MARC S. HARRIS, INC., WAB No. 88-40 (WAB Mar. 28, 1991)
CCASE:
MARC S. HARRIS, INCORPORATED
DDATE:
19910328
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
MARC S. HARRIS, INCORPORATED WAB Case No. 88-40
and
MARC S. HARRIS,
Owner
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: March 28, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
the Administrator of the Wage and Hour Division for review of the
July 14, 1988 decision and order ("ALJD") of Administrative Law
Judge ("ALJ") Alfred Lindeman. The Administrator requests reversal
of the ALJ's determination that Marc S. Harris, Incorporated, and
Marc S. Harris, owner ("Harris" or "Respondents") should not be
debarred for "aggravated or willful" violations of Davis- [1]
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[2]
Bacon Related Acts. For the reasons stated below, the Board grants
the petition for review.
I. BACKGROUND
In 1983, Harris was awarded two contracts by the U.S. Postal
Service for construction of post offices in South Lake Tahoe and
Auburn, California. Both contracts were subject to the Postal
Reorganization Act of 1970 (29 U.S.C. [sec] 410(b)(4)(C)), and the
Contract Work Hours and Safety Standards Act (40 U.S.C. [sec] 327
et seq.)("CWHSSA").
Upon an investigation into Harris' performance on the
contracts, the Wage and Hour Division determined that Harris had
failed to pay the prevailing wage rate and proper overtime
compensation, misclassified employees, and falsified certified
payrolls. Unpaid wages and overtime compensation totaling
$174,793.04 were assessed by the Wage and Hour Division --
$114,420.24 for 27 workers on the South Lake Tahoe project, and
$60,372.80 on the Auburn project. Harris acknowledged that $76,626
in violations had occurred, and voluntarily paid that amount.
After issuance of a charging letter the matter was referred to the
Office of Administrative Law Judges for a hearing both on the issue
of back wages and on whether Harris should be debarred for
"aggravated or willful" violations of the Postal Reorganization Act
and the CWHSSA.
The hearing scheduled for April 4, 1988 was canceled when the
parties entered into the Partial Consent Findings and Order by
which the parties resolved the back wage issue and agreed to have
the debarment issue disposed of by the ALJ on the basis of written
submissions. Under the terms of the Partial Consent Findings and
Order, Harris authorized release of $43,000 in withheld funds by
the Postal Service to the Department of Labor in settlement of
Harris' back wage liability. The ALJ adopted the Partial Consent
Findings and Order on June 24, 1988. In his July 14, 1988 decision
and order, the ALJ accepted the parties' stipulations regarding
prevailing wage and overtime violations, as well as the stipulation
that the back wage assessment had been satisfied by Harris'
payments of $76,626 and $43,000. The parties also stipulated that
Harris submitted certified payrolls on the South Lake Tahoe project
that were false and inaccurate in that they did not properly
reflect the rates of pay or hours of work for certain employees.
In addition, the parties stipulated Mr. Marc S. Harris had entered
a guilty plea on March 13, 1985 to a violation of 40 U.S.C. [secs]
328 and 332 as a result of Harris' performance on the South Lake
Tahoe contract. (FOOTNOTE 1) [2]
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(FOOTNOTE 1) 40 U.S.C. [sec] 328 sets forth the overtime compensation
requirements of the CWHSSA. 40 U.S.C. [sec] 332 provides that
"[a]ny contractor or subcontractor . . . who shall intentionally
violate any provision of [the CWHSSA] shall be deemed guilty of a
misdemeanor, and for each and every offense shall, upon conviction,
be punished by a fine of not to exceed $1,000 or by imprisonment
[2]
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[3] In evaluating whether Respondents should be debarred the ALJ
stated (ALJD at 4) that "[t]hough I do find that the violations
stipulated to have occurred in this case, namely the failure to pay
nearly $120,000 in wages and fringe benefits and the submission of
falsified payrolls, were `aggravated' and `willful' violations ...
I do not conclude . . . that debarment must follow automatically."
The ALJ added that in his view "where, as here, it is inferred that
debarment would have a significant impact on [Harris'] business and
that three years have already passed without further Federal
contracts, the dispositive determination is whether three more
years of debarment would serve a useful purpose." The ALJ
concluded that on the basis of the pre-sentencing report from
the criminal proceeding, "the fact that Harris has paid a fine and
served a three year criminal penalty as a result of that action,
and his declarations in connection with the instant matter that
indicate he has been significantly chastened, I find that debarment
is no longer necessary in this case to serve the purpose for which
that remedy is intended" (Id.).
II. DISCUSSION
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).[*]
In this case, the parties stipulated that Respondents failed
to pay proper prevailing wage and overtime compensation and by
submitting falsified certified payrolls on the two post office
contracts. It is established under Board precedent that
falsification of certified payrolls constitutes "aggravated or
willful" conduct warranting debarment under 29 C.F.R. 5.12(a)(1).
See, e.g., A. Vento Constru-
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(CONTINUE FOOTNOTE 1)
[3] for not more than six months, or by both such fine and
imprisonment, in the discretion of the court having jurisdiction
thereof." [3]
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ction [3][4], WAB Case No. 87-51 (Oct.
17, 1990) (29 WH 1685), at p. 15, and cases cited therein at p. 7
n.4. (FOOTNOTE 2)
The ALJ declined to order debarment of Harris, on the basis of
the pre-sentencing report in the criminal matter, "the fact that
Harris has paid a fine and served a three year criminal penalty as
a result of that action, and his declarations in connection with
the instant matter that indicate he has been significantly
chastened." However, in A. Vento Construction (at p. 14), the
Board held that "aggravated or willful" violations of the labor
standards provisions of the Related Acts warrant an order imposing
a three-year debarment period absent extraordinary circumstances.
(FOOTNOTE 3) See also A. Vento Construction, at p. 18 (Member Rothman,
concurring) (falsification of payrolls warrants a three-year
debarment period). The Board finds no extraordinary circumstances
present here.
Among other things, Respondents make a "de facto debarment"
argument, claiming (Response to Petition for Review ("Response") at
p. 8) that Harris "has served the three-year period without another
Government contract. Thus it can be argued that he has already
served debarment if one were ordered." However, the Board has made
clear that claims of a de facto debarment are not relevant to the
issue of placing a contractor on the ineligible list for
"aggravated or willful" violations of the Related Acts. A. Vento
Construction, at p. 16. Respondents also claim (Response, at p. 7)
that Harris gave Ben Bingham total responsibility to run the
projects, and that Mr. Harris did not sign or review the certified
payrolls. We note, however, that the ALJ determined (ALJD at 5)
that neither Harris' or Bingham's version of events "is
sufficiently corroborated to permit me to rule on the issue of
debarment based on the fact or degree of Harris's personal
involvement." Furthermore, Board precedent does not permit a
responsible company official to avoid debarment by claiming that
the labor standards violations were committed by agents or
employees of the firm. See, e.g., P.B.M.C., Inc., WAB Case No.
87-57 (Feb. 8, 1991); Marvin E. Hirchert, WAB Case No. 77-17 (Oct.
16, 1978).
Accordingly, the petition for review is granted. The decision
and order of the ALJ is reversed to the extent that the ALJ
declined to debar Respondents. [4]
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(FOOTNOTE 2) See also Gaines Electric Service Company, Inc., WAB Case No.
87-48 (Feb. 12, 1991), at p. 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.").
(FOOTNOTE 3) Persons and firms placed on the ineligible list pursuant to
29 C.F.R. 5.12(a)(1) are permitted to request removal from the
ineligible list after completing six months of the debarment
period, pursuant to the procedure set forth at 29 C.F.R.
5.12(c). [4]
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[5] III. ORDER
It is ordered that Marc S. Harris, Incorporated, and Marc S.
Harris, having committed "aggravated or willful" violations of
Davis-Bacon Related Acts, shall be ineligible, pursuant to 29
C.F.R. 5.12(a)(1), to receive 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 [5],
