JOHNSON ELECTRIC CO., WAB No. 80-03 (WAB Apr. 11, 1983)
CCASE:
JOHNSON ELECTRIC
DDATE:
19830411
TTEXT:
~1
[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
JOHNSON ELECTRIC CO. WAB Case No. 80-03
Grand Rapids, MI Dated: April 11, 1983
BEFORE: Stuart Rothman, Acting Chairman, Thomas X. Dunn, Member
Gresham C. Smith, Alternate Member /FN1/
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Johnson Electric Company, (hereinafter Johnson Electric) for
review of the decision of the Administrator, Wage and Hour
Division, dated November 20, 1975. Johnson Electric had been
the electrical subcontractor on the construction of a nursing
care building at the Michigan Veterans facility in Grand Rapids,
Michigan, from January, 1973 to July, 1975.
During construction of the project an investigation of
petitioner disclosed alleged Davis-Bacon violations. These
included the improper crediting of holiday pay when holiday pay
was not listed on the applicable wage determination as a prevailing
fringe benefit for electricians, the employment of electrician
apprentices on the project in excess of the permissible ratio of
apprentices to journeymen, and the [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Board Chairman Alvin Bramow withdrew from consideration of
this appeal and did not participate in the decision. [1]
~2
[2] failure to pay apprentices the required wage rate. The
aforementioned Administrator's decision ruled that Johnson Electric
had failed to pay six of its apprentices the correct wage rate
and that it could not receive Davis-Bacon credit for holiday
payments made to its employees.
Petitioner made restitution for the violations involving
the permissible apprentice/journeyman ratio. Also, the question
involving the holiday pay violations has been resolved by a
subsequent Wage Appeals Board Decision, Collinson Construction
Company, WAB Case No. 76-09 (April 22, 1977). The Wage and
Hour Division has credited petitioner with the full amount of
the holiday pay benefits.
Remaining is the issue whether petitioner paid its six
apprentices the proper wage rates on the Michigan Veterans
facility. The question arose because petitioner paid its
apprentices a percentage of a journeyman rate which was established
by the apprenticeship committee of the Western Michigan Chapter of
the Associated Builders and Contractors, Inc., at $5.25 (and later
$5.50) per hour. The Wage and Hour Division's position is this is
a Davis-Bacon project, and the contractor must pay its journeyman
electricians the predetermined wage rate, which was $7.97 per hour
plus $.39 in fringe benefits; accordingly, the appropriate
apprentice wage rate is the appropriate percentage of the
predetermined journeyman's wage rate plus the full amount of the
fringe benefits.
The Wage and Hour Division has determined that $13,637.69 [2]
~3
[3] is due in back wages to petitioner's apprentices.
Petitioner's position is that the Department's regulation in
effect at the time the work was contracted and performed, 29 CFR
[sec] 5.5(a)(4)(i), was not clear that apprentices were to be paid
percentages of the wage rate contained in the wage determination,
but indicated, in effect, that the apprentices could be paid the
rate established in a bona fide apprenticeship program registered
with either the State or Federal Apprenticeship Bureau. Petitioner
points out that shortly after it completed work on the Veterans
facility, the Department of Labor, on August 20, 1975, amended the
language of the regulation in question to make it clearer that the
apprentices were to be paid not less that the appropriate
percentage of the journeyman's rate contained in the applicable
wage determination. It is petitioner's position that this
amendment reflects a change in the Department's policy which cannot
be retroactively applied to petitioner's Davis-Bacon contract.
Petitioner also asserts that the original language of the
regulation was unclear as evidenced by the fact that the Wage and
Hour Division felt obliged to clarify it by publishing the
amendment. Petitioner contends that rules of construction require
obscure language be construed against the drafter of the language.
The Wage and Hour Division argues that the amended language
of the Regulation did not reflect a change in their position [3]
~4
[4] concerning payment of apprentices but merely sought to clarify the
position existing at the time petitioner entered into its contract.
The Wage and Hour Division cites Wage Appeals Board decision In re
Jack Picoult, WAB Case No. 68-09 (December 19, 1968) as evidence of
Wage and Hour's policy in this regard. The primary distinction
between the Picoult case and the instant case is that in Picoult
the contractor was working in a different geographical area from
the location of the apprenticeship committee, whereas in the
instant case the apprenticeship committee's agreement is applicable
to Grand Rapids where the project was located. In Picoult the
contractor paid its apprentices in accordance with the
apprenticeship committee's agreement instead of a percentage of the
applicable wage rate contained in the wage determination. The
Board held that the contractor was in error in Picoult and that it
should have paid the apprentices the appropriate percentage of the
predetermined wage rate. It is the position of Wage and Hour in
this case that the fact that the apprenticeship committee agreement
was applicable to the Grand Rapids area makes no difference in the
application of the rule announced in Picoult that the journeyman's
rates in the bid documents are the critical rates concerning the
determination of the apprentice rates.
It is also Wage and Hour's view that the apprentice's rate
is based on a percentage of the wage determination's journeyman's
rate plus all of the value of the published fringe benefits. [4]
~5
[5] The Wage Appeals Board considered this appeal on the basis of
the Petition for Review, Reply Brief to the Statement for the
Administrator and a Summary Brief filed by petitioner in response
to the Board's request for additional information, the Statement
for the Administrator, a further Statement of the Administrator in
response to the Board's request for additional information, and the
record of the appeal in the Wage and Hour Division filed by the
Solicitor of Labor. Although petitioner originally indicated it
wished to have an oral hearing or a telephonic hearing, the latter
request was denied by the Board. Thereupon, petitioner decided
that an oral hearing would not be required.
* * *
Upon review of all the pleadings filed in this appeal and the
answers the parties provided to the Board's request for additional
information, the Board believes that the only way petitioner can
sustain its position is if the effect of the Department of Labor's
regulation as amended was to change the position of Wage and Hour
concerning the payment of apprentices, or if the earlier version of
the regulation tended to mislead petitioner into making an
erroneous interpretation of the regulation to its detriment. The
Board finds that neither of these propositions can be answered in
petitioner's favor. After [5]
~6
[6] petitioner received the wage determination listing the predetermined
journeyman's rates, petitioner was then on notice of the proper wage
rates to be paid, it is inconsistent and unreasonable for petitioner to
consider that, another journeyman's rate is appropriate for the purpose of
determining the apprentices' wage for this particular project. The
entire process of compensating apprentices during their training
period is based upon the relationship of their wages to the
journeyman's wages. If the apprentices were paid as proposed by
petitioner this wage relationship between the journeyman and
apprentice wages would be completely destroyed.
The Board also finds that when the Department of Labor rewrote
Regulation, 29 CFR [sec] 5.5(a)(4)(i) in August, 1975, after
petitioner had completed work on the project, the Department did
this only in the interest of clarification of the existing
regulation. The Board does not agree with petitioner's argument
that the revision represented a change in Wage and Hour's policy or
procedure. Nor does the Board accept the idea that the Regulation
as previously written was so confusing or ambiguous as to mislead
petitioner to its detriment.
The Wage Appeals Board takes notice of the fact that for
Davis-Bacon purposes apprenticeship rates have, from the inception
of the Davis-Bacon Act, been determined as various percentages of
the wage rate predetermined for the journeyman of each particular
trade and not by a percentage of another journeyman's rate set up
by various apprenticeship committees, pursuant to a Bureau of
Apprenticeship and Training program, as proposed by petitioner. [6]
~7
[7] The Board approved this policy [in] In re Jack Picoult,
supra. The factual difference which petitioner points to, i.e.,
that the contractor was operating in a geographically different
location from the location of the apprenticeship committee does not
change the principle. The rule established in Picoult applies to
any Federal or Federally-assisted construction contract subject to
the Davis-Bacon or the related Acts. This ruling would not apply
to any private construction contracts which Johnson Electric may
have.
The Board agrees with the Solicitor's argument that the
apprentice's wage rate will be determined by applying the
appropriate percentage to the predetermined basic wage rate for the
trade plus the total value of the fringe benefits which are
applicable to it.
In view of these considerations, the petition of Johnson
Electric is hereby denied and the appeal is dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
