MILNOR CONSTRUCTION CORP., 1988-DBA-12 (ALJ Apr. 30, 1991)
CCASE:
MILNOR CONSTRUCTION CORP.
DDATE:
19910430
TTEXT:
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[1] [91-21 ATTACHMENT]
U.S. Department of Labor Office of Administrative Law Judges
1111 20th Street, N.W.
Washington, D.C. 20036
In the Matter of
Disputes concerning the payment of
prevailing wage rates and overtime by
MILNOR CONSTRUCTION CORP.,
Prime Contractor
and
DIAL ELECTRIC CONTRACTING CO., INC.
Subcontractor
and Case No. 88-DBA-12
Proposed Debarment on account of
Labor Standards Violations by DECISION AND ORDER
DIAL ELECTRIC CONTRACTING CO., INC.
and
HERMAN ROSENBLATT, Its President
With respect to laborers and mechanics
employed by the Subcontractor under U. S.
Department of Housing and Urban Development
Contract No. NY36-P005-292 (Lenox
Road - Rockaway Parkway Rehabilitation,
Brooklyn, New York)
Sheldon Feinstein, Esquire
Bayside, New York
For the Contractor
No Appearance for the Subcontractor
Louis DeBernardo, Esquire
Office of the Regional Solicitor
United States Department of Labor
New York, New York
For the Complainant
Before: Aaron Silverman
Administrative Law Judge [1]
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[2] DECISION AND ORDER
I. Introduction and Issues
This case, arising under the United States Housing Act of 1937, as
amended (42 U. S. C 1437j) and the Davis-Bacon Act (40 U. S. C. 276a et
seq.), came on for hearing in New York City on May 17-18 and July 19 in
1989. It is to be decided under the procedures prescribed in the Act,
Reorganization Plan No. 14 of 1950 (64 Stat. 1267), and the applicable
regulations (Part 5 of Title 29, Code of Federal Regulations,
particularly its sections 5.11(b) and 5.12(b)). /FN1/
The parties here agree that the work in question was covered by the Act,
but the Department contends that there was an underpayment of wages that
were due to nine certain workers on the project, and it seeks also to
debar from future contracts with the Federal Government the
Subcontractor, Dial Electric Contracting Co., Inc. and its president,
Herman Rosenblatt. The Department appeared in this proceeding and
actively presented its case. So also did the Prime Contractor, Milnor
Construction Corp., which acknowledges its obligation to pay the amount
of any such wage deficiency as is alleged, but which vigorously contests
the amount claimed for it by the Department. Neither Dial nor its
president appeared in the action. We are presented, therefore, with two
issues for decision, as follows
1. Was there any deficiency, in wages paid under this contract to each
of nine certain workers, and if there was how much was it for each one?
2. Should Subcontractor Dial and its president, Herman Rosenblatt, or
either-of them, be debarred under the Act from contracting with the Federal
Government? [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The following abbreviations may be used in this Decision and Order:
The Act, to refer to the Davis-Bacon Act;
The Department, to refer to the United States Department of Labor;
Milnor or the contractor to refer to Milnor Construction Co.;
Dial or the subcontractor, to refer to Dial Electric Contracting Co.;
The Lenox site or the project, to refer to the Lenox Road Rockaway
Parkway
Rehabilitation Project;
Tr., with a page reference, to refer to pages of the transcript of
hearing; and
Exh. P- and Exh. R-, with a number, to refer to Exhibits of the
Department of Labor (P-) or the Contractor R-) in the record of this
proceeding. [2]
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[3] For reasons which are fully discussed below, I have concluded that
there were deficiencies in wages paid, in amounts that I have computed
for each of the nine named workers, that Milnor and Dial are jointly and
severally liable for the payment of those deficiencies, and that both
Dial and Mr. Rosenblatt should be debarred.
II. The Davis-Bacon Act
A. The Act and Its Implementing Regulations
The Davis-Bacon Act, 40 U. S. C. 276a et seq., requires that contractors
on Federally funded construction projects pay not less than prevailing
wages, as determined by the Secretary of Labor, to all persons who
perform the duties of "laborers or mechanics" on such projects. The Act
by its own terms applies to
every contract in excess of $2,000 to which the United States or the
District of Columbia is a party, for "construction, alteration,
and/or repair, . . . and which requires the employment of mechanics
and/or laborers....
The Act provides in substance that
all mechanics and laborers employed directly upon the site of the
work . . . [shall be paid not less than prevailing wage rates in the
area as determined and announced by the Secretary of Labor,]
regardless of any contractual relationship which may be alleged to
exist between the contractor or subcontractor and such laborers and
mechanics.
Failing such payment, the Act authorizes the Government contracting
officer to withhold from the contractor such amounts as he deems
necessary "to pay to laborers and mechanics employed by the contractor
or any subcontractor on the work" the difference between those required
rates of pay and the rates actually received by the workmen.
Section 5.2(o) of Title 29, Code of Federal Regulations reads as
follows:
Every person performing the duties of a laborer or mechanic in the
construction, prosecution, completion, or repair of a public building
or public work, . . . is "employed" regardless of any contractual
relationship [3]
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[4] alleged to exist between the contractor and such
person.
The terms "laborer" and "mechanic" have repeatedly been construed under
the Act to include all workers working on the project, including common
labor, clean-up workers, skilled and semi-skilled and unskilled labor,
and the trades, among others. There is no doubt, and none of the
parties disputes, that the term includes workers doing the work that the
workers in question performed here.
B. Interpretations of the Davis-Bacon Act
The Davis-Bacon Act, 46 Stat. 1949, P.L. 74-403, 4[0] U.S.C.
276a-276a-7, as amended, was enacted in 1931. It has been interpreted
often and consistently enough with respect to several common or
recurring fact situations that we can accept certain principles relating
to it as well settled. It is remedial legislation, and it was enacted
for the benefit of workers, and not for the benefit of contractors or
subcontractors. Universities Research Ass'n., Inc. v. Coutu, 450 U.S.
754 (1981); United States v. Binghamton Construction Co., 347 U.S. 171
(1954); North Georgia Bldg. and Constr. Trades Comn. v. Goldschmidt,
621 F.2d 697 (5th Cir. 1980). Workers cannot waive, release, or in any
manner contract or sign away their rights to the correct wages under the
Act. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697 (1945); U.S. ex rel.
Maude A. Johnson v. Morley Construction Co., et al., 98 F.2d 781 (2nd
Cir. 1938); In the Matter of Jack Picoult, WAB Case No. 68-9 (Dec. 9,
1968), p. 13. A prime contractor is responsible for the back wages due
employees of its subcontractor. 29 C.F.R. secs. 5.2(o), 5.2(i),
5.5(a)(2), 5.5(a)(6); All Phase Electric Co., WAB Case No. 85-18 (June
18, 1986); A. D. Roe, Inc., WAB Case No. 84-11 (December 18, 1985); In
re Simpson Construction Co., 24 WH 484 (1979); ln re J.B.L.
Construction Co., 23 WH 1064, 1071 (1978). In fact, a prime contractor
has the responsibility to insure that all persons engaged in performing
the duties of a laborer or mechanic on the construction site receive the
appropriate prevailing wage rate, irrespective of any contractual
relationship alleged to exist or not to exist between the contractor and
such persons. 40 U.S.C. sec. 276a; In re Simpson Construction Co., 24 WH
484 (19[79]); In re J.B.L. Construction Co., supra. No employment
relationship with the prime contractor -- Milnor, here -- need be shown,
for Milnor to be responsible under the Act for compliance with its
terms. 29 C.F.R. secs. 5.2(o), 5.5(a)(1)(ii)(D); In re Joseph Morton, 26
WH 1450, 1451 (1984).
III. The Undisputed Facts
The parties agree that the following statements are true:
1. Or May 1, 1984 the New York City Housing Authority entered
into a contract with the Rocky Hill Building Corporation, on a turnkey
construction [4]
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[5] operation, under which Rocky Hill agreed to renovate, according to
plans and specifications furnished it by the City, three abandoned
buildings, which together made up the Housing Authority's Lenox Road
Rockaway Parkway Rehabilitation Project No. NY36-P005-292, and then to
sell the renovated project back to the Housing Authority, all œor $
4,350,000. The funds involved were furnished entirely by the [] United
States Department of Housing and Urban Development, and the contract
contained the prevailing wage schedule applicable under the Act. It
also contained the prevailing wage rates applicable under the New York
State Prevailing Wage Act (sec. 220 of the State Labor Law). This
project is referred to hereinafter as "the Lenox" job site or project.
Exh. R-1 Tr 101, 434, 456-7, 594.
2. On May 15, 1984, Rocky Hill contracted with Milnor Construction
Corporation for Milnor to be the prime contractor of the Lenox project. Exh.
P-31.
3. The two corporations, Rocky Hill and Milnor, were under a common
ownership and control. President of both was Milton Novie; he alone
owned all the shares of stock in Rocky Hill, and with his wife he owned
all the shares in Milnor. Tr. 593, 607, 625.
4. On July 2, 1984, Milnor as prime contractor on the Lenox project
contracted with Subcontractor Dial Electric Contracting Co., Inc., for
Dial to perform all the electrical work on the project, for the total
amount oœ $199,800. Exh. P-3.
5. The Lenox project consisted of three buildings, known respectively
as No. 1 (1142 Lenox Road), No. 2 (1144 Lenox Road), and No. 3 (1145 Lenox
Road). Thus the Government contract with Rocky Hill was signed on May
1, 1984, Rocky Hill's with Milnor on May 15, 1984, and Milnor's with
Dial on July 2, 1984. The exact dates when work began and was completed
on the project are not agreed on, but certain relevant dates in 1985 do
appear in the record for Buildings 2, 3, and 1 respectively:
Certificates of occupancy were granted by the city on February 15, March
13, and April 8 (Exhs. R-3, R-4, R-5); Board of Fire Underwriters'
certificates were issued February 12, February 12, and April 2 (Exhs.
R-12, R-13, R-14); and the deeds transferring title to the City were
executed February 25, March 22, and May 1 (Exhs. R-9, R-10, R-11).
Even after the work was formally completed, however, the Contractor and
Subcontractors were responsible to return to the project to repair
deficiencies and take care of incomplete work noted on a "punch card
list." See. Tr. 81-2; Exh. R-2, 6/3/85.
6. While Dial was performing the electrical work under this contract,
it was also performing electrical work under an unrelated contract on an
unrelated but nearby job, referred to as the Park Rock project. Park
Rock is not directly involved in this case. It is relevant, however,
that Dial, for its own administrative convenience and advantage, shifted
its men about between the [5]
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[6] two jobs even during parts of the same day, and it apparently
maintained no records that showed how any employee's hours were divided
as between the two projects. Tr. 445.
7. During the period of its performance of the work on the Lenox
project, Dial employed among others nine workers whose allegedly
inadequate wages constitute the basis for the Department's Order of
Reference in this case. These workers were Rosario ("Teto") Fernandez,
Winston Foy, Solomon Glantz, Ilya Illish, Antonio ("Tony") Irizarry,
Patrick Lopez, Michael Reale, Joseph Solla, and Herme Valle. All of
these, except Patrick Lopez, testified at the hearing. All but Irizarry
and Valle had earlier filed written statements with the Department.
8. The Department claims that these men were underpaid wages, in
violation of the Davis Bacon Act, in a total sum for all of them of
$119,154.14. Milnor acknowledges that the men were underpaid by Dial,
but contends that the total sum of those underpayments is no greater
than $9,529.56. The case of each man will be discussed separately
below.
IV. Debarment of Dial and Rosenblatt
The Department asks in this proceeding that Dial Electric and its
president personally be barred, as provided in the Act, from further
contracting with the Federal Government. A three-year debarment is
provided, under the provisions of 29 C.F.R. sec. 5.12(a)(1), against a
contractor or subcontractor whose violations under the Davis Bacon Act
are determined to be "aggravated or willful." Reason tells us, and the
Wage Appeals Board has consistently held, that failure to pay prevailing
wages, accompanied by the submission of payrolls falsified to show that
the required amounts were paid, are sufficiently aggravated and willful
to constitute grounds for debarment, under this provision. Camilo A.
Padre[d]a General Contractors, Inc., WAB Case No. 87-1 (August 3, 1987);
Morris Excavating Co., Inc, WAB Case No. 86-27 (February 4, 1987);
Wilfred G. Gooden Construction Corp., WAB Case No. 86-3 (October 1,
1986); McAndrews Co. and Robert McAndrews, WAB Case No. 86-22 (March 26,
1986); Warren C. Manter Co., WAB Case No. 84-20 (June 21, 1985). If
this mere falsification of those records were not enough, there is more:
the record shows clearly that Dial maintained two sets of books on
payroll, a false set to show payments in the required Davis-Bacon
amounts (Exh. P-4), and a presumably truer set reflecting different
amounts paid, for use by Dial management in-house (Exh. P- 5).
These practices of Dial's demonstrate beyond any reasonable doubt
that Dial Electric and Herman Rosenblatt deliberately filed fraudulent
payrolls that simulated compliance with the requirements of the Act, by
showing false wage rates paid and inaccurate counting of hours worked,
omission of the names of [6]
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[7] employees who were actually working, and failing to include all
employees under their proper wage classification. This conclusion is
further supported by the uncontradicted testimony of Rosario Fernandez,
that when he called Rosenblatt's attention to the fact that Fernandez
was not receiving the prevailing wage rate as required under the
Davis-Bacon Act, Rosenblatt responded simply that "If you don't like it
then you can leave" (Tr. 391, 393). See Exh. P-4, and testimony of the
respective workers, Tr. passim; cf. wages and hours worked for Ilya
Illish and Michael Reale in Exhs. P-5, P-16, and P-18.
Dial did not deny, in response to a Request for Admissions served by
the Department, the Department's contentions with respect to the number of
men working on the Lenox job, the number of hours that each one worked
there, and that the men involved were electricians. Exh. P-29; 29
C.F.R 18.20(b).
The record thus demonstrates clearly that both Dial Electric and Herman
Rosenblatt should be debarred as provided under the Act.
V. What Rate of Pay Applies
A. The Contract Provisions
1. The Davis-Bacon Act schedule. The parties disagree with respect
to the rate of pay that should be employed in the computations in this
proceeding. They do agree that the contract between the Housing
Authority and Rocky Hill contained a provision requiring that workers on
the job be paid at wage rates not less than the aggregate of the basic
hourly rates and the rates of payment contributions, or costs for only
fringe benefit contained in the wage determination decision of the
Secretary of Labor which is attached hereto and made a part hereof,
regardless of any contractual relationship which may be alleged to exist
between the contractor or subcontractor and such laborers and mechanics.
Exh. R-1, exh. "D" of the contract. The contract contains Department
of Labor Decision No. NY 83 3032, which requires: [7]
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[8] Basic Hourly Wage Fringe Benefits
Electricians $19.50 29.2% + a + b
Jobbing, maintenance,
repair work; alterations
and new work up to
contract price of $50,000 8.75 10% + a + b
Footnotes:
a. Employer contributes $4.00 per day
b. Paid Holidays: A through F, Washington's Birthday, Columbus Day and
Election Day
Paid Holidays: A - New Year's Day, B - Memorial Day, C - Independence Day,
D - Labor Day, E - Thanksgiving Day, F - Christmas Day
2. The New York State schedule. The contract also contains the
prevailing rates established under the New York State Prevailing Wage
Act. Exh. R-1; Tr. 456. The Contractor here points out that it too
contains two rates. The first is $20.50 per hour, plus certain fringe
benefits the value of which I am unable to determine from the record
before me. The second is a lower rate designated as "Electrician 'M'".
This rate is $10.75 per hour, likewise plus certain fringe benefits
named but not evaluated. In addition, the State schedule has lower
rates for "electrician trainees."
The "Electrician 'M'" rate appears to be for work deemed as "jobbing,
maintenance and repair work." Tr. 457. It is apparently customary to
pay the higher rate on new construction, and the lower, "M," rate on
alteration work. Tr. 602.
In order to start work on the buildings, Milnor was required to obtain
a building permit. It appears that there are three types of building
permits issued. One is for a small alteration, for which a "BM" number
is issued. The second is for a large alteration; for this, the
contractor receives an alteration number. The third is for a new
building, for which the contractor receives an "NB" number. Tr. 604.
For the Lenox project, Milnor received a building permit bearing an
alteration number. Exh. R-8; Tr. 604. It is conceded by the
Department that the work to be done here was the rehabilitation and
repair of existing buildings. Tr. 459. [8]
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[9] B. What Was The Workers' Proper Job Classification?
Milnor does not seem to contest that the workers must be regarded as
electricians, but it does disagree with the Department with reference to the
applicable rate of pay.
It is well settled that under the Davis-Bacon Act worker classification
is determined on one basis only, that of actual work done, irrespective
of worker qualification or degree of skill or experience. The record
contains no contradiction of the testimony, given by all the eight
workers who testified, and in the written statement of the ninth, that
all of them used the tools customarily used by electricians and
performed work customarily performed by electricians. Having done that,
they must be paid as electricians, under the Act. The lack of
experience or other qualifications, relied on by Milnor as supporting a
lower rate, is altogether irrelevant under the Act. If a contractor or
subcontractor chooses to have apprentices do the work of journeymen or
masters, he must pay them as such. The choice as to assignment belongs
to the employer, under the Act, but the choice as to pay, once the
assignment is made, belongs to the Secretary. It may well be, as the
Contractor here contends, that these employees were "M" workers, and
even that some of them were no better than helpers. If so, they should
have been assigned work commensurate with their ability. But if an
employer, on a Davis-Bacon job, wants to have a young man still in high
school do electrician's work for him, that employer exposes himself to
the risk among other risks that the Department of Labor will agree with
the employer about the worker's classification, and require that the
employer pay that worker electricians' wages. Framlau Corp. WAB Case
No. 70-5 (April 19, 1971), cited in FSG Contracting Co., 76-DB-110 (June
22, 1976); Lee Roy Corley, 77-DB-114 (March 21, 1978), aff'd, Decision
of Administrator (October 6, 1978); Titan Atlantic Constr./Quality
Electric Contractors, 78-DB- 125 (August 23, 1978).
C. What Is The Workers' Applicable Rate of Pay?
Milnor contends that the applicable base wage rate is $8.75, because
the work involved was "alteration" work under New York State law. It
contends that this rate is further supported because it corresponds most
nearly to the New York State "M" rate, which the claimant workers' here
acknowledge is all they are paid on private jobs. Nevertheless, this is
not an argument that need detain us long, in view of the restriction of
this rate in the schedule to contracts of $50,000 or less; both Milnor's
contract and Dial's involve prices of much more than that. In any
event, New York State law, though as a matter of Department policy its
wage rates might be accepted as a floor for Federally funded projects,
would surely not take precedence over the rates established pursuant to
a United States statute! We see no other hourly wage rate here than the
Davis-Bacon base for "Electricians" of $19.50, which with the addition
of 29.2% ($5.69) and the $4.00 daily in footnote "a" ($.5714 per hour
for a [9]
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[10] seven-hour day and $.50 per hour on the basis of eight) amounts to
a rate of $ 25.76 or $25.69 per hour, for a seven-hour and an eight hour
day, respectively.
Milnor advances two other arguments on this point. Both are futile.
One is that (1) New York State recognizes the "M" rate, for electricians
having more than apprentice skill and experience, but less than that of
journeymen, (2) the State "M" rate ($10.75 per hour plus fringe
benefits) is what these men were customarily paid on jobs not federally
funded, (3) the $8.75 rate set forth in the Act (as shown above) is
substantially equivalent to the State "M" rate, so that (4) that lower
Davis-Bacon rate is the one that should be applied here. The short
answer to this argument is that, while the contract does not allow the
contractor or its Subcontractors to pay less than the State-determined
"M" rate, the Davis-Bacon Act makes no exception to its own rates in
favor of the State rate; the Davis-Bacon provision fixing the rate of
$8.75 states clearly what work it applies to, and that is not the work
being performed here. Milnor's other contention is that the provision
in the Act regarding the lower rate is ambiguous, as to whether the cap
of $50,000 applies only to "new work," or to "alterations" (which they
contend the work under this contract is) as well, that because of this
ambiguity the Government as drafting party should be subject to the
principle of contra proferent[u]m and have the ambiguity resolved
against it, with the result that the rate of $8.75 would apply. This
argument, too, fails; I find the provision entirely unambiguous as
applying the $50,000 cap for the rate of $ 8.75 to both alteration work
and new work.
I conclude, accordingly, that the wage rate to be applied in this
case is the $19.50 base, increased by the adjustments described above.
VI. For How Many Hours Were The Workmen Underpaid?
A. Introductory Statement
There are many, and conflicting, bases in the record for computing how
many hours each man here involved worked under this contract.
I found all the testimony, on both sides, credible, as being what the
witness now recalled, with perhaps one exception. Witness Ilya Illish's
explicit and detailed recall of his own data, and even that of other
workers, with respect to this one job they had worked on five years
before, coupled with the contrasting vagueness of his recall about jobs
preceding and following this one, renders his testimony in my judgment
significantly less credible than that of the other witnesses. Obviously
all the witnesses, other than DOL Investigator Irv Miljoner and City
Housing Authority representatives Alvin Reinstein and Joseph Nanartowich
(and the Authority's Superintendent on the job, Colville D. Holt, who
signed its daily construction log, Exh. R-2, and is [10]
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[11] now retired, Tr. 81), had a pecuniary interest in the outcome of
the case, and the recollections of all were being given at a distance of
five years from the actual events, but I do not find that these facts
diminished the credibility of the testimony as being truthfully what the
witness now recalled.
Nevertheless, these credible witnesses in several respects contradicted
each other.
B. The Number Of Hours In the Working Day
One such respect relevant here is the length of the working day on the
project.
All the workers who testified (except for Solla, who worked only
half-days), and Lopez in his statement, said that they worked each day
for eight hours, from 7:30 a.m. to 4:00 p.m. (after an initial period
when both times were half-an-hour earlier), with a half-hour for lunch,
and that they worked those hours regularly five days a week, for a total
of forty hours. Solla's testimony, regarding his half-day work, was
consistent with this, and so were the written statements given by
several of the workmen at earlier times nearer to the actual events.
Dial's "in house" accounts (Exh. P-5) also show forty-hour weeks,
and the pay stubs that are in the record reflect the same thing. Exhs.
P-7, P-16, P-18, P-21, P-23, P-30. On the other hand, Dial's false
certified accounts, Exh. P-4, submitted for the purpose of satisfying
the requirements of the Act, show a 35-hour work week.
Both the owner of Milnor, Milton Novie, who visited the site
occasionally, and his foreman, Joe Carbonara, who made an inspection
trip there every day precisely to see what manning the trades had and to
check on the progress of the work, and to note his observations down in
a daily report (Tr. 640; Exh. R-7), were very definite in their
testimony that Lenox was a seven-hour day (7:30 a.m. to 3:00 p.m.),
35-hour-per-week job. Both said that the premises were secured at the
end of seven hours, that no trade was allowed to work beyond that time
without requesting and obtaining permission from Milnor, and that no
such permission had been requested or given. The persuasive weight that
I can attach to Milnor's evidence, however, is diminished by the fact
that they declined the Department's request to produce their own daily
reports. Tr. 437-8, 479-80.
I find that the men worked five eight-hour days for a forty-hour week.
I accept the Milnor testimony as fully credible, but that testimony also
suggests that neither of its two witnesses ever actually inspected the
site during non-working hours and that the "security" after working
hours really was not for the purpose of monitoring the trades. I simply
have no basis to conclude that [11]
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[12] there was some sort of a conspiracy among the men, or somehow that
they all suffered by chance from the same misapprehension, extending
back to the time they made their respective written statements. The
conformity of Dial's "Davis-Bacon" books with the Milnor witnesses'
testimony suggests that what they say is correct as to how things should
have been, but the more reliable character of Dial's "in-house" books
and the weight I accord the unanimous testimony of the workmen makes me
find as a fact that the men did work on the Lenox project a forty-hour
week made up of five eight-hour days.
C. The Comparative Reliability Of Records
There are several sources of information in the record as to the periods
of time during which each of the nine claimants here was employed on the
Lenox project. First is the testimony of the men themselves, buttressed
by the statements most of them gave at a time closer to the events and
by the recollections of each one with respect to the presence of the
others on the job. Another is Dial's payroll records, particularly the
inherently more trustworthy "in-house" edition, Exh. P-5. Milnor's job
superintendent, Joseph Carbonara, who inspected the site and the work
every day, made a daily record of what work each trade was doing and how
many foremen and crew were on the site doing it. Exh. P-7. Colville
D. Holt, Superintendent of the project for the New York City Housing
Authority, also inspected the site daily for the same purpose, and made
the same sort of record, Exh. R-2; however, half of his records
(February - June 1985) were reported missing, so that we do not have
them all. Nor, as I have already observed, do we have Milnor's own
daily payroll records.
The record, needless to say, does not present a clear picture. The
testimony and earlier statements of the respective claimant witnesses
are generally consistent with each other and, as I have already stated,
I find them credible. Moreover, although it is conceded that Dial had a
second, apparently private, project nearby, just across the street or
down the block, and readily transferred men back and forth between the
two projects, none of the pay or other records reflect which of the two
projects any of the men was working on at any time, so that the workers'
testimony and statements themselves are the only basis I have to
determine which specific individuals were working on the Lenox site at
any given time. As for Dial's records, even if they did indicate what
project a man was working on during any day or part of a day, I would
take for granted that the data was artificial, to attribute more or
fewer men to the Government job for whatever advantage one or the other
course might give Dial. However, I accept their "in-house" records,
Exh. P-5, as being generally credible with respect to total hours of
work and rates of pay for each man. Carbonara's and Holt's respective
records seem to me trustworthy enough, in that they were being made for
dealing with actual operations, subject to a recognition of their
limitations. Neither of them shows names; both follow a form, as for
example "1/5," that would show the presence of a single foreman and five
men working [12]
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[13] on the trade. These two records unfortunately do not agree, either
with each other or with the claimants' evidence, in that both generally
show fewer electricians than are claimed to be present and Milnor's
record generally shows fewer than Holt's. In addition, of course, half
the Holt records could not be found.
Once again, I must allow the most weight to the testimony and
statements of the claimants. Their knowledge of their own activities was,
necessarily, complete, at least as of the time the events took place.
But both Carbonara and Holt were not normally on the job site the whole
day; they came and went, so that their records are a snapshot taken at a
given time during the day. This would still be the case, even though
they did rely on information they obtained from the various foremen on
the job, as well as on their own observations. The fact that both would
be interested in obtaining an accurate count, and yet that they often
disagree, at least indicates some inaccuracy in their reports. It may
also be -- the record does not show -- that their count of
"electricians" was limited to qualified tradesmen, and did not include
those of the claimants who clearly do not purport to be qualified
electricians but who must be considered so under the facts of this case
for Davis-Bacon Act purposes. If that were the case, they would
inevitably record fewer than the Act includes, on the basis of its
criteria based strictly on what work the worker was performing,
irrespective of his qualifications or lack of qualification to perform
it properly. In any event, Milnor's refusal to furnish its own reports
necessarily gives rise to a diminution of confidence in its allegations.
Thus I credit most heavily in this record the testimony and statements
of the claimants, as reflecting most accurately what each of them did
and when he did it. Precise computation for each claimant appears
below.
D. At What Rate Were The Claimants Actually Paid?
There is no dispute with respect to the respective rates of pay
the various claimants actually received. This data will be discussed as
part of the computation of the basic pay due each worker, below.
VII.Computation Of The Amount Due Each Claimant
A. The Method Of Computation
In view of the fraud and inaccuracy inherent in the pay records
obtained from Dial, and the refusal by Milnor to produce its own pay
records, we are left to compute claimants' back wages without those
documents. Under these circumstances, Milnor's contention that the Secretary
has failed to prove the amounts due by a preponderance of the evidence and
that the Secretary's demands constitute only a "guesstimate" (Tr.
648-651) must be recognized as being [13]
~14
[14] without merit. Where a contractor's records are inaccurate and
unreliable, as Dial's are, or unavailable, as Milnor's are, the Supreme
Court has held 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.
Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1192 (1946).
In Structural Services, WAB Case No. 82-13 June 22, 1983), the Wage
Appeals Board explicitly reminded contractors of their obligation:
The Board warns contractors and subcontractors who take on government
contracts covered by Davis-Bacon and related acts that they should be
aware that they must keep accurate records of wages, overtime and
fringe benefits payments to their employees. Failure to keep such
records will be at the contractor's or subcontractor's peril.
Recordkeeping is the only method to substantiate the actual wages and
fringe benefits paid laborers and mechanics. Without proper payroll
records, the Wage and Hour compliance officers are compelled to invoke
the criteria set forth in the Mt. Clemens case . . . .
Id., slip op. at 8. This is similar to the rule followed in cases
arising under the Fair Labor Standards Act. See Brock v. Norman Country
Market, Inc., 835 F.2d 823, 828 (11th Cir. 1988); Brock v. Seto, 790
F.2d 1446, 1449 (9th Cir. 1986); Hodgson v. American Concrete
Construction Co., Inc., 471 F.2d 1183, 1186 (6th Cir. 1973); Hodgson v.
Humphries, 454 F.2d 1279, 1282, 1283 (10th Cir. 1972).
Accordingly, in the absence of the true and accurate payroll
records that it was the obligation of the contractor and subcontractor to
furnish, I shall accept the reconstruction by the Department, using
whatever evidence appears to be reliable toward that end, to the extent
that it is reasonable. [14]
~15
[15] The period and hours during which the respective claimants are
credited with working at the Lenox job site is derived from the
claimants' testimony, confirmed to the extent possible by recourse to
Dial's records and, further, by the recollection of at least two of the
other workers that the claimant did work there. I find that this method
the Department has used to calculate each claimant's hours is
reasonable, under the circumstances of this case, and therefore I accept
it.
The mathematical formula for the computation in the case of each
claimant will simply be (1) to determine, by deducting the rate actually
paid from the rate that should have been paid, the rate of back wages
due per hour he worked on the Lenox job, and (2) to determine the total
amount due by multiplying the basic wages due per hour by the number of
hours worked (plus creditable holidays not received).
The rate that should have been paid is that fixed by the Wage Decision
cited above: $19.50 (the basic hourly rate) + $5.69 (29.2% of $19.50) +
$.50 ($4.00 / the 8 hours of a working day) = $25.69.
B. Rosario Fernandez
Rosario Fernandez worked for Dial at Lenox from the third week of August
to the first week of October, in 1984, a period of 7 weeks. Tr. 385.
He then worked at Park Rock, but he returned to Lenox the first week of
December and worked there for 10 weeks until his departure in February
of 1985. Ibid.; Exh. P-23. His total time worked at Lenox was thus 17
40-hour weeks, or 680 hours. Tr. 383-385. His hourly pay was $7.50,
and he received no fringe benefits or paid holidays. Tr. 386, 388;
Exhs. P-26, P-5. The hourly underpayment in his case was $18.19
($25.69 - $ 7.50) and the total underpayment for the whole 680 hours was
$12,369.20. In addition he was entitled to pay for four holidays, that
he did not receive, for an additional deficit of $822.08 ($25.69 x 8 x
4). Exh. P-26. The total due Rosario Fernandez is thus $13,191.28.
C. Winston Foy
Winston Foy appeared on the Dial payroll from February 18 through May
31 in 1985, a total of 15 weeks. The Dial record shows that he worked 540
hours during that time, and was paid at the rate of $10.75 an hour.
Exh. P-5; Tr. 15, 20-1. Foy's testimony and statement support this
figure, and are uncontradicted that he was employed on the Lenox
project. He was also due two holidays, for which in fact he was not
paid, during that period.
Accordingly, Foy is due a differential per hour of $14.94 ($25.69 -
$10.75), and therefore a total of $8,067.60 for the 540 hours. The two
unpaid [15]
~16
[16] holidays increase this amount by $411.04 ($25.69 x 8 x 2), to make
a total sum due Winston Foy of $8,478.64.
D. Solomon Glantz
Solomon Glantz worked at Lenox from February 15 to May 31 in 1985,
a total of 16 weeks. He worked for 15 weeks at 40 hours and one week at
32 hours, a total of 632 hours. He was paid at the rate of $8.00 per
hour. Tr. 236; Exhs. P-7, P-5. Thus the total amount of underpayment
due him for the days he worked amounts to $11,180.08 ($17.69 [$ 25.69 -
$ 8.00] x 632). In addition, Glantz did not receive two paid holidays
that were due him, for which we must add $411.04 ($25.69 x 8 x 2), for a
total due Solomon Glantz of $11,591.12.
E. Ilya Illish
Illish was the Dial foreman at Lenox Road. He worked on that project
from June 7, 1984 until June 14, 1985. Tr. 115, 148. He was paid
$11.00 an hour until August 31, 1984, then $11.50 until October 12, and
then $12.50 until the end of his tenure. Tr. 116; Exhs. P-16, P-5. Of
this total of 55 weeks, he was assigned to the Park Rock project for the
13 weeks from November 2, 1984 through January of 1985, a period not
involved here. See Exh. P-20. I therefore credit Illish with 42 work
weeks at 40 hours a week, making a total of 1,680 hours. The Department
has reasonably taken this claimant's pay to have been an average of
$11.50 per hour, making a difference from the $25.69 Davis-Bacon
requirement of $14.19, which for the whole 1,680 hours makes a total
underpayment of $23,839.20. The compliance officer properly credited
him with a credit of $540.15 for fringe benefits actually received, so
that the total basic pay due Ilya Illish amounts to $23,299.05. Exh.
P-26.
F. Antonio Irizarry
Antonio Irizarry worked on the Lenox project from "February" to mid-May
of 1985. Tr. 210. I credit him from the middle of February, the 15th,
to May 17th, a total of 13 weeks. He was paid at the rate of $8.25 per
hour, and received no fringe benefits. Tr. 207-10; Exhs. P-21, P-5.
His 13 weeks of work make a total of 520 hours. The underpayment in his
case being $17.44 ($25.69 - $8.25), the total back wages due him for
these 520 hours is $9,068.80. Exh. P-26.
G. Patrick Lopez
Respondent Milnor has moved (Tr. 512) that Lopez' entire claim be
disallowed, because he himself did not appear to testify at the hearing,
and the only evidence in the record with respect to his alleged
underpayment is a statement taken by an employee of the Department of
Labor who also did not testify. Exh. P-25; Tr. 448. Thus Milnor had
no opportunity for cross-examination. [16]
~17
[17] This argument overlooks the fact that the reason why this lack of
better documentation exists is the Contractor's failure to enforce and
the Subcontractor's failure to obtain the accurate books and records
required by law and by this contract. For this reason I am authorized
to accept the Department's reasonable reconstruction of the amount due
Lopez as back wages, even though it be entirely based on out-of-court
statements. See Structural Services, supra, and Glen Electric Co.,
Inc., WAB Case No. 79-2 (1983). Milnor's motion is therefore denied.
Lopez worked at Lenox from the middle of August in 1984 to the end
of February in 1985, a total of 28 workweeks or 1,120 hours. He was paid
$11.00 an hour, with no fringe benefits. Exh. P-25, P-5. The hourly
underpayment in his case was $14.69 ($25.69 - $11.00), so that his
accumulated back pay adds up to $16,452.80 ($14.69 x 1,120). In
addition, Dial failed to pay him for five paid holidays, which results
in an additional underpayment of $1,027.60 ($25.69 x 8 x 5). Thus the
total amount of back wages due Patrick Lopez is $17,480.40.
H. Michael Reale
Michael Reale kept a calendar record of his work, and that calendar,
Exh. P-19, is probably the most accurate and reliable record in this
case (once one realizes that the October and December sheets have
exchanged places). Reale worked at Lenox from August 15, 1984 to
January 26, 1985, a total of 23.5 weeks. Tr. 172-173; Exhs. P-18,
P-19. Of these weeks, he was paid during 11.5 (430.5 hours) at $7.00 an
hour and during 12 (450.5 hours) at $8.00. Thus he suffered an
underpayment of $18.69 ($25.69 - $7.00) per hour for 430.5 hours, a
total of $7,615.55, and an underpayment of $17.69 ($25.69 - $8.00) per
hour for 450.5 hours, totalling $7,969.35, the sum of the two amounting
to $15,584.90. In addition, Reale was entitled to three paid holidays,
that he did not receive, a deficit of $616.56 ($25.69 x 8 x 3). Exh.
P-26. Michael Reale is, accordingly, entitled to a total back pay of
$16,201.45.
I. Joseph Solla
Joseph Solla was a high-school senior who worked for Dial at Lenox on
a half-day (four hours) basis from October 12, 1984 through February 22,
1985, five days a week during the 1984 months and two to four days in
1985. Tr. 356, 363; Exh. P-5. While he testified that he often
arrived a half-hour early and worked through without taking any time for
lunch, he could not say how often this occurred and acknowledged that he
had been hired to work four hours and he was paid for four. Tr. 356,
363. Therefore I credit him with 13 twenty-hour [17]
~18
[18] work weeks from October through December 22 in 1984, a total of 260
hours. Taking two and a half days (10 hours) as his average work week
at Lenox during the eight weeks he worked in 1985, I credit him with 80
additional hours, for a total of 340.
Solla did perform other work for Dial than that of an electrician.
He performed such services as driving a truck and delivering materials, as
well as working on the job itself. See Addendum of February 28, 1986 to
written statement of Rosario Fernandez, Exh. P-24, p. 2. He failed to
mention that fact, and the record does not disclose what proportion of
his time was spent in these other duties, but half seems to me a fair
and reasonable proportion in the case of a high school senior on an
electrical job. Solla received $4.00 an hour, and no fringe benefits,
for his work (Tr. 355; Exh. P-5), and I will apply the deficit of
$21.69 ($25.69 - $4.00) to 170 hours as being for his work as an
electrician. This calculates to an underpayment of $3,687.30. In
addition, he should have received three paid holidays (12 hours),
one-half of which consists of 6 hours, for which he is entitled to an
additional $154.14 ($25.69 x 6). Thus I find that Joseph Solla is
entitled ta payment now of $3,841.44.
J. Herme Valle
Herme Valle worked for Dial during the period from December 1984 into
March 1985. Tr. 529-30. There being no way to fix specific dates for
the beginning and ending of his work at Lenox, I credit him with half
each of the first and last months (i. e., from December 16,1984 to March
15,1985, a total of 13 weeks). Valle did not work only at Lenox,
however, but divided his time between that project and the Park Rock job
nearby. Valle estimated that he worked at Lenox an average of 25 hours
a week -- four to eight hours on three or four days a week. Tr. 532.
In the absence of the more exact data that we should have from the
contractor's side, there is no reason for me not to accept the
claimant's estimate.
Valle received pay at the rate of $5.00 per hour on the Lenox site (Exh.
P-30), making an underpayment for Davis-Bacon purposes of $20.69 ($25.69
- $5.00). Working 13 weeks at an average of 25 hours each, he has a
total of 325 hours, for which the underpayment comes to $6,724.25
($20.69 x 325). Adding in one unpaid holiday for which he was entitled
to be paid, we apply the 25/40 proportion of the holiday (5 hours) for
which he is reasonably entitled to Davis-Bacon pay under his working
arrangement at Lenox, to credit him with an additional $128.45 ($25.69 x
5). I therefore find that Herme Valle is entitled to payment of
$6,852.70. [18]
~19
[19] ORDER
For the reasons stated above, it is ORDERED, pursuant to the United
States Housing Act of 1937, as amended, and the Davis-Bacon Act, as
amended, as provided under section 5.12(b) of Title 29, Code of Federal
Regulations:
1. That the following companies and individuals be, and they hereby are,
debarred and ineligible to receive any contracts or subcontracts subject
to any of the statutes listed in Section 5.1 of Title 29, Code of
Federal Regulations, for a period of three years from the date of
publication by the Comptroller General of their names on the ineligible
list:
Dial Electric Contracting Co., Inc.
Herman Rosenblatt
2. a. That Dial Electric Contracting Co., Inc. and Milnor Construction
Corp. are jointly and severally liable and shall pay the unpaid
prevailing wages and fringe benefits due the following named employees
in the individual amounts appearing beside their respective names and
totalling $110,044.88. This total sum is to be paid to the United
States Department of Labor. The respective names and amounts due are as
follows:
Rosario Fernandez $13,191.28
Winston Foy 8,478.64
Solomon Glantz 11,591.12
Ilya Illish 23,299.05
Antonio Irizarry 9,068.80
Patrick Lopez 17,480.40
Michael Reale 16,201.45
Joseph Solla 3,841.44
Herme Valle 6,852.70
$110,004.88 [19]
~20
[20] b. And if any of those named persons refuses to accept those funds
or cannot be found, then that person's share shall be deposited into the
Treasury of the United States as miscellaneous receipts.
c. The New York City Housing Authority shall release, to the Wage and
Hour Division of the United States Department of Labor, any funds it has
withheld under Contract NO. NY36-P005-292.
[3]. The balance of the monies being withheld under that contract shall
be paid to the Contractor under the contract.
Aaron Silverman
Administrative Law Judge
Dated: April 30, 1991
Washington, D. C.
AS:SBG:gbs
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
NOTICE OF RIGHT TO APPEAL. Pursuant to the applicable regulations,
which appear in Section 6.29 of Title 29, Code of Federal Regulations,
any interested person may appeal, within 40 days after receipt of this
decision, by filing exceptions thereto. The original statement of such
exceptions must be filed with the Wage Appeals Board, Frances Perkins
Building, 200 Constitution Avenue, N. W., Washington, D. C. 20210, and a
copy must be sent to the Chief Administrative Law Judge, United States
Department of Labor, 1111 20th Street, N.W., Washington, D.C. 20036. [20]
