D.R. ALLEN & SON, INC., 1986-DBA-70 (ALJ July 28, 1987)
CCASE:
D.R. ALLEN & SON, INC.
DDATE:
19870728
TTEXT:
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[1] [87-45.WAB ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
Suite 201
55 West Queens Way
Hampton, Virginia 23669
804-722-0571
DATE ISSUED: July 28, 1987
CASE NO.: 86-DBA-70
IN THE MATTER OF
D.R. ALLEN & SON, INC., Prime Contractor
and
LYLE AVERY, LTD, Subcontractor
and
J. LAFAYETTE MORGAN, Owner
Stephen J. Simko, Jr., Esq., for the U.S. Department of Labor
J. Edward Welborn, Esq., for the Respondents
BEFORE: JOHN C. BRADLEY
Administrative Law Judge
DECISION AND ORDER
This is a matter arising under the Davis-Bacon Act, 40 U.S.C.
[sec] 276(a), the Postal Reorganization Act, 39 U.S.C. [sec]
410(b)(4)(c), the Contract Work Hours and Safety Standards Act, 40
U.S.C. [sec] 327, and the regulations found at 29 C.F.R. [sec] 5.1,
et seq.
A hearing was held in Greensboro, NC, on 3/24/87, at which
time appearances were made by counsel for (a) the Administrator,
Wage and Hour[] Division, Employment Standards Administration, U.S.
Department of Labor [DOL], and (b) Lyle Avery, Ltd. [LAL], and its
owner, J. Lafayette Morgan [Morgan], sometimes referred to jointly
as "Respondents". No appearance was made by or on behalf of D.R.
Allen & Son, Inc. [DRA]. [1]
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[2] At the hearing each party was afforded the opportunity to
present evidence and argument in support of their respective
positions.
I. PROEM
On 6/13/83, DRA contracted to construct a $1,491,000.00
addition to the general mail facility of the U.S. Postal Service
[USPS] in Greensboro, NC. To meet minority hiring requirements,
on 7/1/83 DRA, in turn, contracted with LAL to supply the materials
and labor necessary to accomplish the masonry portion of the
project, the price being $170,430.00. While the masonry work was
substantially completed by 1/14/84, two employees remained on the
project until about 3/31/84.
Morgan has vehemently insisted that DRA officials were
responsible for racially motivated interference with his efforts to
perform under the contract, including inciting Morgan's employees
against him.
Responding to a complaint by Morgan's erstwhile employees,
a DOL investigator interviewing approximately 20 of them, and,
analyzing incomplete payroll records obtained from Morgan, the
USPS, or elsewhere, concluded that Morgan (a) failed to pay some
employees for normal and/or overtime hours they worked, and (b)
paid some overtime at straight time rather than the required time-
and-a-half rate. Morgan disagrees, contending that he paid his
employees all they were due.
Money otherwise due Morgan has apparently been withheld by
USPS, and DOL requests that from such funds 38 former employees of
Resp[o]ndents be paid amounts varying by individual employee, but
aggregating $6,794.03. It further requests that, although
Respondents have been on the Comptroller General's debarment list
since 6/17/85, they be continued on it until 6/17/88, i.e., until
the total debarment time reaches 3 years.
II. ISSUES
Upon review of the record, applicable statutes and
regulations, and the representations of the parties, it appears
that the following are the principal issues that must be resolved
in this proceeding: [2]
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[3] (1) Considering the existence of sharply conflicting
testimony, which witnesses were the more credible?
(2) Is there evidence of record sufficient to substantiate
findings that Respondents,
(a) Failed to pay for all hours worked by their employees,
including both straight time and overtime, and/or
(b) Paid some employees for overtime at the straight time
rate?
(3) If so, what is the amount of Respondent's liability?
(4) Did Morgan fail to maintain adequate payroll records,
as required by 29 C.F.R. [sec] 5.5(a)(3)?
(5) If so, what effect, if any, would that fact have upon
applicability of the debarment provisions of 29 C.F.R. [sec] 5.12?
III. THE EVIDENCE OF RECORD /FN1/
A. Don A. Allman, Compliance Office Supervisor
Allman was employed as a Compliance Officer in March, 1965,
was promoted to a supervisory position in 1978, and at the time of
hearing was the Greensboro Office Supervisor, W&HD, DOL (TR 31, 87,
88). Over the years he has conducted more than 1,000 investigations
(TR 88).
On 6/13/83, DRA entered into a $1,491,000.00 contract to
construct an addition to the general mail facility of the USPS,
located at 900 E. Market Street, Greensboro, NC (EX 2). It then
subcontracted with LAL on 7/1/83 to provide the masonry
construction portion of the project at the cost of $170,430.00
(EX 3). [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ When making citations to the record, the following
abbreviations will be used.
EX - Exhibits
TR - Hearing Transcript
Citation to the text in a voluminous exhibit may be made by
following the exhibit designation with a hyphen and the appropriate
page number. [3]
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[4] During the last week in January, 1984, information was
received that Morgan was not paying employees for all hours
worked (TR 31, 32, 90). When, over a period of about 2 weeks,
several trips to the job site and requests for Morgan to return
Allman's telephone calls did not bring Allman in contact with
Morgan. the latter was sent a registered letter requesting that he
produce his records in Allman's office on 2/24/84 (TR 31, 32).
When Morgan failed to appear, a telephone call that afternoon
succeeded in reaching Morgan, at which time he promised to call
back the following Monday, but did not do 80 (TR 32). Days later
Allman finally caught up with Morgan when DRA's superintendent by
telephone informed Allman that Morgan was on the job site (TR 32,
34).
Morgan then agreed to bring his records to Allman's office,
including time books, but thereafter produced only some cancelled
checks (See EX 11) and check stubs (TR 34), alleging later than he
could not find the time book (TR 35, 74). Foreman Swinson made
available some time records (See EX 9) covering about 4 weeks (TR
39), as did employee Steve Peele (See TR 40, 77; EX 10). Employees
Swinson, Martin and Peele, each of whom kept the time book for a
period of time and said he accurately recorded the hours, indicated
that it was Morgan's practice to go through the time book and
reduce the hours of some people (TR 69).
When he was unable to obtain them from Morgan, Allman obtained
copies of so-called "Certified Pay Rolls" /FN2/ [CPR] from USPS (TR
36). However, USPS advised that none were received after 1/14/84
(TR 36, 70), a point conceded by Morgan (TR 36). Allman's
examination revealed "great discrepancies" between the entries in
the time book records and what was shown in the CPR's filed by
Morgan (TR 40, 67, 84). A number of specific examples were given
of differences between what was shown on CPR's compared with was
shown by cancelled checks or check stubs (TR 51-67). Morgan's
explanation was that he paid "a lot of his pay roll" in cash (TR
35, 43).
Allman estimated that he interviewed 20 or more of
Respondent's then present or former employees (TR 42, 79). Some
alleged that they worked up to 12 hours per day (TR 42). Some
alleged that they regularly worked 9 1/2 - 10 hour days (TR 42).
But the CPR's with few exceptions listed 8 hour days, although in
some instances a 48 hour week was shown (TR 42). Some employees
said they worked Saturdays and Sundays (TR 43). Various employees
contended that they worked hours for which no pay was received,
specifically, Swinson - 45 hours (TR 40); Peele - 5 to 6 weeks (TR
41 /FN3/); Tony Walden /FN4/ - "50 something" hours (TR 41);
Bolden - 16 hours (TR 58); [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ See 29 C.F.R. [sec] 5.5(a)(3)(ii)(A).
/FN3/ Inconsistently, it was later said that Peele claimed payment
of $100.00 per week for working around 60 hours per week (TR 65,
80).
/FN4/ The written records suggest this man's last name is
Welborn. [4]
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[5] Culp - 34 hours (TR 62); and Jones - 40 hours (TR 64). On the
other hand, employee McAdoo, who is a relative of Morgan, said
in Morgan's presence that no money was owed him (TR 37, 76).
Many employees said Morgan would allege he could not pay in
full one week, promising to make it up (TR 44). Those who were
paid in cash normally accepted what they were paid (TR 43).
Based on the interviews with Respondent's ex-workers, Allman
derived a formula which estimated that, on average, the employees
worked overtime 2 hours per week, and where the applicable hourly
rate was $9.00, Allman assumed an employee was due $4.50 per hour
(TR 47,-75, 76). Furthermore, when a CPR showed a 48 hour week,
Allman assumed an employee was not paid overtime (TR 82). The
end result was the computation shown by EX 7 as money due various
employees from Respondents. Allman believed that, if Morgan had
kept accurate records, the liability would have been revealed
as higher than he has charged (TR 72). Money was withheld /FN5/
on the contract, based upon an estimate of the money due employees
from Respondents.
LAL and Morgan are listed on the Comptroller General's
ineligible list, with a 3 year expiration dated of 6/17/88 (TR 71;
EX 12).
Allegedly, Morgan told Allman he had not made any payments
to the Internal Revenue Service as a consequence of payroll
deductions (TR 50).
B. Michelle Jones, Former LAL Employee
Jones has worked as a brickmason for almost 6 years, and
worked for Respondents on the Market Street post office project for
2-3 months (TR 14, 15, 22, 24). She was initially paid $9.00
per hour, but then was cut to $8.50 on Morgan's representation
that he could not afford to pay more (TR 18, 25).
Initially the work hours approximated 10 per day, but
diminished to 9 and then to 8 (TR 16, 23). The first month, Jones
came to work at 7:30 A.M. and left about 6:00 P.M., with 1/2
hour for lunch (TR 17). Most crew members worked the same hours
(TR 28). During the first month, Jones usually worked Saturdays
(TR 16, 21). On weekdays the crew numbered about 15, on Saturdays
usually 4 (TR 27, 28).
Jones quit after about 3 months /FN6/ because Morgan was
"funny with money" (TR 18, 22). He did not pay Jones until she had
worked almost 3 weeks, and then she did not get all the money due
(TR 18). [5]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ See 40 U.S.C. [sec] 330(a); 29 CFR [sec] 5.5(a)(2) and
(b)(3).
/FN6/ Actually, just over 2 months (EX 7). [5]
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[6] Morgan sometimes paid only 1/2 the amount due in a week, with
a promise to pay the remainder the following week (TR 19), and
kept giving excuses for not paying in full (TR 24). Most of
the time, Morgan failed to pay for overtime (TR 20). When Morgan
last paid Jones, he promised to pay the remainder due (TR 26).
Jones estimates her losses totalled one week's pay (TR 21).
At first Morgan paid by check, then by cash (TR 18). She
neither borrowed money from Morgan (TR 30), nor received a W-2
form from him (TR 28).
C. J. Lafayette Morgan
Morgan, who completed his junior year in college, worked as
a brickmason and/or contractor for 20 years, although at the time
of hearing he was working for others (TR 131, 132). He worked
on the Greensboro Post Office project from July, 1983, to April,
1984, although after January the job was 99% complete (TR 94, 95).
After 1/20/84, his employees worked less than a week because there
was "nothing for us to do" (TR 110). Consequently, there were no
weeks when employee Peele could have worked 40-50 hours (TR 110).
Morgan claimed he was always on the job because it was
necessary in order to protect his interests (TR 112, 116),
generally arriving on the job at 6:30 A.M. and leaving between 6
and 7:00 P.M. (TR 117). In contrast, his employees arrived at 7:30
to 8:00 A.M. and left between 4:30 and 5:00 P.M. (TR 117), with a
lunch period more often an hour than 1/2 hour (TR 96). When crew
members worked past 4:30 P.M., it was usually because of an
equipment breakdown which caused them to work over "to make up our
regular time" (TR 96). Saturday work was infrequent (TR 96).
An employee working 9 hours was paid for 8 hours, plus one hour
of overtime (TR 95).
Because of representations made to them by the DRA project
manager, after 10/27/83 Morgan's employees did not want to take
his checks and he paid them in cash (TR 97). At least 50% of
their wages were paid in cash (TR 115). His contract called for
payments to Morgan based upon progress toward completion (TR 126).
Morgan would go to the DRA office in Fayetteville for his payment
check, would cash it at DRA' s bank, return to Greensboro and pay
his employees, "that's why basically I paid in cash prior to
October 27th" (TR 111).
Morgan was making loans to his employees (TR 100), some of
which were not repaid (TR 106). On the other hand, Morgan does not
owe money to Michelle Jones (TR 120), described "as one of the
biggest liars since An(n)anias" (TR 106), and "* * * all of the
people that were owed were paid in full" (TR 106). Between July,
1983, and January, 1984, no employee asked for payment of money
allegedly owed by Morgan (TR 99, 113). [6]
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[7] The CPR's were made out by Morgan at times, by his daughter,
or by someone paid to do it (TR 122). Morgan performed the chore
from 11/18/83 to 12/18/83 (TR 132, 134). The CPR for the week
ending 11/25/83 was made out by Morgan using records turned into
him by his time keeper (TR 133).
Respecting the employees, Swinson worked Morgan's employees
on his own projects, /FN8/ and converted money to his own use (TR
101). Don Martin converted money to his own use (TR 108), Culp and
Welborn abandoned Morgan's truck in a "bad part" of Winston-Salem
at which time power tools valued at $1,200.00 disappeared (TR 109;
EX 15). Bolden, Lawson, Culp and McCullough were stealing gas from
DRA trucks, even though Morgan had bought cars for them and was
lending money to buy gas (TR 118, 119). An attorney demanded
payment of $3,000.00 to Peele for unpaid wages (EX 13), which
Morgan refused to do (TR 106).
A letter addressed to the W&HD, DOL, by Morgan dated
9/28/85 contains various allegations against Allman, Peele and DRA
(EX 14). Another such letter addressed to DRA under date of
1/24/84 outlined problems encountered in working on the project,
referred to lack of cooperation by DRA employe[e]s, "Red" Allen and
John Schultz, and expressed the view that the harassment
experienced by Morgan was racially motivated (EX 16). Morgan also
averred that the failure of DRA to pay him was the cause of his not
paying his crew (EX 116). In still another letter by Morgan to the
OALJ-DOL dated 5/13/86, he outlined in detail the problem he had
experienced as a minority contractor in dealing with DRA (EX 17).
It was also mentioned that as of about 1/13/84, Morgan's crew had
not been paid the previous week; (EX 17-4).
At the hearing, Morgan reiterated his belief that the DRA
people were trying to get him off the job, that there existed a
racially motivated conspiracy in which "some of my forces"
participated (TR 124-126). He conceded, however, that former
employees Swinson, Bolden, Peele, Jones, Burton, Martin, Lawson,
Culp, McCullough and Welborn are black (TR 129).
D. Jerome F. McAdoo, Former Employee and Nephew
Morgan is McAdoo's uncle (TR 143). McAdoo worked on the
Market Street project as a $4.00 per hour laborer, "probably from
October until the end of March" (TR 135, 136, 146). He worked
mostly an 8 hour day, 40 hours per week, and, when he worked
Saturday 2-3 times, he was paid time-and-a-half (TR 136). Two or
three times per month McAdoo would work over 8 hours (TR 137).
When shown that the CPR for 1/7/84 listed for him 8 hours a day for
6 days, but that a time book noted 4 1/2 hours work on Sunday and
8 1/2 on Monday and Friday, McAdoo was unable to say which was
correct (TR 140, 141). [7]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN8/ This contention is difficult to reconcile with Morgan's claim
that he was always present on the project site to protect his
interests. [7]
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[8] McAdoo usually worked from 7:30 A.M. to 5:00 P.M., with
a lunch period of 30-60 minutes, and 15 minute breaks 2-3 times
per day (TR 141, 143, 144). In fact, on those occasions when
McAdoo drove Morgan to the site in the morning, they arrived
about 7:30, not 6:30 (TR 147, 148). On 3-4 occasions, McAdoo
worked until 8:00 P.M. (TR 145).
McAdoo worked on the project until the end of March with
Peele cleaning bricks, working about 8 hours per day and sometimes
4 hours on weekends (TR 143, 146). Peele discussed his DOL claim
with McAdoo, asking him if he wanted to make an extra $1,000.00
(TR 137). McAdoo's explanation for his receipt of only $92.00
for the week of 11/25/83 when he supposedly worked 40 hours @
$5.00 ($200.00) was that he had borrowed money during the week
and a corresponding deduction was made on pay day (TR 149).
IV. FINDINGS AND CONCLUSIONS
A. Credibility Issues
It is clear from the foregoing that the testimony offered
by either party -- Allman and Jones on one side and Morgan and
McAdoo on the other -- is in direct, irreconcil[]able conflict.
The question is whom to believe.
Witness Allman is a professional government investigator
with many years of experience who, perhaps unlike a private
investigator, has no financial interest in the outcome of this
matter. He testified in some detail regarding his findings, both
from examination of documents and from what 20 or more of
Respondent's former employees told him. He was able to document
discrepancies between what some of Respondent's time records showed
and representations made a part of CPR's filed with the USPS. He
had no discernable reason to distort the results of his
investigation.
Witness Jones, of course, like Morgan, has a financial
interest in the outcome of the proceeding. Allman has placed that
interest at $450.00. Nevertheless, at the hearing her demeanor was
that of someone telling the truth.
Witness Morgan has a much larger financial interest in the
matter, consisting of the prospect of losing approximately
$6,800.00 in withheld funds and whatever other costs remaining on
the Comptroller General's debarred list may entail. He is
reasonably articulate and his expressions reveal a person of some
education. However, it has been concluded that there is an
unacceptable risk involved in according significant weight to
Morgan's assertions on critical points. This conclusion was
induced by the following: [8]
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[9] (1) Morgan insisted that he had been on the job almost
all the time, despite Allman's detailed description of
his often frustrated efforts to bring Morgan into contact
on the job site or by telephone.
(2) Morgan accused Swinson of working LAL employees on
his own project, a virtual impossibility if, as he
claimed, Morgan was on the job all the time to "protect
his interests."
(3) Morgan testified that he reached the job site by
6:30 A.M., whereas his nephew McAdoo placed the time at
7:30 A.M.
(4) Morgan testified that after 1/20/84 there was
"nothing left for us to do," whereas the uncontroverted
testimony of McAdoo was that he and Peele worked 8 hour
days, plus some overtime, cleaning brick until the end of
March, more than 2 months later.
(5) Allman's uncontroverted testimony was that Morgan
admitted failure to pay the IRS deductions made from
employees' pay.
(6) Morgan clearly falsified some CPR's, and failed to
file others (after 1/14/84).
(7) Having admitted that he personally compiled the CPR
of 11/25/83 from records turned into him by his
timekeeper, Morgan failed to come up with a plausible
reason why he failed to produce those records for Allman.
(8) Morgan's demeanor on the witness stand.
McAdoo is Morgan's nephew, and, while it is believed that his
testimony was candid for the most part, it was also obvious that
his mission on the witness stand was to provide support and comfort
for his uncle.
B. The Issue of Liability
The testimony and documentary exhibits sponsored by Allman,
buttressed to some extent by Jones' testimony, are sufficient to
establish a prima facie case for the proposition that Morgan failed
to pay all of his employees for all hours they worked, including
both straight time and overtime, and, further, paid overtime to
some employees at the straight time rate. There is no credible
evidence to the contrary.
In what appears to be an effort to avoid imposition of
liability, Morgan has contended that DRA and/or its employees were
responsible for racially motivated impediments to his efforts
properly to perform under his contract with DRA. It is difficult [9]
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[10] to reach a judgment as to whether Morgan's complaints have
a significant basis in fact -- and they may well have -- or whether
Morgan has simply seized upon a convenient alibi for whatever
shortcomings his own performance may have had. Whatever the answer
to that conundrum may be, it is not necessary that it be resolved
here. Even if DRA personnel had acted toward Morgan as racially
motivated arrant blackguards and knaves, he was not thereby
relieved of his duty to pay his employees in accordance with the
requirements of law.
The proposition that DRA and Morgan's employees engaged in a
racially motivated conspiracy to injure Morgan by reporting alleged
wage and hour violations to DOL will not stand scrutiny either.
All of Respondent's former employees whose race was identified of
record were black, and it is difficult to accept the idea that
they would have joined DRA in a racial conspiracy against Morgan.
Moreover, other than Morgan's bare, unsubstantiated allegations,
there is nothing in the record to show that Respondent's employees
entered into a conspiracy of any kind with DRA and/or any member
of its staff.
The next question, then, is the extent of Respondent's
liability. In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680,
687 (1946), the Supreme Court had this to say:
When the employer has kept proper and accurate records
the employee may easily discharge his burden by securing
the production of those records. But where the
employer's records are inaccurate or inadequate and the
employee cannot offer convincing substitutes a more
difficult problem arises. The solution, however, is not
to penalize the employee by denying him any recovery on
the ground that he is unable to prove the precise extent
of uncompensated work. Such a result would place a
premium on an employer's failure to keep proper records
in conformity with his statutory duty: it would allow the
employer to keep the benefits of an employee's labors
without paying due compensation as contemplated by the
Fair Labor Standards Act. In such a situation we hold
that an employee has carried out his burden if he proves
that he has in fact performed work for which he was
improperly compensated and if he produces sufficient
evidence to show the amount and extent of that work as a
matter of just and reasonable inference. The burden then
shifts to the employer to come forward with evidence of
the precise amount of work performed or with evidence to
negative the reasonableness of the inference to be drawn
from the employee's evidence. If the employer fails to
produce such evidence, the court may then award damages
to the employee, even though the result be only
approximate. [10]
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[11] EX 7 provides Allman's estimate of the approximate amounts
due each of some 38 employee[]s of Respondent as derived by a
formula invoked by Allman and explained of record. It has been
held by the Wage Appeals Board, DOL, that where neither the
contractor nor the subcontractor kept required payroll records, the
"Board sees no alternative but to accept Wage and Hour's
determination of violations of the labor standards obligations
***." In the Matter of Structural Services, WAB 82-13 (1983), pg.
7. Here, as there, it is found that "there has been no convincing
showing made that the figures prepared by the Wage and Hour
Division are erroneous." (pg. 9).
Accordingly, the data shown by EX 7 is summarized on Appendix
A, [NOT] attached hereto, and it is adjudged that Respondents are
liable to 38 of their former employees in the amounts there shown.
C. The Debarment Issue
It has been recognized that such acts as submitting falsified
CPR's, failing to pay overtime, and failing to keep accurate
records are an indication of aggravated and willful violations of
law, Marvin E. Hirchert, d/b/a M & H Construction Co., WAB 77-17
(1978); and M.C. Morgan Contractors, Inc., WA[B] 84-18 (1985). In
such cases, invocation of the debarment provisions of 29 C.F.R.
[sec] 5.12(a)(1) for 3 years is justified. Compare Warren E.
Manter Co., Inc., WAB 84-20 (1985); and Early & Sons, Inc., WAB
86-25 (1987).
ORDER
Based upon the foregoing, I conclude that Lyle Avery, Ltd.
and J. Lafayette Morgan violated the aforesaid Acts and
Regulations, and owe $6,794.03 in back wages to the employees and
in the amounts stated on Appendix A attached hereto. Accordingly,
it is hereby ORDERED that:
(1) The U.S. Postal Service shall release and pay over
to "Wage and Hour Division -- Labor", from funds
currently being withheld from respondents under contract
subject to the aforesaid Acts, the amount of $6,794.03.
The Administrator forthwith shall distribute such monies
to Respondent's employees in accordance with the terms
contained in the Consent Findings.
(2) If any funds being withheld by the U.S. Postal
Service remain after the aforesaid release to the
Administrator, they shall be paid by the U.S. Postal
Service to the respondents, absent further retention
under other statutory authority. [11]
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[12] (3) The Administrator shall forward the names of
Respondents Lyle Avery, Ltd. and J. Lafayette Morgan to
the Comptroller General, in accordance with the
ineligible list provisions of 29 C.F.R. [secs] 5.12 and
6.35, for inclusion on and publication of the list of
persons and firms who shall be ineligible (together with
any firm, corporation, partnership, or association in
which said Respondents have a substantial interest) to be
awarded any contract with the United States until
6/17/88.
JOHN C. BRADLEY
Administrative Law Judge
JCB/lkw [12]
