CCASE:
ACE CONTRACTING
DDATE:
19800530
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
ACE CONTRACTING COMPANY, INC. WAB Case No. 76-23
and ALBERT N. WEST, PRES. Dated: May 30, 1980
DECISION BY: Alfred L. Ganna, Chairman, William T. Evans,
Member, Thomas M. Phelan, Member
DECISION BY THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Ace Contracting Company, Inc. and Mr. Albert N. West, President,
seeking review of the decision of the Administrator, Wage and Hour
Division, dated November 3, 1976, affirming an earlier ruling by
Assistant Regional Administrator Hugh B. Campbell. It was the
decisions of both officials that Ace Contracting Co., Inc., and its
President, Mr. Albert N. West, should be placed on the ineligible
bidders list of the Comptroller General for violations of Section
3(a) of the Davis-Bacon Act and the Contract Work Hours and Safety
Standards Act (CWHSSA).
From a period from March 1972 through December 1973,
Petitioner entered into a total of 28 contracts to perform various
types of construction at Ft. MacPherson, Georgia, with the Post
Engineers of the Army, the Corps of Engineers and the U.S. Postal
Service. Each of the contracts contained the labor standards
provisions required by the Davis-Bacon Act and CWHSSA [1]
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[2] and the appropriate Department of Labor wage determination.
An investigation by the Wage and Hour Division of projects
at Ft. MacPherson during 1973 and 1974 disclosed that Petitioners
had failed to maintain accurate payroll records, had failed to
pay the prevailing wage rates required by the wage determinations
in the contracts, had misclassified workers performing
electricians' work as helpers, and paid employees working as
painters and carpenters as laborers. The investigation also
indicated that Petitioners had failed to pay time and one-half
after 8 hours a day or 40 hours a week. As a result of the fact
that Petitioners' employees were working on various contracts at
different times within the same work week, the back wages due them
were estimated and Petitioners finally paid $67,354.31 for their
own employees, $13,118,78 in back wages for the employees of a
subcontractor, Savage Electric Company, and $2630 in liquidated
damages for CWHSSA violations.
In April, 1976 the Deputy Administrator, Wage and Hour
Division, sent a letter to Mr. West advising him that the
Department of Labor was considering debarment of Petitioners
pursuant to Section 5.6(c), 29 CFR, stating as a basis his finding
that there was reasonable cause to believe that the alleged
violations of the Davis-Bacon Act and CWHSSA, together with
submission of payrolls containing inaccurate information
constituted willful and aggravated violations of the labor
standards provisions. Petitioners were offered an opportunity to
submit a written statement in explanation [2]
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[3] of the apparent violations, and were also offered an opportunity to
attend an informal hearing.
On August 12, 1976 the informal proceeding was conducted by
Mr. Campbell, and in his decision of September 9, 1976 Mr. Campbell
found that no facts were presented at the hearing to justify
Petitioners' actions in making subminimum wage payments, failure to
pay proper overtime rates and submitting falsified payrolls to
government agencies. Mr. Campbell concluded that Petitioners be
recommended for debarment. On October 8, 1976 Petitioners appealed
this decision to the Wage and Hour Administrator on the grounds
that Petitioners had entered into the back wage settlement in the
interest of expediency without admitting any guilt, that they had
submitted testimony at the informal hearing from five
subcontractors and two representatives of government contracting
agencies to justify relief from debarment action, and that
Petitioners were then in current compliance with the requirements
of the Davis-Bacon and related Acts. On November 3, 1976, the
Administrator responded to these objections and affirmed the
Assistant Regional Administrator's decision.
On November 24, 1976 Petitioners filed a Petition for Review
of the Administrator's decision with the Wage Appeals Board.
Petitioners' argument in its petition to the Board was based
on its claim that the approximately $80,000 paid to the employees
as back wages would result in settlement of the governments' claims
against it. They felt there was a tacit understanding [3]
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[4] to this effect. Petitioners also rely on the testimony of five
subcontractors working for them that Petitioners had made them aware of
the requirements of paying predetermined prevailing wage rates and that
Mr. West had never advised them to simulate compliance by falsifying
payrolls. Any discrepancies in these subcontractors' payrolls were
explained as unintentional and not willful or deliberate. These
subcontractors also denied misclassification of employees and in
particular contradicted the testimony of Mr. Raymond Savage who provided
Wage and Hour with a statement that Mr. West had instructed him to
underpay his electrical employees and simulate compliance on the
certified payrolls.
Petitioners also rely on statements of contracting agency
representatives who testified to the quality of the work of Ace
Contracting Company and recommended against debarment.
In an extensive statement in reply to the Statement for the
Deputy Administrator Petitioners expand upon the arguments set
forth in their petition and also urge the Board to rule that the
21 month lapse between the settlement payment for the alleged
violations and the notice that debarment was being contemplated
was due to the government's failure to pursue the appeal and
that since the settlement date in July, 1974, Petitioners had
performed over 100 projects on which no further violations have
been alleged. Petitioners argue that this case is similar to
Tilo Company, Inc., WAB Case No 76-01 (June 6, 1977) in which the
Board reversed a recommendation for debarment because [4]
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[5] internal changes in Tilo's corporate and management organization as
soon as the violations were made known to it made it unlikely that
labor standards abuses would be repeated and because the government
had been largely responsible for the long lapse of time between the
investigation of Tilo and the discovery of labor standards
violations.
Finally, Petitioners attack the credibility of the statement
of Mr. Savage who claimed that Mr. West instructed him to falsify
the payrolls. Petitioners urge the Board to reverse and deny the
Administrator's imposition of debarment sanctions.
The Department of Labor has argued to the Board that there
was no basis for Petitioners' understanding that the back wage
settlement would settle all the government's claims against them.
It is argued that the only tests for instituting debarment are
whether or not the violations were willful or aggravated and
whether the violations constitute a disregard of the contractor's
obligations to employees or subcontractors as stated in 29 CFR
[sec] 5.6(c)(1). The Administrator rejects the testimony of the
subcontractors and contracting agency representatives at the
informal hearing as not bearing on the question of willfulness of
the labor standards violations or the disregard of Petitioners'
obligations to its employees. The Administrator also rejects the
argument that mere carelessness or negligence do not indicate a
clear and willful pattern of paying less than required wage rates,
paying straight time for overtime hours, [5]
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[6] and submitting reduced hours on certified payrolls to
simulate compliance.
The Board considered this appeal on the basis of the petition
and response to the Stat[e]ment for Deputy Administrator filed by
the Petitioners, and the Statement for the Deputy Administrator and
the record of the case in the Wage and Hour Division filed by the
Solicitor of Labor. The Board notes that Petitioners originally
requested a hearing by the full Board in its petition filed
November 23, 1976. The Board is also concerned and has notified
the parties of its concern for the excessive amount o[f] time this
appeal has been pending before the Board. Neither party can be
excused for allowing the appeal to require three and one-half
year[s] to reach a decision. In the Board's January 25, 1980
Notice of Denial of Motion from Petitioners request for an order
granting discovery, the Board advised the parties it would not
countenance any further delay in the conduct of this appeal and
unless one of the parties made a motion for a hearing, the Board
was prepared to decide the appeal on the record before it. Since
90 days have elapsed without a request for a hearing being
received, the Board considered this appeal in executive session
on the basis of the record of the case in the Wage and Hour
Division and documents filed with the Board.
Throughout this case, Petitioners have claimed that they were
at a disadvantage at the informal hearing because they did not have
all the information that was in the government's [6]
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[7] investigation file available to them. Petitioners applied to the
Deputy Administrator and then the Solicitor of Labor under the
Freedom of Information Act for additional information from this
file. The Deputy Administrator and the Solicitor both denied
Petitioners' requests that they disclose their file because to do
so would interfere with the law enforcement proceedings.
Petitioners have since filed suit in the U.S. District Court for
disclosure under the Freedom of Information Act of the files,
notes, memoranda, computations, statements and any other writing
or document relating to the Administrator's decision to debar
Petitioners. This case is still before the District Court. The
Wage Appeals Board then decided to proceed with its administrative
determination of the issues before it. Petitioners have moved for
an order from the Board granting discovery for the same materials
requested in the District Court. The Board has denied this motion
also.
The Board finds that there is ample evidence in the record to
demonstrate Petit[i]oners' underpayment of their employees and of
Petitioners' efforts to simulate compliance with the labor
standards by falsification of the certified payrolls to justify
the Administrator's decision. The Board can arrive at this
conclusion without reliance on the testimony of Mr. Raymond Savage
who stated that Mr. West had instructed him how to falsify the
payrolls. Mr. Savage's testimony appears to be [7]
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[8] unreliable because of his conviction for submitting false,
fictitious and fraudulent payrolls to GSA for a period in 1972.
Petitioners' explanation that they were working on so many
projects at one time that errors of recordkeeping were bound to
happen, and that these errors do not demonstrate that the
violations were willful or deliberate, or should be used to
determine that Petitioners were in disregard of their obligations
to their employees is not persuasive. Petitioners have been in the
business of government contracting for at least ten years and have
had in excess of 100 government contracts since 1974. It seems to
the Board that this is all the more reason for expecting
Petitioners to keep accurate records and be able to avoid the
pitfalls of labor standards violations due to their familiarity
with these standards which are part of every government contract
they performed.
Petitioners have also attempted to compare this case with the
Tilo case, supra, by showing there was excessive delay in notifying
Petitioners they could be eligible for debarment, and by calling
the Board's attention to a record of current compliance since the
contracts under consideration have been questioned. The Board
agrees that although a considerable amount of time elapsed between
the date of the settlement of the underpayments and the Deputy
Administrator's letter to Petitioners notifying them that debarment
was being considered, such delays are not [8]
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[9] unusual in cases of this nature, particularly where the
responsibilities for the delays can rightly be laid at the feet of both
parties to the action. In the Tilo case the Board considered that the
delay had been almost totally caused by the government and that
Petitioner in that case had promptly undertaken numerous corrective
measures including a corporate reorganization to prevent the payroll
abuses from occurring again. The Board felt in that case that debarment
after that amount of time would serve no useful purpose. In this case
the Board finds that the delays have been caused by both the Petitioners
and the government, and that these delays have only served to benefit
Petitioners since, by their own admission, they have performed over 100
contracts since this case began. The Board finds that Petitioners have
used these delays merely to forestall the debarment sanction for as long
a time as possible and does not consider these two cases comparable.
The Wage Appeals Board finds that the Petitioners have not
rebutted the prima facie case which has been developed as a result
of the Wage and Hour Division's investigation of their contracts at
Fort MacPherson. All of Petitioners' evidence and testimony have
been weighed in the administrative process and they have had an
opportunity to fully rebut all of the charges. They have not done
this.
In the light of the foregoing, the Board is of the view that
Petitioners have disregarded their obligations to their employees
within the [9]
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[10] meaning of Section 3(a) of the Davis-Bacon Act and therefore the
decision of the Administrator, Wage and Hour Division is affirmed and
the petition is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [10]