JAK COMPANY, INC., WAB No. 89-10 (WAB June 28, 1991)
CCASE:
JAK COMPANY
DDATE:
19910628
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
JAK COMPANY, INC. and WAB Case No. 89-10
STEVE CALAS, President
Proj. Nos. MA-23-1,
B-82-AB-25-0064 and
25-MC-0035-2-2, Mass.
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: June 28, 1991
DECISION OF THE WAGE APPEALS BOARD
This matter raises the question of whether a surety known to
the Department of Labor has standing to participate in a Wage
Appeals Board proceeding determining back wage liability where that
surety is a real party in interest. For the reasons contained
herein, the Board rules in the affirmative.
This case is before the Wage Appeals Board on the petitions
of JAK Company and its president, Steve Calas (hereinafter "JAK")
from Wage and Hour Division determinations of back wage liability
and debarment that became final by operation of Department of Labor
regulations. Insurance Company of North America ("INA") has filed
a petition contesting the back wage liability claim. Wage and
Hour, through the Solicitor's office, opposes JAK's petition on the
basis of the regulations; and also opposes INA's petition on two
grounds: first, that as surety "has no right to participate in such
proceedings"; and second, that a surety's rights are limited to
those of the insured party. [1]
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[2]
I. BACKGROUND
During 1987, DOL investigated wage underpayments by JAK on
the three above-captioned contracts. As JAK was apparently in dire
financial straights, the Department entered into contracts with INA
on at least one of the projects (MA-23-1), whereby INA guaranteed
the payment of any back wages and agreed to become the "completing
contractor" (Record, Tab B). Despite the foregoing agreement, the
Department gave notice of a back wage determination to JAK (but not
to INA) in a letter of May 4, 1988 (Record, Tab C).
In the May 4, 1988 letter, JAK was given the opportunity to
seek a hearing on the back wage determination and the issue of
potential debarment within 30 days in accordance with the terms of
29 C.F.R. 5.11 and 5.12. JAK did not respond to this letter until
August 30, 1988, although the Wage and Hour letter was received on
May 11, 1988. (Record, Tab D).
II. DISCUSSION
As JAK ignored the notice of the Wage and Hour Division, and
has not provided the Board with a justification of that oversight
other than the pendency of settlement negotiations, its petition
for review is denied.
INA, however, was a contractor on at least one of the
projects in question [,] a status evidenced by the plain language
of the contract it signed with the Department of Labor. Thus, even
under the restrictive interpretation of the Part 5 Regulations
espoused by the Solicitor, INA should have had notice of and the
opportunity to participate in the back wage determination
proceeding relating to Project No. MA-23-1, and this matter is
remanded for [] that purpose. If INA was a contractor on the other
two projects, it would similarly have the rights to notice of and
hearing on the two remaining back wage determinations.
As a practical matter, a surety would have standing before
the Board in matters of this nature. Under the Rules of the Wage
Appeals Board, 29 C.F.R. Part 7, a surety would certainly be an
"aggrieved person" entitled to file a petition for review where
that surety suffers an economic loss from a back wage
determination. (FOOTNOTE 1) As the surety would have standing in the
review proceeding, the [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 1) This point is reinforced by the sole case cited by the
Solicitor, United States v. Powers Maintenance Co., 336 F.Supp. 819
(W.D. Okla. 1972), which stands for the proposition that the surety
is bound by the outcome of the administrative process in the
context of the McNamara-O'Hara Service Contract Act. [2]
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[3] Wage and Hour Division may wish to streamline the
administrative process by allowing the surety to participate from
the outset. (FOOTNOTE 2)
III. CONCLUSION
This matter is remanded with the following instructions:
first, INA shall be given the full opportunity to participate in
the back wage liability determina- tion attendant to Project No.
MA-23-1; second, if INA was a contractor with regard to the other
two projects, it shall be given the full opportunity to participate
in the back wage determinations attendant thereto; and, thirdly, if
the back wage determinations are so thoroughly intertwined that
liability must be determined on an overall basis, INA shall have
the full right to participate in the liability determinations under
all three contracts.
The determination of the Wage and Hour Division with regard
to the debarment of JAK Company and Steve Calas is affirmed.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
____________________________
Charles E. Shearer, Jr.
Chairman [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 2) By stating that INA has standing as a contractor even under
the restrictive interpretation of the Part 5 Regulations espoused
by the Administrator, the Board does not wish to imply that it
agrees with that interpretation. The Board need not address the
question of whether 29 C.F.R. 5.11 and 5.22 contain minimum or
maximum notice and participation standards. [3]
