CCASE:
D.A. COLLINS CONSTRUCTION
DDATE:
19840920
TTEXT:
~1
[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
D.A. COLLINS CONSTRUCTION CO. WAB Case No. 81-04
Amsterdam, New York Dated: September 20, 1984
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
Mohawk Contracting Company (hereinafter Mohawk) seeking review
of a decision of the Assistant Secretary of Employment Standards
dated January 14, 1981, reversing a prior decision of an
Administrative Law Judge (hereinafter ALJ). The ALJ had ruled that
Mohawk was a materialman and not a subcontractor on a Federal
Aid Highway Act project in New York. As a result of this finding
the ALJ ruled that Mohawk was not subject to the Davis-Bacon Act
labor standards provisions and did not have to pay its employees
working in two gravel pits the predetermined wage rates applicable
to the highway project.
On appeal by the government the Assistant Secretary acting
in the absence of the Wage and Hour Administrator overruled the
ALJ and held that the gravel pit employees were covered under
the Act and regulations. Pursuant to this decision, it was [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Chairman Alvin Bramow withdrew from consideration of this
appeal and did not participate in this decision. [1]
~2
ruled that the workers in question were underpaid by $45,710.50.
Mohawk, thereupon, appealed the Assistant Secretary's decision
to the Wage Appeals Board on April 21, 1981.
The factual situation in this appeal is not in dispute and
may be simply stated. In September, 1975, D.A. Collins
Construction Co., Inc., (hereinafter Collins) entered into a
contract for $2,099,634 with the New York Department of
Transportation to construct .59 miles of highway in Amsterdam, New
York. Part of this contract called for the construction of a
railroad embankment which required a large amount of stone and
gravel fill. Collins contracted with Mohawk to furnish and deliver
materials, including stones to be placed on the embankment. This
contract included the terms and conditions of the prime contract.
To fulfill its obligations under the contract, Mohawk was obliged
to enter into agreements to remove materials from two borrow pits
for Collins' use on the highway construction project. Shortly
after Mohawk signed its contract with Collins, it contracted
with the owners of the Fort Johnson pit to remove 200,000 cubic
yards of material to be delivered in place to Collins, including
practically all of the stone required for the embankment. The Fort
Johnson pit also provided all the material for 3 related federally
assisted projects in the same area. Aside from these projects and
the highway project in question, less than 5 % of the material
taken from the pit during this period was supplied by Mohawk to a
local private contractor. There was testimony at [2]
~3
[3]the hearing that Mohawk had stopped the pit owners from selling
to others for fear that there would not be sufficient materials for
its requirements.
A second pit, known as the Colburn pit, provided 36,383
cubic yards of stone fill to the Collins project. Although the
owner of the pit stated that stone and gravel were for sale to
the public, no one prior to Mohawk had bought any fill since
1969, seven years earlier.
It is Mohawk's argument that it was a bona fide materialman
and not a subcontractor. It contends that Wage and Hour has
failed to establish a prima facie case before the ALJ that it
was a subcontractor, that credible evidence supports the ALJ's
decision and that the ALJ's decision should not be overturned
unless there was an abuse of discretion. Finally Mohawk claims
that the findings of the Assistant Secretary are not supported
by credible evidence adduced at the trial.
The Wage and Hour Division on behalf of the Assistant
Secretary relies on a line of cases developed by the Solicitor
of Labor and the Wage Appeals Board which have determined that a
material supplier can be a subcontractor if certain conditions
are met. /FN2/ These conditions include the fact that the
material [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ T.L. James & Co., WAB 69-02 (Aug. 13, 1969), Sweet Home
Stone, WAB 75-01 (Aug. 4, 1975), Big Six, WAB 75-03 (July 25, 1975)
and Ameron, Inc., WAB 73-07 (September 14, 1973). [3]
~4
[4] must be taken from a facility in the vicinity of the project,
that the facility be opened exclusively or nearly exclusively for
the construction project and not be used to supply the general
public regularly and routinely. The Assistant Secretary also
relied on MacEvoy v. U.S., 322 U.S. 102 (1944) which held that the
extent that a subcontractor takes over a specific part of either
the labor or material requirements of the prime contract is
significant in determining the status of the subcontractor as
opposed to that of a bona fide material supplier.
The Wage and Hour Division's argument applies the facts of
this contract to the precedents established in the aforementioned
cases. They claim that Mohawk contracted directly with the prime
contractor and agreed to deliver specific quantities of materials
from the specified pits. Collins, the prime contractor, had a
right of reversion in the event of Mohawk's default whereby
Collins could obtain the contractually required materials in
Mohawk's stead. It is argued that these materials were taken
from pits opened and substantially used for the federal projects.
These facts, coupled with the evidence of minimal sales to the
public before and during the period of the construction contract
were determinative in the Assistant Secretary's decision that
Mohawk's operations at the Fort Johnson and Colburn pits are those
of a subcontractor, and thereby subject to the Davis-Bacon
provisions of the Federal Aid Highway Act.
It is also argued on behalf of the Assistant Secretary that [4]
~5
[5] his decision overruled the ALJ's conclusions of law and not
the ALJ's [*] findings of fact [*]. It is pointed out that no
material facts are in dispute in this appeal. Wage and Hour claims
that the Assistant Secretary's decision is based upon consideration
of the use of the quarry pits in terms of sales and material
removed therefrom prior to and during this project. These facts
lead the Assistant Secretary to conclude as a matter of law that
the pits were used nearly exclusively for federal projects and
that therefore Mohawk was a subcontractor on the Collins project.
* * *
The Wage Appeals Board considered this appeal on the basis
of the Petition for Review, the record of the case made before
the ALJ and a statement on behalf of the Assistant Secretary
filed by the Solicitor of Labor. No request for a hearing was
received by the Board.
Upon review of the record and the information provided in
the Petition for Rev[ie]w and the Assistant Secretary's decision,
the Board has concluded that the Assistant Secretary's conclusions
of law based upon the basically undisputed facts of this case are
consistent with earlier decisions of this Board. These decisions
defined the differences between material suppliers who are not
subject to the labor standards provisions of the Davis-Bacon Act
and bona fide subcontractors who are subject to these provisions.
Although each case must be considered on its own merits, [5]
~6
[6] it is obvious had there been significant use of the quarry pits
in question in terms of prior sales to the public and substantial
removal of gravel for a variety of uses over a period of time, it
would be indicative that the gravel pits were not dedicated
exclusively or nearly exclusively to the federal projects in and
near Amsterdam, New York. Under such facts Mohawk could be
considered to be a material supplier and its employees would not be
subject to the applicable wage determination. In this case,
however, the evidence in the record does not support the ALJ's
finding that Mohawk is a materialman. Any sales not related to
the federal projects were exceptionally minor. In 6 years prior to
Mohawk's contract with the Fort Johnson pit owners, less than 1000
cubic yards of material was sold for other uses. Over 224,000
cubic yards were excavated by Mohawk for delivery to Collins for
the highway project. During the life of Mohawk's contract on the
Collins job less than 5% of the material drawn from the pit was
sold by Mohawk to a private contractor not related to the highway
construction project. There is also evidence that Mohawk
stopped the owner from selling to others, presumably so that it
would not run short of the necessary material for its contract
with Collins. Although the owners say they were willing to sell
to the public, no sales were made by the owners to the public
after 1976 when the owners contracted with Mohawk for Collins'
requirements at the highway project. [6]
~7
[7] Also, a total of 36,383 cubic yards of fill was removed
from the second gravel pit (Colburn) by Mohawk for the Collins
project. Again, although the owners stated that they would
sell to the public, no sales had been made from 1969 to 1975
and until Mohawk withdrew its requirements.
From the Board's point of view, the ALJ took too narrow
a view of the Board's decision in the T.L. James case, supra.
The large quantities of fill excavated and delivered to Collins'
project creat[e] a prima facie case that Mohawk was a subcontractor
to Collins. The fact that Mohawk delivered the fill to precise
locations as required by the general contract and fulfilled
Collins' contractu[]al requirements by spreading the required
amounts of stone on the railroad embankment, an obligation that
was specifically called for in the prime contract, reinforces
the conclusion that Mohawk was a subcontractor.
The prima facie case created by these facts is not rebutted
by the owners' statements that they were willing to make sales
to the public, nor by minimal actual sales which cannot be
called significant or substantial when compared to the quantities
required for Collins' highway project.
In view of these considerations the Board affirms the
decision of the Assistant Secretary that Mohawk performed the
duties of a subcontractor on the project and as such was
subject to the Davis-Bacon provisions of the Federal Aid Highway
Act. The Petition for Review filed herein is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
