CCASE:
Disputes concerning the payment of
prevailing wage rates and overtime
DDATE:
19880511
TTEXT:
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[1] [88-32.WAB ATTACHMENT]
U. S. DEPARTMENT OF LABOR Office of Administrative Law Judges
525 Vine Street, Suite 900
Cincinnati, Ohio 45202
In the Matter of
Disputes concerning the payment of Date Issued: MAY 11, 1988
prevailing wage rates and overtime
compensation by:
LANCE LOVE, INC., Prime Contractor Case No. 85-DBA-117
and
Proposed Department of Labor
Standards Violations by:
LANCE LOVE, INC., Prime Contractor
MR. LANCE LOVE, President
GEORGE H. NONWEILER, JR., Contract Sales Manager
With respect to laborers and mechanics
employed by Lance Love, Inc. on Contract
DABT-82-C-0105 Ft. Benjamin Harrison, Indiana
APPEARANCES: Richard D. Schreiber, Esq.
Schreiber and Sevenish
Indianapolis, Indiana
For the Prime Contractor
Phyllis B. Dolinko, Esq.
U.S. Department of Labor
Office of the Solicitor
Chicago, Illinois
For the Secretary
BEFORE: RUDOLF L. JANSEN
Administrative Law Judge
DECISION AND ORDER
This case arises under the Davis-Bacon Act (DBA), 40 U.S.C.
Section 276(a) et seq., the Contract Work Hours and Safety [1]
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[2]
Standards Act (CWHSSA), 40 U.S.C. Sections 327 et seq., and
Department of Labor Regulations, 29 C.F.R. Parts 3 and 5. The
United States Department of Labor, Employment Standards
Administration, (hereinafter DOL), issued an Order of Reference
which determined that Lance Love, Inc., violated the provisions
of DBA, CWHSSA, and Regulation 5 by failing to pay mechanics and
laborers employed on Contract DABT-82-C-0105 (hereinafter
Contract), which was being performed at Fort Benjamin Harrison,
Indiana (hereinafter the Fort), prevailing wages, fringe benefits,
and overtime compensation as required by the Contract. The DOL
seeks full payment of the back wages for the mechanics and laborers
and proposes the debarment of Lance Love, Inc., and its President,
Lance A. Love, for having committed violations constituting a
disregard of the contractor's obligations to its employees under
the DBA and also for having committed aggravated or willful
violations of the CWHSSA. Lance Love, Inc. and Lance A. Love both
appealed the determination of DOL and requested a hearing. By
letter dated January 8, 1985, the Department of the Army formally
adopted the findings and conclusions of the compliance officer's
report. Funds in the amount of the underpayments were transferred
to the General Accounting Office to be held pending the disposition
of this matter. (DOL Exhibit 1, pp. 246, 247) On August 12, 1986,
the complaint of DOL was amended to seek the debarment of George R.
Nonweiler, Jr., (Nonweiler), who was contract sales manager of Love
Inc., for allegedly receiving kickbacks from employees of Love,
Inc., in violation of 29 C.F.R. Part 3.
The hearing in this case commenced on February 10, 1987 in
Indianapolis, Indiana. It concluded in the afternoon of February
12, 1987. Each of the parties had full opportunity to present
evidence and argument. The FINDINGS OF FACT AND CONCLUSIONS OF
LAW which follow are based upon my observation of the appearance
demeanor of the witnesses who testified at the hearing and upon my
analysis of the entire record, arguments of the parties, and
applicable regulations, statutes, and case law. Any exhibit or
document admitted as evidence of record has been fully considered
in arriving at the Decision herein. The parties were directed to
file post-hearing memorandum briefs on April 24, 1987, and a reply
brief no later than May 25, 1987. The DOL did file an excellent
original brief. However, no briefs were filed on behalf of Lance
Love or Lance Love, Inc.
When this case was called for hearing, George Nonweiler did
not appear on his own behalf but only as a subpoenaed witness.
Forest Bowman, Jr., Esq., of the firm of Bowman, Parker, and
Emery, Indianapolis, Indiana appeared at the hearing to represent
Mr. Nonweiler only in his capacity as a subpoenaed witness.
Following the commencement of the hearing, Ms. Dolinko moved that
Mr. Nonweiler be defaulted since he had failed to respond to the
amendment of the complaint and, therefore, had not filed an
answer in this proceeding, and he had also failed to respond to
[2]
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[3] the Pre-Hearing Order which required him to participate in
the preparation of this matter for hearing. In a pre-hearing
conference which took place immediately prior to the receiving of
evidence in this case, Mr. Bowman advised that if George
Nonweiler were called to testify in this case, that he would
plead the Fifth Amendment to the U.S. Constitution and, thereby,
refuse to respond specifically to any questions that related to
his activities while employed by Love, Inc. Mr. Bowman declined
to respond to the Motion to Default with respect to his client.
Based upon these facts, the Motion to Default was granted at the
hearing and debarment is found with respect to the activities of
Mr. Nonweiler.
ISSUES
1. Whether Love, Inc., paid the various classes of
laborers and mechanics the full amounts earned, computed
at wage rates of not less than those determined by the
Secretary of Labor, and included in the contract;
2. Whether Love, Inc., paid its laborers and mechanics
overtime compensation of not less than one and one-half
times their basic rate of pay for all hours worked on the
project in excess of eight per day and forty per week;
3. Whether the weekly certified payrolls were correct
and complete in disclosing the hourly rates paid, the
number of hours worked, and reported data concerning all
employees who worked on the project;
4. Whether Love, Inc., and Lance A. Love, President,
should be placed on the Comptroller General's ineligible
list for receiving federal government contracts for a
period not exceeding three years from the date of
publication; and
5. Whether DOL is subject to sanctions as the result of
its refusal to comply with an express order of the
Administrative Law Judge.
The original charging letter directed to Lance A. Love and
Love, Inc., included an underpayment for Tim Foster based upon
overtime work. The charging letter also included an underpayment
for Sharon Kimble, who was registered as a carpentry trainee.
The underpayments asserted against both of these individuals were
withdrawn at the hearing. (Tr. I, p. 12) The charging letter
also included liquidated damages in the amount of $1,950.00.
This office has no jurisdiction over that matter and, therefore,
no determination will be made concerning that item. [3]
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[4] IMPOSITION OF SANCTIONS CONCERNING THE CWHSSA VIOLATIONS
Compliance Specialist Nancy Dzara, DOL, conducted the
investigation in this case. The investigation was initiated as
the result of a complaint lodged by one of the competitors of Love,
Inc. In the course of her investigation, Ms. Dzara took interview
statements from numerous individuals. The statements were made
contemporaneously with the interview and were signed by the party
at the conclusion of the interview. The interview statements of
Greg Beemer and Greg Ford were used in conjunction with the
certified payrolls submitted by Love, Inc., and the records of
Love, Inc., in computing the underpayments. The computations of
the underpayments were computed in part by comparing the interview
statements of the employees so as to determine that the
representations concerning the number of hours worked were verified
by the other employees.
In the course of cross-examining Ms. Dzara, Mr. Schreiber
requested that DOL produce the interview statements of both Greg
Beemer and Greg Ford. (Tr. 3, pp. 149, 151, 152) Department of
Labor Exhibit 5 was prepared in part by Ms. Dzara based upon the
content of the interview statements of Greg Beemer and Greg Ford.
The Administrative Law Judge ordered DOL to produce the statements
of both Beemer and Ford and Phyllis Dolinko refused to comply.
(Tr. 3, pp. 151-155, 158) Upon the refusal of DOL to produce the
statements, Mr. Schreiber moved that DOL be held in contempt for
failing to comply with the order to produce. That request was
denied summarily. (Tr. 3, p. 159)
The transcript seems to indicate that either Beemer or Ford
had been subpoenaed to testify in this matter but had failed to
appear. (Tr. 3, p. 151) As an explanation for refusing to comply
with the order, Ms. Dolinko offered that, as a general rule, an
employee who does not choose to appear at the hearing still is
employed by the contractor and is essentially concerned about his
job security if he is required to testify. (Tr. 3, pp. 151-152)
She acknowledges that if the employee authorizes them to turn over
the witness statements, then she is permitted to do that. Her
explanation included a reference to DOL Guidelines on this problem,
but no statutory, regulatory, or case cites were offered and no
claim of privilege was made at the hearing. The brief filed by DOL
in this case does not address the problem.
Any claim of privilege must be narrowly construed, J. R.
Norton Co. v. Arizmendi, 108 F.R.D. 647 (S.D. CAL 1985), and the
government bears the burden of proving its applicability. Mobile
Oil Corp. v. Department of Energy, 520 F.Supp. 414 (N.D. NY 1981).
There are very specific procedural requirements which must be met
in order for the government to properly invoke an assertion of
privilege. It is clear that none of those requirements have been
met in this case. [4]
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[5] Although reference was made by Ms. Dolinko to DOL
guidelines, I find nothing in the applicable regulations that would
provide any type of an exemption for the disclosure of this
information. Clear statutory authority exists for the heads of
each federal agency to prescribe regulations for the preservation
of records, papers, and property pertaining to its operation. 5
U.S.C. [sec] 301. The regulations promulgated under authority of
this statute have the force and effect of law and in the absence of
a waiver by appropriate government officials, the courts have no
power to compel the disclosure of this information. United
States ex rel. Touhy v. Ragen, 340 U.S. 462, 95 L Ed. 417, 71 S.Ct.
416 (Regulations of Attorney General); Boske v. Comingore, 177 U.S.
459, 44 L Ed. 846, 20 S.Ct. 701 (Treasury Regulations); United
States v. Marino, (CA2 NY) 141 F.2d 771, cert. denied, 323 U.S.
119, 89 L Ed. 578, 65 S. Ct. 48, rehearing denied 323 U.S. 813, 89
L Ed 647, 65 S.Ct. 113 (Treasury Regulations); Walling v. Comer
Carriers, Inc., (DC NY) 3 FRD 442 (Regulations of Department of
Labor).
Twenty-nine C.F.R. Part 2, Subpart C, provides the procedures
to be followed whenever an "order" of a court or other authority is
made in connection with the proceeding to which DOL is [*] not [*]
a party. [*Emphasis in original*] These regulations outline clear
procedures for handling disclosure requests. Those procedures were
not followed in this case. Additionally, the regulation provisions
apply to cases in which DOL is [*] not [*] a party. [*Emphasis in
original*] The DOL, under its own regulations, filed the complaint
in this case and is clearly a party. Therefore, the Part 2,
Subpart C regulations are not applicable to this case.
I am mindful of the provisions of 29 C.F.R. Part 70 dealing
with the examination and copying of DOL records. Although some
restrictions on disclosure are noted, the data involved in this
case does not appear to fall within the framework of the areas
outlined. The regulations provide specific procedures for
responding to requests for information, including a written
response detailing a brief statement of the reasons for a denial.
29 C.F.R. [sec] 70.49. A special exemption is noted for
investigatory material compiled for law enforcement purposes, but
even that provision would seem to indicate that at least a portion
of the material should be disclosed while protecting any damaging
representations. 29 C.F.R [sec] 70a.13(b)(2)(i)(C)(1). The
regulations also provide a disclaimer as to the exemption
applicability with respect to information depriving an individual
from learning of the existence of information maintained in a
record about him, even though that information may have been
received from a confidential source. 29 C.F.R. [sec]
70a.13(b)(2)(i)(C)(2).
Since no specific authority has been offered by DOL as a basis
for refusing to produce the witness statements involved I am
unaware of any authority supporting that action, I must conclude
that there exists no such authority and that even if [5]
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[6] there had been some regulation dealing with this subject
matter, some more definitive method for claiming the exemption
under the regulations should have been undertaken by DOL in its
attempt to assert that exemption.
The circumstances involved here are such that in my judgment,
the majority of the information included within those witness
statements was probably available from other sources within this
record. The DOL acknowledged at the hearing that one of the two
individuals had been subpoenaed and was scheduled to testify.
Therefore, they had apparently intended to produce that witness
statement if counsel requested for cross-examination purposes. I
have a problem believing that the content of the second witness
statement could have possibly qualified under one of the exemptions
outlined under the applicable regulations.
In view of the above, it is my conclusion that DOL has clearly
failed to comply with an order of the Administrative Law Judge and,
therefore, sanctions are appropriate. In view of that finding, I
conclude as an appropriate sanction in this case that all
understatements of income asserted against Love, Inc., with respect
to the overtime compensation of Greg Beemer and Greg Ford be
stricken. 29 C.F.R. [sec] 18.6(d)(2)(v) and [sec] 18.29(a). In
view of that disposition of the sanction question, I will not
consider any adjustments pertaining to the underpayments asserted
for work performed by either Greg Beemer or Greg Ford.
FINDINGS OF FACT
Love, Inc., is located in Indianapolis, Indiana and is a
business engaging in the sale and installation of floor coverings.
The company has both contract and retail divisions. Lance A. Love
is the president, secretary, treasurer, and sole stockholder of the
corporation. His brother-in-law, Michael Flanagan, is the general
manager for Love Inc., and headed its Retail Sales Division.
George H. Nonweiler, Jr., served as Contract Sales Manager. He was
paid strictly a commission on sales based upon twenty-five percent
of the contract's gross profit. Nonweiler's duties included the
soliciting, estimating, and bidding for both government and
commer[ci]al contracts. After Nonweiler estimated the cost
associated with the proposed contract, Lance Love, Flanagan, and
Nonweiler all prepared the bid for the project. A profit margin of
approximately sixteen percent was included in the contract bid
price.
On June 4, 1982, Love, Inc., by George H. Nonweiler as
Contract Sales Manager, entered into a contract with the Department
of the Army (hereinafter DOA) to replace and/or install floor
covering in Building l and the post buildings located at Ft.
Benjamin Harrison, Indiana. The bid price was $47,179.00 and the
contract contained labor standard provisions pertaining to DBA,
CWHSSA, and the Copeland Act. The wage and [6]
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[7]
other requirements of these Acts were all made applicable to any
subcontracts. The contract called for the payment of compensation
at the following rates for workers inside of Marion County,
Indiana:
Prevailing Wages
Carpenter $13.95 per hour
Health and Welfare Benefits .75 per hour
Pension .95 per hour
Education and Apprenticeship Training .08 per hour
Total $15.73 per hour
Prevailing Wages
Laborers $ 9.50 per hour
Health and Welfare Benefits .85 per hour
Pension .75 per hour
Education and Apprenticeship Training .09 per hour
Total $11.19 per hour
This contract was bid upon the basis of a price per square foot
which included the tile and latex and also the labor cost.
On opening the bids submitted by the contractors for this
project, the government determined that the bid prices ranged from
an estimated $47,179.00 to $102,251.00. Love, Inc., had submitted
the low $47,170.00 bid. The government, on April 21, 1982 , sent
a possible mistake-in-bid notice to Love, Inc., advising them of
the disparity in prices and calling to their attention the wage
rate requirements included within the contract. Nonweiler, on
behalf of Love, Inc., responded immediately by advising that their
bid was firm and that they had taken into account the wage
requirements. This contract was an open-ended contract covering a
one-year period for orders for work to be issued as the work was
required. Although the government engineers had estimated that a
reasonable bid price should be in the area of $90,050.00 for the
initial contract, that estimate of work to be performed proved low
in that ultimately delivery orders were eventually written against
the contract in the amount of $250,698.75. The contract provided
an option for Love, Inc., to refuse any work in excess of that
stated in the initial contract bid. That option, however, was not
exercised by Love, Inc., and they performed all of the work for
which work orders were written.
A pre-commencement conference was held on June 14, 1982 and
was attended by Mari Jane Renfro, contract specialist, DOA, and
George Nonweiler on behalf of Love, Inc. The conference included
discussions for an accident prevention policy and also Nonweiler
was provided with copies of all applicable forms and posters
required to comply fully with DOL guidelines. [7]
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[8]
Love, Inc., used six employees who performed work as either
laborers or carpenters to complete the contract. These employees
were essentially paid upon a piece-rate basis. Nonweiler was the
project manager on behalf of Love, Inc., for all of the contract
work. Incorporated by this reference is Attachment "A" which
includes the method of computation used by DOL in computing the
amount of back wages due each of these employees. The
computations were based upon an analysis of checks produced by
Love, Inc., an evaluation of the certified payrolls, witness
statements from the employees, and a cross check of the witness
statements between each other. Of this group of employees, only
Tim Foster was paid an hourly rate. His activities were
supervised by one of the subcontractors. Foster testified as to
the inaccuracy of the certified payrolls. The other Love, Inc.
employees who worked on this contract did not report their hours
worked since they were paid piece rate based upon building size
or by the square foot. They were paid no fringe benefits and
they were not notified of the wage determination requirements.
Additionally, the record shows that the wage requirements were
not posted at the job site.
Adams and Johnson worked together as laborers ripping up
floors, removing the flooring from the area by placing it in
dumpsters, preparing the floors for the plywood to be installed,
and hauling tile onto the site after the plywood had been laid.
They were not required to work regular hours since they were paid
on a piece rate basis. Their compensation was substantially less
than the $12.00 per hour shown on the certified payrolls and they
were not compensated at time and one-half for overtime hours. Both
individuals testified that George Nonweiler advised them that if
anyone were to ask the rate of their compensation, that they were
to represent that it was $12.00 per hour. The record also shows
that both of these individuals, for some period of time, paid
approximately ten percent of their wages per week to Nonweiler as
kickbacks to retain their jobs. At some point during the execution
of this contract, Lance Love personally became aware of these
kickbacks.
Wayne Jones worked as a carpenter and was compensated at the
rate of $.15 per square foot for laying plywood subflooring and
$.14 per square foot for ripping out old flooring. He also had
worked with a subcontractor in doing the same type of work. He
testified to some overtime work as a carpenter. He was not
required to report his work hours to Love, Inc.
Gary Greever testified to his work with Love, Inc., together
with his partner, Dan Kloss. His testimony was that they had
worked thirty-two hours each on the contract and that they were
paid a piece rate per building and that they did not report their
hours worked. They worked both as laborers and carpenters. The
Love, Inc., certified payrolls do not refer to either Greever or
Kloss, although the check stubs provided by the company show
their employment. [8]
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[9]
Love, Inc., also used subcontractors on this job. Harry
Ken Phillips and Albert Weir apparently worked individually and as
a part of a subcontracting team doing business as A & R Tile. The
subcontractors were required by Love, Inc., to sign documents
entitled "ACKNOWLEDGMENT". This statement indicated that the
individual understood that he was not an employee of Love, Inc.,
but was an independent contractor and that his gross earnings
were not subject to withholding for Social Security taxes or
Federal or State income taxes. Additionally, the statement
indicated that the individual would furnish his own insurance.
There apparently were no other subcontract agreements executed by
any of these contractors. They were paid by the square foot of
work performed and apparently kept their own hours. Nonweiler
prepared the certified payrolls which included the hours worked
for these individuals. Love, Inc., compensated the subcontractors
at a piece rate of $.30 per square foot when they tore up the old
flooring and installed new flooring. They were not apprised of the
basic wage requirements nor was a wage determination posted at the
job site. The compensation actually paid these individuals and the
underpayments of compensation for each of these individuals was
determined in essentially the same way as for the employees of
Love, Inc. The compliance officer used A & R Tile Company ledger
sheets, in addition to discussions with the bookkeeper for that
concern. The transcription of information from the records of A &
R Tile disclosed significant underpayments in compensation to these
individuals. Ms. Dolinko also prepared a spreadsheet covering the
compensation paid and the underpayments to all of the
subcontractors' work activities. That computation is incorporated
herein by this reference and is [NOT] evidenced by Attachment "B"
to this Decision and Order.
The certified payrolls of Love, Inc., reflected an hourly rate
of compensation for laborers of $12.00 per hour and an hourly rate
for mechanics of $16.00 per hour. This compensation was greater
than the prescribed wage determination rates. Compliance
specialist, Rosemary Persley, testified concerning her examination
of the certified payrolls and other records. It was her testimony
that within the construction industry, it was relatively common to
have companies half the overtime hours and record compensation at
twice the amount actually paid in order to demonstrate compliance
with the requirements of the wage laws. She also interviewed
employees to verify the information on the records which she was
provided. She located numerous inconsistencies and falsification
of data. The payrolls reflected erroneous total compensation paid
in relation to the number of hours worked and the rate of
compensation stated. Check stubs provided for examination by Love,
Inc., did not coincide with the certified payroll record of gross
wages for corresponding periods. Small increments of time were
also recorded which, based upon her experience, she considered to
be unusual. Also, she located reductions from compensation for
tools which are not authorized under these regulations. She also
[9]
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[10] was provided check stubs for some individuals for which
there were no corresponding entries on the certified payrolls.
Lance A. Love testified that he delegated the responsibility
for the government job at Ft. Benjamin Harrison to George
Nonweiler. He testified that the certified payrolls were prepared
by Mr. Nonweiler and he would ask him whether they were correct,
and if the response was in the affirmative, then he would sign
them. During the term of the contract, he had no knowledge that
the certified payrolls had been improperly prepared. He had heard
of the kickbacks being paid to Mr. Nonweiler and his testimony was
that he approached Nonweiler who denied that he had received any
kickbacks. He also approached the employees and they denied paying
the kickbacks. He disclaimed knowledge about events occurring at
Ft. Benjamin Harrison because Nonweiler had been in charge of that
job. Mr. Love considered both Flanagan and Nonweiler to be
management employees for him. Flanagan was in charge of the retail
end of the business and Nonweiler took charge of the commercial end
of the business. Mr. Love disclaimed any particulars with respect
to the preparation of the certified payrolls.
Numerous witnesses testified during the course of this
hearing. I find all of that testimony to be credible even though
I note that there exist inconsistencies within the record.
CONCLUSIONS OF LAW
ISSUE NO. 1
Whether Love, Inc., paid the various classes of laborers
and mechanics the full amounts earned, computed at wage
rates of not less than those determined by the Secretary
of Labor, and included in the contract.
I am convinced after reviewing this entire record that Love,
Inc., has failed to pay the various classes of laborers and
mechanics the full amounts earned as required by the DBA contract.
I am also convinced af[t]er reviewing this entire record that the
computations of DOL reflecting the underpayments and as [NOT]
evidenced by Attachments "A" and "B" to this Decision and Order,
are basically correct. That is not to suggest that they are
exactly correct, but that is not the burden of DOL. If the
contractor fails to maintain adequate records of hours worked, it
is not necessary to prove uncompensated or undercompensated wage
payments of each employee with precision. It is sufficient to
show the amount and extent of work in a job classification as a
matter of reasonable inference even though the result may only be
approximate. James Q. West and James Whaley, SCA 397 (1975); Glenn
Electric Company, Inc., 79 DBA 119 (1979). Love, Inc., had a
statutory obligation to maintain proper records pursuant to this
contract. The Supreme Court, in Anderson v. Mt. Clemens [10]
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[11]
Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946),
addressed the problems associated with an employer's failure to
discharge its statutory obligation of maintaining proper records:
(W)here the employer's records are inaccurate or
inadequate . . . (t)he solution . . . is not to penalize
the employee by denying him any recovery on the ground
that he is unable to prove the precise extent of
uncompensated work. Such a result would place a premium
on an employer's failure to keep proper records in
conformity with his statutory duty; it would allow the
employer to keep the benefits of an employee's labors
without paying due compensation as contemplated by the
Fair Labor Standards Act. In such a situation we hold
that an employee has carried out his burden if he proves
that he has in fact performed work for which he was
improperly compensated and if he produces sufficient
evidence to show the amount and extent of that work as a
matter of just and reasonable inference. The burden then
shifts to the employer to come forward with evidence of
the precise amount of work performed or with evidence to
negative the reasonableness of the inference to be drawn
from the employee's evidence. If the employer fails to
produce such evidence, the court may then award damages
to the employee, even though the result be only
approximate.
328 U.S. at 687-688.
Where improper records are maintained, the standard clearly
requires the employer to produce evidence demonstrating with
specificity the actual compensation which should have been paid
to these employees. As an alternative, the standard allows the
employer to produce evidence which negatives the reasonableness
of the inference to be drawn from the employee's evidence. This
record does contain evidence that some of the employees may not
have worked the total number of hours asserted in the DOL
computations. However, the employer has failed to establish with
specificity the exact number of hours for which these individuals
worked in view of the fact that the record may contain conflicting
data with respect to those individuals. Love, Inc., offered no
records to disprove the basis upon which the compliance officer had
made her computations. Based upon the standard enunciated in Mt.
Clemens, I find that DOL has established a prima facie case of wage
underpayment and that the employer has failed to carry its burden
of establishing the precise amount of compensation which ought to
have been paid nor was evidence produced which negatives the
reasonableness of the inference drawn from the employees' evidence.
In arriving at that conclusion, I note that it is not necessary
that each employee testify in order for DOL to have made a prima
facie case of the number of hours worked as a matter of "just and
reasonable inference." Brennan v. General Motors Acceptance Corp.,
482 F.2d [11]
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[12] 825 (5th Cir. 1973); Donovan v. New Floridian
Hotel, Inc., 676 F.2d 468 (11th Cir. 1982). An employee may not
waive any rights conferred under the Davis-Bacon Act. Brooklyn
Savings Bank v. O'Neil, 324 U.S. 697 (1945). Thus, the
"Acknowledgments" signed by some employees did not impact upon any
rights conferred by the statutes.
Upon the basis of this entire record, I conclude that Love,
Inc., failed to pay the various classes of laborers and mechanics
the full amounts earned pursuant to the contract and, therefore,
is obligated for those payments as determined by DOL with the
exception of Greg Ford and Greg Beemer.
ISSUE NO. 2
Whether Love, Inc., paid its laborers and mechanics
overtime compensation of not less than one and one-half
times their basic rate of pay for all hours worked on the
Project in excess of eight per day and forty per week
No need exists to discuss in detail either the burdens of
proof associated with this issue or the manner in which DOL
computed the underpayments for overtime work. My analysis of this
record made in the last issue discussion applies equally here. I
find the computations of DOL with respect to the overtime pay to be
reasonable projections of the actual dollars earned. The DOL has
established a prima facie case and Love, Inc., has failed to carry
its burden under the Mt. Clemens standard. Therefore, this issue
is also decided against the contractor.
ISSUE NO. 3
Whether the weekly certified payrolls were correct and
complete in disclosing the hourly rates paid, the number
of hours worked, and reported data concerning all
employees who worked on the project.
This issue must also necessarily be decided against the
contractor. Clearly, the certified payrolls were false.
Certification was made that the records were correct and complete,
that proper compensation was paid, and that the designated
classifications were correct. In each instance, one or more of
those items was clearly erroneous. This record evidences certified
payrolls containing obviously false and fictitious entries. The
individual in charge of the job acknowledged that the
subcontractors were paid by the square foot and not an hourly rate
and that he was not even aware of the total number of hours worked
by these individuals. The record contains evidence that one or
more of the employees involved were asked to make erroneous
representations concerning their hourly wage in the event any
individual questions them. A compliance [12]
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[13]
officer testified as to the erroneous nature of some of the
information contained on the certified payrolls. She found
erroneous hours assigned, improper compensation noted, mathematical
inconsistencies, inconsistencies from the certified records with
the actual check stubs or other records of the company, and what
amounts to an acknowledgment by Nonweiler that he really did not
know how many hours the subcontractors' employees even worked. This
record will support no conclusion other than that the certified
payrolls were falsely prepared, incorrect, and incomplete.
ISSUE NO. 4
Whether Love, Inc., and Lance A. Love, President, should
be placed on the Comptroller General's ineligible list
for receiving federal government contracts for a period
not exceeding three years from the date of publication.
Based in part upon the disposition of the other issues
involved in this case, I find that Lance A. Love and Love, Inc.,
are in aggravated or willful violation of the Labor Standards
Provisions of these Acts. The deficiencies associated with the
record keeping requirements are all noted above and need not be
repeated here. The record also shows that the anti-kickback
prohibitions contained within the Copeland Act have been
violated.
The regulations implementing the Davis-Bacon Act provide
that "contractors or subcontractors and their responsible
officers, if any, (and any firms in which the contractors or
subcontractors are known to have an interest)" may be placed on
an ineligible list barring them from receiving any federal
contract or subcontract subject to the labor standards provisions
of the statutes listed in 29 C.F.R. [sec] 5.1. Section 5.12(a)(2)
states that debarment shall be recommended where contractors or
subcontractors are found to have "disregarded their obligations
to employees" imposed by the terms of the Act and contracts entered
into which are subject to the Act. Unlike relevant provisions in
the statutes listed in 29 C.F.R. [sec] 5.1, a finding of
"aggravated or willful" violations of the Act is [*] not [*]
required in order to trigger debarment for violations of the
Davis-Bacon Act. [*Emphasis in original*]
In the majority of Davis-Bacon cases where debarment is
ordered, the contractor or subcontractor is found to have violated
the Davis-Bacon Act and one of the Davis-Bacon related statutes
listed in 29 C.F.R. 55.1. In that circumstance, administrative law
judges and the Wage Appeals Board tend to apply the "aggravated and
willful" standard and to conclude that actions which are found to
be "aggravated and willful" clearly encompass the lower disregard
of obligations to employees standard. See e.g., In re Ace
Contracting Co., [September 1978 - January 1981 Transfer Binder]
Lab. L. Rep. (CCH) [par] 31,357 (1980); [13]
~14
[14]
In re Cosmic Construction Co., [September 1978 - January 1981
Transfer Binder] Lab. L. Rep. (CCH) [par] 31,382 (1980); In re
P. J. Stella Construction Corp., 2 Wage Hours Lab. L. Rep. (CCH)
[par] 31,435 (1984). For that reason, the body of case law which
specifically addresses the disregard of obligations to employees
standard is quite small.
Lance Love offered little in the way of a defense to the
debarment in this case. It was Love's contention that he was
unaware of the specific provisions of this contract and that he
signed the certified payrolls without verifying any of the specific
information which they included because of his explicit trust in
George Nonweiler. When rumors of kickbacks finally reached him, he
spoke to both Nonweiler and some employees, but apparently took no
other affirmative action to determine if the allegations were true.
My impression is that he did not consider these rumors to be a
serious matter. Although he held the offices of president,
secretary, treasurer, and sole stockholder of his company, his
testimony was that Flanagan and Nonweiler basically saw to the
day-to-day operation of the business. He has, in essence, taken
the position that he was unaware of any wrong doing of his
subordinates. That contention does not remove him from
responsibility for his actions or the actions of his company.
P. J. Stella Construction Corp. & My Glass Co., WAB 80-13 (March 1,
1984).
Even assuming that Mr. Love was totally ignorant of all of
the circumstances and violations associated with the Benjamin
Harrison Contract, I must conclude that because of his position
within the company, that he was grossly irresponsible in failing
to oversee his company's performance on the contract. Based upon
this scenario of events, I conclude that Lance A. Love and Love,
Inc., are in aggravated or willful violation of the labor
standards associated with each of the Acts involved in this case.
ORDER
In view of the disposition of all of the issues in this case,
IT IS HEREBY ORDERED that:
1. The General Accounting Office shall release all funds
being held in escrow for the payment of back wages as
determined in Attachments "A" and "B" to this Decision
and Order;
2. The General Accounting Office shall return to Lance
Love, Inc., that portion of the funds being held in
escrow which related to alleged underpayments for Greg
Beemer and Greg Ford;
3. It is recommended that Lance A. Love and Lance Love,
Inc., be placed on the ineligible list pursuant to
Section 3(a) of the Davis-Bacon Act and 29 C.F.R.
[14]
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[15] [sec] 5.12(a)(1) for a period not to exceed
three years from the date of publication by the
Comptroller General of the United States; and
4. It is recommended that George H. Nonweiler be placed
on the ineligible list pursuant to Section 3(a) of the
Davis-Bacon Act and 29 C.F.R. [sec] 5.12(a)(1) for a
period not to exceed three years from the date of
publication by the Comptroller General of the United
States.
RUDOLF L. JANSEN
Administrative Law Judge [15]
/FN1/ In this Decision, "DOL" refers to U.S. Department of Labor
Exhibits, "Love" refers to the Exhibits of Lance Love, Inc., and
Lance A. Love, "Stip" refers to the Stipulation of Facts, and
"Tr" refers to the Transcript of the hearing. [15]
