METROPOLITAN REHABILITATION CORP., WAB No. 78-25 (WAB Aug. 2, 1979)
CCASE:
METROPOLITAN REHABILITATION
DDATE:
19790802
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of WAB Case No. 78-25
METROPOLITAN REHABILITATION CORP. Dated: August 2, 1979
Bronx, NY
APPEARANCES: Jonathan Lang, Esquire for Metropolitan
Rehabilitation Corp.
Terry R. Yellig, Esquire for the Building and
Construction Trades Department, AFL-CIO
George E. Rivers, Esquire & Gail V. Coleman, Esquire
for the Wage and Hour Division, U.S. Department of
Labor
DECISION BY: Alfred L. Ganna, Chairman, William T. Evans, Member,
Thomas M. Phelan, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Metropolitan Rehabilitation Corporation seeking review of the
decision of the Assistant Administrator, Wage and Hour Division,
that employees of Petitioner's subcontractors engaged in stripping
the interiors in two six story apartment buildings consisting of
168 units at a HUD project in the Bronx, New York, should be paid
the hourly wage rate listed on the applicable wage decision [1]
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[2] for "Laborers, Bldg. & Hvy." ($7.25 plus fringes), rather than at
an hourly wage rage based on the rate for "Truck drivers:
Demolition and Wrecking: Straight jobs", ($4.76 plus fringes).
Petitioner's position is that approval of the rate of $4.76 was
obtained from an official of the Department of Housing and Urban
Development (HUD) at the preconstruction conference, that payrolls
were timely submitted to HUD and the wage rate for the workers
gutting the dwellings was never questioned by HUD until after the
project was completed and the subcontractors were paid off by
petitioner. Finally, Petitioner claims HUD should be ordered to
pay the sums it is withholding for the underpayments to the
Petitioner.
In its petition and other documents subsequently filed with
the Board, Petitioner relies on a report of HUD's Inspector
General with respect to the payment of the $4.76 wage rate to
workers on the project. In the report HUD's Wage Enforcement
Officer (Mr. Turner) indicated that the question of the rate
for demolition workers was considered at a preconstruction
conference and that Petitioner's representative indicated that the
prevailing rate for this work was the same rate as that for Truck
drivers, Demolition and Wrecking, Straight jobs, ($4.76/hour)
on similar jobs in the New York area. Petitioner claims that
Mr. Turner said that it could use the rate and subsequently told
it that the rate had been approved by the U.S. Department of Labor.
It is also stated in the IG's Report by Mr. Weddington, a HUD
investigator, that Mr. Turner concurred that the truck driver's
rate could be used for demolition workers. [2]
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[3] In subsequent documents filed after the petition (i.e.:
the Reply Statement of Petitioner and the Statement of Petitioner
in Reply to the Statement of the Building and Construction Trades
Department, AFL-CIO) Petitioner also argues that it should be
permitted to rely on the representations by HUD and the wage
determination by DOL, that the doctrine of governmental estoppel
should apply to prevent DOL from changing the instructions
Petitioner received from HUD and thereby assessing the back wages.
Petitioner also claims that it is inequitable to require Petitioner
to pay more than the rate approved by HUD when it has relied to its
detriment on those instructions.
Finally, Petitioner argues that the final decision concerning
the correct rate for demolition workers was not made until after
the project was completed, and it appeared that HUD's finding of
the correct wage rate in the Inspector General's Report was based
solely on a statement from the DOL Wage and Hour Specialist that
the laborer's rate was applicable. The investigation and
recalculation of the wage rates for the demolition workers resulted
in underpayments to 26 employees in the amount of $61,896.10 by
Petitioner and three of his subcontractors.
Pursuant to a request under 29 CFR [sec] 5.12 by Petitioner
and by HUD, the Assistant Administrator, Wage and Hour Division,
issued a ruling on July 28, 1978 concurring in the determination [3]
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[4] that payment of the wage rate for "Truck Drivers: Demolition
and Wrecking: Straight jobs" was erroneous since the rate applied
to truck drivers, and that "laborers" was the proper
classification. It is from this ruling that Petitioner has
appealed to this Board.
The Department of Labor has argued to the Board that the work
performed by the workers on the project was that of laborers and to
apply a truck driver's wage rate to them was clearly erroneous.
The Department relies on Mr. Turner's statement that this approval
of the $4.76/hour rate was conditioned on subsequent approval by
DOL and also relies on Turner's later statement that DOL had ruled
that the laborer's rate applied to the work. Wage and Hour in its
Statement cites decisions before this Board that have held that the
authority to determine the proper classification of workers is an
inherent part of the wage determination process, solely within the
jurisdiction of the Department of Labor. Finally, Wage and Hour
claims Petitioner was on notice through the statement of Mr. Turner
that approval of the $4.76 rate was conditional and that DOL had
the final authority to determine appropriate classification of
workers.
The Department of Labor was supported in its position by a
post hearing brief filed on behalf of the workers by the Building
and Construction Trades Department, AFL-CIO. The Building and
Construction Trades Department argues that the [4]
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[5] the Secretary of Labor has final authority over all matters
relating to the enforcement of the Davis-Bacon Act and its
related statutes and that the Department of Labor is not
estopped from enforcing payment of the wage rates found to be
prevailing regardless of representations made by the HUD
officials in this case.
The Board considered this appeal on the basis of the
petition and reply memoranda filed by Petitioner and the Statement
on behalf of the Assistant Administrator and the record of the case
in the Wage and Hour Division filed by the Solicitor of Labor, the
brief on behalf of the Building and Construction Trades Department,
and a hearing on the appeal held May 11, 1979 at which time all
interested parties were present and participated.
It seems to the Board that although there are questions of
fact unresolved by this appeal as to what Mr. Turner of HUD and
Petitioner's representatives may or may not have said at the
preconstruction conference and subsequent meetings, the resolution
of this appeal does not rest upon those matters. The Board views
Petitioner's reliance upon North Georgia Building and Construction
Trades Council v. Department of Transportation, 399 F. Supp. 58
(N.D. Ga. 1975) as inapposite. The facts in the appeal on which
all parties are in agreement are that the applicable wage
determination contained no wage rate for demolition [5]
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[6] laborers and that the regulations applicable to the contract
contain provisions for the establishment of additional classifi-
cations and approval by the Department of Labor (29 CFR Part 5, Sec.
5[.]5(a)(ii)). The North Georgia case is therefore not controlling
on this appeal.
Petitioner's reliance upon the contracting officer's advice
as to the appropriate wage rate cannot operate to relieve
Petitioner of its responsibility to pay the correct wage rate to
laborers and mechanics employed on its projects for two important
reasons: First; even if the Board assumes that the contracting
officer's advice was not conditioned on Department of Labor
approval, that advice was not binding on the Department of Labor
and does not estop the Department of Labor from requiring the
payment of the proper wage rate. The Department of Labor has the
final authority in this regard under the statute and Reorganization
Plan No. 14, and no one outside the Department operates with any
apparent authority such as would estop the Department of Labor from
making the final determination. Second, the estoppel argument
would not be binding on the laborers and mechanics themselves so as
to cut off any individual rights they may have under the
Davis-Bacon Act to receive the proper wage rate. Petitioner
may still be liable in a private suit brought to enforce their
rights if their rights had been violated. [6]
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[7] While the Board must reject the arguments of the
Petitioner and affirm the decision of the Assistant Administrator,
it is not unmindful of the dilemma in which a contractor may find
itself when it relies to its detriment upon the advice of the
contracting agency's representative concerning the proper wages to
be paid on the project. Our decision here is not intended to
foreclose any action which such a contractor may have against the
contracting agency. What we do hold though is that in such a
situation, the laborers and mechanics on the project do not forfeit
any legal rights they may have under the Davis-Bacon Act by reason
of the erroneous advice given to the contractor. The Davis-Bacon
Act was intended to protect the rights of the laborer[s] and
mechanics employed on the projects, not to protect the contractors
from bad advice given by someone without the final authority to
make the determination. U.S. v. Binghampton Construction Company,
347 U.S. 171 (1954). The Board notes that Petitioner has relied on
several cases in its Reply Statement where the contracting agency
has been sued successfully when there have been errors in the bid
documents, but that is not the case before this Board.
In view of these considerations, the decision of the
Assistant Administrator, Wage and Hour Division, is affirmed and
the Petition for Review is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
