CCASE:
COLONIAL REALTY, INC.
DDATE:
19890222
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
COLONIAL REALTY, INC. WAB Case No. 87-37
Chestnut Street Development Proj.
Contract No. NJ 39-P01-3010 Dated: February 22, 1989
Passaic, New Jersey
APPEARANCES: Doug Romaine, Executive Vice President for Colonial
Realty, Inc.
Arthur Bolstein, Esquire, and Douglas Davidson,
Esquire, for the Administrator, Wage and Hour
Division, U.S. Department of Labor
BEFORE: Jackson M. Andrews, Chairman, Stuart Rothman,
Member, and Thomas X. Dunn, Member, Dissenting
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Colonial Realty, Inc., (hereinafter Colonial) seeking review of a
decision of the Administrator, Wage and Hour Division, dated August
7, 1987 concerning Colonial's performance as a subcontractor on a
housing project in Passaic, New Jersey. The Administrator ruled
that Colonial exceeded the allowable ratio of apprentices to
journeymen carpenters as to the entire work force permitted under
the program in which the apprentices were registered.
The facts concerning this appeal may be simply stated. Jet
Construction Co., Inc., the prime contractor, was awarded [1]
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[2] a Department of Housing and Urban Development (DHUD) contract to
construct the Chestnut Street Development Project, a 70 unit housing
project in Passaic, NJ. Colonial was the carpentry subcontractor on the
project. The wage determination applicable to the project required
payment to journeymen carpenters of $18.51 per hour plus 20.5% in fringe
benefits, for a total package of $22.30. The prime contract and
Colonial's subcontract contain applicable labor standards provisions,
including the provis[i]ons regarding use of apprentices found at 29 CFR
5.5(a)(4)(i) of the Department's regulations.
An investigation by the Wage and Hour Division, on the basis
of a complaint filed alleging that Colonial was employing
apprentices in excess of the number allowed by the apprenticeship
agreement, resulted in a finding that six apprentice carpenters
were employed in excess of the allowable ratio of one apprentice
for every five journ[]eyman carpenters between June, 1985 and
March, 1986. Computation of back wages totaled $8,007.64 due the
excess six apprentice carpenters.
At a conference in March, 1986 between the Compliance Officer
and Mr. Doug Romaine, Executive Vice President of Colonial,
Colonial denied responsibility for the alleged violations.
Colonial stated that the apprentices employed on the project were
registered in a bona fide apprenticeship program recognized by the
Bureau of Apprenticeship and [2]
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[3] Training (BAT) of the Department of Labor and by the New Jersey
Department of Education. Colonial further urged that it had been
mislead by the apprenticeship program and the local carpenter's union
into believing that it was customary in the area to hire apprentices in
excess of the allowable ratio. Colonial also claimed that it had
requested journeymen carpenters from the carpenter's hiring hall but
that the local union had sent apprentices, and that it was only after
five to six months into the project that this "technical violation of
the allowable ratios" was made known to Colonial by the New Jersey
Department of Labor (NJDOL). Colonial claims NJDOL failed to audit on a
timely basis, depriving Colonial of its right to correct the "technical
deficiency", and that the apprenticeship program was not properly
managed.
In response to an inquiry from the prime contractor about the
employment of excess apprentices, Colonial advised Jet that the
ratio was 75% journeymen to 25% apprentices. As stated above, the
registered apprenticeship program set the approved ratio at one
apprentice for every five journeyman carpenters. Colonial advised
Jet that it relied on the opinion of the local union's business
agent that its apprentice to journeyman ratio did not violate the
Davis-Bacon Act.
Colonial advised Jet that it would appeal the finding of
unpaid wages and no back wage payment was made. The Wage and [3]
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[4] Hour Division requested DHUD to withhold sufficient funds from
Jet to cover the back wages. The Wage and Hour Division reviewed
the determination of back wages due and affirmed the earlier
ruling. On August 28, 1987 Colonial appealed Wage and Hour's
decision to the Wage Appeals Board.
- - -
The Wage Appeals Board considered this appeal on the basis of
the Petition for Review filed by Colonial, the record of the appeal
before the Wage and Hour Division and the Statement of the
Administrator, filed by the Solicitor of Labor, and a hearing
before the Board held on September 1, 1988 at which all interested
persons were present or were represented by counsel, and
participated.
Since it is the Davis-Bacon employer and not the local labor
organization who must be looked to for compliance with the Act and
adherence to the apprentice/journeyman ratios of approved BAT
programs, an employer is not to be excused from compliance with
applicable apprentice/journeyman ratios because he was either
encouraged, permitted or misled into violation of the ratios by a
local union business agent or when the violation of the contractual
ratio was a cooperative effort. The Board said in Repp & Mundt,
Inc., et al., supra [sic],
[The apprentice regulation, 29 CFR 5.5(a)(4)(i)] . . .
was not drafted to permit business agents to determine
when the ratios of apprentices to journeymen could be
waived on an ad hoc basis without BAT approval. . . [4]
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[5] This statement of principle must remain the guiding principle
for Davis-Bacon employers.
Nonetheless, the Board sees more and more cases where
deviations from the contractual and approved BAT ratios are the
rule and not the exception in private construction and the same
pattern shows up in Davis-Bacon cases. This is not a situation in
which the employer attempted to avoid its Davis-Bacon obligations
by utilizing apprentices as journeymen in order to reduce labor
costs.
This being the case and in view of the representations of the
petitioner that the local business agent made it clear to the New
Jersey State investigator that he saw no violation of the
apprenticeship rules in this case and that the deviation "is done
all the time", the Board grants the petition herein and remands
this case to the Administrator for a recheck by survey as to the
preval[e]nce in the local area of the practice not to adhere to the
apprentice/journeyman ratios. If the statement of the local
business agent reflects local custom and practice in a substantial
and significant way, area practice has been superimposed on
contractual language and the Administrator should take a no
enforcement position under the singular facts of this case.
The Board views this case as one involving special features at
the enforcement stage and it should not be viewed as an abandonment
of the general rule. [5]
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- - -
[6] Member Dunn, dissenting
The Wage and Hour Administrator was correct in her
interpretation of the Department's regulations concerning
apprentices and of the Board's decisions relating to this
regulation.
Regulation 29 CFR 5.5 (a)(4)(i) provides in pertinent part:
The allowable ratio of apprentices to journeymen on the
job site in any craft classification shall not be greater
than the ratio permitted to the contractor as to the
entire work force under the registered program.
In CRC Development Corporation, Case No. W[A]B 77-01, 77-13
(January 23, 1978), the Board commented on this regulation as
follows:
[While the regulation] is not as clear as it could be, it
must be recognized that this provision has been in effect
since the 1950's and has been interpreted consistently by
the Department to mean that the allowable ratio had to be
maintained on each construction project subject to the
Davis-Bacon and related acts.
Furthermore, in an Order Dismissing a Petition for Reconsideration
in CRC Development Corporation, supra, the Board stated:
Payment of the apprentice wages [is] permitted under
Davis-Bacon Act cases only to the very limited extent
that is spelled out in the approved apprenticeship
agreement. Other than the apprentice rate, there is no
provision [6]
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[7] for payment of a wage rate other than the
journeyman's rate in the Davis-Bacon Act and related
acts.
In a very similar case, Repp & Mundt, Inc., et al., WAB Case
No. 80-11 (January 17, 1984) the contractor, while not denying that
it employed excess apprentices, attempted to justify the practice
because of an alleged area practice approved by the union. The
Board noted that the apprentice regulation quoted above:
. . . was not drafted to permit business agents to
determine when the ratios of apprentices to journeymen
could be waived on an ad hoc basis without BAT approval
. . . .
The majority fails to recognize that the regulation of the
Secretary in respect to the ratio of apprentices to journeymen must
be respected by the Board as prevailing over area practice.
Actually, the Board decides that continued violations of
registered apprenticeship programs by unions, their business agents
and/or contractors will now be considered as area practice, thereby
super[s]eding not only the approved apprenticeship programs but the
regulation itself.
Super[s]eding the apprenticeship ratio provision of the
regulation may be proper under ordinary circumstances where
equitable principles may be applied. Not so here. See U.S. v.
Binghamton Construction Co., 347 U.S. 171 (1954). The Board has
made that very clear previously. See, also, Urban Housing
Constructors, Inc., WAB Case No. 73-2 (April 4, [7]
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[8] 1973), where the Board stated: "The Board does not sit to grant
"equitable" relief from increasing construction costs."
I would affirm the decision of the Administrator finding the
prime and subcontractor liable for back wages in the amount of
$8,007.64 for the six employees who were employed in excess of the
allowable ratio of one apprentice to five journeymen and would
dismiss the Petition for Review.
BY ORDER OF THE BOARD
Craig Bulger, Esquire
Executive Secretary,
Wage Appeals Board [8]
