Fred A. Nemann Co., WAB No. 94-08 (WAB June 27, 1994)
CCASE:
Fred A. Nemann
DDATE:
19940627
TTEXT:
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WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of:
Fred A. Nemann and WAB Case No. 94-08
Fred A. Nemann Co.
BEFORE: David A. O'Brien, Chair
Ruth E. Peters, Member
DATED: June 27, 1994
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of Fred A. Nemann and Fred A. Nemann Company (collectively
referred to as "petitioners" or "Nemann") for review of two
ruling letters dated October 4, 1993 and February 14, 1994 from
the Deputy Assistant Administrator of the Wage and Hour Division
of the Department of Labor ("DOL"). This matter arises under the
labor standards provisions of the Federal-Aid Highway Acts (23
U.S.C. [sec] 113, as amended by the Surface Transportation
Assistance Act of 1982, Pub. L. 97-424), and the Contract Work
Hours and Safety Standards Act (40 U.S.C. [sec] 327 et seq.),
which are Davis-Bacon related Acts ("DBRA"). The DOL denied
Nemanns' request for early removal from the debarred bidders'
list because of the severity of the violations which provided the
basis for the debarment and because of post-debarment violations
committed by Nemanns' companion firm, Treble Construction
Company. For the reasons set forth below, the petition for
review is denied and the decision of the DOL is affirmed.[1]
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I. BACKGROUND
On November 28, 1989 DOL issued a charging letter to Nemann
alleging aggravated and willful violations of DBRA. On December
20, 1989 Nemann requested a hearing on those charges. However,
prior to the date of the hearing Nemann entered into a settlement
agreement with DOL that caused Nemann to be placed on the
debarred bidders' list for a period not to exceed three years
with a termination date of February 3, 1995. On September 1,
1992, Nemann requested that they be removed from the debarred
bidders' list pursuant to 29 C.F.R. 5.12(c).
On October 4, 1993, DOL issued a ruling denying Nemanns'
request due to the severity of the underlying charges and because
a post-debarment investigation revealed that a companion firm,
Treble Construction Company, committed Fair Labor Standards Act
(29 U.S.C. [sec] 201 et seq.; "FLSA") violations. An appeal to
the WAB was filed based upon this decision of the DOL, but at the
request of Nemann the case was later remanded. A second decision
of the DOL was issued on February 14, 1994 affirming the ruling
of October 4, 1993. On March 11, 1994, Nemann filed a petition
for review with this Board alleging that the willfulness of the
underlying charges has never been admitted, nor has it been
proven; that considering the companion company's FLSA violations
in denying the petition constitutes denial of due process; and
that the underlying violations were not sufficiently severe to
deny the petition.
II. DISCUSSION
29 C.F.R. 5.12(c) states that a debarred contractor may
request removal from the debarred bidders' list after six months.
When such a request is made the DOL should:
[E]xamine the facts and circumstances surrounding the
violative practices which caused the debarment, and
issue a decision as to whether or not such person or
firm has demonstrated a current responsibility to
comply with the [DBRA] .... Among the factors to be
considered in reaching such a decision are the severity
of the violations, the contractor['s] . . . attitude
towards compliance and the past compliance history of
the firm. In no case will such removal be effected
unless the Administrator determines after an
investigation that such person or firm is in compliance
with . . . other labor statutes providing wage
protection, such as ... the Fair Labor Standards Act.
Relevant portions of 29 C.F.R. 5.12(c).[2]
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[3] The underlying violations which resulted in Nemanns'
debarment involved failure to pay the applicable prevailing wage
rates, exceeding the contracts allowable ratio of apprentices to
journeymen, failure to pay the overtime premium and falsification
of certified payroll records. The DBRA violations resulted in
Nemann agreeing to pay $21,095 in back wages to 29 employees.
The total amount of back wages paid, including FLSA violations,
was $58,006 to 63 employees. Nemann argues that they never
admitted the violations were willful and that a hearing has never
been held to give them an opportunity to rebut the allegation.
A hearing was not held because Nemann entered into a
settlement agreement which concluded the matter. Nemann had an
opportunity to rebut the charges at the time the charging letter
was issued, but chose not to do so. The settlement agreement
specifically notes that Nemann would be debarred under the
provisions of 29 C.F.R. 5.12(a)(1). Pursuant to that code
section a contractor cannot be debarred except upon a finding of
an aggravated or willful violation of the DBRA. Nemanns'
argument that they have not admitted, nor have they been found
guilty of, a willful violation of DBRA is without merit.
Pursuant to the specific language of 29 C.F.R. 5.12(c), DOL
conducted an investigation to determine whether or not Nemann is
in compliance with relevant statutes providing wage protection.
That post-debarment investigation revealed that a companion firm,
Treble Construction Company, was currently in violation of FLSA
as a result of a joint employment relationship with a third firm,
Specialty Contractors. Nemann/Treble agreed to compensate 21
employees in the amount of $7,714.54 based upon that
post-debarment investigation. It is not clear from their brief
whether or not Nemann is contesting DOL's allegation that Treble
Construction Company is a companion company. It is clear that
Nemann is contesting the joint employment allegation between
Specialty Contractors and Nemann/Treble.
The record supports DOL's position that Treble Construction
is a companion company to Nemann and that Treble was engaged in a
joint employment relationship with Specialty Contractors which
resulted in FLSA violations. DOL has shown that Treble is run by
Fred A. Nemann's son and that Fred A. Nemann III has admitted
that the two companies have always operated as one. Further, DOL
has shown that Nemann/Treble employees were simultaneously
employed by Specialty Construction and that the result was the
failure to pay appropriate overtime wages to 29 employees.
Employees interviewed indicated that each day Fred A. Nemann III
would determine which job site they worked at and which company,
Nemann/Treble or Specialty, they would work for on that day. [3]
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[4] Nemann/Treble and Specialty were not "completely
disassociated" as required by 29 C.F.R. 791.2 and therefore, the
employee's hours must be aggregated for overtime purposes. 29
C.F.R. 5.12(c) places the burden of proof on Nemann to
"demonstrate a current responsibility to comply with the labor
standards provisions . . . ." Nemann has failed to meet that
burden of proof. Thus, Nemann has failed to show that they are
qualified for early removal from the debarred bidders' list by
virtue of the current FLSA violations.
Nemann alleges that their constitutional due process rights
have been violated because they have had no opportunity to review
and respond to the allegations regarding post-debarment FLSA
violations. In order to assert rights under the procedural due
process protection of the Fifth Amendment Nemann must first
establish that they have been denied a liberty or property
interest. Thus, Nemann must show that they have " a legitimate
claim of entitlement" to early removal from the debarred bidders'
list. Board of Regents v. Roth, 408 U.S. 564 (1972). Nemann can
make no such claim. Nemann is simply asking for leniency in the
execution of the sanction imposed as a result of the underlying
charges. The federal courts have held that a prisoner seeking a
reduction in sentence has no right to the reduction sought and
therefore, constitutional due process is not applicable. U.S. v.
Doe, 940 F.2d 199 (7th Cir. 1991). The rights of a prisoner in a
criminal proceeding are clearly paramount to the rights of Nemann
in this civil debarment.
Even though Nemann is not entitled to due process
protection we do believe that they are entitled to be informed of
the basic allegations against them. In this case Nemann paid the
amount allegedly owed for FLSA violations -- $7,714.54. Nemann
states that the payment of the assessment was a show of good
faith and not an admission. Even if we assume that Nemann
admitted nothing by paying the assessment, we still must conclude
that Nemann was sufficiently apprised of the basis for the FLSA
violations. Certainly, Nemann did not pay nearly $8,000 on just
the unsupported allegation of owing that amount in overtime
wages. Further, the record reflects numerous conversations
between DOL and Nemann/Treble in which the FLSA violations were
discussed and the basis for the calculation of overtime wages was
disclosed. The minimal administrative due process necessary in
this situation was afforded to Nemann.
DOL also alleges that Nemann is not eligible for early
removal from the debarred bidders' list because of the severity
of the underlying charges. In support of this allegation DOL
simply restates the original allegations against Nemann and
points out that said violations were willful. While this is
certainly true, it alone is not a proper basis for denial of
Nemanns' request. Since nearly every debarment is based, in
part, upon the falsification of certified records, to rely on
this point alone in denying a petition for early removal from the
debarred bidders' list would effectively obviate the clear intent
of 29 C.F.R. 5.12(c). That [4]
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[5] code section presupposes that a willful violation has occurred,
otherwise debarment would not have been appropriate, and therefore, the
notion of a "severe" violation as set out in 29 C.F.R. 5.12(c) must mean
more than just willful. In this case DOL has shown that Nemanns'
petition should be properly denied based upon more than just a willful
underlying violation.
For all the reasons stated above, the decision of DOL is
affirmed and the petition for review is dismissed.
BY ORDER OF THE BOARD:
David A. O'Brien, Chair
Ruth E. Peters, Member
Gerald F. Krizan, Esq.
Executive Secretary[5]
