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NORTH COUNTRY CONSTRUCTORS OF WATERTOWN, INC., WAB No. 92-22 (WAB Sept. 3, 1993)


CCASE: NORTH COUNTRY CONSTRUCTORS OF WATERTOWN DDATE: 19930903 TTEXT: ~1 [1] WAGE APPEALS BOARD UNITED STATES DEPARTMENT OF LABOR WASHINGTON, D. C. In the Matter of: NORTH COUNTRY CONSTRUCTORS WAB Case No. 92-22 OF WATERTOWN, INC. With respect to application of the Davis-Bacon Act to Contract No. DACA51-86-C-0141 (FY 86 Infrastructure Package) Construction of Roads, Distribution System & Utility Facilities, Fort Drum, Jefferson County, Watertown, New York BEFORE: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member DATED: September 3, 1993 DECISION OF THE WAGE APPEALS BOARD This matter is before the Wage Appeals Board on the petition of North Country Constructors of Watertown, Inc. ("NCCW"), seeking review of the November 13, 1992 ruling issued by the Deputy Assistant Administrator of the Wage and Hour Division. The ruling in question held that the work of installing underground PVC electrical conduit, precast concrete electrical manhole structures and duct bank in Jefferson County, New York was the work of electricians and that NCCW should have accordingly classified and paid its employees performing the disputed work. NCCW had classified and paid its employees as laborers under the wage determination applicable to the contract. For the following reasons, the ruling of the Deputy Assistant Administrator is reversed. [1] ~2 [2] I. BACKGROUND A. Factual History The United States Army Corps of Engineers awarded Contract No. DACA51-86b-0036 to prime contractor Morrison-Knudsen Company, Inc. (doing business as Fort Drum Constructors) in May 1986. The prime contract was for development of the "FY 86 Infrastructure Project," under which Morrison-Knudsen was required to construct roadways, distribution systems for utilities and related utility facilities at Fort Drum in Watertown, New York. The prime contractor awarded NCCW a subcontract on June 18, 1986. The subcontract was for construction of the mechanical and electrical site utilities, including water lines, sanitary gravity sewers, buried sanitary sewage force mains, underground high temperature water distribution systems, aerial electrical distribution system, underground electrical distribution system, communication system and street lighting, as well as for work on a sewage pumping station and a sewage treatment plant. The prime contract and subcontract were subject to and contained General Wage Decision No. NY86-10, applicable to Heavy and Highway construction in St. Lawrence, Lewis and Jefferson Counties, New York. NCCW commenced performance of its subcontract on or about June 30, 1986. Prior to that time, however, Local 1249 and 910 of the International Brotherhood of Electrical Workers ("IBEW") initiated inquiries to certain Congressmen -- characterized by the parties as a "jurisdictional dispute /FN1/" -- expressing their concern that their local members perform "the IBEW portion" of the subcontract work. The IBEW locals also contacted the Corps' contracting officer, requesting a decision concerning the appropriate classification and wage rate for work relating to the electrical conduit and manhole installation. The Corps conducted an "area practice" investigation regarding the proper classification for performance of the disputed work. Among others, the Corps contacted local electrical contractors, representatives of the IBEW and LIUNA, Local No. 322, and NCCW. Seventeen contractors responded to the [2] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN1/ With respect to this aspect of the dispute, the affidavit of Sam Agati (Business Manager for Laborers International Union of North America ("LIUNA"), Local 322) was submitted by NCCW. Agati averred that Article IV of the 1985-1988 Heavy-Highway Agreement between LIUNA and the New York Chapter of the Associated General Contractors ("AGC") provides: "that the duties of laborers on heavy-highway contracts in Jefferson County include the following: `the laying of all types of pipe and conduit; . . .; and the placing of all pre-cast and prestressed materials.[']." This is an accurate representation; a portion of this labor agreement is in the Administrative Record ("AR") Tab OO, Exhibit I. No written jurisdictional claim by IBEW has been brought to the Board's attention by the parties or interested person IBEW Local 910. [2] ~3 [3] Corps' inquiry; additionally, information was submitted by the Northern New York Builders Exchange and the AGC, New York Chapter. NCCW, meanwhile, had proceeded under its subcontract and classified and paid its employees laying conduit and installing the manhole fixtures and duct banks as laborers. On December 3, 1986, the Corps informed the prime contractor of the results of its investigation, stating that NCCW had "misclassified the installation of underground conduit and ductbank for electrical systems as laborers' work, instead of the correct classification, electricians' [sic]." AR Tab K. As a result of this classification determination, the Corps ultimately determined that back wages in the amount of $13,943.10 were due affected employees for the alleged misclassification as laborers. This amount was withheld from contract payments by the Corps. Subsequent work -- the "FY 87 project" -- was also performed by NCCW utilizing the laborer classification. For the FY 87 project, the Corps has also purportedly withheld more than an additional $50,000 for alleged misclassification and overtime violations at Wage and Hour's request, based on the 1987 (and ostensibly) 1990 ruling letters. See AR Tab AA. At all times during the Corps' and Wage and Hour's investigations, NCCW has contended the proper classification for the work was that of laborer and refused to authorize the Corps to disburse the withheld funds as back wages. B. Procedural History On February 18, 1987, the Corps transmitted its investigation report to the Wage and Hour Division and NCCW requested Wage and Hour to review the Corps' determination. Additional information was obtained from IBEW, LIUNA, local construction contractors, and the AGC. After its review, Wage and Hour informed the Corps on May 20, 1987 that "it was the practice in Jefferson County for electricians rather than laborers to install manholes, underground electrical conduit and duct banks during the period." AR Tab R, p. 1. On June 19, 1987, both NCCW and LIUNA requested Wage and Hour to reconsider the May 20 determination. On the same day NCCW also appealed the ruling to this Board, which first stayed consideration of the petition for review pending a final ruling on the request for reconsideration; subsequently, the Board -- by Order dated August 17, 1990 -- remanded the pending case to the Wage and Hour Division to complete reconsideration. Meanwhile, on July 11 and December 22, 1989, NCCW requested Wage and Hour to issue its decision or, alternatively, grant a hearing to resolve the dispute. NCCW addressed numerous other requests for information or action to Wage and Hour; however, the record discloses no responses other than the 1987 and 1992 ruling letters. [3] ~4 [4] Wage and Hour conducted yet another area practice investigation in the latter part of 1990. Based on this newest, third, survey, Wage and Hour stated its conclusion that "employees who installed manholes, conduit and duct banks on the Fort Drum infrastructure project should be re-classified and compensated as electricians in accordance with the contract wage determination. . . ." AR Tab A, p. 2. Wage and Hour found that "68% of the employees who installed manholes, underground electrical conduit and duct bank on projects of a character similar to the Fort Drum project, were classified as electricians, while only 23% were classified as laborers (i.e., a ratio of 21 electricians to 10 laborers)." Id. Counsel for Wage and Hour now explains that -- as a result of a transposition or "clerical" error -- the correct laborers' statistic was 32%. The November 13, 1992 Wage and Hour ruling was issued pursuant to 29 C.F.R. 5.13 and NCCW was notified of its right to appeal the new determination. On December 10, 1992 the instant petition for review was filed. IBEW Local No. 910 has participated in this proceeding as an interested person, filing statements on behalf of the Wage and Hour ruling and appearing at the oral argument conducted on July 28, 1993. II. DISCUSSION The central question for resolution in this case is not difficult, i.e., the counting of respective classifications performing the disputed NCCW work on the project. /FN2/ The Wage and Hour Division's ruling concluded -- based on the results of the 1990 area practice survey -- that approximately 68% (21 out of a total of 31 workers) of the survey population were electricians performing the work similar to that in dispute. However, to make a proper count of these survey numbers, first resort must be had to the pertinent statutory requirement and several policies and procedures utilized by the Wage and Hour Division in conducting area practice surveys in general and with particular application in this matter. The Davis-Bacon Act requires, in part, that contractors and subcontractors on construction of public buildings and works shall pay wages to [4] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN2/ There is no dispute concerning the vast majority of Petitioner's work on the FY 86 project, which entailed the construction of 28,500 feet of high temperature hot water lines, 35,000 feet of gravity sewers, 18,300 feet of sewer force mains, approximately 21,000 feet of above ground electric lines, approximately 79,000 feet of water lines and a pumping station. No violations were alleged for NCCW's employment practices with respect to any of the trades concerned with this work. Moreover, with regard to the work related to the present dispute, NCCW employed and properly classified equipment operators to dig and fill trenches and electricians to pull necessary cabling or lines.[4] ~5 [5] various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which the work is to be performed.... 40 U.S.C. 276a(a); emphasis supplied. The Wage and Hour Division has accordingly established a methodology for determining the nature of construction projects appropriate for comparison to disputed work: residential, building (or commercial), highway, and heavy construction. The parties and Interested Person IBEW Local 910 are in agreement that the FY 86 project is heavy construction and that "projects of a character similar" would be other heavy construction projects. Moreover, since the applicable prevailing rates in the locality were determined as those from collective bargaining agreements, it is appropriate in this case to look only to the area practice of union contractors. See Fry Brothers Corporation, WAB Case No. 76-06 (June 14, 1977). In conducting a full area practice survey, Wage and Hour looks to the "peak week" of employment for work of a character similar to that in dispute. A peak week is "the week in which the greatest number of employees performed the work in question. . . ." Field Operations Handbook ("FOH") 15f05(d)(4). Furthermore, a proper area practice survey should encompass a period of "no more than one year prior to the beginning of the survey or the request for a wage determination." 29 C.F.R. 1.7(a). We begin our analysis of the record supporting Wage and Hour's ruling here. With respect to this part of the procedure, counsel for the Wage and Hour concedes that two survey projects --both at the "Cloverdale Complex" of apartments /FN3/ were constructed in November 1984 and February 1985 -- prior to the appropriate one- year period. Counsel, nevertheless, states [a]rguably, the survey should have included only the projects ongoing between May 1985 and May 1986, but inclusion of the projects of 1984 [sic] is harmless, as the more restrictive period would only eliminate two projects (the Cloverdale Complex projects) and four electricians from the survey. [5] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN3/ Wage and Hour did not characterize these "projects" as building construction, but as "electrical power line and underground distribution when City converted from a private utility to own municipal power company." AR Tab A, Attachment, p.1. These projects entailed the installation of 20 [*] feet [*] and 10 [*] feet [*] of underground electrical conduit, respectively, which ran from streetside elevated power lines into the buildings. [[*]EMPHASIS IN ORIGINAL[*]] [5] ~6 [6] Statement of the Acting Administrator at p. 13, n.9. This error may have been harmless in light of the remainder of Wage and Hour's conclusions, but it was clearly wrong to include these results in the final survey report. See Northstar Steel, Inc., WAB Case No. 89-22 (Aug. 21, 1991), slip op. at p. 4 (the applicable regulation requires "expansion of the geographic sample prior to an historical search"). Another project employing electricians (two) to perform similar work was the Watertown Correctional Facility, where again 10 feet of electrical conduit was installed. Petitioner argues that this project was not of a character similar and should not have been included in the survey because 1) it was part of a building project; and 2) it was so small and therefore not "similar" to the Fort Drum FY 86 project. Wage and Hour considered this Correctional Facility work pertinent to the survey as it was part of a heavy construction project: "part of the City conversion project and not part of the expansion of the facility." AR Tab A, p. 1. It must be noted at this juncture that most of the projects contained in the Wage and Hour 1990 survey were for installation of substantial amounts of underground electrical conduit. For instance, another Watertown Correctional Facility project (for a closed circuit television perimeter alarm) entailed installation of 14,000 feet of conduit and 5 electricians were reported in the peak week; 2000 feet of conduit were involved in the Sandy Hollow Hydroelectric facility and 6 electricians were tallied for the peak week. The scope of these two electrician-staffed projects represent a stark contrast to that of the 10 feet of conduit in the Correctional Facility "conversion project," which surely entailed less than a single day's work for the two reported electricians. The Board does not reach the question of whether the Correctional Facility "conversion project" -- as a whole -- was heavy construction and therefore of a "character similar" for purposes of the area practice survey. However, the minimal nature of installing 10 feet of conduit does raise another issue: the appropriateness of counting the 2 electricians on that project in the same manner as those electricians and laborers employed on similar projects of far greater scope. In this regard, the Board notes without comment that among the surveyed projects, one -- the Sandy Hollow Hydroelectric Plant -- was a building project, but since it had a more than "incidental" amount of conduit, (i.e., approximately 20% of project cost), Wage and Hour counted the conduit work as heavy construction and 5 electricians were included in the survey results contained in the November 13, 1992 ruling letter. (The investigator who compiled the 1990 area practice survey did not count this project at all in reaching his conclusion. Compare AR Tab LL, pages 2 and 4.) [6] ~7 [7] Granting the same weight to data from vastly disparate-sized projects is remarkably similar to the area practice methodology rejected by this Board in Gust K. Newberg Construction Co., WAB Case No. 91-35 (Mar. 31, 1992). In that case, Wage and Hour had departed from its usual procedures in determining area practice data -- since there was no peak week employment information -- and instead issued an area practice determination based on simply counting projects where differing practices were utilized. The Board held that the approach used by Wage and Hour in this case is unreasonable as a method of determining area practice because this approach does not provide a sufficient measure of the amount of work performed or the number of workers employed. Furthermore, as LIUNA noted at oral argument, the use of this approach in this case is inconsistent with the position taken by Wage and Hour when the Davis-Bacon helper regulations were under consideration. See Iron Workers II, WAB Case No. 90-26 (March 20, 1992), at p. 9. Thus, in response to suggested alternatives (counting projects on which helpers are used, or counting contractors employing helpers) for determining area practice regarding employment of helpers, Wage and Hour stated that these alternatives "are not acceptable approaches . . . because they fail to give necessary weight to the size of a project or a contractor's workforce." 54 Fed. Reg. 4239 (Jan. 27, 1989). Likewise, the project counting approach used in this case is not an acceptable method of determining area practice. On remand Wage and Hour either must utilize its traditional approach of analyzing peak employment data or, if such information is not available, must utilize an alternative approach which gives appropriate weight to the amount of work performed and the number of employees performing that work. Id. at pp. 4-5. In the Board's view, the present situation also evidences an unreasonable approach -- tantamount to "project counting" -- to determination of this area practice dispute. Under the holding in Gust Newberg, 2 electricians installing 10 feet of conduit should not reasonably be given the same weight as 6 installing 14,000 feet. Thus, Wage and Hour gave improper weight to the two electricians counted in the survey data for the Correctional Facility conversion project, and those two are neither valid nor acceptable survey results. /FN4/ [7] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN4/ We would reach the same conclusion with respect to the two Cloverdale Complex projects where 10 and 20 feet of underground conduit were installed by four electricians, had not these projects been rejected for being outside the correct survey time period. See pp. 5-6, supra. [7] ~8 [8] For another project -- the Watertown Electrical Distribution System -- the investigator found that "[s]ome conduit was laid into buildings such as the power station, schools and the municipal building." AR Tab LL, p. 2. Wage and Hour's investigator reported that this project was "similar" to the Cloverdale Complex projects where one 10-foot and one 20-foot conduit project were constructed. Id. at 2-3. Given our disapproval of "project counting" for area practice surveys, granting full weight for the laying of "some conduit" would --without clarification of the amounts involved -- appear to be proscribed, as well. Four electricians were included in the survey results for this project, but should be also be excluded. Under the foregoing analysis, the Board has determined that at least 10 electricians should not have been counted -- or should have been pro-rated on a reasonable basis -- in the survey results, which originally reported 21 electricians (67.7%) and 10 laborers (32.3%). Upon elimination of ten electricians under four projects, the ratio stands at 11 electricians (52.4%) to 10 laborers (47.6%). Given these statistics, Wage and Hour should be viewed as having failed to document sufficient evidence to support the conclusion that Jefferson County area practice was for electricians to perform the disputed work. The FOH specifies procedures for counting data in area practice surveys: Compile all information received and total the number of employees in each classification which performed the work in question. The classification which has the clear majority of employees performing the work in question is the proper classification. However, if it is found that only 51% to 60% of the employees in a classification performed the work in question, contact the RO [Regional Office] for guidance. The RO should contact the NO [National Office], if necessary. If no common, single classification practice is found to be predominant in the area or if no project involving work of a similar character is found, we will not take exception to the contractor's particular practices. FOH 15F05(d)(4)(6/29/90); emphasis supplied. A margin of one employee is not a "clear majority." With only 52% of the survey represented by electricians --and in light of Wage and Hour's FOH directives -- the Board cannot conclude that Wage and Hour has demonstrated that electricians were "predominant in the area." This percentage is well within the FOH zone where predominance cannot be established and exception should not be taken to NCCW's practices. We next reach consideration of three more projects -- each involving installation of conduit and manholes for the New York telephone system -- and for which Wage and Hour concluded that the contractor (Altec Construction Co., Inc.) utilized laborers. Wage and Hour stated in the ruling letter that Altec had [8] ~9 [9] employed 3, 4, and 3 laborers (respectively) on the three projects. However, the record demonstrates that in responding to Wage and Hour's 1987 area practice survey, on March 18, 1987 Altec first claimed it employed crews of six, seven and five men -- without identifying peak weeks. AR Tab S. In clarification, on April 20, 1987 Altec reported peak week employment of "a six man crew," "a [sic] eight man crew," and "a nine man crew" on the three New York Telephone Co. projects. AR Tab U. Altec did not identify the work classification for the members of its work crews in either 1987 submission. At the July 28, 1993 hearing, Petitioner raised -- for the first time -- the discrepancy between both of Altec's survey data reports and the Wage and Hour conclusion regarding that contractor's employment numbers on these three projects. Counsel for Wage and Hour was granted five working days to submit an explanation -- based on the administrative record as then constituted -- to explain the discrepancy. On August 4, 1993, counsel submitted Wage and Hour's explanation but by contemporaneous motion requested permission to supplement the record with a compliance officer's work sheets (which were not a part of the original record) in order to explain the reduction of Altec's statistics to the levels stated in the November 13, 1992 ruling letter. The motion to supplement the record is hereby denied. The Board's directive to Wage and Hour plainly precluded submission of additional information to support the ruling determinations. We note that Wage and Hour's counsel states [a]s a rule, work sheets of Wage and Hour investigator's are not part of the record submitted to the Wage Appeals Board. The work sheets do not alter, modify, or amend the record, but merely explain and show the process that Wage and Hour used to determined the number of laborers working on the projects that Altec listed. Administrator's Supplemental Statement, p. 4. In this case, the Board must disagree with the "rule." These work sheets do alter, modify and amend the record in which Altec separately states its non-peak and peak week employment. The work sheets serve to explain how the Wage and Hour investigator reduced Altec's reported numbers in the March 18, 1987 submission, which did not reference peak employment data /FN5/. But counsel for Wage and Hour also [9] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN5/ The numbers in the Altec's March 18, 1987 submission were reduced by several employees, based on the contractor's verbal advice that -- in addition to laborers -- two of the crews consisted of a foreman, a driver, and an operator and the third had a foreman and an operator. Administrator's Supplemental Statement, pp. 5-6. [9] ~10 [10] dismisses the importance of the investigator's omission of the data described by Altec as being peak employment: The notes do not address the number of employees that Altec stated in its April 20, 1987 letter work on the project. Because Wage and Hour should have had that letter at the time that it spoke with Altec, apparently the numbers in the first letter were deemed the relevant numbers. Id. at p. 5, n.3; emphasis supplied. The basis for stating the March 18, 1987 numbers were the relevant numbers is not "apparent" to the Board. What is apparent from the record is that Wage and Hour did not address Altec's peak employment data and the Administrator's Supplemental Statement confirms this. If, for instance, the investigator had extrapolated the method used to reduce Altec's March 18 numbers to Altec's numbers reported in the April 20 peak employment numbers (commensurately reducing the "crews" by a foreman, an operator and, where appropriate, a driver), an additional five laborers could have been counted in the survey of Altec's projects. Five additional laborers would increase the valid total for that classification to 15, which would be over 57% of the survey universe. This would raise the conclusion of "predominance" for the laborer's classification. Finally, the Board will also consider Wage and Hour's treatment of survey results concerning another heavy construction conduit project, this one constructed in the proper time frame on Fort Drum itself -- the Multi-Purpose Training Range for Tanks. Both the prime contractor and a subcontractor reported having performed work of a character similar on this project, but Wage and Hour excluded from consideration all information for the Training Range project because "conflicting data was received on whether electricians or laborers performed the installation of cable or conduit. Additional fact finding efforts failed to resolve the conflict." AR Tab A, Attachment, p. 3. The Board concludes that Wage and Hour's basis for excluding both contractor's data -- inability to resolve the "conflict" -- was unreasonable. /FN6/ The prime contractor, [10] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN6/ Exclusion of Zeronda's area practice evidence based on the record was not reasonable. The prime contractor F.J. Zeronda, Inc. reported that an electrician supervised three laborers who installed conduit on this project. AR Tab V. Zeronda stated that it "installed all concrete structures and PVC conduit duct banks and concrete encasements." Id. On the other hand, the subcontractor on the project (T.H. Green Electric Co.) reported -- apparently orally -- that it performed similar work and used electricians. However, the record also demonstrates that T.H. Green's representative also stated "that the project was too long ago for him to be able to answer" the Wage and Hour investigator. This is not -- in the Board's opinion -- a conflict which would merit the exclusion of the prime contractor's information. A more reasonable result would have been exclusion of the subcontractor's information. T.H. Green's report was inherently unreliable as to the amount of conduit work; moreover, the subcontractor did not report that it [10][NOTE 6 CONTINUED TO PAGE 11 [11] performed any duct bank or manhole installation as did Zeronda. The only reasonable use of this "conflicting" information would have been to exclude the subcontractor's report and include Zeronda's -- thus adding three more laborers to the area practice survey result. [END NOTE 6][11] ~11 [11] F.J. Zeronda, Inc., reported that an electrician supervised three laborers who installed conduit on this project. AR Tab V. Zeronda stated that it "installed all concrete structures and PVC conduit duct banks and concrete encasements." Id. On the other hand, the subcontractor on the project (T.H. Green Electric Co.) reported that it performed similar work and used electricians. Even if this "conflict" were unresolvable by Wage and Hour's investigation, the Board believes that a more appropriate solution would have been referral of the factual dispute to an administrative law judge for taking of evidence, credibility resolutions, and determination of the issue. In fact, so many conflicts in the overall evidence collected by Wage and Hour existed that it would could have been more reasonable to submit the entire dispute to an administrative law judge for decision. For the foregoing reasons, the Board holds that the evidence of record supports only a determination that there was no predominant classification performing work of a character similar to that in dispute and concludes that the decision of the Wage and Hour Division must be reversed. Moreover, in light of the passage of time, the Board finds that no useful purpose would be served in remanding the case for additional consideration. Accordingly, the Department of Labor should take no exception to NCCW's practice of employing laborers for the installation of precast manholes, underground electrical conduit and duct banks on the FY 86 infrastructure project. Finally, given the Board's disposition of this matter, Petitioner's otherwise acceptable employment policies under the FY 86 project must be considered in any subsequent determination of area practice for the FY 87 project. BY ORDER OF THE BOARD: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member Gerald F. Krizan, Esq. Executive Secretary [11]



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