LABOR SERVICES, INC., WAB No. 90-14 (WAB May 24, 1991)
CCASE:
LABOR SERVICES, INC.
DDATE:
19910524
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of:
LABOR SERVICES, INC.,
Renovation of Warren Avenue WAB Case No. 90-14
Girl Scout Hall
Bremerton, Washington
Project No. K-87-018
BEFORE: Charles E. Shearer, Jr, Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: May 24, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Labor Services, Inc. ("Labor Services") and its president, Paul
Hoskinson (collectively, "Petitioner"), for review of a July 20,
1989 decision by the Administrator of the Wage and Hour Division
regarding coverage of four workers alleged to be subcontractors.
This matter involves a back wage assessment totaling $631.64. For
the reasons stated below, the Board denies the petition for
review. [1]
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[2] I. BACKGROUND
Labor Services was the contractor for the exterior renovation
of the Girl Scout Hall in Bremerton, Washington. This federally
assisted project was subject to a Davis-Bacon Related Act -- the
Housing and Community Development Act of 1974 ("HCDA"), 42 U.S.C.
[secs] 5310, 1440(g). Labor Services' initial bid of $5485.00 plus
state sales tax was rejected as too high; the project was rebid,
and the contract was awarded to Labor Services for the amount of
$3988.60. Labor Services entered into "subcontractor" agreements
with each of four workers who were said to constitute Labor Pool,
Inc. ("Labor Pool"). It is undisputed that these four workers
performed the construction work called for in Labor Services' prime
contract.
Hoskinson attended a pre-construction meeting, at which city
officials stated that a "labor pool" must consist of no more
than five individuals owning a minimum of 20% of the company.
Hoskinson stated that he had 15 individuals in his pool. After
completion of the renovation project, the Director of HUD's Seattle
Office of Labor Relations informed the City of Bremerton that the
four Labor Pool workers did not meet HUD's criteria for qualifying
as bona fide subcontractors, and accordingly, the workers were due
back wages.
Hoskinson subsequently requested a determination from the Wage
and Hour Division of the Department of Labor regarding the status
of Labor Pool. Documents submitted by Hoskinson along with his
request included copies of signed "subcontractor" agreements with
each of the four workers as a Labor Pool subcontractor, and
certified payroll records that listed each worker as a
self-employed joint venture partner and that listed the hours they
worked on the project. Hoskinson acknowledged that the
individuals held less than 20% equity in Labor Pool.
In her decision dated July 20, 1989, the Administrator stated
that according to the labor standards provisions of the HCDA and
the Department of Labor's regulations at 29 C.F.R. Part 5, Labor
Services was required to pay laborers and mechanics employed on
the project not less than the predetermined prevailing wage rate.
Furthermore, the Administrator stated, 29 C.F.R. 5.5(a)(1)(i)
requires that all laborers and mechanics employed or working on
the site receive the wage determination rate "regardless of the
contractual relationship alleged to exist."
The Administrator noted that information supplied by HUD
indicated that Labor Services claimed that the individuals who
worked on the project were subcontractors who had entered into a
Joint Venture Partnership and thus were exempt from the Davis-Bacon
prevailing wage requirements. However, the Administrator stated,
"The statutory language of the Davis-Bacon Act makes it [2]
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[3]
clear Congress intended that individuals performing the work of
laborers and mechanics on construction sites be guaranteed the
prevailing wage rate `regardless of any contractual relationship
which may be alleged to exist between the contractor or
subcontractor.'" Accordingly, the Administrator added, "when
officer/owners of a subcontractor corporation, partnership, or
proprietorship, are themselves performing the work of laborers and
mechanics, the prime contractor must pay them weekly an amount
equal to at least the applicable wage for the hours worked in the
specific classification. . . ." In this matter, the Administrator
stated, the individuals in question received less than the
prevailing wage rate, and back wages totaling $631.64 had been
calculated.
Hoskinson contacted HUD by letter dated August 4, 1989,
alleging conflicts between HUD's position and the Administrator's
July 20, 1989 decision. The Director of HUD's Seattle Office of
Labor Relations responded that HUD was required to follow the
Administrator's decision.
II. DISCUSSION
Section 1(a) of the Davis-Bacon Act, 40 U.S.C. [sec.] 276a(a),
requires a contractor or subcontractor to "pay all mechanics and
laborers employed directly on the site of the work [not less than
the prevailing wage rate] regardless of any contractual
relationship which may be alleged to exist between the contractor
or subcontractor and such laborers and mechanics." Thus, as the
Board recently explained in Lance Love, Inc., WAB Case No. 88-32
(Mar. 28, 1991), Section 1(a) "applies a functional rather than a
formalistic test to determine coverage: if someone works on a
project covered by the Act and performs tasks contemplated by the
Act, that person is covered by the Act, regardless of any label or
lack thereof." See also, N.B.A. Enterprises, Ltd., WAB Case No.
88-16 (Feb. 22, 1991). It is undisputed in this matter that the
four individuals who were labeled as "subcontractors" performed the
work called for in the contract awarded to Labor Services.
Accordingly, the Administrator properly determined that Labor
Services was required to pay these individuals not less than the
prevailing wage rate for the work they performed on the project.
(FOOTNOTE 1) [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 1) According to the record, Hoskinson was advised that a labor
pool consisting of not more than five individuals, each holding at
least 20% equity in the company, would not be subject to prevailing
wage requirements. However, Hoskinson's Labor Pool did not satisfy
HUD's criteria and, in any event, Section 1(a) of the Davis-Bacon
Act provides no exemption for "labor pools." Furthermore, advice
given by the contracting agency is not binding on the Administrator
of the Wage and Hour Division. [3]
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[4] The petition for review is denied. The July 20, 1989 decision
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 [4]
