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CCASE:
WERZALIT OF AMERICA
DDATE:
19860407
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
WERZALIT OF AMERICA, INC.
UDAG Grant No. B-83-AB-42-0293 WAB Case No. 85-19
Bradford, Pennsylvania Dated: April 7, 1986
APPEARANCES: Timothy G. Hewitt, Esquire, for Community
Development Agency for the City of Bradford,
Pennsylvania
Leif Jorgenson, Esquire, Douglas Davidson, Esquire,
for Wage and Hour Division, U.S. Department of Labor
BEFORE: Alvin Bramow, Chairman, Thomas X. Dunn, Member
Stuart Rothman, Member, concurring
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on a Petition for
Review of a decision of the Deputy Administrator, Wage and Hour
Division, dated June 21, 1985, filed by the Community Development
Agency of the City of Bradford, Pennsylvania. This decision held
that employees of Werzalit of America, Inc., (hereinafter Werzalit)
who installed a boiler at Werzalit's plant were subject to the
labor standards provisions of the Housing and Community Development
Act of 1974. Werzalit argues that it relied on advice provided by
an official of the Wage and Hour Division that its [1]
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[2] employees who installed the boiler were eligible for the "force
account" exception and were properly paid their regular rate of pay as a
Werzalit employee, something less than the wages determined by the
Department of Labor for laborers and mechanics engaged on building
construction in the Bradford, McKean Cou[n]ty, Pennsylvania, area.
This appeal arose from the following factual situation. The
City of Bradford, Pennsylvania, obtained a $500,000 Urban
Development Action Grant (UDAG) from the Department of Housing and
Urban Development in early 1983. The City loaned the UDAG funds to
the McKean County Industrial Development Authority, which in turn
loaned it to Werzalit, which, with about $2,000,000 from other
sources, made some improvements on its Bradford factory, including
the purchase and installation of the boiler in the factory.
Although an outside contractor built the boiler house and made
other improvements at the factory and paid its employees the
predetermined Davis-Bacon wage rates, Werzalit installed the boiler
with its own employees at their regular wage rates for factory
work.
In September, 1983, the Department of Housing and Urban
Development advised Werzalit that it was permissible for the firm
to use its own employees to install the boiler but that Werzalit
would have to pay them the Davis-Bacon predetermined wage rates.
A representative of the company contacted Wage and Hour's Regional [2]
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[3] Wage Specialist in Philadelphia concerning DHUD's advice and
the Wage Specialist told them orally and then in writing that he
thought that Werzalit's employees came within the "force account"
category which is not covered by the Davis-Bacon labor standards.
The Regional Wage Specialist also stated that if contrary advice
was received from DHUD, the matter should be resolved by the
Administrator, Wage and Hour Division, pursuant to 29 CFR [sec]
5.13.
One year later, the Executive Director of Bradford's Community
Development Agency requested an opinion from the Administrator
concerning the applicability of the labor standards provisions to
Werzalit's employees. In January, 1985, DHUD again advised
Bradford's officials that the Davis-Bacon labor standards were
applicable to Werzalit's employees. In June, 1985, the Deputy
Administrator, Wage and Hour Division, issued his opinion which is
the subject of this appeal. The Bradford Community Development
Agency has requested the Wage Appeals Board to review the Deputy
Administrator's decision.
Petitioner has made two alternative arguments as to why
Werzalit is not required to comply with Davis-Bacon labor
standards. It contends that Werzalit is not a contractor and
therefore its employees are not covered under the terms of the
Housing and Community Development Act of 1974. Further, Petitioner
argues that the Government is estopped from enforcing the Act by
reason of Werzalit's claimed reliance upon information furnished
by an employee of the Wage and Hour Division. [3]
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[4] The Wage and Hour Division's positions are directly contrary
to those of the petitioner. The Government claims that Werzalit
is a bona fide contractor within the labor standards provisions
of the Housing and Community Development Act of 1974. Also,
Wage and Hour argues that the Government has not been estopped
by the advice or actions of one of its employees if that employee
is not authorized to give authoritative advice, according to a
long line of court and Wage Appeals Board decisions.
The Wage Appeals Board considered this appeal on the basis
of the Petition for Review and the Petitioner's Reply Brief filed
on behalf of the City of Bradford, the Statement on Behalf of the
Deputy Administrator and the record of the appeal before the Wage
and Hour Division filed by the Solicitor of Labor for the Deputy
Administrator. On March 4, 1986, the Wage Appeals Board held an
oral hearing at which all interested persons were present and
participated.
* * *
The Wage Appeals Board has before it issues concerning
construction work on a two and one-half million dollar project
which consists of the expansion of Werzalit's plant including a new
boiler. Certainly, the entire project is construction within the
meaning of the Housing and Community Development Act of 1974.[4]
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[5] The labor standards provisions of the Housing and Community
Development Act of 1974 provides in pertinent part as follows:
All laborers and mechanics employed by contractors
or subcontractors in the performance of
construction work financed in whole or in part
with grants received . . . shall be paid wages at
rates not less than those prevailing on similar
construction in the locality as determined by
the Secretary of Labor in accordance with the
Davis-Bacon Act, as amended. (40 U.S.C. 276a-
276a-5) . . . (42 U.S.C. 5310)
Now, the Board must address the contention of the petitioner
that Werzalit is not a contractor within the meaning and intent
of the labor standards provisions quoted above and therefore not
subject to the Davis-Bacon labor standards contained therein.
The petitioner reads these labor standards provisions to apply
only to contractors or subcontractors performing on the
construction work. The petitioner maintains that Werzalit is the
mandated recipient of the UDAG funds under the funds agreement and
as such stands in the place of the recipient local government and
not a contractor.
The Board cannot agree with petitioner's interpretation. The
statute and the agreement which Werzalit entered into with the City
of Bradford and the McKean County Industrial Development Authority
must be read together. Werzalit by the very terms of the statute
and agreement cannot be considered a recipient. The statute limits
grant recipients to States and units of local government.
Therefore it is clear that reading [5]
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[6] the statute and all the documents in the record Werzalit is not
placed in the position of a recipient but as the prime contractor. To
hold otherwise would render the labor standards provisions of the
Housing and Community Development Act of 1974 meaningless.
The Board also finds that Werzalit should not have been
mislead or relied on the advice given to it by a Department of
Labor Regional Wage Specialist that its employees could qualify
for the "force account" exception. The record shows that this
advice was given with some reservation. The Wage Specialist
qualified the statement given in his letter of October 19, 1983
by saying "we [*] believe [*] that the referenced employees of
Werzalit are included in the category of 'force account'. . . . If
the contracting agency provides you with contrary advice, the
matter should be resolved by the Administrator of the Wage and Hour
Division in accordance with Section 5.13 of Regulations, 29 CFR
Part 5 (copy of applicable section enclosed)." Emphasis added.
Surely, this is not unequivocal advice.
Werzalit's claimed reliance upon the advice contained in
the October 19 letter from the Wage Specialist is not persuasive
in view of the fact that on September 15, 1983 the City was
correctly advised by DHUD that the employees in question did not
qualify for the "force account" exception. It is noted that this
advice was given more than a month prior to the Wage Specialist's
advice. As mentioned above, the Wage Specialist informed Werzalit [6]
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[7] that if it received contrary advice from the contracting
agency the matter should be resolved by the Administrator of the
Wage and Hour Division. Nothing in the record indicates that this
advice was followed by Werzalit at that time. It was not until
October 25, 1984, one year later, that the Administrator of
Wage and Hour was requested to make a ruling.
Under the factual situation in this case, the Board cannot
visualize a re[a]sonable or prudent person relying on the
inconclusive advice given by the Wage Specialist.
In view of the foregoing, the decision of the Deputy
Administrator is affirmed and the petition is dismissed.
* * *
Member Rothman, concurring.
I concur in the result reached by the majority in this
case but do so primarily for a reason which is not fully
articulated in the majority decision or the majority does not place
the significance on it that I do.
In these UDAG jobs which call for an amalgam of private
and public initiative, it is not always clear where the public
financial involvement ends (factually or under UDAG requirements)
and private enterprise, free of UDAG, begins. From all the
Board has to go on in this case, the buildings and facilities
project with UDAG funds included the new boiler and its
installation. As I understand the record in this case and the oral [7]
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[8] presentation the engineering, procurement and construction
program with UDAG funds was truly consolidated and integrated.
The petitioner could not reasonably infer that it could separate
the installation costs of the new boiler in the new building,
using its factory employees to install it, from the boiler
itself and the building which housed it.
I have no difficulty in distinguishing this situation from
the factual situation in Muskogee, WAB Case No. 85-26, January 21,
1986, in which I also concurred in the limited holding in that
case.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [8]
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