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<![CDATA[
CCASE:
EDWARDS FURNACE COMPANY, INC.
DDATE:
19780918
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
EDWARDS FURNACE COMPANY, INC. WAB Case No. 77-28
EDWARDS HOME IMPROVEMENT AND
FURNACE COMPANY d/b/a EDWARDS
HOME IMPROVEMENT COMPANY,
BERNARD BECKERMAN, PRESIDENT Dated: September 18, 1978
Decision by: Alfred L. Ganna, Chairman, William T. Evans, Member,
Thomas M. Phelan, Member
DECISION OF THE WAGE APPEALS BOARD
This appeal is before the Wage Appeals Board on the petition
of Edward Furnace Co., Inc., Edwards Home Improvement and Furnace
Company and Bernard Beckerman, individually, and as owner of the
aforementioned companies, and also doing business as Edwards Home
Improvement Company, seeking review of the Administrator's decision
dated August 16, 1977. This decision confirmed the decision and
recommendation of the Regional Administrator of the Wage and Hour
Division that Petitioner's violation of the Davis-Bacon Act, as
amended, (40 U.S.C. 276a et seq.) constituted a disregard of
Petitioner's obligations to its employees and subcontractors within
the meaning of Section 3(a) of the Act and recommended that
Petitioner be placed on the ineligible bidders list of the
Comptroller General pursuant to Section 3(a) of the Act.
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[2] This appeal arose from the fact that Petitioner Edwards Home
Improvement and Furnace Company contracted with the Department of
Housing and Urban Development, Federal Housing Administration, to
perform rehabilitation construction on FHA's properties in Ohio.
These contracts were subject to the Davis-Bacon Act and the
Regulations issued thereunder. An investigation by the Wage and
Hour Division covering a period from April 1972 to March 1974
revealed that four men working as carpenters on the covered
projects did not receive the prevailing wage rates for the work
they performed. The investigation showed that before starting work
on most of the FHA rehab projects, each carpenter had signed a
contract with Petitioner in which he agreed to perform certain work
for a specified amount; nevertheless, these carpenters continued to
be paid an hourly wage by Petitioner. Wage and Hour determined
that the carpenters were employees of Petitioner and that the
hourly wages received were far below the applicable prevailing wage
rates for the work they performed. Also, Wage and Hour found that
Petitioner failed to keep adequate and accurate records as required
by Regulations, [sec] 5.5(a)(3)(i). Back wages totaling $17,508.30
were found due these employees.
Through a series of meetings in 1974 between Petitioner and
representatives of the Wage and Hour Division, Petitioner resisted
paying the back wages because he claimed that the carpenters, as a [2]
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[3] result of the contracts they had with Petitioner, were
independent contractors and not entitled to the prevailing wage
rates as required by the Davis-Bacon Act. Petitioner did pay back
wages in the amount of $6,366.00 to three carpenters for work
performed by these men prior to the signing of their contracts.
One carpenter refused to accept part-payment of his wages.
Petitioner did not accept the Wage and Hour Division's
findings and refused to pay remaining back wages found due the four
workers or to agree to future compliance. Petitioner was advised
that there was reasonable cause to find the alleged violations
constituted a disregard of its obligations to its employees under
Section 3(a) of the Davis-Bacon Act and that there was a
possibility of the imposition of ineligibility sanctions in
accordance with Regulations, 29 CFR 5.6(b). Petitioner filed a
statement and participated in the informal proceeding on March 30,
1977, and in April 1977, the Regional Administrator ruled that no
evidence had refuted or altered the conclusions following the
investigation and he confirmed Wage and Hour's findings contain[]ed
in the charging letter to Petitioner.
On May 4, 1977, Petitioner appealed to the Administrator for
a review. After considering the Petitioner's objections, the
Administrator affirmed the decision and recommendation of the
Regional Administrator. The Administrator's decision focused on
whether the carpenters were laborers and/or mechanics subject [to]
the Davis-Bacon Act and the [3]
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[4] regulations thereunder. As indicated in his Decision of August 16,
1977, the Administrator found such laborers and/or mechanics must
receive the prevailing wage for their work regardless of any contractual
relationship which may be alleged to exist with the contractor. Based
on Petitioner's refusal to pay the remaining back wages and to agree to
future compliance the Administrator recommended that ineli[gi]bility
sanctions be considered by the Comptroller General.
From this ruling, Petitioner appealed to the Wage Appeals
Board on October 22, 1977.
In addition to the Petition for Review and a Response Brief
from Petitioner, and the Statement on behalf of the Administrator,
Wage and Hour Division, the Associated General Contractors of
America, Inc., and the Associated Builders and Contractors, Inc.,
filed amicus curiae briefs with the Board commenting on the
question whether bona fide independent contractors are subject to
the prevailing wage requirements of the Davis-Bacon Act, as
amended, and related acts.
The Board considered the Petitioner's appeal in executive
session on the basis of the documents submitted by the various
parties and the record filed by the Solicitor of Labor. The
Petitioner's position before the Board is the same as it was
expressed to the Administrator: petitioner considers the
carpenters independent contractors and as such not subject to the
prevailing wage requirements of the Davis-Bacon Act and the
regulations thereunder. [4]
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[5] From the Board's view of this case it is not necessary to
consider all of the arguments which have been urged on it. It
seems clear to the Board that the four carpenters were not bona
fide subcontractors. The record indicates Petitioner continued to
pay the carpenters hourly wage rates and even fringe benefits for
one of the workers. None of the carpenters had any prior
experience as subcontractors. There is nothing in the file to
indicate that they had an office address, stationery or have done
any other work as subcontractors during or after these jobs. The
contracts signed by the carpenters indicated that Petitioner agreed
to furnish the materials for completion of the projects, and the
so-called independent contractors were to provide only tools and
labor. It is noted that this is the same arrangement an employer
would have with an employee. To the Board it seems clear that the
contracts in question are merely a subterfuge to enable Petitioner
to avoid the consequences of the prevailing wage statutes,
therefore the carpenters cannot be considered bona fide
subcontractors. From this it follows that the carpenters were
actually employees of Petitioner and should have been paid the
appropriate prevailing wage rate for carpenters.
Following this view of this case the Board does not reach
the question concerning the status of bona fide subcontractors
which is the subject of the amicus curiae briefs filed with the
Board by the Associated General Contractors of America, Inc., and
the Associated Builders and Contractors, Inc. [5]
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[6] The Administrator's decision which found these alleged
subcontractors were employees and as such the Davis-Bacon Act, as
amended, applied to them and required payment of the appropriate
prevailing wage rate is affirmed.
Furthermore, in view of Petitioner's consistent refusal to
pay the prevailing wage rate or to agree to compliance with the Act
in the future, the Administrator's recommendation that Petitioner
be included on the Comptroller General's list of ineligible bidders
is also affirmed and the petition is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger, Executive Secretary
Wage Appeals Board [6]
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