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CCASE:
GREEN ISLAND ASSOCIATES
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19870807
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
GREEN ISLAND ASSOCIATES WAB Case No. 86-21
Bolton, New York Dated: August 7, 1987
APPEARANCES: Robert J. Bray, Esquire, and George A. Massih III,
Esquire, for L. F. Driscoll Co.; Joseph Walsh,
Esquire, for Green Island Associates
Katherine Waldbauer, Esquire and Douglas Davidson,
Esquire, for the Administrator, Wage and Hour
Division, U.S. Department of Labor
BEFORE: Alvin Bramow, Chairman, Stuart Rothman, Member,
Concurring separately & Thomas X. Dunn, Member,
Concurring in part and dissenting in part.
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the Petition of
Green Island Associates (hereinafter GIA) seeking review of the
decision of the Wage and Hour Administrator as published in Wage
Decision S-85-NY-0324 issued September 23, 1985. This wage
decision was issued to apply to the renovation and construction of
the Sagamore Hotel on Green Island in the Town of Bolton, Warren
County, New York. The wage decision in question was issued by the
Wage and Hour Division as the result of an earlier decision by this
Board, WAB Case No. 85-04. The earlier decision remanded the
appeal to the Administrator to resurvey the area applicable to
Bolton, New York, because construction and renovation of the hotel
had begun in July, 1983, and the Wage and Hour Administrator was
not aware of this fact. The Board directed the Wage and Hour
Division to issue an Advisory Opinion reflecting wage rates
prevailing at the time construction [1]
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[2] started, or when the contract was awarded.
On September 25, 1985, the Wage and Hour Division issued a new
wage determination applicable to the construction and renovation of
the Sagamore Hotel. The total project is valued at $56 million.
The original petitioner is the developer of the project. L.F.
Driscoll Company is the contractor and has intervened in support of
the developer. GIA was awarded a $5.275 million Urban Development
Action Grant (UDAG) by the Department of Housing and Urban
Development to partially finance the project. The wage rates
contained in the reissued wage determination reflect approximately
a 10% reduction of wage rates from those originally issued by Wage
and Hour. Petitioners contend, however, that the wage
determination does not reflect wages paid on construction in the
Bolton area, but mainly come from construction projects in the
Glens Falls urban area. Glens Falls is also located in Warren
County. Petitioners characterize the wage rates issued by Wage and
Hour as those negotiated by the local unions in the Albany,
Schenectady and Troy metropolitan areas. Petitioners argue that
they should be allowed to utilize a schedule of residential
construction wage rates which Wage and Hour also issued in wage
determination S-85-NY-0324 since the construction on the
three-story, wooden frame hotel involves the same construction
techniques, material and skills as are required for residential
construction.
The Wage and Hour Division has presented the Board with a
motion to dismiss GIA's petition for review as untimely. The
renovation of the hotel is completed and the petitioners' challenge
to the wage rates was not initiated until after construction had
started. No sums of money have been escrowed to assure that the
laborers and mechanics will be paid the estimated $500,000 in back
wages due employees on the project if the Board upholds the
Administrator. [2]
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[3] The Wage and Hour Division disputes the petitioners'
contention that they should be allowed to pay residential wage
rates and asserts that it was proper to issue the wage rates
contained in wage decision S-85-NY-0324 because its survey
demonstrated that negotiated wage rates prevailed in Warren County
at the time for which the survey was made. Wage and Hour further
asserts that considering projects in all of Warren County was
appropriate because of the small amount of construction which had
been performed in the Town of Bolton itself, and that Wage and
Hour's regulations, 29 CFR sec. 1.7, provide for considering the
county as the normal entity for conducting wage rate surveys
for Wage and Hour purposes.
The Building and Construction Trades Department, AFL-CIO, has
intervened in this case and filed a memorandum with the Board in
support of the Administrator's motion to dismiss and the statement
filed on behalf of the Administrator.
On May 19, 1987, the Wage Appeals Board held an oral hearing
at which all interested persons were present and represented by
counsel, and in which all interested persons have participated.
* * *
The Wage Appeals Board indicated in its Notice of March 26,
1987 that the subject of the hearing would include the
Administrator's Motion to Dismiss the Petition on the basis that
the Appeal is untimely as well as the appropriate wage rates to be
applied to the renovation and construction of the Sagamore Hotel
in Bolton, Warren County, New York. The Board believes that it
should rule on the primary issue of the appropriate wage rates and,
then if necessary, consider the Motion to Dismiss for untimeliness.
The definition of the term "area" used in the Department of
Labor Regulations, 29 CFR sec. 1.2(b) indicates that in determining
wage rates under the [3]
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[4] Davis-Bacon and related acts, area shall mean the city, town,
village, county or other civil subdivision of the State in which the
work is to be performed. The Regulations at 29 CFR sec. 1.7(a) further
state in part that in making a wage determination, the "area" will
normally be the county.
Even though the county is the normal area considered by the
Wage and Hour Division for the source of wage rate data for making
wage determinations, the Regulations certainly allow a deviation
from this norm. However, to use a smaller area than the county, it
must be shown by substantial project data that it is inappropriate
to apply wage rates from the normal geographic unit of
consideration to the area of the county in question. Therefore,
the Board must consider the nature of the project to be constructed
along with the wage rate information in the area of the proposed
project to determine if separate wage rates are appropriate.
The project to be constructed is the complete gutting,
refurbishing and reconstructing of the interior of the Sagamore
Hotel. The Board in the past has considered hotel work as falling
into the general category of "building construction". As this
Board stated in In the Matter of Wage Rates for Biscayne Retirement
Home, WAB Case No. 83-02 (1983),
. . . this building is not, in a construction sense,
a project of a character similar to the usual lowrise
residential apartments or single family homes from
which the residential wage rate information is
compiled in wage and hour surveys. The Board considers
this facility to be similar to [*] hotel, motel [*], clinic,
hospital, dormitory, barrack or low rise commercial
construction, all of which are included in the general
category of building construction and are issued building
construction wage rates by the Wage and Hour Division.
[*Emphasis added.*]
In view of the fact that the construction comes within the
category of building construction, the Wage and Hour Division must
only look to [4]
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[5] building construction wage data and not residential construction in
making an applicable wage determination for the Sagamore Hotel project.
The record in this case only reveals some very limited amount
of building construction in the vicinity of Bolton which shows
crafts such as carpenters and laborers being paid at lower rates
than those contained in wage determination No. 5-85-NY-0324 which
was issued by the Wage and Hour Division for application to the
Sagamore Hotel project. This information is not sufficient in
scope for the Wage and Hour Administrator to deviate from her
normal geographical unit of consideration, i.e., the entire county
in the use of wage data for making a wage determination.
The petitioners request that even if the wage rates contained
in wage determination No. 5-85-NY-0324 are correct it should be
rescinded under the rationale of Muskogee Shopping Mall, WAB Case
No. 85-26 (January 21, 1986). In that case this Board held that
the provisions of regulation 29 CFR 1.6(f) authorizing the
Administrator to include a wage determination after contract
award or after beginning of construction would apply only with
respect to contracts for which bids were solicited or negotiations
were concluded on or after June 28, 1983. The same rationale
applies to the provisions of 29 CFR 1.6(g) which govern this case.
It is not clear to the Board that negotiations between the
city and the developer were concluded prior to the effective date
of the regulation. There appears to be some discrepancy as to the
time frame which must be resolved. If the negotiations were
concluded, then the Board would rule as in Muskogee that the Wage
and Hour Division has no authority to issue a wage determination. [5]
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[6] However, there appears to be a second discrepancy which
needs clarification. Did the petitioners have knowledge that
Davis-Bacon labor standards applied to this project prior to the
conclusion of negotiations and the start of construction? The Wage
and Hour Division maintains that petitioners had knowledge,
whereas, petitioners contend that they were unaware of any such
requirements prior to conclusion of the negotiations and start of
construction. This is an important element in view of this Board's
decision in Granite Builders, Inc., WAB Case No. 85-22 (January 27,
1986), wherein the Board stated in part:
. . ., it appears to the Board that the only reason an
appropriate wage determination was not given to the
petitioner or the owners was due to their reluctance or
negligence in obtaining the labor standards required by the
loan agreement. It was incumbent upon them to go forward with
all of the requirements of their agreement. This type of
activity cannot be endorsed by the Board as an excuse to
avoid Federal labor standards laws and regulations.
The record is not conclusive on these points so that the Board
can resolve the issues. Therefore, the case is remanded to the
Administrator to make an investigation concerning these matters
and, thereafter, to make a decision in accordance with the above
guidelines.
* * *
Member Rothman, Concurring
I concur in the remand for the reasons stated. I take no
position whether in the Bolton locality the renovation and
rehabilitation of a wooden, three-story, rambling structure built
over 100 years ago as a hotel, would in today's market conditions
be classified by the local building and construction [6]
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[7] industry as normal building and commercial construction or as the
type of construction classified for Davis-Bacon purposes as residential,
four-story or less. The factual record is not sufficient to reach a
conclusion on such a point, and there is no reason at this time to
resort to presumptions in such a special case.
* * *
Member Dunn, Concurring in part and dissenting in part.
I concur with Chairman Bramow's findings and conclusions in
this case, except for the conclusion that the Board has no
authority to issue a wage determination in this case if
negotiations between the City of Bolton and the developer, Green
Island Associates, to purchase the Sagamore Hotel and surrounding
lands were concluded prior to the effective date of 29 CFR
sec. 1.6(g). The majority relies on its holding in Muskogee
Shopping Mall, supra, to justify its conclusion.
The Board, in Muskogee Shopping Mall, recognizing the limit
imposed by the Secretary, concluded that it was without authority
to direct the Wage and Hour Administrator to issue a prevailing
wage determination applicable to the project because it found that
the negotiations between the City of Muskogee and the project
developer were concluded prior to the effective date [of] 29 CFR
sec. 1.6(f).
Prior to the promulgation of 29 CFR sec. 1.6(f) in 1983, the
Board and the courts held that Davis-Bacon prevailing wage
determinations could not be incorporated in federally funded
construction contracts after award or beginning of construction.
/FN1/ However, the courts recognized that the post-award
incorporation of wage determinations would be permissible if the
Labor Department [7]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ See, Installation of Conveyor System, Naval Supply Center,
WAB Case No. 78-24 (Apr. 6, 1979; 40 Comp. Gen. 565, 570-571
(1961); Universities Research Association v. Coutu, 450 U.S. 754,
761, n. 9 (1981).[7]
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[8] promulgated appropriate regulations. /FN2/
Accordingly, the Secretary of Labor promulgated a new CFR Part
1 on April 29, 1983, which became effective on June 28, 1983. The
preamble to the newly promulgated 29 CFR, Part 1 stated:
The provisions of this part shall be applicable only as to
wage surveys compiled on or after June 28, 1983, except for
sec. 1.6 which shall be applicable only to contracts entered
into pursuant to invitations for bids issued or negotiations
concluded on or after June 28, 1983. None of the revisions
herein shall be applicable to any contract entered into prior
to June 28, 1983. 48 F.R. 19532 (Apr. 29, 1983).
The majority believes it is bound by the Secretary's limitation on
the applicability of 29 CFR sec. 1.6.
It does not follow however, that the Board is precluded from
requiring the contractors and subcontractors employed by Green
Island Associates and its construction manager, L.F. Driscoll, on
the Sagamore Hotel project to comply with otherwise applicable
Davis-Bacon prevailing wage requirements. Section 1.6(g) of 29 CFR
Part 1 provides:
(g) If federal funding or assistance under a statute
requiring payment of wages determined in accordance
with the Davis-Bacon Act is not approved prior to
contract award (or the beginning of construction where
there is no contract award), the agency shall request a
wage determination prior to approval of such funds. Such a
wage determination shall be issued based upon the wages
and fringe benefits found to be prevailing on the date of
award or the beginning of construction (under the National
Housing Act, under section 8 of the U.S. Housing Act of 1937
or where there is no contract award, as appropriate, . . . .
The Secretary proposed this regulation after the Board ruled
in Hartsfield International Airport, WAB Case No. 77-24 (Feb. 25,
1977) that Davis-Bacon rules and regulations do not apply to
projects that receive federal funding after contract award and
commencement of construction. The Board's decision was later
reversed in [] North Georgia Building and Construction [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Universities Research Association v. Coutu, 450 U.S. at 761,
n.9 (1981) [8]
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[9] Trades Council v. Goldschmidt, 23 Wage & Hour Cases 250 (N.D.
Ga. 1977), affirmed in part and remanded, 621 F.2d 697 (5th Cir.
1980), which held that under such circumstances, Davis-Bacon
prevailing wage rates are retroactively applicable to the project
from the time construction began.
After 29 CFR sec. 1.6(g) was published for comment in late
1979 (44 FR 77026, Dec. 28, 1979) one commentator questioned the
Labor Department's authority to require retroactive application of
Davis-Bacon prevailing wage rates. In response, the preamble to
the January 16, 1981 final regulation stated that "the Department's
position in this regard is consistent with the recent decision in
North Georgia Building and Construction Trades Council v.
Goldschmidt" 621 F.2d 697 (5th Cir. 1980) 46 FR 4309 (Jan. 16,
1981). /FN3/
Accordingly, unlike sec. 1.6(f) which changed pre-existing law
/FN4/ sec. 1.6(g) is simply the codification of pre-existing law.
In other words, if the Secretary had never promulgated sec. 1.6(g)
as a final rule, the Board would still be authorized to find that
Davis-Bacon prevailing wage requirements apply retroactively to the
Sagamore Hotel project on the basis of the holding in North
Georgia, supra. /FN5/ Thus, the effective date of sec. 1.6(g) is
irrelevant to the resolution of this case. [9]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ Implementation of the Jan. 16, 1981 regulations was delayed
by Labor Secretary Donovan on several occasions until August 14,
1981 (46 FR 41,444 et seq.) at which time new proposed Davis-Bacon
regulations were published for comment. Proposed 29 CFR sec.
1.6(g) was not changed, however, and was promulgated as a final
rule on April 29, 1983 in the same form originally proposed on
December 28, 1979.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ See footnote 2.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ The majority states that, if the negotiations between the
City of Bolton and Green Island Associates were completed before
the effective date of sec. 1.6(g), it would rule that the
Administrator has no authority to issue a wage determination. Such
a holding would be consistent with the rationale for the holding in
Hartsfield International Airport, supra, which the Fifth Circuit
overruled. [9]
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[10] For this reason, I must respectfully dissent from that part
of the majority opinion which remands the case to the Wage and Hour
Administrator to determine whether negotiations between the City of
Bolton and Green Island Associates were concluded before the
effective date of 29 CFR sec. 1.6(g).
BY ORDER OF THE BOARD
Craig Bulger, Executive Secretary
[] [10]
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