CCASE:
SEALTITE CORPORATION
DDATE:
19881004
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
SEALTITE CORPORATION, Contractor WAB Case No. 87-06
& Miles S. Firnhaber, President
Iowa Ammunition Plant Dated: October 4, 1988
Contract No. DACA 45-83-C-0124
APPEARANCES: Miles S. Firnhaber for Sealtite Corporation
Gerald F. Krizan, Esquire, Linda Jan S. Pack,
Esquire, for the Wage and Hour Division, U.S.
Department of Labor
BEFORE: Jackson M. Andrews, 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
Sealtite Corporation (hereinafter Sealtite) and Miles S. Firnhaber,
(hereinafter Firnhaber) its President, seeking review of the
Decision and Order of an Administrative Law Judge granting the
Secretary of Labor's motion for a default entry against Sealtite.
The ALJ found Sealtite liable for $34,156.98 in back wages and
recommended debarment of Sealtite and Miles S. Firnhaber for a
period of three years.
In July, 1983, Sealtite was awarded an Army contract on [1]
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[2] the Iowa Ammunition Plant in Middleton, Iowa, calling for
blowing insulation into the attics of two frame office buildings,
cutting ridges into the roof for installation of sheet metal ridge
fences and cutting slots into the underside of the roof to
accommodate soffit vents. The contract also called for the
installation of wood nailers, ridge insulation, board plywood
sheeting, felt paper and fiberglass shingles on uninsulated roofs
of production buildings at the plant.
The wage determination issued by the Wage and Hour Division
which was applicable to the project reflected the collective
bargaining wage rates for Des Moines County, Iowa at the time the
contract was entered. At a preconstruction conference Firnhaber
protested the absence of an insulator's wage rate on the federal
wage determination. Sealtite started construction on October 6,
1983 but did not submit any certified payrolls to the Army until
mid-December, 1983, when it submitted the first nine payrolls
showing employees classified as insulators receiving wage rates
between $6.00 and $8.50 per hour.
When the Army objected to the rates being paid to Sealtite's
employees, Firnhaber declared that the prevailing wage rate for
insulators in the area was between $5.00 and $6.00 per hour. At no
time did Sealtite try to establish a [2]
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[3] wage rate for insulators by the conformance procedures. (29 CFR
5.5(a)(1)(ii)(A)) Ultimately, the Army requested a conformed wage rate
for blown-in insulation at the laborer's rate of $15.20 per hour. This
rate was approved by the Wage and Hour Division. The Army also
determined that the carpenters and roofers rates were applicable to the
remainder of the contract work. Although Sealtite protested the Army's
decision, the Assistant Administrator of the Wage and Hour Division
affirmed it. Sealtite did not appeal these decisions to the Wage
Appeals Board.
Sealtite abandoned the project on or about February 17, 1984,
when the project was approximately 50% completed. The Army
terminated the contract with Sealtite and the project was completed
by another contractor utilizing carpenters to finish the work.
After a compliance investigation of Sealtite's performance by
the Wage and Hour Division, it was alleged that Sealtite had
misclassified and underpaid its employees who were doing the work
of roofers and/or carpenters. Wage and Hour also determined that
the wage rates paid to Sealtite's employees and the payroll
violations reasonably appeared to constitute a disregard of
Sealtite's obligations to its employees within the meaning of Sec.
3(a) of the Davis-Bacon Act and recommended debarment of Sealtite
and its [3]
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[4] President, Miles S. Firnhaber. The issues of prevailing rates and
overtime violations were referred to an ALJ for a fact-finding hearing
pursuant to 29 CFR 5.11(b), 5.12(b).
A notice of the ALJ's hearing on July 29, 1986 was issued to
Sealtite and Firnhaber but neither Firnhaber nor a representative
of the firm appeared at the hearing. Wage and Hour presented its
case to the ALJ and submitted a motion for default entry. The ALJ
issued an order permitting Sealtite to show cause why the motion
for default entry should not be granted. Firnhaber filed a document
stating that his failure to appear at the hearing was due to severe
illness which detained him in Florida. Ultimately, the ALJ ruled
that Sealtite had failed to show good cause why the motion for
default entry should not be granted and issued the default
judgment. After the ALJ issued a Decision and Order on October 30,
1986, Sealtite and Firnhaber appealed the ALJ's decision to the
Wage Appeals Board.
The ALJ's decision held that Sealtite had misclassified and
underpaid its employees classified as "insulators". The amount of
$34,156.98 was ordered as back wage restitution. The ALJ also held
that Sealtite failed to comply with record keeping provisions of
the labor standards provisions of the Davis-Bacon Act and held that
Sealtite committed repeated and willful violations of the Act and
recommended the debarment [4]
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[5] of Sealtite and Firnhaber for a period of three years pursuant to
Section 3(a) of the Act.
- - -
The Board considered this appeal on the basis of the record
before the ALJ, the petition for review and a response to the
statement for the Administrator filed by the petitioner, the
statement for the Administrator filed by the Solicitor of Labor and
a hearing before the Board on August 5, 1988, at which all
interested persons were present or represented by counsel, and
participated.
At the outset the Board must consider whether the granting of
the motion for a default entry by the ALJ on September 12, 1986 was
appropriate.
Petitioners indicate that the reasons for not appearing at the
July 29, 1986 ALJ'S hearing was because (1) Firnhaber was severely
ill, and (2) that he was engaged in an investigation for the U.S.
Attorney's office in Florida in a criminal matter.
Statements by the Secretary's trial attorney in response to
Firnhaber's assertion indicate that the Solicitor's office
attempted "numerous times" in July, 1986 to contact Firnhaber [5]
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[6] at his Sealtite office in Waukesha, Wisconsin. His employees
affirmed his presence in Florida. The Secretary attempted service
of a subpoena upon Petitioners on July 24, 1986 at their office and
the compliance officer was informed that Firnhaber was repairing an
airplane in Florida and would not return to Wisconsin until
"around" August 1, 1986. No illness was mentioned. On August 18,
1986 the trial attorney contacted the manager of the aviation
company in Florida by telephone and was advised that until August
16, 1986, Firnhaber had been at the firm everyday (including
weekends) for two months working on the airplane and that no
illness had prevented Firnhaber from working on the plane.
When the ALJ entered the default judgment against the
petitioners he considered the submissions of both parties and
specifically rejected the medical evidence as offering no
justification for failure to attend the ALJ's hearing either in
person or by representative.
After the entry of the default judgment, Petitioners have
filed various documents still intending to influence the ALJ's
decision. Petitioners filed an affidavit with the ALJ entitled
"Motion for Reconsideration" in which it was stated that
Petitioners had attempted to call the ALJ prior to the hearing. The
ALJ found no call logged into his office and denied the motion for
reconsideration without written order [6]
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[7] on October 2, 1986.
Also, Petitioners filed a medical certificate with the ALJ to
attest to Firnhaber's illness in Florida as a cause for missing the
scheduled hearing. It appears to the Board that the ALJ had
adequate basis to discount this certificate as it did nothing to
explain Sealtite's or Firnhaber's failure to notify either the
Solicitor's office or the ALJ of an anticipated problem in
attending the hearing.
It was also after the default entry that Petitioners advanced
for the first time the allegation that Firnhaber was an undercover
operative for the federal government's anti-drug campaign. At the
Board's hearing, when Firnhaber was faced with inconsistencies in
respect to his participation in the investigatory process with the
U.S. Attorney's office, he suggested that the investigation was
with the drug agency, not the U.S. Attorney. Sealtite's assertion
that the ALJ had been informed of this excuse for Petitioner's
absence in its August 11, 1986 answer to the Order to Show Cause is
not creditable.
Mr. Firnhaber submitted to the ALJ an October 20, 1986 letter
"To Whom it May Concern" from the Assistant U.S. Attorney
purporting to excuse him from attending the ALJ's hearing. This
letter states: ["i]t was necessary for Mr. [7]
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[8] Miles Firnhaber to make a special trip to Tampa to appear as a
government witness . . . ." No date of the court appearance is given.
It doesn't appear that the Assistant U.S. Attorney's letter offers a
justification for Mr. Firnhaber's disregard of the administrative
proceeding.
The Board has considered all of the matters urged at the
hearing which might tend to cast doubt on the ALJ's default entry
but has ruled that there was ample justification for the ALJ's
decision.
Furthermore, the Board has considered all the evidence
introduced at the ALJ's hearing bearing on the question [of]
Petitioner's misclassification of its employees and the
underpayment of the prevailing wage rates issued by Department of
Labor. It is admitted by Petitioners that the only classification
which they employed on that part of the project which they
performed is insulators, a classification which was not issued in
the original wage determination and which was not added by the
conformance procedure until the Army added "blown-in insulators" at
the common laborer's wage rate of $15.20, long after the project
was underway. It is the Board's opinion that all of the
representations made by Petitioners bearing on the wage rates
actually paid on the project, even if viewed in a light most
favorable to the Petitioners, does not justify or excuse
Petitioners from [8]
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[9] paying the wage rates for blown-in insulators, carpenters and
roofers which it agreed to pay when it received the original contract.
The wage rates which Petitioners paid were never approved by the Wage
and Hour Administrator, who has the final authority to set wage rates.
Concerning the issue of the recommended debarment of Sealtite
Corporation and Miles S. Firnhaber, its president, the Board is in
agreement that the ALJ's decision was justified. The standard for
debarment contained in section 3(a) of the Davis-Bacon Act states
that debarment is appropriate if the employer has demonstrated
disregard of its obligations to employees and subcontractors. In
this case the ALJ found that Sealtite was responsible for wage and
overtime violations. The Board has concurred in this assessment.
Furthermore, Sealtite did not file certified payrolls on a timely
basis with the Army which had the effect of inhibiting the Army's
efforts to monitor wage compliance under the contract. The specific
payroll reporting requirements applicable to and incorporated in
the contract are found at 29 CFR 5.5(a)(3)(ii) (1982) and state in
pertinent part:
The contractor will submit weekly a copy of all payrolls
to the [Corps of Engineers] if the agency is a party to
the contract . . . . The copy shall be accompanied by a
statement signed by the employer or his agent indicating
that the payrolls are correct and complete, that the wage
rates contained therein are not less than those [9][
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10]determined by the Secretary of Labor and that the
classifications set forth for each laborer or mechanic
conform with the work he performed . . . .
Sealtite was in willful violation of this regulation. Sealtite
waited for nine weeks before it submitted the first nine certified
payrolls. These payrolls showed that the only classification
employed by Sealtite was insulators at hourly wage rates between
$6.00 and $8.50 per hour. The insulator classification was not
contained in the wage determination applicable to the project, nor
was it ever added to the wage determination by the conformance
procedures. The wages paid by Sealtite to its employees were far
less than even the wage rate issued for laborers in wage
determination IA 82-4030. Furthermore, a review of the work
called for by the contract on the Army Ammunition Plant indicates
that roofers, carpenters, laborers and truck drivers would be
required to be employed on the project. According to the certified
payrolls and to representations made at the hearing, Sealtite never
employed any classification except insulators, and these at a wage
rate lower than any of the aforementioned trades would have
received. This is a classic example of misclassification. The
evidence in the record demonstrates that Sealtite's employees were
not paid the required prevailing wage rates and that the contractor
submitted untimely certified payrolls and misclassified its
employees thereon. In Edwards Furnace [10]
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[11] Company, Inc. WAB Case No. 77-28 (September 18, 1978) the Board
held debarment to be the appropriate sanction where a contractor has
consistently refused to pay the prevailing wage rate due under Federal
contracts and refused to comply with the Act's requirements.
In view of these considerations the Board affirms the ALJ's
Decision and Order and holds that Sealtite Corporation and Miles S.
Firnhaber, its President, shall be liable for $34,156.98 in back
wages due its employees, and that Sealtite Corporation, and Miles
S. Firnhaber, its President, shall be debarred for a period of
three years and shall be ineligible to receive any contract or
subcontract subject to any of the statutes listed in 29 CFR Sec.
5.1 during this period.
BY ORDER OF THE BOARD
Craig Bulger, Esquire
Executive Secretary
Wage Appeals Board [11]
