KILLEEN ELECTRIC COMPANY, INC., WAB No. 87-49 (WAB Mar. 21, 1991)
CCASE:
KILLEEN ELECTRIC COMPANY, INC.,
DDATE:
19910321
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
KILLEEN ELECTRIC COMPANY, INC., WAB Case No. 87-49
Subcontractor
and
DELORES SOLIS, President
JOE L. SOLIS, Treasurer
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: March 21, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Killeen Electric Company, Inc. ("Killeen Electric"), Delores Solis,
president of Killeen Electric, and Joe L. Solis, treasurer of
Killeen Electric (hereinafter, "Petitioners") for review of the
October 1, 1987 decision and order (Attachment) of [1]
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[2] Administrative Law Judge ("ALJ") Alfred Lindeman regarding back
wages owed to employees of Killeen Electric and debarment of
petitioners. For the reasons stated below, the Board denies the
petition for review.
I. BACKGROUND
Killeen Electric is a corporation with an office in Killeen,
Texas. Delores Solis, is president of the corporation; her
husband, Joe L. Solis, is treasurer. Killeen Electric entered into
several contracts with prime contractors to perform electrical work
on military bases in Texas, Oklahoma and New Mexico. The contracts
and subcontracts each contained wage determinations that Killeen
Electric was required to follow.
After an investigation of Killeen Electric's performance on
these subcontracts, the Wage and Hour Division issued a charging
letter alleging violations of the Davis-Bacon Act (40 U.S.C. [sec]
276a et seq.), the Contract Work Hours and Safety Standards Act
("CWHSSA") (40 U.S.C. [sec] 327 et seq.), and the Copeland Act (40
U.S.C. [sec] 276c). The matter was referred to an ALJ for a
hearing on whether Killeen Electric committed violations by
misclassifying employees, failing to pay proper prevailing wage and
overtime compensation, submitting falsified certified payrolls, and
requiring employees to "kick back" their wages. The order of
reference also alleged that petitioners should be debarred for
disregard of their obligations to employees under the Davis-Bacon
Act, and for "aggravated or willful" violations of the Copeland
Act.
The decision and order of the ALJ catalogued a lengthy list of
misclassification, unpaid wages and overtime compensation, and wage
kickbacks (ALJ's decision ("ALJD") at 4-12). The ALJ ordered the
payment of $54,940.08 in back wages (Id. at 13). On the debarment
issue, the ALJ determined that the violations were "willful and
aggravated," and recommended that petitioners be debarred for
three years (Id. at 12-13).
II. DISCUSSION
A. Petitioners' due process allegations
Before turning to the merits of this matter, it is necessary
to address a number of apparent allegations of due process
violations raised by Joe L. Solis, appearing pro se on behalf of
the petitioners. Among other things, petitioners allege that their
request for a "public defense attorney" was not ruled upon.
However, as noted by the Solicitor on behalf of the Administrator
(Administrator's Reply To Petition For Review ("Reply"), at p.
11), in civil administrative [2]
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[3] proceedings there is a presumption that an indigent litigant has a
right to appointed counsel only when, if the litigant loses, he may be
deprived of his physical liberty. Lassiter v. Dep't of Social Services,
452 U.S. 18, 26-27 (1981). Furthermore, with respect to petitioners'
ability to afford counsel, the Board notes that at the time of the
hearing Joe L. Solis was employed by Joe Louis Corporation, which is
owned by his sister and is an apparent successor to Killeen Electric
(Tr. 413-416).
Other allegations of the petitioners center on pre-hearing
matters. Deputy Chief ALJ E. Earl Thomas issued a pre-hearing
order on January 30, 1986, requiring the parties to exchange
exhibits, requiring the Administrator to set forth all allegations
and relevant facts, and requiring petitioners to set forth their
defenses. The Administrator requested an extension of time on May
2, 1986. The extension was granted on May 27, 1986, establishing
May 30 as the date for submitting the pre-hearing report and June
30 for the exchange of exhibits. On June 2, petitioners requested
that the Administrator's extension request be denied, and also
requested dismissal of the matter because the Administrator had not
responded to the ALJ's order. The Administrator filed a pre-
hearing report on June 4, and sent the proposed exhibits to Killeen
Electric on July 3. Killeen Electric did not respond to the pre-
hearing order.
A second pre-hearing order setting a hearing date was issued
by ALJ Steven E. Halpern on October 15, 1986. That order, as well
as Killeen Electric's motion requesting dismissal because of the
Administrator's failure to respond to the order, were not served
upon the Regional Solicitor's office. The ALJ canceled the hearing
scheduled for January 15, 1987, when he learned that the Regional
Solicitor had not received those documents (Tr. 7-8). The hearing
was subsequently rescheduled for February 25, 1987 before ALJ
Lindeman.
Petitioners apparently contend that they were denied due
process by the ALJ rulings on these pre-hearing matters. However,
the Board concludes that the granting of the Administrator's motion
for extension of time regarding the first pre-hearing order and the
acceptance of the Administrator's response (filed a few days out of
time) to that order were well within the discretion of ALJs to
exercise "all powers necessary to the conduct of fair and
impartial hearings . . . ." 29 C.F.R. 18.29. Furthermore,
petitioners -- who received the Administrator's pre-hearing report
and proposed exhibits several months before the hearing -- have
failed to demonstrate any prejudice resulting from these actions.
The Board also rejects petitioners' claim that the ALJ erred in not
granting petitioners' motion for dismissal of the matter due to the
lack of response to the second pre-hearing order, which was not
served on the Regional Solicitor's office. Again, petitioners have
failed to show that they were prejudiced by the ALJ's disposition
of this issue. [3]
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[4] Petitioners also contest the ALJ's denial of petitioners'
request to depose Debra Baker post-hearing, but again the Board
discerns no abuse of discretion. As noted by ALJ Lindeman (ALJD at
3), under the Department of Labor's rules of procedure the record
is closed at the conclusion of an administrative hearing unless the
ALJ directs otherwise. 29 C.F.R. 18.54, 18.55. In this case, the
record remained open at the close of the hearing for the limited
and specific purpose of deposing additional witnesses designated by
the parties at the hearing. Petitioners had the opportunity to
call witnesses at the hearing, and also were given the opportunity
at the hearing to designate additional witnesses for post-hearing
deposition (Tr. 353). However, petitioners did not designate Debra
Baker for post-hearing deposition. In these circumstances, the
ALJ's denial of the request to depose Debra Baker was within the
ALJ's scope of discretion, and did not violate petitioners' due
process rights.
Finally, petitioners take issue with the ALJ's denial of
petitioners' request for copies of the hearing and deposition
transcripts (ALJD at 3-4). (The record indicates that the ALJ did
provide copies of the transcripts to petitioners on December 2,
1987, after issuance of the ALJ's decision and order in this case,
and after petitioners requested Board review of the decision and
order.) We conclude that petitioners, whose allegation is simply
that they "cannot refer to the transcript by line or by page,"
have failed to demonstrate that they were prejudiced by the denial
of the request for the transcripts.
B. The back wages owed by Killeen Electric
Petitioners do not specifically contest the long list of
violations that the ALJ found had been committed by Killeen
Electric, but they do raise a number of contentions regarding the
amount of back wages owed as a result of those violations. Among
other things, petitioners argue that a portion of the back wage
award is barred by a statute of limitations. In this case, back
wages were awarded for violations calculated from October 29, 1982,
until November 3, 1984. The Wage and Hour Division issued the
charging letter in this matter on July 31, 1985. We are not
certain about the nature of petitioners' statute of limitations
contention; however, the Board does note that it has consistently
held that the two-year statute of limitations of the Portal-to-
Portal Act (29 U.S.C. [sec] 255) does not apply to administrative
proceedings arising under the Davis-Bacon Act. See Ball, Ball and
Brosamer, Inc., WAB Case No. 90-18 (Nov. 29, 1990) (30 WH 138, 144-
145), at p. 17-18 and cases cited therein. Accordingly, the Board
concludes that no portion of the back wage award in this case is
barred by a statute of limitations.
Petitioners also argue that illegal aliens are not entitled to
back wages under the Davis-Bacon Act and, accordingly, that back
wages should be denied for employee Juan Manuel Juarez (also known
as Antonio Gutierrez), who is an [4]
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[5] illegal alien. Petitioners principally rely on a district court
decision (Patel v. Sumani Corp., 660 F. Supp. 1528 (N.D. Ala. 1987)),
which states that illegal aliens are not "employees" for Fair Labor
Standards Act purposes. However, that district court decision was
subsequently overruled by the Eleventh Circuit in Patel v. Quality Inn
South, 846 F.2d 700 (1988), cert. denied, 489 U.S. 1011 (1989). The
Eleventh Circuit noted that the Department of Labor has enforced the
FLSA on behalf of undocumented workers on several occasions, and that
"[a] number of courts have concluded, either expressly or implicitly,
that undocumented aliens are entitled to the FLSA's protection." 846
F.2d at 703, n.4, and cases cited therein. Cf. American Waste Removal
Co. v. Donovan, 748 F.2d 1406 (10th Cir. 1984) (upholding back wage
award under the Service Contract Act on behalf of illegal alien workers
who had been deported).
In addition to this case authority, the Board finds persuasive
the Solicitor's argument (Reply, at pp. 16-17) that the
Department's enforcement policy regarding illegal aliens is
consistent with a legislative goal underlying the Davis-Bacon Act
-- to protect the local wage structure from being undercut by
underpaid outside labor. See H.R. Rep. No. 2453, 71st Cong., 3d
Sess. 2 (1931). In sum, the Board rejects petitioners' contention
that undocumented workers are not entitled to back wages under the
Davis-Bacon Act.
Petitioners also object to the award of back wages in excess
of the amount assessed in the Assistant Administrator's charging
letter. However, the Board finds no infirmity in the amount of
back wages awarded or in the procedures followed. The regulations
(29 C.F.R. Part 6) governing Davis-Bacon administrative proceedings
provide at 29 C.F.R. 6.30(b) that Administrator's charging letter
is to be given the effect of a complaint for purposes of these
proceedings. In addition 29 C.F.R. 6.42 permits amendment of the
complaint with the ALJ's permission, providing there is no
prejudice to the objecting party's merits presentation. Section
6.42 also specifies that "[w]hen issues not raised by the pleadings
are reasonably within the scope of the original complaint and are
tried by express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings
...."
In this matter, the back wage award in excess of the amount
assessed in the charging letter resulted from additional back wages
found to be due to employees Rigoberto Merino and Alex Jaramillo,
both of whom were listed in the Administrator's response to the
first pre-trial order (see page 3, supra). The parties agreed (Tr.
348-356) to the post-hearing depositions of these individuals, and
Killeen Electric was given the opportunity to designate rebuttal
witnesses for post-hearing deposition. The back wages awarded to
Merino and Jaramillo for unpaid fringe benefits and overtime
compensation (ALJD at 12) appear to be based entirely on the same
types of violations alleged in the charging letter and found by the
ALJ with respect to other employees. In these circumstances, the [5]
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[6] Board concludes that the back wage claims for Merino and
Jaramillo amounted, in effect, to an amendment of the complaint.
Since no prejudice to Killeen Electric resulted from the
disposition of those claims -- indeed, evidence regarding those
claims was presented according to a procedure expressly agreed to
by petitioners -- the award of back wages in excess of the amount
assessed in the charging letter is proper and is affirmed.
C. Debarment of Petitioners
Petitioners raise no specific arguments about the ALJ's
debarment order, but do suggest that they "perfected due appeal"
from that order. On review of the record, the Board concludes that
debarment is warranted in the circumstances of this case, but finds
it necessary to modify the ALJ's decision and order on the
debarment issue.
Regarding debarment, the ALJ concluded (ALJD at 12) that the
violations of the Davis-Bacon Act, the CWHSSA, and the Copeland Act
were "willful and aggravated." This determination is defective
in two respects: First, the order of reference called for
debarment for petitioners' Davis-Bacon and Copeland Act violations,
but not for CWHSSA violations. Second, the ALJ failed to evaluate
whether petitioners' conduct warranted debarment both for
"disregard of obligations" under the Davis-Bacon Act, and for
"aggravated or willful" violations of the Copeland Act (a
Davis-Bacon Related Act). In addition, the ALJ's order refers to
debarment under the Davis-Bacon Act (Id. at 13), but makes no
reference to debarment for Related Acts violations. The Board
concludes that debarment is called for under both the Davis-Bacon
Act and under the regulation (29 C.F.R. 5.12(a)(1)) governing
debarment for Related Acts violations.
The ALJ found numerous instances of petitioners requiring
employees to "kick back" their earned wages, in violation of the
Copeland Act. It is established under Board precedent that
Copeland Act violations constitute "aggravated or willful" conduct
warranting debarment within the meaning of 29 C.F.R. 5.12(a)(1).
Morello Brothers, Inc., WAB Case No. 87-24 (Feb. 21, 1991); All
Temp Insulation Co., WAB Case No. 87-26 (Jan. 31, 1991). Board
precedent also calls for a three-year debarment period, absent
"extraordinary circumstances," for aggravated or willful violations
of the Related Acts. A. Vento Construction, WAB Case No. 87-51
(Oct. 17, 1990). The Board discerns no extraordinary circumstances
in this case that would warrant shortening the length of the
debarment period.
Debarment is also called for in this case pursuant to Section
3(a) of the Davis-Bacon Act, which provides for a three-year
debarment period when an employer disregards its obligations to its
employees. G & O General Contractors, Inc., WAB Case No. 90-35
(Feb. 19, 1991). The Board has repeatedly held [6]
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[7] that violations such as misclassification of employees or failure to
pay prevailing wage rates, coupled with falsification of certified
payrolls, constitutes disregard of Davis-Bacon Act obligations. E.g.,
R.J. Sanders, Inc., WAB Case No. 90-25 (Jan. 31, 1991); Marvin E.
Hirchert, WAB Case No. 77-17 (Oct. 16, 1978). In this case, the ALJ
recounted a long list of misclassifications and underpayment of wages.
But although the issue was presented for disposition, the ALJ failed to
make explicit findings that Killeen Electric had falsified payrolls. As
explained below, however, the Board concludes that the circumstances of
this case demonstrate petitioners' lack of regard for their obligations
to employees under the Davis-Bacon Act.
In previous cases involving debarment for Davis-Bacon Act or
Related Act violations, the Board has explained that falsification
of certified payrolls, itself a deliberate act that violates law
and regulation, also demonstrates the deliberate nature of any
accompanying underpayment of wages. R.J. Sanders, Inc., supra, at
p. 2; Gaines Electric Service Company, Inc., WAB Case No. 87-48
(Feb. 12, 1991), at pp. 3-4. In our view, a similar analysis can
be employed with respect to Copeland Act violations such as the
wage kickbacks that occurred in this case. Thus, requiring
employees to "kick back" their Davis-Bacon wages is itself
deliberate conduct that violates law and regulation -- indeed, it
is "aggravated or willful" conduct that warrants debarment under
29 C.F.R. 5.12(a)(1). Furthermore, even if there could be any
doubt about the nature of the pervasive Davis-Bacon Act violations
in this case -- involving many employees and several contracts --
we conclude that the Copeland Act kickback violations committed by
petitioners resolve any possible question that the numerous
misclassification and prevailing wage violations also committed by
petitioners were undertaken out of a disregard of their obligations
to employees under the Davis-Bacon Act. Accordingly, petitioners
should be debarred pursuant to Section 3(a) of the Davis-Bacon Act.
The petition for review is denied. The decision and order of
the ALJ is affirmed to the extent described herein.
III. ORDER
1. It is recommended that Killeen Electric Co., Inc., Joe L.
Solis, and Delores Solis, having disregarded their obligations to
employees under the Davis-Bacon Act, shall be subject to the
ineligibility list provisions of Section 3(a) of the Davis-Bacon
Act for a period of three years.
2. It is ordered that Killeen Electric Co., Inc., Joe L.
Solis, and Delores Solis, having committed "aggravated or
willful" violations of the Copeland Act, shall be ineligible,
pursuant to 29 C.F.R. 5.12(a)(1), to receive [7][8] any contracts
or subcontracts subject to any of the statutes listed in 29 C.F.R.
5.1 for a period of three years.
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 [8]