CCASE:
ALEUTIAN CONSTRUCTORS
DDATE:
19910401
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
ALEUTIAN CONSTRUCTORS,
A Joint Venture
and WAB CASE No. 90-11
UNIVERSAL SERVICES, INC.
Shemya Island, Alaska
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member, Dissenting in
part, Concurring in part
DATED: April 1, 1991
DECISION OF THE WAGE APPEALS BOARD
This matter concerns the question of the application of the
Davis-Bacon Act to culinary and maintenance workers ("camp
workers") involved in three construction projects on an island in
Alaska. The matter is before the Wage Appeals Board on the joint
petition of Aleutian Constructors ("Aleutian") and Universal
Services, Inc. ("Universal") (collectively, "Petitioners") seeking
review of the December 20, 1989 rulings by the Acting Administrator
of the Wage and Hour Division assessing $412,505.72 in prevailing
wage and overtime compensation for 17 camp workers. Petitioners
also challenge conformance rulings dated September 23, 1987 and
November 8, 1987, in which the Wage and Hour Division responded to
the contracting agency's request for conformed classifications and
wage rates for three classifications of maintenance workers. [1]
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[2]
Filing and appearances were made on behalf of petitioners by the
Associated General Contractors of America ("AGC") and the AGC of
Alaska. The Board held oral argument in this matter on March 5,
1991. For the reasons stated below, the Board remands this matter
to the Acting Administrator for further proceedings consistent with
this decision.
I. BACKGROUND
From the early 1980's to the present, Aleutian has been
engaged in numerous defense-related Davis-Bacon construction
projects on Shemya Island. Shemya is a small island in the end of
the Aleutian chain. It is closer to Siberia than to Anchorage, and
closer to Tokyo than Seattle. State-of-the-art communications and
frequent air traffic link Shemya to the rest of the United States,
although the Air Force closely monitors and limits access to the
island.
From 1985 to 1987, Aleutian performed the three contracts at
issue in this matter. It is undisputed that these contracts were
governed by 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.). It is also undisputed that the
contracts contained the applicable wage determination, which in
turn contained classifications and wage rates for three
classifications of culinary workers (head cooks, cooks, and
bakers). The contracts did not contain classifications and wage
rates for the second category of employees at issue (janitors,
housekeepers, and domestic helpers) (i.e., "maintenance workers").
The bid solicitations and the contracts specified that federal
facilities to feed and shelter the construction employees were not
available; one contract provided that the prime contractor was
responsible for providing food and shelter to its employees.
During 1985, Aleutian allegedly considered a number of ways to
meet its contractual obligation regarding food and shelter. It
settled on establishment of a work camp, and contracted with
Universal to perform the food and housing functions. Aleutian and
Universal entered into a contract on June 4, 1985, after two of the
construction contracts at issue had been awarded to Aleutian.
Aleutian agreed to indemnify Universal for wage-related
liabilities. Aleutian did not include the Davis-Bacon wage rates
and classifications for culinary workers in its contract with
Universal. The Shemya camp opened in 1985 and, according to
Aleutian, continues in operation to date.
The Department of Labor conducted an investigation for the
period of contract performance from July 21, 1985 (when the work
camp was established) through July 5, 1987. The investigation
disclosed that in addition to the culinary workers, the
classifications of housekeeper, janitor and general helper were
also being utilized by Aleutian and Universal. The contracting
officer for the contracting agency -- Army Corps of Engineers --
was instructed to request [2]
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[3] conformed classifications pursuant to 29 C.F.R. 5.5(a)(1)(ii).
The Wage and Hour Division issued conformance rulings in response to
the contracting agency's request on September 23, 1987 and November 8, 1987.
The compliance officer concluded that Universal was Aleutian's
subcontractor engaged in the prosecution of Aleutian's three public
works contracts. The compliance officer also concluded that
Universal had not paid the camp workers the applicable prevailing
wage rates, and that since the employees had not received the
applicable basic hourly rates, they also had not been paid proper
overtime compensation. Back wage computations for the alleged
violations were presented to Aleutian, which declined to make
restitution.
On December 20, 1989, the Acting Administrator issued rulings
to Aleutian and to Universal assessing $358,861.45 in unpaid wages
and $53,644.27 in overtime compensation for 17 camp workers. The
rulings provided Aleutian and Universal the opportunity to present
disputed facts as to the number of hours worked or wages paid, or
to petition for review to the Wage Appeals Board if the facts were
not contested. The rulings did not contain any discussion of the
legal or factual basis for application of Davis-Bacon Act and
CWHSSA requirements to the camp workers.
II. DISCUSSION
A. Remand of the final rulings
The Board has determined that this matter must be remanded to
the Wage and Hour Division for further proceedings, because the
final rulings of the Acting Administrator failed completely to set
out any legal reasoning or the pertinent facts that led the Acting
Administrator to the conclusion that the camp workers were covered
by the Davis-Bacon Act and the CWHSSA and, accordingly, that
petitioners owed more than $400,000 in back wages.
Before the Board, the Solicitor has performed admirably in
offering legal theory and facts in support of the Acting
Administrator's rulings. Likewise petitioners, although noting
that the final rulings under review were "lacking in any specifics"
(Petition, at p. 3), did their best to address the possible bases
for the Acting Administrator's rulings by responding to an October
9, 1987 letter by a Wage and Hour Division Regional Wage
Specialist, which did analyze the application of the Davis-Bacon
Act and CWHSSA to the camp workers. However, the Board's task is
to review the final determinations of the Wage and Hour Division,
and in this case we are unable to discern the legal and factual
basis for the final rulings under review. Thus, for example, the
December 20, 1989 final rulings of the Acting Administrator do not
reference the October 9, 1987 letter by the Regional Wage
Specialist, and we unable to say whether the Acting Administrator
[3]
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[4] agreed in whole, or in part, or not at all, with the
reasoning set forth in the October 9 letter.
Even more important than providing rulings that are capable of
being reviewed for their legal and factual sufficiency is the issue
of fundamental fairness to the parties. That is, the employees,
employee representatives and employers who are affected by the
final decisions of the Wage and Hour Division deserve to be
apprised of the rationale upon which those decisions are based. At
a minimum, a final decision should state the legal basis for Wage
and Hour's determination, should set forth the pertinent facts, and
should demonstrate that the arguments of the parties have been
considered.
On remand of this matter, the Wage and Hour Division should
apply the considerations set forth above. Specifically, the
decision in this matter should at the very least address the issues
that have been addressed by the parties in the pleadings and oral
argument before the Board -- namely, whether the camp workers are
covered by the Davis-Bacon Act and the CWHSSA as a matter of law;
whether the culinary workers are covered as a matter of contract;
and whether the camp workers were employed upon the site of the
work within the meaning of the Davis-Bacon Act. In addition, any
deficiencies in the record should be corrected. We note, for
example, that although three contracts are at issue in this case,
only two of the contracts were included in the record forwarded to
the Board.
The Board is remanding this matter out of our respect for the
role of the Wage and Hour Division to decide, in the first
instance, the issues presented in this matter. The Board also
respects the interests of the petitioners and of the camp worker
employees in having this matter resolved expeditiously. With those
interests in mind, the Board remands this matter to the Acting
Administrator with the expectation that the further proceedings
referenced herein will be completed within 60 days.
B. The conformance procedure
If, on remand, the Wage and Hour Division determines that the
camp workers are covered by Davis-Bacon and CWHSSA requirements,
then the conformance rulings regarding three classifications of
maintenance workers must also be reconsidered. Petitioners alleged
(Memorandum in Support of Petition for Review, at pp. 15-16) that
the Department of Labor and the contracting agency added the
maintenance worker classifications "without the involvement or
agreement of Aleutian or its employees," in violation of the
Department's conformance regulations at 29 C.F.R. 5.5(a). These
regulations (29 C.F.R. 5.5(a)(ii)(C)) specifically require the
contracting officer to "refer the question, including the views of
all interested parties . . . to the Administrator." At the oral
argument in this matter, counsel for the Acting Administrator
acknowledged [4]
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[5] that the record is devoid of any indication that petitioners
were given the opportunity to present their views.
Furthermore, on the basis of the record before the Board, it
appears that the wage rate decision was based exclusively on a
collective bargaining agreement which was terminated over a year
before the first of the three Shemya Island contracts involved in
this case was executed, and over four years before the conformance
ruling. An expired collective bargaining agreement has no legal
significance and only tangential factual relevance.
At a minimum, the Acting Administrator should have considered
wages paid comparable classes of employees on Shemya Island. A
better approach would have included wages paid on other remote
sites. The Board agrees with the AGC that the conformance
procedure under consideration violated the spirit (if not the
letter) of 29 C.F.R. 1.3, which requires ongoing consideration of
wages actually paid.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
____________________________
Charles E. Shearer, Jr.
Chairman
Separate Statement of Member O'Brien, Dissenting in Part and
Concurring in Part
I.
Although I concur with my colleagues to the extent the
majority finds extreme, if not appalling, disregard for the due
process rights of the parties to this matter, and therefore orders
Wage and Hour to do that which it should have done in the first
instance, I must respectfully dissent from a remand for a number of
reasons: firstly, because I do not believe that the maintenance
workers are covered by the Davis-Bacon Act; secondly, because the
government has an unmet burden of proof with regard to the issue of
statutory coverage (and I cannot say the Davis-Bacon Act, where
ambiguous, covers any employee the Department of Labor chooses to
identify); and thirdly, because the contract appears to cover the
culinary workers. [5]
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[6]
The Davis-Bacon Act does not extend to every employee
participating in the stream of commerce resulting in a construction
project. By its own terms, the Act covers only "laborers and
mechanics," and the Secretary's regulations generally exclude the
employees of suppliers and materialmen -- the next functional step
in the stream of commerce. This exclusion of "next stage"
employees is entirely consistent with the legislative history of
the Act.
The Congressional intent to limit the scope of the Davis-Bacon
Act is reflected throughout the regulations. 29 C.F.R. 5.2(m)
defines "laborer or mechanic" with reference to manual or physical
work involving the use of tools or the performance of "work of a
trade," as opposed to mental, managerial, clerical, or
administrative tasks. Similarly, "building" and "work" are defined
at 29 C.F.R. 5.2(i) to include direct construction activity, as
opposed to "servicing and maintenance work."
The cases relied upon by the Solicitor to support inclusion of
off-site maintenance workers are distinguishable. In both The
Griffith Company, WAB Case No. 64-03 (July 2, 1965), and Vecellio
and Grogan, WAB Case No. 84-07 (Oct. 17, 1984), the employees in
question were performing work (servicing heavy equipment) so
directly related to the construction project that it would have
been absurd to define them as other than "laborers or mechanics".
Here the maintenance workers performed services for "all comers,"
some 50% of whom did not work for Aleutian or its subcontractors,
and many of whom did not engage in construction work at all.
It has been suggested that Shemya is a "remote site" and that
under these circumstances the circle of Davis-Bacon coverage should
be expanded. Proponents of this position point to the island's
location on the map, and the fact that access to the island was
limited for national security reasons. Neither of these arguments
is persuasive. Mere geographic location does not constitute
isolation. There was no demonstration that workers were
functionally cut off from the rest of the country by virtue of
limited transportation or communication. We simply do not know if
the maintenance workers in question could have opted to return to
the mainland or pursue other employment on the island, or if (as
argued by petitioners) alternative sources of housing were
available. Hence, it is impossible to conclude that Shemya was
"remote" in the traditional sense.
In summary, I must respectfully dissent from the majority on
the issue of the substantive coverage of the maintenance workers.
II.
While I cannot agree that Congress intended to include off-
site nonconstruction workers within the ambit of the Davis-Bacon
Act, I am more troubled by what could be characterized as
procedural unfairness. Even if we assume that [6]
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[7] Davis-Bacon coverage of the maintenance workers is arguable,
it is clear that Wage and Hour has not met its burden of proof.
The Davis-Bacon Act and the regulations define "laborers and
mechanics" as those engaged in manual or physical labor, including
but not limited to those pursuing "the work of a trade." The
strongest argument for inclusion raised by the Solicitor is the
physical nature of the work performed by the maintenance employees.
Counteracting this argument is petitioners' reliance on the
regulations defining "building or work" as "construction activity,"
but not "maintenance work."
If the majority does not agree that the plain language of
these definitions, on the whole, tends to exclude maintenance
workers, it must agree that the issue of coverage is arguable
either way. In that case, should not the Wage and Hour Division
bear the burden of proving coverage by some preponderance of the
terms of the statute, the legislative history, or the language of
the regulations? Where analysis of the statutory scheme results
(at best) in ambiguity, I would opt for noninclusion just as an
overriding theme of American jurisprudence is the presumption of
innocence.
Where the Department of Labor cannot demonstrate inclusion by
some fair preponderance, extending coverage to those not named in
the statute results in the absence of any practical limit on the
scope of the Davis-Bacon Act. Aside from the unfairness to the
individual contractor, such a construction eviscerates the Davis-
Bacon Act as a guide to future conduct.
III.
I agree with the majority insofar as it regards the
conformance procedure as blatantly unfair, and rules that the case
should be remanded for proceedings consistent with due process and
the Secretary's own regulations. Finally, the Solicitor's office
should be commended for superb advocacy despite a "record" from
Wage and Hour that was grossly inadequate. In an appropriate
future case I would vote against Wage and Hour where the record is
deficient and the interests of justice would be served. [7]
