ARB CASE NO. 02-086
(ALJ CASE NO. 2000-DBA-14)
DATE: February 27, 2004
In the Matter of:
Disputes concerning the payment of
prevailing wage rates and overtime pay by:
RAY WILSON COMPANY, a corporation,
Prime Contractor,
With respect to laborers and mechanics employed
by a subcontractor, Aztec Fire Protection, Inc., on
Contract Number GS-09P-95-KTC-0012 let by the
General Services Administration, Region 9, to
Respondent Ray Wilson Company, regarding the
Ronald Reagan Building in Santa Ana, California.
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For Petitioner: Charles S. Kirwan, Esq., Charles S. Kirwan and Associates, Pawtucket, Rhode Island
For Respondent Administrator, Wage and Hour Division: Carol Arnold, Esq., Paul L. Frieden, Esq., Steven J. Mandel, Esq., Howard M. Radzely, Esq., Solicitor, U.S. Department of Labor, Washington, D.C.
40 U.S.C.A. § 3142(c) (emphasis added). The implementing regulations for the Act elaborate somewhat on this principle, stating:
every person performing the duties of a laborer or mechanic in the construction, prosecution, completion, or repair of a public building or public work, or building or work financed in whole or in part by loans, grants, or guarantees from the United States is employed regardless of any contractual relationship alleged to exist between the contractor and such person.
29 C.F.R. § 5.2(o) (emphasis added). Thus, both the statute and the interpretative regulation make clear (with limited exceptions not at issue here) that if a person performs construction work on a project covered by the Act, that person is always due the prevailing wage. This has long been the established precedent in DBA administration. In affirming this principle, the WAB ruled that the DBA establishes "a functional rather than a formalistic test to determine coverage: If someone works on a project covered by the Act and performs tasks contemplated by the Act, that person is covered by the Act, regardless of any label or lack thereof." Lance Love, Inc., WAB No. 88-32, slip op. at 2 (Mar. 28, 1991).
Similarly, this Board has held that the "fact that the workers were engaged in construction of the [DBA-covered project] triggered their coverage under the prevailing wage provisions of the Act; lack of a traditional employee/employer relationship" did not absolve the employer from the responsibility to insure that they were compensated in accordance with the requirements of the Act." Star Brite Constr. Co., Inc., ARB No. 98-113, slip op. at 7 (June 30, 2000). The Petitioners do not dispute that the persons who purportedly were R&F partners performed the work of sprinkler fitters while installing the fire sprinkler system in the Reagan Building.Therefore, the workers meet the Act's functional test of employment. Accordingly, we affirm the ALJ's ruling that Aztec was obligated to compensate these individuals at not less than the prevailing wage rate for the construction work performed.
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III. Aztec failed to present sufficient evidence to rebut the Administrator's proof of the extent and amount of DBA violations in this matter.
The Petitioners allege that the ALJ erred in accepting the Administrator's evidence as to the amount of wage underpayments. However, we conclude that under the circumstances presented, the Administrator carried her burden of demonstrating the amount due because of wage violations as a matter of just and reasonable inference. Where a DBA construction contractor has failed to maintain accurate records of hours worked and wages paid, it is proper to apply the principles establishing the burdens of proof set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). As the WAB stated in Apollo Mechanical, Inc.,
an employee who seeks to recover unpaid wages "has the burden of proving that he performed work for which he was not properly compensated." 328 U.S. at 687.
However, where an employer's records are inaccurate or incomplete, employees are not to be penalized by denying them back wages simply because they cannot prove the precise amount of uncompensated work. In such circumstances, an employee meets 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." 328 U.S. at 687. The employer then has the burden to demonstrate the precise number of hours worked or to present evidence sufficient to negate "the reasonableness of the inference to be drawn from the employee's evidence." 328 U.S. at 688. In the absence of such a showing, the court "may then award damages to the employee, even though the result be only approximate." Id. Furthermore, Mt. Clemens Pottery provides specific guidance on the responsibilities of the trier of fact: "Unless the employer can provide accurate estimates [of hours worked], it is the duty of the trier of facts to draw whatever reasonable inferences can be drawn from the employees' evidence . . . ." Id. at 693.
WAB No. 90-42, slip op. at 2-3 (Mar. 13, 1991). See also StarBrite Constr. Co., Inc.
Here, in the absence of accurate employer records from either Aztec or R&F, the ALJ properly credited the testimony of the workers that they had not received the required prevailing rates for sprinkler fitter work. Both of the workers who testified at the hearing testified that they were underpaid. While the required hourly rate for sprinkler fitters was $37.96 (D. & O. at 10), Klod Grigorian Maisshi testified that he worked on the project for nine months and was paid $10.00 per hour (with a $500.00 monthly bonus). Id. He further testified that his normal work week on the project was 40 hours. Tr. at 177. His testimony was consistent with the employee interview statement taken by the investigator during the 1997 investigation. Compare testimony of Klod Grigorian Maisshi and Ex. R-44, where the length of his work on the project and his stated hourly wage rate agree with his testimony. The other employee (Bahid Zohrabian) testified that he too worked approximately nine months on the project (Tr. at 489) and was paid approximately $12.00 per hour, with bonuses of $2,500.00 paid "every couple of months." Id.; Tr. at 485-87. He also testified that the work week was approximately 40 hours (7 or 7:30 a.m. to 3 or 3:30 pm). Tr. at 490. This employee's testimony was fully consistent with the employee interview statements he gave during the investigation in 1997, several years prior to the hearing. Compare testimony of Bahid Zohrabian and Ex. C-27.
The employee testimony concerning their hours worked and the wages paid was further supported by the testimony of the Wage and Hour Division's investigator who had interviewed both the testifying and additional R&F sprinkler fitter employees during the investigation. The investigator stated that he used the numbers of hours worked as reported in the certified payrolls, given that that information was generally consistent with employee statements and that the certified payrolls were the only such record maintained.9 The investigator requested R&F's records regarding wages and hours of work, but R&F never supplied information other than copies of cancelled checks. Tr. 263-264.
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1 The DBA, formerly codified at 40 U.S.C.A. § 276a et seq. (West 2001), was revised without substantive change, effective August 21, 2002, and is now codified at 40 U.S.C.A. § 3141 et seq. (West Supp. 2003).
2 Reorganization Plan No. 14 of 1950 centralized Federal policy making and enforcement authority concerning the DBA and its related acts within the Department of Labor.
3 Prior to May 3, 1996, final agency decisions pursuant to the DBA were rendered by our predecessor, the Wage Appeals Board (WAB). Under SO 2-96, 61 Fed. Reg. 19,978 (May 3, 1996), the Secretary of Labor established the Administrative Review Board and delegated to this Board jurisdiction to hear and decide administrative appeals arising under, inter alia, the DBA and numerous statutes requiring DBA compliance, collectively referred to as the Davis-Bacon Related Acts. See 29 C.F.R. § 5.1 (2003). SO 2-96 has been superceded by subsequent orders amending and updating the provisions relevant to the composition of the Board and its jurisdiction; however, the delegation with respect to the Act and its Related Acts is essentially unchanged. The current delegation of authority is set forth in SO 1-2002.
4 All Federal construction contractors are on notice upon entering into a DBA-covered contract, that the government has the right to withhold contract funds in the event of underpayment allegations. See 29 C.F.R. § 5.5(a)(2).
5 The Petitioners cite the duration of the process since the funds were first withheld as evidence of deprivation without due process. The Court in G & G, observing that lawsuits are not known for expeditiously resolving claims, nonetheless concluded that a lawsuit of several years' duration, "while undoubtedly something of a hardship, cannot be said to deprive respondent of its claim to payment under the contracts." Id. at 196.
6 The Petitioners argue that they have already been permanently deprived of a majority of the withheld contract funds based on the fact that "the DOL … violated its own regulations by prematurely dispersing [sic] some of the funds to the R&F workers in 1998 before a hearing was held on the … violations." D. & O. at 2. The early disbursement of funds in the amount of $108,000, while unfortunate, does not constitute a permanent deprivation of the funds. As noted by counsel for the Administrator, "if Aztec prevails in this case, it would have a claim against the government for the full amount withheld." Stmt. for the Adm. at 17.
7 R&F listed the workers on certified payrolls submitted to the Federal government's contracting officer as "owner-operators."
8 The legislative history of the amendment adding the "regardless of any contractual relationship" language makes clear that it was adopted for the purpose of eliminating schemes, like the one before us, characterizing workers as "owner operators" (or subcontractors) and which were frustrating enforcement of the Act's provisions. See S. Rep. No. 1155, 74th Cong., 1st Sess., p. 13 (May 13, 1935); H. Rep. No. 1756, 74 Cong., 1st Sess., p. 3 (Aug. 9, 1935).
9 The investigator tried to cross-check the certified payroll hours with a security log maintained on the work site; the security log information was, however, unusable. Tr. at 255.
10 Robert Denoushi, one of R&F's principal's (and not an employee for whom wages were sought) testified that his brother, Fred Denoushi, was present at the job site 80-90% of the time and prepared the certified payrolls. Tr. at 535-536. He also testified that his brother listed inaccurate hours of work in the certified payrolls, allegedly on the mistaken belief that the sprinkler fitters were not subject to payment of DBA wages, "because we didn't care how much hours we going to put there." Id. at 536.
11 In fact, the Wage and Hour Division reported its investigation findings to the Department of Labor's Office of the Inspector General (OIG) for determination of whether criminal charges were appropriate. Tr. at 420-422. The OIG closed their file without action. Tr. at 421.