CCASE:
MARQUES ENTERPRISES & LISBON CONTRACTORS
DDATE:
19920929
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
MARQUES ENTERPRISES d/b/a/
LISBON CONTRACTORS, INC., WAB Case No. 91-34
Prime Contractor,
and
ANTHONY MARQUES, President,
ANTHONY DIFFER, Vice President, and
RUI DaSILVA, Superintendent
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Stuart Rothman, Senior Member
DATED: September 29, 1992
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petitions
of Marques Enterprises, d/b/a Lisbon Contractors, Inc. ("Lisbon"),
and president Anthony Marques ("Marques") and vice president
Anthony Differ ("Differ"); and the petition of the Acting
Administrator, Wage and Hour Division, seeking review [1]
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[2] of the October 3, 1991 decision and order of Administrative Law
Judge ("ALJ") Paul H. Teitler in this case.
The Acting Administrator petitions for review of the ALJ's
determination that the Lisbon firm should be relieved from
debarment, and that Marques should be debarred for one year rather
than for the full three-year debarment period provided for in 29
C.F.R. 5.12(a)(1). Lisbon seeks review of the ALJ's determination
that Lisbon violated Davis-Bacon prevailing wage requirements and
the overtime requirements of the Contract Work Hours and Safety
Standards Act, as amended (40 U.S.C. [sec] 327 et seq.) ("CWHSSA"),
and committed "aggravated or willful" violations of the Copeland
"Anti-Kickback" Act (40 U.S.C. [sec] 276c). Marques petitions for
review of the ALJ order debarring him for a year, and Differ seeks
review of the order debarring him for three years. For the reasons
stated below the Board grants the Acting Administrator's petition
for review; denies the other petitions for review; and orders that
Lisbon and Marques, as well as Differ, be debarred for three years.
I. BACKGROUND
A. Factual background
Lisbon served as the primary contractor from 1981 to 1984 on
a $16 Million sewer project in Concord, New Hampshire. The purpose
of the project was to separate the combined sewer system of the
City of Concord into a separate sanitary system and a separate
storm system. The project was subject to the labor standards
provisions of the Federal Water Pollution Control Act (33 U.S.C.
[sec] 1372), the CWHSSA, and the Copeland "Anti-Kickback" Act (all
applicable Davis-Bacon Related Acts).
Differ was Construction Vice President for Lisbon at the time
of the project and was "administratively" in charge of the project.
Employees on the project included three men from Bethlehem,
Pennsylvania: Jose Lopes DeLemos, Arlindo Campia and Joao Silva.
All three were born in Portugal and were unable to read or write
English. The three men were paid as pipelayers, and were paid
"expenses" of $100 per week while they worked in New Hampshire.
In 1984 the Wage and Hour Division investigated Lisbon's
performance on the Concord project. The investigation concerned
five employees who were performing work as masons but were being
paid as pipelayers at a lower wage rate. The five employees were
DeLemos, Campia, Silva, James Rodger and Manuel DeMelo. Lisbon
employed these workers to build invert channels in the bottom of
the sewer manholes, and classified these workers as
pipelayers/masons. The City of Concord questioned the
appropriateness of this classification. On May 26, 1982, the City
of Concord sent a letter to the New Hampshire [2]
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[3] Department of Labor stating that "the employees installing the brick
and mortar inverts and shelfs [sic] in the manholes are being paid the
pipe- layer/laborer rate." The City inquired whether "Mason" was the
proper classification.
By letter dated June 8, 1982, the New Hampshire Department of
Labor responded to the City's letter, stating that "employees
installing the brick and mortar inverts and shelves in the manholes
would be classified as bricklayers/masons." In response to the New
Hampshire Department of Labor determination that mason was the
appropriate classification for these workers, Lisbon changed the
rate of wages for five affected employees, although it disagreed
with the state's determination. Lisbon also decreased the "expense
payments" which had been paid to the employees from $100 to $10 per
week for all employees except Rodger. Upon investigating Lisbon in
1984, Wage and Hour determined that Lisbon owed back wages to the
five employees for their hours worked for the period between the
start of the project and the company's coming into compliance after
the state's determination.
Differ agreed that Lisbon would pay the full amount of back
wages. Differ and the Wage and Hour compliance officer decided
that the company would pay the employees by issuing to each a check
for the net amount owed. The firm also agreed to forward to the
Department of Labor a copy of form WH-58, a back wage receipt form,
as proof of payment of back wages for these employees. Differ
raised with the compliance officer the issues of future payment of
expenses to employees and the recoupment of expenses already paid.
The compliance officer told Differ that if the company "wanted to
cease paying expense money to employees that was their
prerogative," but the Department prohibited the recoupment of
expense payments. Differ did not indicate to the compliance
officer that Lisbon intended to seek the repayment of expenses from
the mason employees.
In May 1984 Differ held a meeting with DeLemos, Silva and
Campia at Lisbon's headquarters in Pennsylvania. Rui DaSilva, a
foreman for Lisbon, transported the employees to the meeting and
translated Differ's words into Portuguese for the employees. The
employees were not informed of the meeting's purpose until the
commencement of the meeting. Differ told the employees that Lisbon
wanted the back wages returned. Differ, through Rui DaSilva, told
the employees that if they did not sign over their back wage checks
to Lisbon, they would have to give back the expense money, which
would amount to more money than the back wages. The employees
returned the checks to Lisbon and signed back wage receipt forms.
No one orally translated the receipts into Portuguese or provided
the employees with a written translation.
According to the employees, Anthony Marques looked in on the
meeting, but did not stay. According to Differ, Marques
participated in the discussions [3]
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[4] leading to the decision to request the employees to repay the back
wages, and Marques approved of the decision. Marques did not testify at
the hearing.
B. The ALJ's decision and order
In his October 3, 1991 decision and order, the ALJ concluded
that Differ committed aggravated and willful violations of the
Copeland Act, and ordered that Differ be debarred for three years.
Regarding Marques, the ALJ concluded that Marques was "[a]t
the very least . . . less culpable than Differ." The ALJ stated
that "Marques, personally, committed no willful violation of the
Copeland `Anti-Kickback' Act," but "failed to fulfill his
affirmative obligation to ensure Differ adhered to the statutory
obligations." The ALJ ordered that Marques be debarred for one
year.
As for Lisbon, the ALJ stated that "Differ acted without
authority when he induced the masons to endorse over their backwage
checks," and that "Differ acted outside the scope of his employment
because Marques never authorized Differ to illegally recover the
backwage money." The ALJ also cited "extraordinary circumstances,"
on the basis of assurances of compliance, a training program for
Lisbon mid-level managers on labor law requirements, the lack of
violations of record since the violations that occurred in the
instant case, the fact that Differ has left Lisbon for new
employment, and the effect of debarment on employees and
subcontractors. The ALJ did not order debarment of Lisbon, on the
basis of his conclusion that the Department of Labor "failed to
prove Differ acted within the scope of his employment to impute his
culpability to Lisbon and Lisbon demonstrated extraordinary
circumstances."
II. DISCUSSION
A. Debarment of Differ
Debarment for violation of the Davis-Bacon Related Acts is
governed by 29 C.F.R. 5.12, which provides in Section 5.12(a)(1):
Whenever any contractor or subcontractor is found by the
Secretary of Labor to be in [*] aggravated or willful
violation [*] of the labor standards provisions of any of
the applicable statutes . . . other than the Davis-Bacon
Act, such contractor or subcontractor or any firm,
corporation, partnership, or association in which such
contractor or subcontractor has a substantial interest
shall be [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The ALJ also determined that foreman Rui DaSilva should not
be debarred. That determination has not been appealed by the
Acting Administrator. [4]
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[5] ineligible for a period not to exceed 3 years (from the
date of publication by the Comptroller General of the
name or names of said contractor or subcontractor on the
ineligible list . . .) to receive any contracts or
subcontracts subject to [the Davis-Bacon Act or Related
Acts]. (Emphasis supplied).
Board precedent makes clear that Copeland Act violations are
actions which constitute "aggravated or willful" conduct warranting
debarment. E.g., Morello Brothers, Inc., WAB Case No. 87-24 (Feb.
21, 1991); A. Vento Construction, WAB Case No. 87-51 (Oct. 17,
1990), at p. 7 n.4.
The ALJ in this case found that Differ induced the Lisbon
employees to endorse over their back wage checks to the company by
the threat of recovering expense payments, and leading the
employees to believe that they owed Lisbon more in expense payments
than the company owed them in back wages. Thus, the ALJ ruled, the
Department of Labor established that Differ "willfully" violated
the Copeland Act by requiring three employees to endorse back to
Lisbon their back wage checks.
Upon review, the Board affirms the ALJ's determination that
Differ's conduct violated the Copeland "Anti-Kickback" Act, and
warrants debarment of Differ for three years. However, we part
company with the ALJ on points. The first defect in the ALJ's
decision in this area is his analysis of Differ's Copeland Act
violations to determine the intent behind those violations. While
we agree with the ALJ's analysis of the record that led him to the
conclusion that the back wage kickbacks to Lisbon were induced by
Differ intentionally and deliberately, we note that Board precedent
provides specific instruction on the willful nature of Copeland Act
violations. Thus, as the Board explained in Killeen Electric
Company, Inc., WAB Case No. 87-49 (Mar. 21, 1991):
In previous cases involving debarment for Davis-Bacon Act
or Related Act violations, the Board has explained that
falsification of certified payrolls, itself a deliberate
act that violates law and regulation, also demonstrates
the deliberate nature of any accompanying underpayment of
wages. R.J. Sanders, Inc., [WAB Case No. 90-25 (Jan. 31,
1991)] at p. 2; Gaines Electric Service Company, Inc.,
WAB Case No. 87-48 (Feb. 12, 1991), at pp. 3-4. In our
view, a similar analysis can be employed with respect to
Copeland Act violations such as the wage kickbacks that
occurred in this case. [*] Thus, requiring employees to
"kick back" their Davis-Bacon wages is itself deliberate
conduct that violates law and regulation -- indeed, it is
"aggravated or willful" conduct that warrants debarment
under 29 C.F.R. 5.12(a)(1).[*] [*](Emphasis supplied.)
[*][5]
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[6] Accordingly, Differ -- who engaged in "aggravated or willful"
conduct by requiring Lisbon employees to kick back their back wages
-- should be debarred for three years absent extraordinary
circumstances. See A. Vento Construction, supra; Morello Brothers,
Inc., supra. Differ has failed to demonstrate the existence of any
circumstances that would support relieving him from debarment.
Differ argues that he is not a "responsible officer" within
the meaning of the debarment regulations at 29 C.F.R. 5.12. /FN2/
He argues that the term should be limited to owners or corporate
officers, and further contends that he was "not a corporate officer
and could not sign checks or execute agreements without the
approval of Marques" (Differ Brief at 40). Differ's arguments,
however, do not square with the record evidence. Differ himself
testified that he was construction vice president during the period
relevant to this case, and that he was responsible for
administrative oversight at the Concord site, as well as for
estimates, scheduling, changes and other matters (Tr. at 2, 26).
Furthermore, the record establishes that Differ was the instigator
of and deeply involved in the scheme to induce back wage kickbacks
from three Lisbon employees. Thus, there is simply no merit to
Differ's argument that he somehow lacked the status of "responsible
officer."
Differ also makes a due process claim, alleging that he was
deprived of effective representation by counsel before the ALJ
because counsel represented respondents with conflicting interests.
However, the Board -- an administrative tribunal -- is the not the
appropriate forum to resolve constitutional issues. As for
Differ's claim that his due process rights were violated because
the ALJ was biased, we note that none of the evidence referred to
by Differ as demonstrating bias is in the record. Furthermore, the
Department's regulations (29 C.F.R. 18.31(b)) set out specific
procedures for disqualification of an ALJ. See R.J. Sanders, Inc.,
WAB Case No. 90-25 (Jan. 31, 1991). These procedures were not
followed by Differ; consequently, the Board has no record upon
which to review Differ's claim -- raised for the first time at the
appellate stage -- of bias on the part of the ALJ. Id.
B. Debarment of Marques
As noted earlier, the ALJ determined that Marques did not
personally commit a willful violation of the Copeland Act, but
"failed to fulfill his affirmative obligation to ensure Differ
adhered to the statutory obligations." Concluding that Marques was
"[a]t the very least . . . less culpable than Differ," the ALJ
ordered that Marques be debarred for only one year. [6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ The Board's consistent precedent permits debarment under 29
C.F.R. 5.12(a)(1) of responsible officers for aggravated or willful
Related Acts violations. See discussion re debarment of
responsible officers for Related Acts violations at pp. 8 - 10 of
Facchiano Construction Company, Inc., WAB Case No. 91-06 (Aug. 29,
1991). [6]
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[7] The Board agrees that Marques should be debarred, but
concludes that the circumstances of this case do not support
shortening the debarment period. Board precedent does indeed place
an affirmative obligation on responsible company officials to see
to it that their firm complies with its statutory obligations;
furthermore, Board precedent makes clear that such an official
cannot avoid debarment by claiming that the violations were
committed by agents or employees. See, e.g., Marc S. Harris, Inc.,
WAB Case No. 88-40 (Mar. 28, 1991), at p. 4 and cases cited
therein. Thus, the Board finds no support for the ALJ's
determination that Marques, who failed to carry out his affirmative
obligation to ensure that Differ adhered to the relevant statutory
obligations, should be debarred for only one year. Such an
approach does not does not serve the purpose underlying the Related
Acts debarment regulation -- that is, to "effectuat[e] compliance,
and further[] the public policy represented by the labor acts." A.
Vento Construction, supra, at p. 6, quoting Copper Plumbing and
Heating Co. v. Campbell, 290 F.2d 368, 372 (D.C. Cir. 1961).
C. Debarment of Lisbon
The ALJ did not order debarment of Lisbon, determining instead
that the Department did not prove that Differ's conduct was within
the scope of his employment, and that Lisbon had demonstrated the
existence of extraordinary circumstances. The Board disagrees with
the ALJ's determinations, and concludes that Lisbon should be
debarred for three years. First, the ALJ's determination that
Lisbon somehow can avoid responsibility for Differ's actions is
utterly inconsistent with the ALJ's recognition of the affirmative
obligation of Marques -- Lisbon's president -- to ensure that
Differ complied with the applicable statutory requirements.
Furthermore, to permit a corporate entity to escape debarment in
such a manner is inconsistent with Board precedent and the policies
underlying the debarment regulation. See discussion at p. 6,
supra.
The ALJ's discussion of whether Lisbon demonstrated the
existence of "extraordinary circumstances" which would warrant
relieving the firm from debarment is also in error. We note that
the ALJ relied heavily on Service Contract Act debarment cases in
analyzing this issue. However, analogies between the
appropriateness of debarment under the Service Contract Act and the
Davis-Bacon Related Acts must be drawn with great care, given the
differences in the standards set forth in those two debarment
schemes. /FN3/ In the Board's view, the types of factors cited by
the ALJ in this case -- such as Lisbon's statements [7]
ÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ As discussed above, under the Department's regulations and
Board precedent regarding Related Acts debarment, contractors or
subcontractors who commit "aggravated or willful" violations of the
Related Acts shall -- absent extraordinary circumstances -- be
placed on the ineligibility list for a period not to exceed three
years. By comparison, persons or firms who have been found to
violate the Service Contract Act are to be debarred for three years
"[u]nless the Secretary [of Labor] otherwise recommends because of
unusual circumstances." [7]
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[8] regarding current compliance -- are not sufficient to
demonstrate extraordinary circumstances that would support
relieving Lisbon of debarment.
Lisbon alleges that no violations of the Davis-Bacon Act or
the CWHSSA occurred, and thus that the enforcement provisions of
the Copeland Act were not implicated. The Board does not accept
Lisbon's position. First, as noted by the Acting Administrator,
the Copeland Act (18 U.S.C. [sec] 874) provides a penalty for
inducing a person to give up "any part of the compensation to which
he is entitled under his contract of employment." In this case,
Lisbon agreed to pay back wages after Wage and Hour conducted an
investigation and concluded that employees had been underpaid
because Lisbon had misclassified those employees. We agree with
the Acting Administrator that once the contractor assented to
paying the back wages computed by the compliance officer, those
back wage payments constituted "compensation to which [the employee
was] entitled" for purposes of the Copeland Act enforcement
mechanism.
Furthermore, we also agree with the Acting Administrator that,
in any event, the record contains uncontroverted evidence that
CWHSSA violations occurred. Lisbon -- which did not request a
hearing on the amount of back wage liability -- argues that the
expense payments to the three employees should have been credited
as prevailing wage payments, and that if those payments had been so
credited, the employees would have received amounts in excess of
the back wage liability. However, Lisbon admitted that it did not
use the expense payments in calculating the amount of overtime
compensation due to its employees. Thus, even under Lisbon's own
argument, the firm violated the CWHSSA by calculating overtime
compensation according to an hourly rate that excluded the expense
payments.
III. ORDER
It is ordered that Marques Enterprises d/b/a/ Lisbon
Contractors, Inc.; Anthony Marques; and Anthony Differ, having
committed "aggravated or willful" violations of the Copeland Act,
shall be ineligible, pursuant to 29 C.F.R. 5.12(a)(1), to receive
any contracts or subcontracts subject to any of the statutes listed
in 29 C.F.R. 5.1 for a period of three years.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Stuart Rothman, Senior Member [8]
