GAINES ELECTRIC SERVICE COMPANY, INC., WAB No. 87-48 (WAB Feb. 12, 1991)
CCASE:
GAINES ELECTRIC SERVICE COMPANY, INC.
DDATE:
19910212
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
GAINES ELECTRIC SERVICE COMPANY, INC.,
Subcontractor
WAB Case No. 87-48
ULIS GAINES,
Owner
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: February 12, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Gaines Electric Service Company, Inc., and owner Ulis Gaines
(collectively, "Gaines" or "Petitioner") seeking review of the
decision and order (Attachment) of the Administrative Law Judge
("ALJ"), dated September 23, 1987. The ALJ recommended debarment
of Petitioner, after finding that Gaines had committed
"aggravated or willful" violations of Davis-Bacon Related Acts.
For the reasons set forth below, the Board remands this matter to
the ALJ for further proceedings consistent with this decision. [1]
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[2] I. BACKGROUND
Gaines was awarded a subcontract on November 20, 1982, for
electrical work for the Desire Square Revitalization Project in
New Orleans. The prime contract was between Gibbs Construction
Company, Inc. ("Gibbs") and the Community Improvement Agency of
the City of New Orleans. Both the prime contract and the
subcontract were subject to the labor standards provisions of the
Housing and Community Development Act of 1974, as amended (42
U.S.C. [sec] 5310 ("HCDA").
In August 1984 Bruce Clark, a Wage and Hour Division
compliance officer ("CO"), investigated Gaines' performance on
the subcontract. As a result of the investigation, the Wage and
Hour Division asserted a claim of unpaid paid wages (totalling
$9,935.01) and uncompensated overtime (totalling $112.34) for 14
employees. Restitution was made on November 1, 1984. In
addition, the matter was referred to an ALJ for a hearing on
whether Gaines had committed "aggravated or willful" violations
of the HCDA.
In his "Decision and Order Recommending Debarment," the ALJ
concluded that Gaines had committed "aggravated or willful"
violations of the HCDA. Specifically, the ALJ concluded that
Gaines' failure to report two employees on one week's payroll,
Gaines' failure to pay electricians at the prevailing wage rate of
$17.52 per hour, and Gaines' failure to ascertain that one employee
was not registered in a bona fide apprenticeship program
constituted "aggravated or willful" violations (ALJ's Decision
("ALJD") at 6). The ALJ recommended that Gaines be placed on the
debarment list for a period not to exceed three years (Id. at
8). /FN1/
The standard by which the ALJ measured Gaines' conduct to
determine whether Petitioner had committed "aggravated or
willful" violations was the standard set forth in Coleman v.
Jiffy June Farms, Inc., 458 F.2d 1139 (5th Cir. 1972) for willful
violations of the Fair Labor Standards Act ("FLSA"). Jiffy
June, the ALJ said, "clearly states that an employer is guilty
of a willful violation if it is found that he knew or suspected
that his actions were governed by the statute" (ALJD at 7). [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ As the Solicitor noted (Statement on Behalf of the
Administrator, at p. 6 n.1), under the Davis-Bacon Act debarment is
recommended by the Department of Labor to the Comptroller General.
However, under the regulation (29 C.F.R. 5.12(a)(1)) governing
debarment under the Related Acts, the Secretary of Labor has final
authority to order debarment. [2]
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[3] II. DISCUSSION
Upon review, the Board concludes that this matter must be
remanded to the ALJ for a determination of whether, under the
applicable legal standard, debarment of Petitioner is warranted.
Debarment for violation of the Davis-Bacon Related Acts is
governed by 29 C.F.R. 5.12, which provides in Section 5.12(a)(1):
Whenever any contractor or subcontractor is found by
the Secretary of Labor to be in aggravated or willful
violation of the labor standards provisions of any of
the applicable statutes . . . other than the Davis-
Bacon Act, such contractor or subcontractor or any
firm, corporation, partnership, or association in which
such contractor or subcontractor has a substantial
interest shall be ineligible for a period not to exceed
3 years (from the date of publication by the
Comptroller General of the name or names of said
contractor or subcontractor on the ineligible list...)
to receive any contracts or subcontracts subject to
[the Davis-Bacon Act or Related Acts]. (Emphasis
supplied).
As noted above, in assessing whether Gaines had committed
"aggravated or willful" violations, the ALJ in this case
utilized the Jiffy June standard for willful violations of the
FLSA. However, subsequent to the ALJ's decision the Supreme
Court rejected the Jiffy June standard in McLaughlin v. Richland
Shoe Co., 486 U.S. 128 (1988). The Court observed that "[i]n
common usage the word `willful' is considered synonymous with
such words as `voluntary,' `deliberate,' and `intentional.'" Id.
at 133. The term "willful," the Court added, "is widely used
in the law, and although it has not by any means been given a
perfectly consistent interpretation, it is generally understood
to refer to conduct that is not merely negligent." Id. at 133.
Furthermore, our review of Board precedent does not indicate
that a standard akin to the Jiffy June standard has been utilized
to determine whether an employer's conduct warrants debarment
under 29 C.F.R. 5.12(a)(1). In a recent decision -- A. Vento
Construction, WAB Case No. 87-51 (Oct. 17, 1990) (29 WH 1685) --
the Board noted (at p. 7) that the "aggravated or willful"
standard "has not been expanded to encompass merely inadvertent
or negligent behavior. Instead, the actions typically found to
be `aggravated or willful' seem to meet the literal definition of
those terms -- intentional, deliberate, knowing violations of the
labor standards provisions of the Related Acts." (Footnotes
omitted).
Thus, in the vast majority of the Related Acts debarment
cases reaching the Board -- and in which the Board determined
that debarment was appropriate -- the record contained evidence
that the employer falsified certified payrolls to [3]
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[4] conceal violations or to simulate compliance with the applicable
labor standards. See, e.g., A. Vento Construction, at p. 15, and cases
cited therein at p. 7 n.4. Falsification of certified payrolls is
itself deliberate conduct that violates law and regulation; furthermore,
submission of falsified payrolls raises a prima facie case that any
accompanying underpayment of wages or overtime compensation was
deliberately undertaken. Violation of the Copeland Anti-Kickback Act is
another example of an "aggravated or willful" violation under Board
precedent. See All Temp Insulation Co., WAB Case No. 87-26 (Jan. 31,
1991); Homer L. Dunn Decorating, Inc., WAB Case No. 87-03 (Mar. 10,
1989).
The Board is of the view that the trier of fact is in the
best position, in the first instance, to evaluate the record
evidence and to determine whether the employer has committed
"aggravated or willful" violations warranting debarment.
Accordingly, the Board remands this case to the ALJ to determine
Petitioner's violations were "aggravated or willful," as that
term has been applied in other debarment cases arising under the
Related Acts. And while the Board leaves this determination to
the ALJ in the first instance, the Board makes the following
observations to assist the ALJ on remand.
First, although the ALJ concluded Gaines' failure to report
two employees on one payroll was an "aggravated or willful"
violation, the record contains no finding that Gaines falsified
certified payrolls. Indeed, the Solicitor (Statement, at p. 7)
suggests that Gaines submitted "inaccurate" payrolls; however,
we think that there is a difference -- or, at least, that there
can be a difference -- between inaccurate payrolls and
falsification of payrolls. Second, the ALJ also concluded that
Gaines' failure to ascertain that employee Karl Brooks was not
registered in a bona fide apprenticeship program was an
"aggravated or willful" violation. While we do not suggest
what the outcome should be, we do note that on remand the ALJ
will need to evaluate whether that conclusion, apparently based
on the findings in [pars] 13-14 of the ALJ's decision (ALJD at 3),
is warranted.
Finally, the ALJ also concluded that Gaines' failure to pay
electricians the prevailing wage was an "aggravated or willful"
violation. Again, while the Board does not suggest the outcome
on remand, we do think that appropriate evaluation of this point
-- and, indeed, the case as a whole -- is made difficult by the
fact that CO Clark, who investigated Gaines' performance on the
Desire Square Revitalization Project subcontract, did not testify
at the hearing before the ALJ, apparently because by the time of
the hearing Clark had transferred out of the New Orleans office
of the Wage and Hour Division (Tr. 9). In the circumstances of
this case, the Board is of the view that the testimony of the
compliance officer who investigated Petitioner's conduct would
have been particularly helpful -- and perhaps necessary -- in
determining whether the violations committed by Petitioner were
"aggravated and willful," and warranted debarment. [4]
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[5] For the reasons stated herein, this case is remanded to the
ALJ for further proceedings consistent with this decision.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
Gerald F. Krizan, Esq.
Executive Secretary [5]
