CCASE:
AFFOLTER CONTRACTING COMPANY
DDATE:
19890616
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
AFFOLTER CONTRACTING COMPANY, INC.
Prime Contractor & WAB Case No. 87-11
Herman's Trucking Company, Dated: June 16, 1989
Subcontractor
BEFORE: Jackson M. Andrews, Chairman, Thomas X. Dunn, Member, and
Stuart Rothman, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
the Administrator, Wage and Hour Division, seeking review of a
Decision and Order of the Administrative Law Judge (hereinafter
ALJ) dated February 4, 1987, in the above-captioned matter. The
issues presented in the appeal are whether the ALJ erred in
concluding that the $7.00 per hour paid to truck driver employees
of subcontractor, Herman's Trucking Company, (hereinafter Herman's)
was not the basic hourly wage rate on which overtime should be
computed, and whether the ALJ erred in concluding that the labor
standards violations were not aggravated or willful so that
debarment under the Contract Work Hours and Safety Standards Act
(hereinafter CWHSSA) was not an appropriate sanction.
The factual situation from which this appeal arose is as
follows. Herman's was a subcontractor on a Corps of Engineers
project to provide truck hauling services at [1]
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[2] Spellman Island Disposal Area, Houston Ship Channel, Houston, Texas.
The wage determination applicable to the contract contained a
prevaili[]ng wage rate for truck drivers of $6.00 per hour. A Wage and
Hour investigation of the project disclosed that Herman's had not paid
some of its employees the predetermined wage rate and had not paid
CWHSSA-required overtime. The basis of this practice was that Herman's
estimated that its employees would regularly work 60 hours per week, (40
hours straight time and 20 hours overtime), and that their pay for the
60 hour week based on the predetermined $6.00 per hour for straight time
and $9.00 per hour for overtime would be $420. Herman's then divided
the $420 weekly pay by the estimated 60 hour work week and paid the
truck drivers $7.00 per hour for all hours worked. The employees
interviewed by the Wage and Hour investigator stated that they were paid
$7.00 per hour for all hours worked. If Herman's position is correct,
for practical purposes the truck drivers have been properly paid. There
was testimony elicited at the ALJ's hearing that truck drivers in the
Houston area were generally paid straight time for all hours worked, as
opposed to 40 hours of straight time plus overtime.
Herman's certified payrolls submitted to the Corps of
Engineers showed that their employees were paid $6.00 per hour for
straight time, and $9.00 per hour for overtime hours worked. The
actual pay was shown on Herman's pay records, [2]
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[3] and that pay divided by the actual hours worked yielded a pay of
$7.00 per hour.
The Wage and Hour Administrator has maintained that Herman's
was in fact paying employees $7.00 per hour straight time and that
its overtime should have been $10.50 per hour (instead of $9.00 per
hour) and as a result Wage and Hour claimed that there were
overtime violat[]ions due 36 employees in the amount of $13,710.43.
As soon as Wage and Hour conducted its investigation Herman's
changed its pay system to $6.00 per hour for straight time and
$9.00 per hour for overtime. Back wages of $747.74 were computed
for prevailing wage violations and the Corps of Engineers has
withheld sufficient funds to pay the back wages of $14,458.07 due
Herman's employees.
The basic question in this appeal is whether Herman's was
paying its employees $6.00 per hour plus overtime, or whether the
employees were being paid $7.00 per hour as straight time without
overtime. If the basic hourly rate for Davis-Bacon purposes is
$6.00, the overtime will be $9.00 and the employees have been
properly paid. If the basic hourly rate for truckers is $7.00 per
hour, the overtime rate is $10.50 per hour and there are back wages
due Herman's employees.
It is the Administrator's position that the truck drivers were
hired at $7.00 per hour. Herman's claims that the basic hourly rate
was $6.00 per hour and that the [3]
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[4] employees were properly paid. After the hearing the ALJ concluded
that overtime did not need to be computed on the $7.00 rate because
Herman's was paying $7.00 per hour not as a regular rate of pay but
rather as an average of the $6.00 per hour basic hour rate plus the
$9.00 per hour overtime based on 20 hours of overtime.
The Wage Appeals Board considered this appeal on the basis of
the Petition for Review filed on behalf of the Administrator by the
Solicitor of Labor, a Response to the Petition for Review filed on
behalf of Herman's Trucking Company, and the record of the case
before the Wage and Hour Division and the hearing before the ALJ.
Neither party to this appeal requested an oral hearing before the
Board.
- - -
Upon review of the record of this appeal the Board affirms the
Decision and Order of the ALJ remanding the case to the
Administrator for computation of any overtime due each employee on
a basic hourly wage rate of $6.00 per hour, and denying a request
for debarment of Herman's Trucking Company.
Although the Board has held on occasion that failure to pay
prevailing wage rates and/or overtime, and the falsification of
payroll records to simulate compliance are tantamount to
debar[r]able acts, in this case the large number of overtime
violations are found only by assuming that the basic hourly rate
was $7.00 per hour, thereby producing and overtime rate of $10.50
per hour. The ALJ, however, [4]
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[5] carefully looked behind the facts in this appeal and held that the
basic hourly rate was reported by Herman's in the certified payrolls,
and that the $7.00 rate was an average of the $6.00 per hour rate plus
an estimated 20 hours of overtime worked per week by Herman's employees.
It is apparent that there was virtually no underpayment to Herman's
employees by following this approach, and that there would be a
considerable windfall to the employees if the Administrator's position
was followed.
Furthermore, the ALJ found that Herman's cooperated in the
Wage and Hour investigation and quickly came into compliance when
the investigation was completed. Although Herman's has not made
restitution to its employees as requested by the Wage and Hour
Division, it is apparent that there was a real dispute between the
contractor and Wage and Hour as to what the basic hourly wage rate
was and whether restitution was due. Certainly, if the additional
money had been paid to Herman's employees prior to a determination
as to what basic hourly rate applied, there would be no way for
the contractor to recover its money.
The ALJ's decision to remand the case to the Administrator for
a determination of any unpaid overtime due under CWHSSA, based on
a $6.00 basic hourly rate is correct. [5]
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[6] In view of these considerations, the Board hereby affirms the
decision of the ALJ, remands the case to the Administrator for
recomputation of overtime and dismisses the petition of the
Administrator filed herein.
BY ORDER OF THE BOARD
Craig Bulger, Esquire
Executive Secretary,
Wage Appeals Board [6]
