CCASE:
SPARTAN MECHANICAL
DDATE:
19840416
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
SPARTAN MECHANICAL CORPORATION WAB Case No. 80-06
ATLANTIS HEATING CORPORATION
Bronx Park I, Bronx Park South Dated: April 16, 1984
II, Etc., FHA 012-57006-PM-EC
BEFORE: Stuart Rothman, Member, 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 Spartan Mechanical Corporation (hereinafter Spartan) and
Atlantis Heating Corporation (hereinafter Atlantis) to review
the decision of the Assistant Administrator, Wage and Hour
Division, dated February 14, 1980, denying petitioners a hearing
pursuant to 29 CFR Part 5, [sec] 5.11(b) of the Department of
Labor's regulations. The Assistant Administrator's decision also
ruled that Atlantis had not enrolled employees considered by it to
be trainees in an approved training program and had failed to
pay its employees the applicable predetermined wage rate for
the classification of work performed on several Department of
Housing and Urban Development (hereinafter DHUD) projects in
New York. [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Chairman Alvin Bramow withdrew from consideration of this
appeal and did not participate in the decision.
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[2] Spartan and Atlantis were heating subcontractors performing
rehabilitation work on DHUD apartment buildings in the Bronx,
New York, from 1976 to 1978. The contracts in question called
for compliance with the Davis-Bacon Act labor standards
requirements, including provisions for apprenticeship and training
program approval and employee registration. In general, Spartan
provided materials and equipment for the projects and Atlantis
supplied the labor and certain piping equipment to install
Spartan's products.
The wage determinations applicable to the projects under
consideration contained basic wage rates of $10.07 per hour plus
fringes for a total wage of $14.77, and $10.52 per hour plus
fringes for a total wage of $15.22 for steamfitters. Atlantis
paid its employees who it classified as apprentices, trainees
and/or helpers wage rates varying from $4.50 to $8.00 per hour.
No helper rate was listed on the applicable wage determinations.
Journeymen on the projects were paid wage rates totalling $9.00 to
$11.09 per hour. In addition, the certified payrolls submitted by
petitioners to the Federal Housing Administ[r]ation, the
contracting agency, indicated that excessive numbers of apprentices
were employed on the projects during various payroll periods,
contrary to the ratio requirements of apprentices to journeymen
usually contained in approved programs. [2]
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[3] Atlantis was advised by a representative of the prime
contractor that helpers could not be employed on the projects and
that approval was required before any apprentices or trainees
could be employed. Although Atlantis met or corresponded with
Federal, State and local agencies and the steamfitters' local
union in an apparent attempt to enroll its employees in approved
programs, such enrollment was never accomplished and it did
not submit a plan to the U.S. Department of Labor's Bureau of
Apprenticeship and Training (hereinafter BAT) for approval.
The Wage and Hour Division's investigation of petitioners'
payment practices ultimately indicated that $78,838.40 in
underpayments were due to 25 of Atlantis' employees on three
projects. The investigation was concluded late in 1978.
In July, 1979, Spartan, through its president, requested
an administrative hearing on the Wage and Hour Division's backwage
ruling, pursuant to 29 CFR [sec] 5.11(b). The hearing was
denied by the Assistant Administrator on February 14, 1980. The
Assistant Administrator concluded that since petitioners' employees
were not enrolled in a bona fide apprenticeship training program,
petitioners were required to pay their employees the wage rate
predetermined for steamfitters on the projects. Since it was clear
that the employees had performed the duties of steamfitters and no
evidence was presented that these employees were enrolled in a bona
fide apprenticeship program, the Assistant Administrator ruled that
there was no relevant question of fact [3]
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[4] to be resolved in an evidentiary hearing.
Petitioners appealed the Assistant Administrator's ruling
to the Wage Appeals Board on April 15, 1980. Petitioners assert
that they were criminally coerced into hiring the employees in
question. They claim that both the Department of Labor and
DHUD had knowledge of the criminal activity practiced upon
petitioners. The Bronx District Attorney has since investigated
and issued indictments in connection therewith. It is alleged by
petitioners that the Department of Labor and DHUD had no approved
or certified programs into which the employees in question could
be placed. Further, it is alleged by petitioners that although
they established their own training programs with local groups,
the Department of Labor and DHUD refused to recognize the plans
or give retroactive approval to them. Petitioners claim that
they were given oral and written confirmation that they would
be granted the [sec] 5.11(b) hearing. As a result of the
Department of Labor's refusal to grant the hearing petitioners
claim that the Assistant Administrator's decision was arbitrary and
capricious and has denied petitioners their constitutional right to
due process and a fair hearing of the evidence.
The Assistant Administrator argues that the only way employees
can be paid as apprentices or trainees at a rate less than the
predetermined journeyman's rate is if such employees are
individually registered in an approved apprenticeship or training
program prior to their employment and if the established ratios of
journeymen to trainees set forth in the approved [4]
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[5] plan are observed. The Assistant Administrator cites three decisions
/FN2/ of this Board in support of her position. The Assistant
Administrator declares that the petitioners never succeeded in
registering their employees, nor in establishing approved training
programs. In view of this, there can be no mitigation of
petitioners' failure to pay their employees performing the duties
of steamfitters the wage rate predetermined for that trade.
With reference to her denial of the fact-finding hearing, the
Assistant Administrator argues that the scheduling of an informal
administrative hearing, pursuant to [sec] 5.11(b) of the
regulations, is discretionary with the Secretary of Labor or
the Secretary's delegate, in this case the Wage and Hour Assistant
Administrator. Because of this a decision denying an informal
hearing should be overruled only if the Assistant Administrator's
discretion was abused by being exercised in an arbitrary or
capricious manner. The Assistant Administrator asserts that since
there is no evidence of this in the record, her actions in denying
the hearing were neither arbitrary nor capricious and her ruling
denying the [sec] 5.11(b) hearing should be upheld.
* * * [5]
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/FN2/ CRC Development Corp., WAB Case Nos. 77-01 and 77-13 (October
31, 1977) and Order Dismissing (January 23, 1978;, Soule Glass &
Glazing Company, WAB Case No. 78-18 (February 8, 1979) and
Tollefson Plumbing and Heating Co., WAB Case No. 78-17 (September
24, 1979). [5]
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[6] The Board considered this appeal on the basis of a petition
for review and subsequent submissions filed by petitioners, a
statement for the Assistant Administrator and the record of the
appeal before the Wage and Hour Division filed by the Solicitor
of Labor. No request for an oral argument was made to the
Board.
Although it is alleged in the record that certain activities
which may be described as criminal thrust certain employees upon
petitioners as the price of doing business on DHUD's rehabilitation
projects in the Bronx, the Board cannot approve a practice of
paying these employees at wages less than those predetermined
by the Department of Labor as a means of bailing the petitioners
out of a bad situation. Criminal statutes could have been
invoked to correct the alleged criminal practices if these
practices were proven. In lieu of this, petitioners undertook to
employ personnel who were not registered in approved apprenticeship
or training programs and paid them less than the wage rate
predetermined by the Department of Labor for the work they were
performing. Petitioners employed personnel in numbers exceeding
the ratios which are customary, did not establish the necessary
apprenticeship or training programs until the projects were
nearly completed and then attempted to apply the standards set
up in these programs retroactively, despite the fact that
early in the construction of the projects, the prime contractor
had warned petitioners that retroactive approval would not be [6]
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[7] permitted by the Department of Labor. All of these activities
are noted in the record and are not disputed.
In Repp & Mundt, Inc., WAB Case No. 80-11 (January 17, 1984)
the Board held that an employer who hired apprentices in excess
of the ratio of journeymen to apprentices permissible under the
applicable collective bargaining agreement, despite the fact
that this practice was condoned by the affected local union's
business representative, was required to compensate those
employees as journeymen instead of trainees. In the three
earlier decisions cited above in footnote 2, the Board has
consistently adhered to the position that payment of apprentice
wages to duly registered apprentices or trainees is permitted under
Davis-Bacon Act cases only to the very limited extent that is
spelled out in the approved apprenticeship agreement. Other than
the apprentice rate, there is no provision for payment of a wage
rate other than the journeyman's rate in the Davis-Bacon Act and
related acts. The responsibility for having a bona fide
apprenticeship program and for the registration of eligible
employees in such a program is the contractor's and not the
contracting agency's.
Although the Board deplores the occurrence of the alleged
criminal acts visited upon the projects with which petitioners
were involved, these acts cannot be used as an excuse to contravene
the employers' obligations to conform to the labor standards
provisions and to observe the employers' [7]
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[8] obligations to his employees as required by the regulations.
It cannot be shown that the alleged criminal acts perpetrated on the
petitioners prevented them from establishing the apprenticeship and
training programs and validly registering their employees therein. The
successful bidder is required to acquaint himself with labor conditions
that will affect his performance. The record indicates that the
petitioners never accomplished the required certification. Without this
provision being carried out, the petitioners are required by their
contracts and the regulations to pay their employees at the
predetermined journeyman's rate contained in the applicable wage
determination. There is no question that this was not done.
With reference to the complaint that the Assistant
Administrator should have granted the request for a [sec] 5.11(b)
hearing, the regulation in question grants the Secretary of Labor
(or the Secretary's delegate) the authority to convene a
factfinding hearing at the Secretary's discretion. It appears to
the Board that no additional facts could have been elicited at such
a hearing which could alter the fact that petitioners paid their
employees less than the wage rates which were predetermined,
which is contrary to the petitioners' undertaking at the time
of accepting the contracts.
No claims of abuse of discretion or novel or unusual
circumstances would change this. There appear to have been
circumstances which place the petitioners in an unfortunate
position, [8]
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[9] but resolution of petitioners' problems by underpayment of
their employees is not acceptable. Until the petitioners established
bona fide approved apprenticeship and/or training programs and duly
registered those employees eligible for such programs, petitioners had
no alternative but to pay the employees in question the predetermined
journeyman wage rate.
Petitioners have also complained that officials of the
Department of Labor orally and in writing assured them that
a hearing would be granted to assess the problems arising in
this case. Although the petitioners do not identify the persons
making these statements, the Board finds that the authority to
convene a [sec] 5.11(b) fact-finding hearing rests solely with the
Secretary of Labor or his delegate, which in this case is the
Assistant Administrator of the Wage and Hour Division. No other
Departmental employee is authorized to commit the Department to
convene a hearing in these circumstances. The Board cannot find an
abuse of discretion on the basis of the record submitted.
In view of these considerations, the Board affirms the
decision of the Assistant Administrator denying the petitioners'
request for a [sec] 5.11(b) hearing and finding that Atlantis had
not enrolled its employees in an approved training program or paid
its employees the applicable predetermined wage rate [9]
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[10] for the classification of work they performed on the projects in
question. The Board hereby dismisses petitioners' petition.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
