PERMIS CONSTRUCTION CORP., WAB Case Nos. 87-55 and 87-56 (WAB Feb. 26, 1991)
[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
PERMIS CONSTRUCTION CORPORATION,
Prime Contractor
WAB Case No. 87-55
and
TRATAROS CONSTRUCTION CORPORATION,
Prime Contractor
&
In the Matter of
TRATAROS CONSTRUCTION CORPORATION,
Prime Contractor
WAB Case No. 87-56
H.P. CONNOR & CO., INC.,
Subcontractor
ABARB HEATING & AIR CONDITIONING,
Lower-Tier Subcontractor
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: February 26, 1991
DECISION OF THE WAGE APPEALS BOARD
These cases are before the Wage Appeals Board on petitions
for review from two Administrative Law Judge ("ALJ") decisions
and orders involving Trataros Construction Corporation
("Trataros"). In Case No. 87-55 ("Trataros [1][2] I"), Trataros
petitions from the ALJ's entry of default judgment in an October
22, 1987 decision and order (Attachment) by ALJ Ralph A. Romano,
in which the ALJ ordered payment of $88,845.74 in back wages for
violations of the Davis-Bacon Act (40 U.S.C. [sec] 276a et seq.)
and the Contract Work Hours and Safety Standards Act ("CWHSSA")
(40 U.S.C. [sec] 327 et seq.). In Case No. 87-56 ("Trataros
II"), also a back wage case, both Trataros and the Administrator
of the Wage and Hour Division have requested review of various
aspects of the November 6, 1987 decision and order (Attachment)
by ALJ George G. Pierce. For the reasons stated below, the Board
denies Trataros' petitions for review in both cases, grants the
Administrator's petition for review in Trataros II and remands
Trataros II to the ALJ for further proceedings consistent with
this decision.
I. BACKGROUND
A. Trataros I (Wab Case No. 87-55)
Trataros had a contract with the U.S. Army to install
windows in barracks at Fort Dix, New Jersey. Trataros had a
subcontract with Future Construction Corporation ("Future").
Upon an investigation of Future's performance, the Wage and Hour
Division assessed back wages totalling $154,193.03 for DBA and
CWHSSA violations. Trataros paid $65,347.29 of the back wages,
but contested the rest of the amount assessed and requested a
hearing.
Pursuant to the ALJ's pre-hearing order the Department of
Labor, on October 10, 1985, served on Trataros the specifications
of the claims involved in this matter. Trataros, by the terms of
the pre-hearing order, was required to answer the specifications
within 20 days, or by October 30, 1985. The ALJ issued an Order
to Show Cause on January 29, 1987, noting that Trataros had
failed to respond to the pre-hearing order. After failing to
receive a response to the show cause order, the ALJ entered a
default judgment against Trataros on March 4, 1987, ordering
payment of $88,845.74 in back wages.
After counsel for Trataros, Chris Georgoulis, wrote to the
ALJ and claimed that his response to the show cause order had
inadvertently been sent to the wrong location, the ALJ vacated
the default judgment. By a Notice of Hearing dated July 31,
1987, the ALJ set the case for hearing on September 28, 1987.
The Notice of Hearing stated that a continuance would be granted
"only for the most compelling reason." On August 13, 1987,
Trataros requested a stay until a decision was issued in another
case (Trataros II) pending before an ALJ. The Department of
Labor, on August 20, 1987, submitted an opposition to the stay
request on the basis that there was no connection, other than
similarity of [2][3] parties, between the two cases. The ALJ
denied Trataros' stay request by order dated August 27, 1987.
On October 22, 1987, the ALJ again entered a default
judgment after Trataros failed to appear at the September 28
hearing. /FN1/ In the default decision and order, the ALJ
determined that Trataros was liable for $88,845.74 in unpaid wages,
and ordered the funds withheld by the contracting agency to be
released for distribution to the affected employees. Georgoulis
filed a Motion to Vacate Default on October 30, 1987. Georgoulis
claimed that a legal secretary at his law firm had filed the
ALJ's denial of the stay request without notifying any of the
attorneys about the decision and without posting the hearing date
in the diary. The ALJ denied Trataros' motion on November 10,
1987.
B. Trataros II (WAB Case No. 87-56)
Trataros was prime contractor on a project involving
modernization of the U.S. Army's Research and Development
Building in Fort Monmouth, New Jersey. Trataros subcontracted
the heating, ventilation and air conditioning portion of the
project to H.P. Connor & Co. ("Connor"), which in turn
subcontracted this work to Abarb Heating and Air Conditioning
("Abarb"). Upon investigating Abarb's performance on the
project, the Wage and Hour Division calculated that Abarb owed
$39,765.67 in back wages to 15 employees for violations of the
Davis-Bacon Act. Connor made partial restitution in the amount
of $4,763.31; Trataros requested a hearing as to the remaining
amount ($35,002.36) of the back wage assessment.
After a hearing, the ALJ issued a decision and order in
which he ordered payment of back wages totalling $16,442.22. The
ALJ found that employees who performed sheet metal work on the
project had been misclassified as laborers. He rejected
Trataros' argument that employees performing sheet metal worker
tasks on the project for the first time were unskilled laborers
and should be paid accordingly. The ALJ stated (ALJ's decision
and order ("ALJD") at p. 10):
Any workers who are shown to have either fabricated,
handled or installed sheet metal duct work will be
found to have been a sheet metal worker. The [Davis-
Bacon] Act mandates that an employee be paid according
to the classification of work performed, without regard
to skill. (Citations omitted).
The ALJ also found that the payroll records maintained by
Abarb were inaccurate (ALJD at 11). He stated that some of the
employees who were found [3]
/FN1/ The other prime contractor involved in the case, Permis
Construction Corporation, did appear at the September 28 hearing,
and reached a settlement with the Administrator. [3]
[4] to have performed sheet metal work also performed work covered
by other classifications. Since the payroll records did not meet
the requirement of accurately listing the time spent in each
classification, the ALJ determined that all employees found to have
performed sheet metal work should be paid at the wage rate for that
classification, regardless of whether some of their work time may
have involved the work of another classification with a lower wage
rate (Id. at 14).
However, the ALJ refused to admit the Department of Labor
compliance officer's computations into evidence, on the basis
that "this is a de novo proceeding and that independent proof
other than the computation and work product of the compliance
officer is necessary to sustain the burden" (Tr. 343). The ALJ
also refused to accept, without further corroborating evidence,
the compliance officer's testimony regarding the appropriate
classifications and wage rates of non-testifying employees (ALJD
at 12-14).
The ALJ made a back wage award to the five employees who
testified at the hearing, and to three non-testifying employees
who were mentioned in the hearing testimony. As to one of these
three non-testifying employees (John Reuter), the ALJ reduced the
award to $198.40, instead of the $1,332.44 assessed by the Wage
and Hour Division. The ALJ denied a back wage award for seven
non-testifying employees who were not mentioned in the hearing
testimony.
II. DISCUSSION
A. Trataros I
The only issue before the Board in this matter is whether
ALJ Romano properly exercised his discretion by entering a
default judgment against Trataros for failing to appear at the
hearing that Trataros had requested. On review of the record,
the Board concludes that the ALJ acted well within his discretion
in defaulting Trataros.
As we recently noted in United Cooling & Contracting Co.,
WAB Case No. 91-04 (Feb. 22, 1991), an ALJ's authority to enter a
default judgment is provided in 29 C.F.R. Part 6, the regulations
governing administrative proceedings under the Davis-Bacon Act.
These regulations provide at 29 C.F.R. 6.7(b) that if a party
fails to show good cause for failing to appear at a hearing, the
ALJ is authorized to dismiss the case or to find the facts as
alleged in the complaint and to enter a default judgment
"containing such findings, conclusions and order as are
appropriate." The Department of Labor's rules of practice
governing proceedings before ALJs also provide for entry of a
default decision if a party fails to appear without good cause.
29 C.F.R. 18.39(b), 18.5(b). [4][5]
The record in this case amply demonstrates Trataros' lack of
good cause for failing to show up at the ALJ hearing. Trataros'
principal argument is that a clerk in counsel Georgoulis' law
firm filed the ALJ's denial of Trataros' request to stay the
September 28, 1987 hearing without notifying the attorneys and
without recording the hearing date in the firm's diary. However,
this argument simply provides no basis for setting aside the
default judgment. Trataros' counsel did not need the order
denying the stay request in order to know the date of the
hearing. Indeed, the parties were apprised of the hearing date
by the ALJ in a July 31, 1987 notice. Furthermore, the ALJ's
order scheduling the September 28 hearing stated plainly that a
continuance would "only for the most compelling reason." When
Trataros requested a stay of the hearing, that request was
opposed by the Department of Labor.
In short, Trataros had been informed of the hearing date,
had been informed that the ALJ was disinclined to grant a
continuance absent compelling reasons, and was aware that the
request for a stay of the September 28 hearing had been opposed
by the Department. In those circumstances, Trataros' counsel had
no basis for assuming that the requested stay of the hearing had
been granted. In the absence of notification from the ALJ that
the stay had been granted, Trataros' counsel should have prepared
for and entered an appearance at the hearing. Furthermore, the
ALJ order denying the stay request was served on the president
and vice president of Trataros; thus, regardless of any alleged
misfiling of that order at the law firm of Trataros' counsel,
Trataros nevertheless had notice that the hearing had not been
stayed. However, Trataros' president and vice president did not
appear for the September 28 hearing. All of these factors,
coupled with Trataros' previous default during this proceeding,
demonstrate that the failure to appear at the scheduled hearing
was willful, and that the ALJ acted well within his discretion in
entering default judgment against Trataros.
The regulation (29 C.F.R. 6.7(b)) governing entry of default
judgment for failure to appear at a hearing in a Davis-Bacon
administrative proceeding provides that "[o]nly where a petition
for review of such default judgment cites alleged procedural
irregularities in the proceeding below and not the merits of the
case shall a non-appearing party be permitted to file such a
petition for review." Assuming that this regulation permits the
Board to take a peek at the merits of the case to determine
whether to vacate a default judgment or to let the judgment
stand, Trataros has failed to show that the outcome of this
matter might be different if the Board were to grant relief from
the default.
Trataros' reliance on the ALJ decision in Trataros II in
support of the argument that it and subcontractor Future did not
violate labor standards requirements by misclassifying workers is
wrong on two counts. First, the ALJ in Trataros II did not
accept Trataros' argument that workers may be classified and paid
according to the workers' skill and the quality of their work.
Instead, as discussed at pages 6-7, infra, the ALJ applied the
established principle that the [5][6] rate of pay is determined by
the work actually performed, and not by the skill of the worker.
Second, to the extent that the ALJ did reduce the back wage award
in Trataros II, the Board has reversed the ALJ's decision in that
case (see pages 7-8, infra).
The petition for review in WAB Case No. 87-55 is denied.
B. Trataros II
The Board has frequently recognized the applicability of the
principles enunciated in Anderson v. Mt. Clemens Pottery Co., 328
U.S. 680 (1946), to back wage claims arising under the Davis-
Bacon Act or Related Acts. See, e.g., P.B.M.C., Inc., WAB Case
No. 87-57 (Feb. 8, 1991). Under Mt. Clemens Pottery, an employee
who seeks to recover unpaid wages "has the burden of proving that
he performed work for which he was not properly compensated." 328
U.S. at 687. However, where an employer's records are inaccurate
or incomplete, employees are not to be penalized by denying them
back wages simply because they cannot prove the precise amount of
uncompensated work. In such circumstances, an employee meets his
burden "if he proves that he has in fact performed work for which
he was improperly compensated and if he produces sufficient
evidence to show the amount and extent of that work as a matter
of just and reasonable inference." Id. The employer then has the
burden to demonstrate the precise number of hours worked or to
present evidence sufficient to negate "the reasonableness of the
inference to be drawn from the employee's evidence." 328 U.S. at
688. In the absence of such a showing, the court "may then award
damages to the employee, even though the result be only
approximate." Id.
The Board has also recognized that application of Mt.
Clemens Pottery permits an award of back wages to non-testifying
employees based on the representative testimony of a small number
of employees. R.C. Foss & Son, Inc., WAB Case No. 87-46 (Dec.
31, 1990). Thus, the Department of Labor may rely on the
testimony of representative employees to establish a prima facie
case of a pattern or practice of violations. Furthermore, the
Board has recognized that in the absence of accurate payroll
records, the compliance officer must necessarily make reasonable
inferences about the extent of violations, and may reconstruct
payrolls where the employer's records are inaccurate or
incomplete. Joseph Morton Co., Inc., WAB Case No. 80-15 (July
23, 1984).
On review of the record in this case, the Board concludes
that the ALJ properly determined that employees who had performed
sheet metal work had been misclassified as laborers. The ALJ
found as a matter of fact that the work performed by these
employees came within the sheet metal work classification.
Trataros' arguments on appeal provide no basis for the Board to
disturb the ALJ's [6][7] factual findings and credibility
resolutions on this point. The ALJ also properly recognized that,
as a matter of law, the Davis-Bacon Act and regulations (29 C.F.R.
5.5(a)(1)(i)) require that an employee be paid according to the
classification of work performed without regard to skill.
Contrary to Trataros' contention, the ALJ also reasonably
computed back wages where payroll records were incomplete. Thus,
to calculate the award for wages during four weeks for which
there were no certified payrolls in the record, the ALJ explained
(ALJD at 15):
The determination of the hours worked during this
period will be based upon the average number of hours
worked per week by the respective employee for each
week that is recorded. Because there is no evidence to
the contrary, it will be presumed that each employee's
rate of pay for this period was the same as it was for
the weeks preceding the missed payrolls, as already
determined herein. Finally, the work performed by the
individual employees during those four weeks will be
presumed to have been the same type of work which I
found that employee to have been performing for the
weeks for which there are payroll records.
The ALJ's calculation of back wages for this four-week period was
an appropriate application of the principles set forth in Mt.
Clemens Pottery. In the absence of any evidence to contradict
this reconstruction of wages earned and hours worked for this
period, the award of back wages for this period is affirmed.
However, the ALJ erred in limiting the award of back wages
to the employees who testified and to non-testifying employees
who were mentioned in the hearing testimony. The ALJ's findings
and conclusions on this point reflect a misunderstanding of the
use of representative testimony to establish a pattern or
practice of violations. Under the case law that has developed in
this area, there is no requirement that to establish a pattern or
practice the hearing testimony must contain references to all
non-testifying employees. See Donovan v. Bel-Loc Diner, Inc.,
780 F.2d 1113, 1116 (4th Cir. 1985). Furthermore, once a pattern
or practice is established, the burden shifts to the employer to
rebut the occurrence of violations or to show that particular
employees do not fit within the pattern or practice. See Brennan
v. General Motors Acceptance Corporation, 482 F.2d 825, 829 (5th
Cir. 1973).
The ALJ's findings and conclusions as to non-testifying
employees also reflect a misunderstanding of the role of the
compliance officer's computations in back wage proceedings.
Where -- as here -- the payroll records are incomplete and
inaccurate, the compliance officer must necessarily make
reasonable inferences about back wages owed, and may
appropriately reconstruct payrolls based on the information
available. The ALJ agreed with the Department of [7][8] Labor that
the payroll records were inaccurate, yet refused to admit into
evidence the compliance officer's computations (counsel for the
Department raised timely objections to exclusion of these
documents and made an offer of proof regarding these rejected
exhibits). The ALJ's misunderstanding of the role of the
compliance officer's computations is also reflected in his
statement that the compliance officer's testimony as it related
to non-testifying employees failed "to rebut" the employee's
classification and wage rate "as evidenced by the payroll
records" (ALJD at 13-14). The ALJ's reduction of the back wages
for John Reuter ($198.40, instead of the $1,332.44 assessed by
the Wage and Hour Division) similarly failed to give appropriate
consideration to the compliance officer's computations.
Accordingly, the Board concludes that it is necessary to
remand this matter to the ALJ for reconsideration of the back
wages owed to the non-testifying employees for whom the ALJ did
not award back pay, and for reconsideration of the amount of back
wages owed to John Reuter. On remand, the ALJ should take heed
of the legal principles regarding the establishment of a pattern
or practice of violations through representative testimony, and
regarding a compliance officer's computation of back wages owed
where the employer's payroll records are inadequate. In
addition, the ALJ should admit into evidence and give appropriate
consideration to the three exhibits (Secretary Exhibits 4, 5 and
6) containing the compliance officer's computations.
The Administrator's petition for review in WAB Case No. 87-
56 is granted; Trataros' petition for review is denied. The 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 [8]
