CCASE:
KASLER CORPORATION
DDATE:
19910429
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
KASLER CORPORATION,
Prime Contractor WAB Case No. 90-03
CUSTOM CRUSHING, INC.,
Subcontractor, Salt Lake City, Utah
Project No. ID-15-5(22)(207)
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: April 29, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Custom Crushing, Inc. ("Custom Crushing"), for review of an August
17, 1989 decision affirming a May 9, 1988 ruling by the
Administrator of the Wage and Hour Division regarding $3,301.25 in
back wages owed to two employees who were determined not to have
been properly registered as apprentices or trainees. For the
reasons stated below, the Board denies the petition for review. [1]
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[2] I. BACKGROUND
Prime contractor Kasler Corporation ("Kasler") was awarded
Contract No. ID-15-5(22)(207) by the Utah Department of
Transportation ("UDOT") for road paving on Interstate 15 from Mills
Junction to South Nephi, Utah. Custom Crushing was a subcontractor
on the project, which was subject to the labor standards
requirements of the Federal-Aid Highway Acts, as amended 23 U.S.C.
[sec] 113, and Department of Labor regulations, 29 C.F.R. Part 5.
The wage determination (UT83-5120) applicable to the project
specified a wage of $23.54 per hour for journeyman equipment
operators.
UDOT received complaints about wage underpayments from two
employees of Custom Crushing, Phillip Rausch and Leslie Harward, in
March and April 1986. In connection with the investigation of this
matter, UDOT held a compliance hearing in October 1986. UDOT
concluded that three employees -- Rausch, Harward and Skip Dunn --
had been classified as apprentices by Custom Crushing and were paid
$16.59 with no fringe benefits, but that the three employees were
not properly registered as apprentices and were entitled to the
journeyman wage rate for equipment operators. Custom Crushing paid
$444.40 to Dunn in satisfaction of his claim. However, Custom
Crushing did not pay the total of $3,301.25 in back wages
calculated as owed to Rausch ($1,362.20) and Harward ($1,939.05);
that amount is being withheld from prime contractor Kasler pending
resolution of this matter.
The Salt Lake City, Utah office of the Department of Labor
Wage and Hour Division advised UDOT in November 1986, that it
concurred in UDOT's determination of back wage liability. The Utah
Division of the Federal Highway Administration ("FHA") advised the
FHA Deputy Regional Federal Highway Administrator of its
concurrence in UDOT's determination on January 8, 1987, noting that
Custom Crushing was paying certain employees apprenticeship rates
even though they had not been formally registered in an
apprenticeship program. The employees were later registered, the
Utah Division of the FHA added, but only after the employees had
been working for a period of time. However, the Utah Division of
the FHA stated, Section 507-3 of the FHA Labor Compliance Manual
"clearly states that `unless written evidence [of registration for
the apprentice program] is in the contracting officer's possession,
the journeyman's wage rate must be paid for the work.' "
The FHA Region 8 Director of the Office of Engineering and
Operations forwarded the matter to the FHA Chief Counsel's office
on February 9, 1987, noting that Custom Crushing had taken the
position that they should not be responsible for the back wages due
because other parties were partially responsible for the occurrence
of the violations. However, the Region 8 transmittal memo noted,
"[t]he regulations and contract provisions clearly provide [2]
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[3]
that the contractor or subcontractor must pay employees
journeyman's wages unless written proof of apprenticeship
registration is furnished the contracting agency prior to
employment on the contract. The responsibility for furnishing
written evidence of the apprenticeship registration is also clearly
that of the prime or subcontractor." The Chief Counsel's Office of
the FHA forwarded the matter to the National Office of the Wage and
Hour Division for a final ruling, noting that the Office of Chief
Counsel concurred in the findings of the state contracting agency,
the FHA Division Administrator and the FHA Regional Director of
Engineering that the employees in question were not properly
compensated.
The Administrator of the Wage and Hour Division issued a
ruling by a May 9, 1988 letter to Steven Zabriskie, president of
Custom Crushing. The Administrator stated that 29 C.F.R.
5.5(a)(4)(i) permits a firm to pay apprentices less than the
predetermined wage for the work they performed only if they are
employed pursuant to and individually registered in a bona fide
apprenticeship program registered with the Bureau of Apprenticeship
and Training ("BAT") of the Department of Labor's Employment and
Training Administration, or with a state apprenticeship agency
approved by BAT. The Administrator noted that the investigation
had disclosed that Custom Crushing had utilized three apprentices
who had not been properly registered, that Custom Crushing had made
restitution to one employee, but that neither Custom Crushing nor
the prime contractor had agreed to pay the back wages owed to the
two remaining employees. The Administrator stated that she
concurred in the investigation findings. The Administrator also
advised the prime contractor Kasler, by letter dated May 9, 1988,
of a prime contractor's responsibility to pay back wages owed by a
subcontractor when the subcontractor fails to do so.
By a response dated May 27, 1988, Custom Crushing disagreed
with the Administrator's May 9, 1988 ruling. The Administrator
reaffirmed that ruling on August 17, 1989. The Administrator noted
that 29 C.F.R. 5.5(a)(4)(ii) provides that trainees are permitted
to work at less than the predetermined rate when they are employed
pursuant to and individually registered in a bona fide training
program certified by the Department of Labor, and that any employee
who is listed on the payroll at the trainee rate but is not
registered in a training program approved by Department of Labor is
to be paid not less than the applicable wage rate for the
classification of work actually performed. The Administrator added
that there is an exception to these requirements: apprentices and
trainees who perform work on federal aid highway projects subject
to 23 U.S.C. [sec] 113 and enrolled in programs certified by the
Secretary of Transportation; however, the Administrator informed
Custom Crushing that "you have not provided documentation to show
that the two employees were enrolled in such a program." [3]
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[4] II. DISCUSSION
Upon review of this matter, the Board concludes that the
Administrator properly concurred in the investigation findings of
the state contracting agency -- findings which were also affirmed
by the FHA. As noted in the Administrator's ruling letters in this
matter, the Department of Labor's regulations at 29 C.F.R.
5.5(a)(4) address the employment of apprentices and trainees on
projects subject to the Davis-Bacon Act or Related Acts. Section
5.5.(a)(4)(i) provides that a firm may pay apprentices less than
the predetermined wage for the work they performed only if they are
employed pursuant to and individually registered in a bona fide
apprenticeship program registered with BAT, or with a state
apprenticeship agency approved by BAT. In addition, Section
5.5.(a)(4)(ii) specifies trainees will not be permitted to work at
less than the predetermined wage unless they are employed pursuant
to and individually registered in a program which has received
prior approval from the Department of Labor.
As further noted by the Administrator, provisions of the
Federal-Aid Highway Acts are also relevant to the resolution of
this matter. The Federal-Aid Highway Acts provide, at 23 U.S.C.
[sec] 113(a) for application of Davis-Bacon prevailing wage
requirements to "construction work performed on highway projects on
the Federal-aid systems, the primary and secondary, as well as
their extensions in urban areas, and the Interstate System,
authorized under the highway laws providing for the expenditure of
Federal funds upon the Federal-aid systems." However, Section
[] 113(c) provides that "[t]he provisions of the section shall
not be applicable to employment pursuant to apprenticeship and
skill training programs which have been certified by the Secretary
of Transportation as promoting equal opportunity in connection with
Federal-aid highway construction programs."
The guidelines set forth in the FHA Labor Compliance Manual
(Section 507-1) state that apprentices and trainees shall be
permitted to work only if they are registered under a
apprenticeship program approved by a state apprenticeship agency or
by BAT, or under an apprenticeship and skill training program
certified by the Secretary of Transportation as promoting equal
opportunity. The Compliance Manual also contains specific guidance
in Section 507-3 on evidence of registration in apprenticeship and
training programs, stating that "[b]efore using apprentices or
trainees on the job, the contractor shall present to the
contracting officer written evidence of the registration of such
employees in a proper program. UNLESS THE WRITTEN EVIDENCE IS IN
THE CONTRACTING OFFICER'S POSSESSION, THE JOURNEYMAN'S WAGE RATE
MUST BE PAID FOR THE WORK."
UDOT, the state contracting agency, grounded its findings in
this matter on the provisions of Section 507-3 of the FHA Labor
Compliance Manual, which [4]
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[5] specify that the contracting officer be presented written evidence
of registration [*before*] apprentices and trainees are used on the job,
and the FHA concurred in UDOT's determination on the basis of Section
507-3. [[*Emphasis in original*] The record indicates that employees
Program of the Utah Chapter of the Associated General Contractors as of
July 29, 1985. However, the record also indicates that both
employees were on the job beginning in June 1985. Hence, Custom
Crushing did not provide the contracting officer with written
evidence of registration before the two employees began work.
Custom Crushing states to the Board (Petition, at p. 3-4) that
"[t]here had been a strike going on at that time and things had
been quite chaotic," and that "[i]t is not clear whether the
original registration paperwork had been completed and then
misplaced or whether the registration paperwork had not been
completed at the time the individuals were hired." Custom Crushing
also argues (Petition, at p. 5) that "[e]ven if the registration
papers were not completed and filed with the appropriate parties on
the day the trainees were hired, the registration papers were
completed and filed with the appropriate parties in a timely
manner." However, none of these arguments provide any basis for
overturning UDOT's findings of non-compliance with the provisions
of Section 507-3 and accordingly that back wages totaling $3,301.25
were owed to employees Rausch and Harward. We note further that
the Administrator's concurrence in the findings in this matter is
consistent with Board precedent regarding employment of apprentices
and trainees under 29 C.F.R. 5.5(a)(4). See, e.g., Van Den Heuvel
Electric, Inc., No. 91-03 (Feb. 13, 1991) (back wages were owed to
employees who were not employed pursuant to and individually
registered in a trainee program which has received prior approval
from BAT); Tollefson Plumbing and Heating Co., WAB Case No. 78-17
(Sept. 24, 1979) (the employer, not the contracting agency, has the
responsibility for registering employees in a bona fide
apprenticeship program).
Accordingly, the petition for review is denied, and the ruling
of the Administrator is affirmed.
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]
