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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
A. T. FLETCHER & CO., INC. WAB Case No. 95-09
General Contractor
and
ARTIE T. FLETCHER, Individually
and as President
BEFORE: Karl J. Sandstrom, Presiding Member
James C. Riley, Member
Joyce D. Miller, Alternate Member
DATED: October 31, 1995
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of the Administrator, Wage and Hour Division (Administrator)
seeking review of the May 26, 1995 Decision and Order (D. & O.)
issued by Administrative Law Judge (ALJ) James W. Kerr, Jr. The
ALJ determined that A.T. Fletcher & Co., Inc. and its president,
Artie T. Fletcher (Fletcher or Respondents) -- construction
contractors under a federally-assisted project subject to the
labor standards provisions of the Davis-Bacon Related Acts --
committed minimum wage and overtime violations and submitted
falsified certified payrolls to the contracting agency. Based on
these violations, the ALJ ordered that Fletcher be debarred from
bidding on federal contracts for a period of 24 months. The
Administrator appealed from this order, arguing that the ALJ's
findings require a three-year period of debarment. For the
following reasons, the ALJ's order is reversed and the
Administrator's petition for review is granted.[1]
[2] I. BACKGROUND
Mr. A.T. Fletcher is the owner of the Amelia Street
apartment complex in New Orleans, Louisiana. On or about January
15, 1988, Fletcher entered Contract No. R-84-MC-22-0206 with the
U.S. Department of Housing and Urban Development (HUD). Under
the agreement, HUD provided funds in excess of $300,000 for the
renovation of the Amelia Street apartments. The HUD funds were
administered through a local housing agency.
It is undisputed that the construction project was subject
to the minimum wage and overtime provisions of the Davis-Bacon
and Related Acts (see 29 C.F.R. 5.1) and the Contract Work Hours
and Safety Standards Act (40 U.S.C. 327 et seq.), respectively.
Fletcher's contract was further subject to a wage determination
(No. LA87-3), requiring the payment of certain hourly rates of
pay and fringe benefits for various classifications of workers on
the project.
In a preconstruction conference conducted by the local
housing agency and attended by Mr. Fletcher, the wage and
overtime requirements under the contract were explained. During
renovation of the project, certain employees filed complaints
that they were not being paid the correct minimum wage rates
and/or overtime. D&O at p. 4.
HUD referred investigation of the wage complaints to an
investigator of the Wage and Hour Division. At hearing the
investigator testified he found that Fletcher committed minimum
wage violations with respect to 5 employees and overtime
violations with respect to two employees. Id. Moreover, the
investigator testified that the certified payrolls Fletcher
submitted to the contracting agency were false in that several
employees were not listed on the payrolls for certain work weeks;
the payrolls showed payment of wages in full when employees only
received partial or no payment; and some payrolls reflected that
no work was performed in certain work weeks, when, in fact, work
subject to the labor standards was performed by employees. Id.
At hearing, Mr. Fletcher admitted that he failed to comply with
the wage requirements.
As noted, the ALJ concluded that debarment from federal
government contracting was warranted. However, the ALJ concluded
that there were factors present in this case such as to warrant a
2-year period of debarment. The ALJ, accordingly, ordered
Respondents' debarment for that period.[2]
[3] II. DISCUSSION
The regulation governing debarment under the Davis-Bacon
Related Acts is found at 29 C.F.R. 5.12(a)(1) and provides:
Whenever any contractor or subcontractor is found by the
Secretary of Labor to be in aggravated or willful
violation of the labor standards provisions . . . , such
contractor or subcontractor or any firm, corporation,
partnership, or association in which such contractor or
subcontractor has a substantial interest shall be
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 any of the statutes listed in [29
C.F.R.][sec] 5.1.
Here, the ALJ specifically found that Fletcher committed wage and
overtime violations, D&O at p. 4; that violations continued after
warnings, Id. at p. 5; and that Fletcher's actions constituted
"intentional conduct." Id.
Rather than ordering the regulation's 3-year debarment, the
ALJ imposed a 2-year period of ineligibility, reasoning:
There are, however, factors which mi[t]igate against the
imposition of a full three year debarment. There is no
evidence, or even a suggestion, of embezzlement,
kickbacks or intent to underpay employees permanently.
The employees were advised that any underpayment was due
to a lack of resources and that full payment would be
made when the funds became available. At this juncture,
restitution to the satisfaction of the U.S. Department of
Labor has been made.
* * * * *
The intentional conduct of Mr. Fletcher, which continued
after the warning, requires a period of debarment.
However, the Court is of the opinion that the absence of
an intent to defraud or malice, mitigates against the
imposition of a three year debarment.
D. & O. at p. 5. On the facts of this case, the ALJ's analysis
is in error and must be rejected by the Board.
In the first place, as noted in the Administrator's
Statement in Support of Petition for Review, there is no
requirement under the regulation that there must [3][4] be an
element of fraud or malice in order to impose the full 3-year
debarment sanction. Statement at p. 2-3. Evidence of
embezzlement is not pertinent to the analysis and proof of
kickbacks would merely provide additional evidence of aggravated
circumstances.
Next, the fact that the ALJ apparently believed that the
employees would have eventually been made whole by Fletcher has
no bearing on the debarment analysis. Promises of future payment
do not satisfy a contractor's obligation to ensure timely and
proper payment of prevailing wage obligations, as it is well
established that an employee cannot waive or bargain away the
payment of wages and rights secured to him by law. Brooklyn
Savings Bank v. O'Neil, 324 U.S. 697 (1945); see Thomas J.
Clements, Inc., WAB Case No. 84-12 (Jan. 25, 1985)(affirming the
decision of the ALJ); see also Harlow Restoration Corp., WAB Case
No. 81-14 (May 11, 1983).
Indeed, since our ruling in the leading case of A. Vento
Construction, WAB Case No. 87-51 (Oct. 17, 1990), the Board has
consistently adhered to the principle that in the absence of
extraordinary circumstances, there should be no consideration of
debarment for less than the full three years provided under the
regulations. Here, Respondents failed to demonstrate any
extraordinary circumstances.
Fletcher committed wage and payroll violations that were
found by the ALJ to be intentional. The violations continued
after not one, but two, notifications to Fletcher that he was in
violation./FN1/ Further, restitution has never been considered
to be an extraordinary circumstance or a reason to mitigate the
period of debarment. Early & Sons, Inc., WAB Case No. 86-25
(Jan. 29, 1987).[4]
III. ORDER
For the foregoing reasons, the ALJ's Order of debarment for
a period of two years is vacated and it is hereby
Ordered, that Respondents A.T. Fletcher & Co., Inc. and
Artie T. Fletcher, individually and as President, shall be
ineligible for a period not to exceed 3 years (from the date of
publication by the Comptroller General of their names on the
ineligible list) to receive any contracts or subcontracts subject
to any of the statutes listed in 29 C.F.R.[sec] 5.1./FN2/
BY ORDER OF THE BOARD:
Karl J. Sandstrom, Presiding Member
James C. Riley, Member
Joyce D. Miller, Alternate Member
Gerald F. Krizan, Esq.
Executive Secretary[5]
/FN1/ To the extent that the ALJ characterized Fletcher's acts as
"negligent," D. & O. at 5, that finding is not supported by the
record, is inconsistent with the ALJ's finding of "intentional
conduct," and is hereby rejected.
/FN2/ Pursuant to 29 C.F.R. 5.12(c), any person or firm
debarred under 29 C.F.R. 5.12(a)(1) may request removal from the
debarment list after six months from the date of publication by
the Comptroller General. Such a request should be directed to
the Administrator.
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