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<![CDATA[
CCASE:
BRIGHT CONSTRUCTION CO & TRAC EXCAVATING CO
DDATE:
19851001
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
BRIGHT CONSTRUCTION COMPANY WAB Case No. 85-03
&
TRAC EXCAVATING COMPANY
Subcontractor Dated: October 1, 1985
Pimlico Apartments, Ky-004-008
Phase C, Lexington, Kentucky
BEFORE: Alvin Bramow, Chairman, Thomas X. Dunn, Member
Stuart Rothman, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Brighton Construction Company, Inc., (hereinafter Bright) seeking
reversal of a decision by the Administrator, Wage and Hour
Division. In his decision, the Administrator rejected a
recommendation by the U.S. Department of Housing and Urban
Development (DHUD) pursuant to 29 CFR [sec] 5.8(b) that liquidated
damages assessed against Bright for violations of the Contract Work
Hours and Safety Standards Act (CWHSSA) by a subcontractor of
Bright, Trac Excavating Company, be waived. Bright was advised of
the Administrator's decision in a letter dated December 31, 1984
from the Labor Relations Branch of DHUD.
Bright was the prime contractor on a construction project to
renovate the Pimlico Apartments in Lexington, Kentucky. [1]
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[2] Since the project was funded by DHUD, it was subject to both the
Davis-Bacon Act and CWHSSA labor standards provisions. An investigation
by the Wage and Hour Division during the construction in 1981 revealed
violations of both acts and their respective regulations. Trac
Excavating, the subcontractor, had failed to pay the prevailing wage
rates for the classification of work performed and also failed to pay
overtime compensation for hours worked in excess of 8 hours per day and
40 hours per week. In addition, falsified certified payrolls which
concealed the fact that overtime was performed on the project were
submitted to the contracting agency and time cards were found to have
been altered. It was determined that $9,303.86 in back wages were due
29 employees of Trac Excavating. Full restitution was made to its
employees by the subcontractor.
As provided by CWHSSA, 40 U.S.C. 328(b)(2) and 29 CFR [sec]
5.8(a), liquidated damages of $1,980 were determined to be due the
government. DHUD recommended to the Administrator, Wage and Hour
Division, that the liquidated damages be waived. The Administrator
did not concur in this recommendation because he found that Trac
Excavating had violated the CWHSSA provisions not inadvertently,
notwithstanding the exercise of due care as is required by 29 CFR
[sec] 5.8(b) and (c). The Administrator's conclusion was based on
the aforementioned facts that Trac Excavating had submitted
falsified certified payrolls and that some of the employee time
cards had been altered to show [2]
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[3] that no overtime had been worked, when, in fact, it had been.
DHUD then sent a letter to petitioner Bright, the prime
contractor, stating that liquidated damages were being assessed
against Bright and withholding the sum of $1980 from sums due
Bright for construction on the project.
By letter dated February 28, 1985, Bright appealed the
Administrator's decision to the Wage Appeals Board, and upon
receiving the record of the case before the Wage and Hour Division,
Bright filed an amended petition for review with the Board.
Bright raises three defenses in its amended petition to the
Board. First, it argues that the government made no effort to
collect the liquidated damages from Trac Excavating, the
subcontractor which had actually permitted the violations. As its
second point, petitioner argues that the government failed to give
petitioner timely notice of the claims against it, thereby waiving
any right to assess liquidated damages against petitioner.
The Wage and Hour Division contends that the prime contractor
is liable for the liquidated damages assessed against its
subcontractor as a result of incorporation of the labor standards
provisions from its prime contracts in its contracts with its [3]
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[4] subcontractors. It is also asserted on behalf of the Wage
and Hour Division that withholding from the prime contractor is the
statutory mechanism prescribed at 40 U.S.C. 328(b)(2) for the
collection of liquidated damages.
Furthermore, the Wage and Hour Division contends that laches
is not available to petitioner in this case because CWHSSA is a
federal wage and hour act designed to benefit employees and the
public interest. The courts have held that laches cannot be
asserted against the United States in its sover[e]ign capacity to
enforce a public right or to protect a public interest. Likewise,
petitioner's estoppel argument is claimed not to be available as a
defense against paying liquidated damages since estoppel would
result in defeating the operations of policies contained in
legislation designed to protect the public.
The Wage Appeals Board considered this appeal on the basis of
the petition for review and amended petition filed by petitioner,
and the Statement for the Administrator and the record of the case
before the Wage and Hour Division filed by the Solicitor of Labor.
No request for an oral hearing was received by the Board.
* * *
The petitioner's contention that it should not be responsible
for the assessment of liquidated damages because the government has
made no effort to collect such liquidated damages from Trac
Excavating is not well founded. [4]
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[5] The Contract Work Hours and Safety Standards Act under which
the liquidated damages were assessed provides in pertinent part:
In the event of violation of the provisions of paragraph
(1), the contractor [*] and [*] any subcon[]tractor
responsible therefor shall be liable to such affected
employee for his unpaid wages and [*] shall, in addition,
be liable to the United States . . . for liquidated
damages as provided therein. 40 U.S.C. 328(b)(2).
[*](Emphasis added.)[*]
Under the Act, the government may look to the prime contractor and
not the violating subcontractor.
It is the prime contractor who entered into the agreement with
the Lexington-Fayette Housing Authority for the reconstruction of
the Pimlico Apartments in Lexington, Kentucky. This project was
funded by DHUD and as part of the agreement for such funds the
petitioner obligated itself to the government to assume that the
provisions of CWHSSA would be maintained both by it and its
subcontractors throughout the construction of the project. The
primary method provided by the government to collect liquidated
damages is to withhold funds. In this case, the sanction of
withholding can only be applied against the prime contractor and
such action is proper under the Act and regulations promulgated by
the Department of Labor as authorized by Reorganization Plan No. 14
of 1950 and section 276c of Title 40.
The government does not forfeit its opportunity to withhold
the liquidated damages from the prime contractor by failure to [5]
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[6] seek the remedy from a subcontractor.
The Board has recently held in Thomas J. Clements, Inc., WAB
Case No. 84-12 (January 12, 1985) that generally the defense of
laches may not be invoked against the government when it acts to
enforce a public right or protect a public interest. CWHSSA is a
statu[t]e, among others administered by the Wage and Hour Division,
designed for the benefit of employees and the public.
Furthermore, as pointed out by the Board in Clements, laches
requires more that delay; it requires a lack of diligence on the
part of the Wage and Hour Division. Administrative procedures are
not known to be expeditious. The mere delay in the final
notification of the assessment of liquidated damages is not
evidence of a lack of diligence on the part of the government.
The Board concludes that the equitable doctrine of laches is
not applicable in this case.
The Board in its recent holding in Thomas J. Clements, supra,
citing McComb v. Home Makers Handicraft Cooperative, 176 F.2d 633
(4th Cir. 1949), cert. den. 338 U.S. 900 (1949), stated that the
doctrine of estoppel may [*] not [*] be invoked against the
government where it would result in defeating the effective
operation of policies embodied in legislations designed to protect
the public. Certainly, CWHSSA is a statute designed to protect the
public. [*EMPHASIS IN ORIGINAL*] [6]
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The petitioner's allegation that its rights have been severely
impaired by the government's delay is still not appropriate to
invoke the doctrine of estoppel against the government.
The final issue before this Board is whether a waiver or
adjustment should be granted of the liquidated damages which were
assessed against the petitioner as a result of violations of CWHSSA
by its subcontractor, Trac Excavating Company.
The Act under which the liquidated damages were assessed also
provides in pertinent part:
. . ., if it is found . . . that the contractor or
subcontractor violated the provisions of this Act
[*] inadvertently notwithstanding the exercise of due
care on his Dart and that of his agents [*],
recommendations may be made to the Secretary that an
[*] appropriate adjustment in liquidated damages be
made [*], or that the contractor or subcontractor
[*] be relieved of liability for such liquidated
damages [*]. The Secretary shall review all pertinent
facts in the matter and may conduct such investigations
as he deems necessary, so as to affirm or reject the
recommendation. 40 U.S.C. at [sec] 330(c). [*] (Emphasis
added.) [*]
There is no question that the petitioner violated the overtime
provisions of this statute. The record shows that the
subcontractor, Trac Excavating Company, failed to pay its employees
the required overtime for hours worked in excess of eight hours per
day and forty hours per week. The subcontractor reported on its
certified payrolls that no overtime was worked by the employees.
This concealment, no matter whether caused by the petitioner or his
agents (the subcontractor herein), in itself shows that the
violations were not [7]
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[8] "inadvertent" and that due care was not
exercised. The Board has stated that where there is a submission
of falsified payrolls the assessment of liquidated damages should
not be waived. See Major Associates, Inc., WAB Case No. 84-14 (May
20, 1985); Harry Johnson Plumbing Co., Inc., WAB Case No. 84-19
(June 6, 1985); and Puckett, Taul & Underwood, Inc., WAB Case No.
85-07 (July 23, 1985).
In Major Associates, Harry Johnson Plumbing, and Puckett, Taul
& Underwood, the Board held that liquidated damages can be reduced
where the factual situation shows the violations in a case do not
warrant the full assessment regardless of instances where the
payrolls were falsified. To determine whether the full assessment
of liquidated damages is mandated, it is necessary to examine the
facts on a case by case basis. In such cases the Board is
exercising equitable relief which it considers t be a fair
adjustment commensurate with the violations.
The overtime violations and falsification of payrolls were the acts of
the subcontractor. The prevention and/or detection thereof is not
always a simple task by a prime contractor's most diligent efforts and
careful procedures implemented to snare violating subcontractors. This,
coupled with the fact that the petitioner has shown that it may not be
able to seek relief from the subcontractor, leads the Board to believe
that the violations in this case do not warrant the full assessment of
[8]
~9 [9] liquidated damages.
In view of the foregoing, it is the decision and order of the
Board that the liquidated damages be adjusted to $990.00.
BY ORDER OF THE BOARD
Craig Bulger, Executive Secretary
Wage Appeals Board [9]
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