57
3. David Gamez $ 314.52
4. Otis Huffer $ 158.64
5. Charles Loveday $ 815.10
6. Joseph Melbourne $ 3,052.42
7. Jeffrey Skjerseth $ 866.34
CC NAS TOTAL $ 7,076.21
DYESS TOTAL $ 6,074.34
SHEPPARD TOTAL $16,331 41
TOTAL OWED $29,481.96
In arriving at these findings, with two exceptions, /FN1/ I
have accepted as reasonable the computations and approximations of
Compliance Officers Frank Carmichael and Benedito Ramos as
summarized in Government's Trial Exhibits 12, 13, 15, and 17, and
Exhibits C and B of Mr. Ramos' deposition taken April 8, 1986.
Both Compliance Officers found, and I concur, that most employees
were paid piece rate (based upon the number of square feet
painted) and that the certified payroll records were incorrect
regarding both hours worked and rate of pay. (Ramos depo.
p. 8, Tr. 118, 269) Accordingly, as Mr. Carmichael testified,
because accurate records were not maintained by Brighton, it was
necessary for the Compliance Officers to use averages and
estimates to reconstruct the payroll records. These estimates
were based upon interviews and investigations conducted close in
time to the violations, when memories were fresh, and I find the
resulting approximations, under the circumstances, to be
reasonable.
In defense of their actions, the Respondents maintain that
the Government is unable to support its calculations and that in
many instances the employees themselves have no records or
acquiesced to the wage arrangement. I find none of these to be
acceptable defenses. For reasons previously stated, the
Government had no choice but to rely upon estimates (which were
at least timely made), and acquiescence by an employee does not
eliminate the contractual obligation of the Respondents.
Brighton also maintains that the "piece rate" method equals or
exceeds the minimum wages for hours worked, but because they
manipulated the certified payrolls by dividing the amount paid
most employees by the hourly rate required by the contract and
used the results as the hours the employees worked, there are no
accurate records available to Brighton to support its contention.
To the extent that this result seems harsh, it must be recognized
that the Respondents own failure to comply with the Acts, and the
inaccurate nature of their bookkeeping produced the shifting of
the burden to them. Proper recordkeeping is imperative for
businesses cho[o]sing to contract with the Federal Government, and
in this instance the recordkeeping was not only improper, but
deceptive. [6]
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[7] II. DEBARMENT
I find that Brighton has violated the DBA and CWHSSA in a
willful and aggravated manner, and has evidenced disregard for
its legal and contractual obligations toward its employees.
I also find that Ronnie Eveans, as owner-president of Brighton
Painting Company, Inc , and Janet Eveans, as secretary-treasurer
of that corporation, are responsible officers who should be
debarred along with the corporation.
In my opinion, the falsification of payroll records to
simulate prevailing wage compliance is prima faci[e] evidence of a
willful violation and itself a debarrable act. The facts found
in this case indicate a willful attempt to falsify records to
simulate compliance. The Eveans were involved in the day-to-day
conduct of the business, and are not unsophisticated people. I
can arrive at no other conclusion than this was culpable conduct.
Strict compliance and careful recordkeeping are at the heart
of the Davis-Bacon and related acts. The recordkeeping
requirements are not burdensome or even unusual. Many successful
government contractors are operating successfully while in
compliance. In contrast, the Respondents' system apparently was
designed not only to avoid compliance with the Acts but to mask
the violations. I find no mitigating circumstances or
justifiable excuse. Good faith has not been demonstrated,
restitution is not a defense, (especially where the offered
restitution was not total), and the amounts involved were
significant. I find the fact that younger employees allegedly
made some of the mistakes to be immaterial. To the contrary, the
manipulations of payroll records here reveals to me extreme
disregard of the employer's statutory and contractual obligations
to the employees. The piece rate system effectively shifted
Brighton's legitimate business risks to its employees. This
result is contrary to the minimum prevailing wage provisions of
the DBA and the overtime provisions of the CWHSSA. It is also
inequitable, because the contractor who stands to make the most
money should also bear the business risks of slow painters.
CONCLUSION
Respondents' violations of the DBA and CWHSSA have been
proven in the absence of accurate records, the Compliance
Officers' reconstructions are accorded significant weight and are
accepted. The false nature of the payrolls is prima faci[e]
evidence of willful and aggravated violations and in the absence
of contrary evidence the corporation and responsible officers
should be debarred. [7]
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[8] RECOMMENDED ORDER
It is hereby Ordered:
1. That Respondents pay to the United States Department of
Labor $29,481.96, and that the same be distributed to the
employees of Respondents previously listed in the respective
amounts set forth in the body of this Decision.
2. That Respondents, Brighton Painting Company, Inc.,
Ronnie Eveans, its Owner-President, and Janet Eveans, its
Secretary-Treasurer, are to be placed on the ineligible list,
pursuant to 29 C.F.R. Section 5.12(a)(1), for a period not to
exceed three years.
C. RICHARD AVERY
Administrative Law Judge [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The two exceptions involve John Beaudin and Dorma Johnson
regarding work assumed to have been performed on the Shep[p]ard Air
Base. Compliance Officer Carmichael mistook the former person as
an interior painter, when in fact he was an exterior painter, and
I am satisfied from the weather records submitted that he could
not have worked the number of hours determined. As regards Mrs.
Johnson, she was the wife of an employee rather than an employee.[8]
