CCASE:
W.J. BOKUS EXCAVATING, INC.
DDATE:
19930723
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
W.J. BOKUS EXCAVATING, INC. WAB Case No. 89-21
Prime Contractor
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
DATED: July 23, 1993
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of W. J. Bokus Excavating, Inc. ("Bokus" or "Petitioner") for
review of a July 6, 1989 decision and order issued by
Administrative Law Judge ("ALJ") Aaron Silverman. The ALJ
determined that work performed at a sand and gravel ("borrow") pit
located about 8 miles from a Davis-Bacon Related Act construction
project was subject to the requirements for payment of prevailing
wage rates and overtime compensation. For the reasons stated
below, the Board affirms the ALJ's decision and order.
I. BACKGROUND
A. Factual background
Bokus was one of three prime contractors under U.S. Economic
Development Administration ("EDA") Project No. 01-11-02355, for
reconstruction of Thirteenth Lake Road, Warren County, New York.
Warren County received an EDA grant for the project pursuant to the
Public Works and [1]
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[2] Economic Development Act of 1965, as amended (42 U.S.C. [sec] 3222)
("PWEDA"), a Davis-Bacon Related Act. 29 C.F.R. 5.1(a)(41). Bokus bid
on one portion of the project, which consisted of about .8 mile. Bokus
and Warren County entered into a contract in the amount of $518,137.69
on April 15, 1982.
The contract between Bokus and the county required Bokus to
clear and excavate .8 mile of Thirteenth Lake Road and to fabricate
and install 8400 yards of Gabion baskets for use as retaining walls
along the road embankments. Gabion baskets are heavy-gauge wire
baskets which are filled with stones 4-8 inches in diameter. The
dimensions of the baskets were 3' X 3' X 12', and the amount of
stone fill per basket was 4 cubic yards. Bokus actually fabricated
and installed 8,674 cubic yards of Gabion baskets on the project.
Bokus also used 415 cubic yards of selected granular fill as
culvert backfill; 200 cubic yards of select granular fill as slope
protection; 3215 cubic yards of subbase course-type gravel as fill
for the road banks, and 200 cubic yards of stone fill, place on top
of the Gabion basket walls.
Bokus performed the contract requirements regarding clearing
and excavation of the road banks at the Thirteenth Lake Road site.
Bokus paid most employees on the road site the required prevailing
wage rates and overtime compensation, although a state
investigation found that certain employees at the road site were
due prevailing wages, and Bokus paid that back wage assessment.
The wire Gabion baskets were supplied by a manufacturer, and
were delivered in collapsed form. The Bokus fabrication process
entailed opening the baskets, wiring the baskets into open
position, and filling them with stones. Bokus originally
contemplated fabricating and filling the baskets at the road site.
Petitioner's original bid contemplated paying employees at or
slightly above the prevailing wage rates. Bokus started work on
the project on May 3,1982. Prior to commencement of the Gabion
basket work, however, Petitioner requested and obtained a change
order to the contract due to design changes in the construction
specifications. The contract price was increased by $173,000
($3,000 of the increase was due to the added specification of
installation of 15,000 square feet of filter fabric). The contract
price increase was based on a new estimate by Bokus, which
contemplated use of "the most cost effective method . . . to tie
and fill the baskets off site at the gravel pit." Petitioner's
estimated increases in labor costs were based on paying the
required prevailing wage rates at the gravel pit.
The gravel pit is the Perkins Pit, situated about 8 miles from
the Thirteenth Lake Road site. The pit is owned by Floyd Perkins
and operated sporadically since the mid-1960s. Petitioner
initially entered into an agreement with Floyd Perkins in December
1981 for a "first option to buy gravel, set up aggregate and cement
plant . . . ." The stated intent of that agreement was "for the
basic purpose of supplying the North Creek Ski Bowl with gravel,
sand, [2]
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[3] stone, and concrete. Also, to supply any other
project of any magnitude in the area." The ski facility was not
built, and Bokus did not exercise the option.
On April 5, 1982 -- 5 days after all sealed bids were opened
and read, and Petitioner learned that it was the low bidder --
Bokus and Floyd Perkins executed a second agreement in which
Perkins "agree[d] to sell to W.J. Bokus Excavating materials out of
[Perkins Pit] to complete [its] obligation to the County of Warren
for the Thirteenth Lake Road Project." Bokus did not sell any
materials from the pit prior to award of the contract between
Warren County and Bokus. No materials were sold until May 24, 1982
-- three weeks after Bokus' first certified payroll indicated
commencement of the project at the road site. Bokus sold excavated
materials in excess of its own requirements for the road project,
but only until December 4, 1982, the last day of the contract work
on the road. Petitioner produced 85,289 cubic yards of materials
from the pit between May 24 and December 4, 1982. That total
included 18,963 cubic yards which were stockpiled; Bokus utilized
8,674 cubic yards to fill Gabion baskets and 4030.5 cubic yards as
fill on the road project. In addition to the amounts used by Bokus
on the project, amounts of 17,583 and 6,845 cubic yards were
purchased by Warren County for its portion of the project, and 200
cubic yards were sold to another contractor for its bridge work on
the project. A total of 28,993.5 cubic yards were sold to other
individuals and entities for purposes unrelated to the road
project.
B. Procedural history
1. The ALJ proceedings
At the conclusion of an investigation of Petitioner's
performance on the Thirteenth Lake Road Project, a Wage and Hour
Division compliance officer computed prevailing rate and overtime
compensation back wages totaling $47,786.21 due 29 employees. The
computations were based on payroll information provided by Bokus
during the investigation in 1983. During the course of discovery
prior to the hearing before the ALJ, Bokus provided payroll
journals for the project which showed more hours worked at the pit
that had originally been reported during the investigation, and
disclosed five additional Perkins Pit employees. The compliance
officer revised the back wage computations to reflect $99,231.33
due 34 employees.
Bokus requested that the case be referred to the Office of
Administrative Law Judges. An Order of Reference was issued on
August 16, 1985, and a hearing was held June 13-15, 1988. The ALJ
issued a decision and order on July 6, 1989. He determined that
the operations at the Perkins Pit came with the definition of the
"site of the work" at 29 C.F.R. 5.2(l)(2). He found that the
Perkins Pit was near the road project, and that the fabrication of
the Gabion baskets and the site chosen for the fabrication "was
established solely for the [3]
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[4] purpose of the project" (ALJ's Decision ("ALJD") at p. 4).
Activities other than the Gabion basket fabrication, the ALJ added,
while not devoted solely to the project, "revolved around the project"
(Id. at p. 5). Thus, he noted, Petitioner sold no material from the pit
prior to award of the project contract, and sold materials only through
December 4, 1982, the last day of contract work on the road project. Of
the materials produced during that period, the ALJ stated (Id.):
44 percent was used on the project. Of all materials
produced and actually used during this period, 56 percent
was used on the project. Of all materials for which a
commitment existed to produce when Bokus began working
the Perkins Pit, over 90 percent was earmarked for the
project.
The ALJ stated that the "most probative evidence" was the April 5,
1982 agreement between Bokus and Floyd Perkins.
The ALJ reduced the back wage award slightly to $97,854.40 for
34 employees. The difference represented the elimination of back
wages for one employee for one day when he did not work at the pit,
and the ALJ's determination that the compliance officer's back wage
estimates for work gloves purchased for Bokus' laborers were not
properly claimable under a Davis-Bacon Related Act. The
Administrator did not appeal from the reduction in the back wage
award.
2. The Midway Excavators decision
Bokus filed a petition for review of the ALJ's decision and
order with the Wage Appeals Board. While this appeal was pending,
the United States Court of Appeals for the D.C. Circuit issued its
decision in Building and Construction Trades Department, AFL-CIO v.
United States Dep't of Labor, Wage Appeals Board (Midway
Excavators, Inc.) ("Midway Excavators"), 932 F.2d 985 (D.C. Cir.
May 17, 1991). The D.C. Circuit examined the Department of Labor's
definition of "construction" set forth at 29 C.F.R. 5.2(j), which
had encompassed within Davis-Bacon prevailing wage requirements ".
. . the transporting of materials and supplies to or from the
building or work by the employees of the construction contractor or
construction subcontractor . . . ." The court held that Section
5.2(j), "insofar as it includes off-site material delivery
truckdrivers in the [Davis-Bacon] Act's coverage, is invalid." The
court of appeals also specifically stated that it was not ruling on
the validity of the Department's site of work regulation -- 29
C.F.R. 5.2(l). [4]
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[5] 3. The Department of Labor's post-Midway Excavators
rulemaking activities
On July 18, 1991, the D.C. Circuit denied the petition for
rehearing and suggestion for rehearing en banc filed by the
Building and Construction Trades Department, AFL-CIO ("BCTD").
Neither the government nor the BCTD sought Supreme Court review.
The Acting Administrator requested that the Board to refrain from
deciding Midway Excavators-related issues until the Department of
Labor had taken rulemaking action in response to the D.C. Circuit's
decision.
On May 4, 1992 the Department of Labor issued an interim final
rule amending the definition of "construction" in 29 C.F.R. 5.2(j).
57 Fed. Reg. 19,204. The regulation was amended to eliminate the
provision of Section 5.2(j) that applied Davis-Bacon requirements
to ". . . the transporting of materials and supplies to or from the
building or work by the employees of the construction contractor or
construction subcontractor . . . ." In remarks accompanying the
interim final rule, the Department explained (Id. at
19,205-19,206):
Under this rule, those truck drivers who transport
materials to or from the "site of the work" would not be
covered for any time spent off-site, but would remain
covered for any time spent directly on the "site of the
work." Time spent transporting between the actual
construction location and a facility which is deemed a
part of the site of the work within the meaning of [29
C.F.R. 5.2(l)], and the materialman/supplier exception,
will continue to be applied as before.
On the same date, the Department also issued a notice of
proposed rulemaking and request for comments regarding the "site of
the work" definition at 29 C.F.R. 5.2(l). 57 Fed. Reg. 19,208. The
Department addressed two matters. First, the Department stated its
view that under Midway Excavators, "truck drivers who spend most of
their time off-site, as `site' is defined in the regulations, and
who come on-site only incidentally to deliver or pick up a load of
material and perform only those activities (such as loading,
unloading, waiting) that are essential to the delivery or hauling
of material to or from the site, should not be subject to the Act
even if they are employed by the construction contractor or
construction subcontractor." Id. at 19,209. On the other hand, the
Department added, "if truck drivers employed by a construction
contractor were to spend more than an incidental amount of time
`employed directly upon the site of the work', they should be
subject to the Act's protections for such time." (Emphasis
supplied.) Id. The Department proposed two options for determining
whether the time spent on "site of the work" by a material delivery
truck driver employed by a contractor or subcontractor was
"incidental." [5]
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[6] Second, the Department posed the question whether the
definition of "site of the work" in Section 5.2(l) should be
changed in light of the Midway Excavators decision. 57 Fed. Reg.
19,211. The Department stated (Id.):
Although the court went to some length to restrict its
decision to the particular facts in Midway, the court's
broad legal reasoning indicates that other traditional
coverage positions not directly at issue in Midway should
be carefully reexamined in light of Midway. The court's
statements, for example, that coverage is restricted in
a geographic sense to only those persons "employed
directly upon the site of the work" raise questions
concerning regulatory provisions that define the "site
of the work" in [sec] 5.2(l).
The Department requested comments on three issues (57 Fed. Reg.
19,211) (footnotes omitted):
(1) Is the regulatory definition of "site of the work" at
[sec] 5.2(l) viable or should it be revised, particularly
in paragraph (l)(2), which includes as a part of the
covered "site of the work" certain dedicated facilities
utilized by a covered construction contractor or
subcontractor that are not technically on the physical
site of the building or work under construction?
(2) If dedicated facilities should remain covered as part
of the "site," should truck drivers be covered for the
time spent hauling between such a dedicated facility and
the site of the actual construction?
(3) In light of Midway, would it be appropriate to
establish a maximum limit for the geographic proximity
test in [sec] 5.2(l)(1) and (2) of the site of the work
definition?
4. The positions of the parties in this case in light
of the Department's rulemaking activities
The Acting Administrator filed a supplemental statement in the
instant case on June 5, 1992. The Acting Administrator stated that
since neither the D.C. Circuit's decision in Midway Excavators nor
the Department's interim final regulation "affected the coverage of
work performed at a dedicated site or the hauling from a dedicated
site to the construction site, the activities at issue in the
instant case remain covered by the Davis-Bacon provisions pursuant
to valid regulations" of the Department (Supplemental Statement, at
pp. 5-6) (footnote [6]
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[7] omitted). /FN1/ The Acting Administrator also argued that
Petitioner had contractually agreed to comply with the Department's
regulatory interpretations of Davis-Bacon requirements. She noted that
the labor standards provisions (see 29 C.F.R. 5.5) contained in
Petitioner's contract specify that "[a]ll laborers and mechanics
employed or working upon the site of the work" will be paid the wages
and fringe benefits listed in the wage determination issued by the
Secretary of Labor. 29 C.F.R. 5.5(a)(1). These provisions further state
that "[a]ll rulings and interpretations of the Davis-Bacon and related
Acts contained in 29 C.F.R. Parts 1, 3, and 5 are herein incorporated
by reference in this contract." 29 C.F.R. 5.5(a)(8). Accordingly, with
respect to the time spent by employees at the Perkins Pit, Bokus agreed
to pay Davis-Bacon rates for such work since it came within the
Secretary's authoritative interpretations.
The Acting Administrator added that the coverage of hauling
activities between the Perkins Pit and the project did not appear
to be at issue in this case, noting that the ALJ did not make
reference to such activities and did not rely upon 29 C.F.R. 5.2(j)
in his analysis. Moreover, the Acting Administrator stated, even
if coverage of the hauling activity were at issue, the regulation
was not invalidated as applied to the time spent hauling between a
dedicated site and the construction site, and such activity
continues to be covered under the revised Section 5.2(j)
(Supplemental Statement, at pp. 5-6 n.3).
Bokus argued in its supplemental statement that the work
performed at the Perkins Pit did not meet the site of the work test
set forth at 29 C.F.R. 5.2(l). Bokus further argued that Section
5.2(l) was invalid in light of the D.C. Circuit's decision in
Midway Excavators.
The BCTD concurred with the Acting Administrator, and also
relied upon the federal district court decision in Wheeler v. Graco
Trucking Corp. ("Graco"), C.A. No. 90-5337 (E.D. Pa., Nov. 14,
1991), for the proposition that coverage under the Davis-Bacon
Related Acts is not limited to the "site of the work." /FN2/ [7]
/FN1/ While this matter was pending before the Board,
counsel for the Acting Administrator submitted to the Board a copy
of a post-Midway Excavators decision of the United States District
Court for the District of Columbia in Ball, Ball and Brosamer,
Inc., Civil Action No. 91-3266 (CRR)(Aug. 18, 1992), appeal
docketed Oct. 9, 1992 (D.C. Cir.). In that case the district court
affirmed the decision of the Wage Appeals Board in Ball, Ball and
Brosamer, Inc., WAB Case No. 90-18 (Nov. 29, 1990), that work done
at a dedicated gravel pit near a dam construction project was
performed on the "site of the work" for Davis-Bacon coverage
purposes. In so doing, the court applied the Department's "site of
the work" regulation (29 C.F.R. 5.2(l)) as a valid regulation, and
also determined that the contractor in that case had a contractual
obligation to pay prevailing wages.
/FN2/ The Board notes that the district court decision in Graco was
subsequently overturned by the United States Court of Appeals for
the Third Circuit (No. 91-2040, Jan. 22, 1993). [7]
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[8] II. DISCUSSION
This matter involves the application of the Department's "site
of the work" regulation -- 29 C.F.R. 5.2(l). Section 5.2(l) is a
duly promulgated regulation of the Department of Labor which was in
effect at the time performed work on the highway construction
project and -- although the provision is the subject of a notice of
proposed rulemaking (see pp. 5-6, supra) and apparently is the
subject of ongoing litigation (see n.1, supra) -- remains in effect
to this day. As such, Section 5.2(l) is binding upon the Wage
Appeals Board. See, e.g., California Human Development Corp. v.
Brock, 762 F.2d 1044 (D.C. Cir. 1985) (Department of Labor's
actions must conform to its own regulations). Accordingly, we will
proceed with an analysis of whether the work performed at the
Perkins Pit came within the "site of the work" definition set forth
in Section 5.2(l).
Section 5.2(l)(1) describes the "site of the work" as "limited
to the physical place or places where the construction called for
in the contract will remain when work on it has been completed and,
as discussed in paragraph (l)(2) of this section, other adjacent or
nearby property used by the contractor or subcontractor in such
construction which can reasonably be said to be included in the
`site.' " Section 5.2(l)(2) sets out a two-part test under which
fabrication plants, batch plants, tool yards and other facilities
are part of the "site of the work" if (1) "they are dedicated
exclusively, or nearly so, to performance of the contract or
project," and (2) they are "so located in proximity to the actual
construction location that it would be reasonable to include
them." /FN3/
With respect to the ALJ's determination that the geographical
test was satisfied by the facts of this case, the record indicates
that the Perkins Pit was situated approximately 8 miles from the
Thirteenth Lake Road project site. Given the nature of road
project, as well as the proximity of the borrow pit to the [8]
/FN3/ Section 5.2(l)(3) provides:
Not included in the "site of the work" are permanent home
offices, branch plant establishments, fabrication plants,
and tool yards of a contractor or subcontractor whose
locations and continuance in operation are determined
wholly without regard to a particular Federal or
federally assisted contract or project. In addition,
fabrication plants, batch plants, borrow pits, job
headquarters, tool yards, etc., of a commercial supplier
or materialman which are established by a supplier of
materials for the project before opening of bids, and not
on the project site, are not included in the "site of the
work." Such permanent, previously established facilities
are not part of the "site of the work", even where the
operation for a period of time may be dedicated
exclusively, or nearly so, to the performance of a
contract. [8]
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[9] project site, it is reasonable and consistent with Board
precedent to include the work performed at the borrow pit within
the "site of the work." See, e.g., United Construction Company,
Inc., WAB Case No. 82-10 (Jan. 14, 1983), at p. 7 (given the
physical layout of the project, "the Board does not have difficulty
finding that the various distances (ranging from 1.8 miles to 55
miles) between the batch plant and the locations of the individual
construction sites" are within the site of work).
The Board also concludes that the ALJ appropriately determined
that the work performed at the Perkins Pit meets the functional
prong of the site of the work test. As noted earlier (see p. 2-3,
supra), Bokus never exercised its option under a December 1981
agreement with Floyd Perkins, and did not enter into a second
agreement with Floyd Perkins until April 5, 1982 -- 5 days after
bids on the road project were opened and Bokus learned that it was
the low bidder. The purpose of that agreement was express, for the
agreement specified that Floyd Perkins "agree[d] to sell to [Bokus]
materials out of [Perkins Pit] to complete [its] obligation to the
County of Warren for the Thirteenth Lake Road Project." Thus, this
agreement was indeed, as the ALJ noted, "most probative evidence"
of the purpose of Bokus' activities at the pit. Furthermore Bokus
sold no materials from the pit prior to award of the contract
between Warren County and Bokus; indeed, no materials were sold
until three weeks after Bokus' first certified payroll indicated
commencement of the road project. Furthermore, Bokus did sell
excavated materials in excess of its own requirements on the road
project, but only until December 4, 1982 -- the last day of the
contract work on the road. As the ALJ noted 56% of all materials
produced and actually used during that period were used on the
project; further, of all the material for which a production
commitment existed when Bokus began working the pit, more than 90
percent was earmarked for the road project. On the basis of all
these circumstances, plus the fact that the Gabion fabrication
operation at the pit was dedicated solely to the road project, we
agree with the Administrator (Statement in Opposition to Petition
for Review, at p. 14), that the record establishes that Bokus was
essentially a Gabion basket fabricator at Perkins Pit (for the
purpose of meeting its road project obligations) and not a bona
fide materialman or supplier. The Board concludes that Bokus'
activities at the Perkins Pit satisfy the functional prong of the
site of the work test, and do not fit within the materialman
exemption set forth at 29 C.F.R. 5.2(l)(3) (see note 3, supra).
Upon review, the Board also rejects contentions raised by
Bokus with respect to other issues. Thus, we do not agree with
Petitioner that the upward revision of the back wage computation at
the hearing was prejudicial to Bokus. As noted by the ALJ (ALJD at
p. 6), since the revised computations were based on Petitioner's
own payroll records, "Bokus had in its possession all of the
information necessary to calculate its potential liability."
Furthermore, Bokus was granted the opportunity to rebut the revised
computations on the second and third days of the hearing, and also
was permitted to offer post-hearing affidavits [9]
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[10] from an accountant to rebut the computations. See Killeen Electric
Company, Inc., WAB Case No. 87-49 (Mar. 21, 1991), at pp. 5-6.
Finally, the Board finds meritless Petitioner's contention
that the ALJ should have estopped the Administrator from enforcing
prevailing rate and overtime labor standards because of erroneous
advice from Warren County officials that the operations at the
Perkins Pit were not subject to such requirements. As observed by
the Administrator (Statement in Opposition to Petition for Review,
at p. 21), the record does not support a finding that such advice
was ever given to Bokus. Furthermore, Board precedent recognizes
that the Secretary of Labor may not be estopped from enforcing
labor standards requirements because of contrary advice from the
contracting agency. See Swanson's Glass, WAB Case No. 89-20 (April
29, 1991), at p. 4 and cases cited therein.
In sum, the decision and order of the ALJ is affirmed.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Gerald F. Krizan, Esq.
Executive Secretary [10]
