SALAZA[R] CONSTRUCTION, INC., 1986-DBA-109 (ALJ July 10, 1987)
CCASE:
SALAZA[R] CONSTRUCTION, INC.
DDATE:
19870710
TTEXT:
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[1] [87-35.WAB ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
211 Main Street - Suite 600
(415) 974-0514 San Francisco, California 94105
FTS 8-454-0514
DATE: JUL 10 1987
CASE NO. 86-DBA-109
In the Matter of
Proposed debarment for labor
standards violations by:
SALAZA[R] CONSTRUCTION, INC.,
ISMAEL C. SALAZAR, ERNEST
SALAZAR, and DOMINGA H. SALAZAR
for labor standards violations with
respect to laborers and mechanics
employed in the performance of
United States Department of Education
Contract No. TX-72-C-49A22, Flour Bluff
Independent School District Facilities
for Trainable Mentally Retarded (T.M.R.)
Students, Carpentry Shop, and Physical
Education Building; and United States
Navy Contract No. N62467-81-C-0095,
Chase Field Naval Air Station Housing,
Beeville, Texas.
Donald O. Ferguson, Esq.
For the Plaintiff
Brian L. Pudenz, Esq. & Robert A. Fitz, Esq.
For the Respondent
Before: JAMES J. BUTLER
Administrative Law Judge
DECISION AND ORDER - FINDING OF FACT
AND CONCLUSIONS OF LAW
This administrative law case having come on for hearing in
Corpus Christi, Texas, on the 8th day of April, 1987, and having
considered the testimony of the witnesses and the exhibits admitted
into evidence, the undersigned administrative law judge makes the
following findings of fact, conclusions of law and order pursuant
to 29 C.F.R. [sec] 6.33(b): [1]
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[2] Findings of Fact
1. Salazar Construction, Inc., was incorporated under the laws
of the State of Texas on August 8, 1974. Its registered agent is
Ismael C. Salazar, 3801 Panama Drive, Corpus Christi, Texas 78415.
He owns 85 percent of the corporation's stock and his brother
Ernest Salazar owns the remaining 15 percent of the corporation's
stock (Tr. 129).
2. Ismael H. Garcia was employed as a compliance officer by
the United States Department of Labor from 1963 to 1986 (Tr. 23).
In 1975, he investigated the labor standards performance of Salazar
Construction on three construction contracts under the Davis
[-]Bacon and Related Acts (Tr. 24). Under Federal Housing Authority
Grant Number 376-1 to the Housing Authority of Duval County, Texas,
he found that carpenters, painters, and a laborer were not being
paid at least the rates specified in the wage decision (Tr. 25, Ex.
36). Under Federal Housing Authority Grant No. 317-1 to the Housing
Authority of Duval County, Texas, he found that bricklayers, a
concrete finisher, painters, carpenters and a roofer were not being
paid at least the wage rates specified in the wage decision (Ex.
36). Under Department of Interior construction contract number CX
700060101 he found a carpenter was paid at the laborer's rate of
$4.23 per hour and that two laborers were paid $2.40 per hour, were
shown on their individual earnings records as being paid $2.40 per
hour, but falsely were shown on the "certified" payroll (Form
WH-347) as being paid $4.23 per hour (Ex. 36).
3. By application number TX-72-C-49A22 dated November 26,
1980, the Flour Bluff Independent School District applied to the
United States Department of Education for federal financial
assistance under Public Law 81-815, as amended by Public Law 85-620
(20 U.S.C. [secs] 631-647), in the construction of facilities for
the Trainable Mentally Retarded (T.M.R.) Students, a Carpentry
Shop, and a Physical Education Building (Ex. 1). By letter dated
March 17, 1981, the United States Department of Education notified
the Flour Bluff Independent School District that its construction
project application had been approved (EX. 2).
4. The supplementary general conditions of the specifications
for Flour Bluff Independent School District Capital Improvement
Phase V, T.M.R. - Carpentry Shop - Physical Education Building,
provided that the contractor and all subcontractors shall
compensate all employees and workmen not less than the basic
construction wage rates specified in Wage Rate Decision Number TX
80-4002 published in the Federal Register, last updated May 16,
1980 (Ex. 3), a copy of which update is [not] attached hereto.
5. Wage Rate Decision Number TX 80-4002 required the following
minimum hourly rates and fringe benefit payments: [2]
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[3] [ Fringe Benefit Payments ]
Classifi- Basic Health Pen- Vaca- Educa- Total
cation Hourly & sions tion tion & or
Rate Welfare Appren-
ticeship
Laborers
Group 1 6.21 .57 .25 $7.03
6. On May 25, 1982, the Flour Bluff Independent School
District awarded Salazar Construction the construction contract for
its Capital Improvement Phase V, T.M.R. - Carpentry Shop - Physical
Education Building (Ex. 4). Ernest Salazar signed the contract on
behalf of Salazar Construction and was the superintendent on the
project (Tr. 139). Therefore, he was a person responsible for the
performance of the contract. The supplementary conditions of the
contract required the mechan[ic]s and laborers to be paid not less
than the hourly rates and fringe benefits contained in the wage
determination (Ex. 5).
7. Salazar Construction performed the contract during the
period of time from Friday, June 4, 1982 through Thursday, May 12,
1983 (Ex. 6).
8. Rene Landeros was employed by Salazar Construction in the
construction at Flour Bluff High School in 1982 and 1983 as a
laborer (Tr. 31). He was paid $3.35 per hour (Tr. 31). Guadalupe
Flores, Jr., was employed by Salazar Construction in the
construction at Flour Bluff High School in 1982 and 1983 as a
laborer (Tr. 34). He was paid $3.50 or $4.00 per hour (Tr. 34).
Jose Huerta Martinez was employed by Salazar Construction at Flour
Bluff High School in the construction at Flour Bluff High School in
1982 and 1983 as a laborer (Tr. 45). He was paid $6.00 per hour
(Tr. 46). However, the "certified" payrolls (Forms WH-347) signed
by Dominga H. Salazar falsely show that they were paid $7.03 per
hour as laborers (Ex. 6).
9. Santos Salinas was employed by Salazar Construction in the
construction at Flour Bluff High School in 1982 and 1983 as a truck
operator (Tr. 37). He was paid $5.50 per hour (Tr. 37, 41-42).
However, the "certified" payrolls (Forms WH-347) signed by Dominga
H. Salazar falsely show that he was paid $7.03 per hour as a
laborer (Ex. 6).
10. Dominga H. Salazar is responsible for these false
"certified" payrolls because she signed them. These falsifications
are identical to the falsifications of the "certified" payrolls
(Forms WH-347) which occurred in 1975 under Department of Interior
construction contract number CX 700060101.
11. On September 30, 1982, the United States Navy awarded
Salazar Construction construction contract number N62467-81-C-0095
for the construction of family housing units at Chase Field Naval [3]
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[4] Air Station, Beeville, Texas. Ismael C. Salazar signed the
contract for Salazar Construction and was responsible for the
performance of the contract. The contract included labor standards
provisions and Wage Rate Decision Number TX 81-4003 (Ex. 9).
12. Wage Rate dec[]ision Number 81-4003 required the following
minimum hourly rates and fringe benefit payments:
[ Fringe Benefit Payments ]
Classifi- Basic Health Pen- Vaca- Educa- Total
cation Hourly & sions tion tion & or
Rate Welfare Appren-
ticeship
Laborers 3.35 3.35
Group 1
[Painter] 6.00 6.00
13. Salazar Construction, Inc., performed the contract during
the period of time from Friday, October 15, 1982 through Thursday,
October 6, 1983 (Ex. 10).
14. The weekly time record for Carmen Huerta for the week
ending May 12, 1983, contains the following entry for Thursday,
May 12, 1983 (Ex. 21):
Beeville
Pintar [To paint in Spanish]
Likewise, the weekly time record for Humberto Huerta for the week
ending May 12, 1983, contains the following entry for Thursday,
May 12, 1983 (Ex. 23):
Beeville
Pintar [To paint in Spanish]
However, the "certified" payroll (Form WH-347) for the week ending
May 12, 1983, falsely shows that on Thursday, May 12, 1983, they
were worked as laborers (Ex. 10). Consequently, Carmen Huerta was
paid at the rate of $3.50 per hour and Humberto Huerta was paid at
the rate of $4.00 per hour rather than at the painter's rate of
$6.00 per hour.
15. These falsifications are similar to the falsifications of
the "certified" payrolls (Forms WH-347) which occurred in 1975
under Department of Interior construction contract number CX
700060101.
16. The "certified" payroll (Form WH-347) for the week ending
February 10, 1983, reflects that Raul R. de los Santos was []
employed as a carpenter for 30 hours at $5.14 per hour and earned
the gross amount of $155.13 (Ex. 10). Although 30 hours at $5.14
per hour is $154.20 instead of $155.13, Mrs. Rios was not able to
explain the discrepancy (Tr. 57). On the other had, the weekly time [4]
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[5] record for Raul R. de los Santos for the week ending
February 10, 1983, reflects that he worked 36 1/2 hours at $4.25
per hour for a mathematically correct total of $155.13 and contains
the following mathematically incorrect entry immediately below the
mathematically correct entry:
30 x 5.14 = $155.13
When $155.13 is divided by $5.14 per hour the result is 30.18093
hours; and when $5.14 per hour is multiplied by 30 hours the result
is $154.20. The inescapable conclusion is that Salazar Construction
"backed" into the 30 hours shown on the "certified" payroll and
that the entries on the "certified" payroll with respect to Raul R.
de los Santos are false (Tr. 68-69).
17. Comparisons of the weekly payroll records with the
"certified" payrolls reveal many similar inconsistencies for which
the only conclusion is that Salazar Construction regularly and
systematically submitted false "certified" payrolls in the
performance of United States Navy Contract Number N62467-81-C-0095
(Tr. 71-72).
18. These falsifications are more sophisticated than the
falsifications of the "certified" payrolls (Forms WH-347) which
occurred in 1975 under Department of Interior construction contract
number CX 700060101.
19. There are no "unus[u]al circumstances" present here which
would warr[a]nt relief from the ineligible list sanction.
Conclusions of Law
1. The labor standards provisions of [t]he Elementary and
Secondary Education Act of 1965 (20 U.S.C. [sec] 1232b) are
applicable to Public Law 85-620 relating to school construction in
areas affected by federal activities (20 U.S.C. [secs] 631-647) and
were applicable to United States Department of Education Contract
No. TX-72-C-49A22.
2. The contents of the Federal Register are required to be
judicially noticed; 44 U.S.C [sec] 1507; and 45 FR 32526-32527, a
copy of which is [not] attached hereto, hereby is judicially
noticed.
3. The labor standards provisions of the Davis-Bacon Act (40
U.S.C. [secs] 276a-276) were applicable to United States Navy
Contract No. N62467-81-C-0095.
4. The United States Department of Labor has the authority to
enforce the labor standards provisions applicable to contracts
covering federally financed and assisted construction.
Reorganization Plan No. 14 of 1950; Fitzgibbon v. Donovan, 102 CCH
Labor Cases Para. 34,627 (D.N.M. 1985). [5]
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[6] 5. This is a debarment proceeding pursuant to Reorganization
Plan No. 14 of 1950.
6. The Code of Federal Regulations, Title 29, Section 5.12,
governs debarment proceedings pursuant to Reorganization Plan No.
14 of 1950.
7. Any contractor found to be in aggravated or willful
violation of the Elementary and Secondary Education Act of 1965
shall be debarred. 29 C.F.R. [sec] 5.12(a)(1).
8. In cases arising under the Davis-Bacon Act, contractors who
have been found to have disregarded their obligation to employees
shall be debarred. 29 C.F.R. [sec] 5.12(a)(2).
9. The submission of falsified payrolls to the contracting
agency, the failure to keep accurate records, and the failure to
pay the predetermined wage rates are indications of aggravated and
willful violations of the labor standards provisions of the
Elementary and Secondary Education Act of 1965. In re Hirchert, CCH
Labor Law Reporter, Wages-Hours Administrative Rulings Para. 31,353
at page 43,942 (WAB 1978).
10. Paying wage rates far below the predetermined wage rates
and submitting falsified certified payrolls cannot be considered
anything short of a disregard of obligations to employees. In re
Hirchert, su[pr]a at page 43,491.
11. Current compliance does not mitigate against debarment.
In re Hirchert, supra at page 43,491. Likewise, payment of the
liquidated damages and back wages due as a result of the violations
does not mitigate against debarment.
12. The failure to perform a statutory public duty not only is
the corporate liability of Salazar Construction but also is the
personal liability of Ismael C. Salazar, Ernest Salazar and Dominga
H. Salazar, the persons who were responsible for the corporation's
performance. United States v. San[]colmar Industries, Inc., 347 F.
Supp. 404, 408 (E D. N.Y. 1972[)]; United States v. Islip Machine
Works, Inc., 179 F. Supp. 585, 588 ([E].D. N.Y. 1959); United
States v. Hudgins-Dize Co., Inc., 83 F. Supp. 593, 598 (E.D. VA
1949).
13. Whether "unus[u]al circumstances" are present in any case
within the meaning of the Act must be determined on the basis of
the facts and circumstances of the particular case. In the case,
Federal Food Service v. Donovan, 658 F.2d 830 (D.C. Cir. 1981) the
court had occasion to observe, beginning at the top column at 833,
that:
In Washington Moving and Storage Co., No. SCA-
168, March 12, 1974, the Secretary established
following guidelines by which "unusual
circumstances" should be judged: [6]
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[7] Whether "unusual circumstances" are present in a
case within the meaning of the Act must be
determined on the basis of the facts and
circumstances of the particular case. Some of the
principal factors which must be considered in making
this determination are whether there is a history of
repeated violations of the Act; the nature, extent,
and seriousness of past or present violations:
whether the violations were willful, or the
circumstances show there was culpable neglect to
ascertain whether certain practices were in
compliance, or culpable disregard of whether they
were or not, or other culpable conduct (such as
deliberate falsification of records); whether the
respondent's liability turned on bona fide legal
issues of doubtful certainty; whether the respondent
has demonstrated good faith, cooperation in the
resolution of issues, and a desire and intention to
comply with the requirements of the Act; and the
promptness with which employees were paid the sums
determined to be due them. It is clear that the
mere payment of sums found due employees after an
administrative proceeding, coupled with an assurance
of future compliance, is not in itself sufficient to
constitute "unusual circumstances" warranting relief
from the ineligible list sanction. [*It is also clear
that a history of recurrent violations of identical
nature, such as repeated violations of identical
minimum wage or recordkeeping provisions, does not
permit a finding of "unusual circumstances."*]
* * * [*(Emphasis supplied)*]
ORDER
Based on the foregoing findings of fact, particularly those
related to the repeated violations of recordkeeping provisions, and
conclusions of law, it is hereby
Recommended that Salazar Construction, Inc., Ismael C.
Salazar, Ernest Salazar and Dominga H. Salazar and any firm,
corporation, partnership or association in which they or any of
them have a substantial interest shall be ineligible for a period
of three (3) years (from the date of first publication by the
Comptroller General of the ineligible list containing their names)
to receive any contracts or subcontracts subject to any of the
labor standards statutes listed in 29 C.F.R. [sec] 5.1.
JAMES J. BUTLER
Administrative Law Judge
JJB/asl [7]
