ARB CASE NOS. 01-014
01-015
ALJ CASE NO. 97-DBA-17
DATE: December 19, 2003
In the Matter of:
Disputes concerning debarment and the
payment of prevailing wage rates, fringe
benefits and overtime pay by:
CODY-ZEIGLER, INC., FRANCIS D.
ZEIGLER, President, ROBERT D. ZEIGLER,
Vice President, JAMES A. SWARTZMILLER,
Vice President, STANLEY C. CALDWELL,
Vice President,
PETITIONERS/ RESPONDENTS,
v.
ADMINISTRATOR, WAGE and HOUR DIVISION,
UNITED STATES DEPARTMENT OF LABOR,
PETITIONER/ RESPONDENT,
and
BUILDING AND CONSTRUCTION
TRADES DEPARTMENT, AFL-CIO,
INTERVENOR,
With respect to laborers and mechanics employed by
the prime contractor on U.S. Postal Service Contract
No. 232098-94-B-0291, Dublin, Ohio, and employed by
the prime contractor and sub-contractor on U.S. Postal
Service Contract No. 232098-95-0215, Westerville, Ohio.
BEFORE: THE ADMINISTRATIVE REVIEW BOARD
Appearances:
For Petitioners/ Respondents: Roger L. Sabo, Esq., Schottenstein, Zox & Dunn, Columbus, Ohio
For Petitioner/Respondent Administrator, Wage and Hour Division: Carol Arnold, Esq., Paul L. Frieden, Esq., Steven J. Mandel, Esq., Howard M. Radzely, Esq., Acting Solicitor, U.S. Department of Labor, Washington, D.C.
For Intervenor Building and Construction Trades Department, AFL-CIO: Terry R. Yellig, Esq., Sherman, Dunn, Cohen, Leifer & Yellig, P.C., Washington, D.C.
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 currently codified at 40 U.S.C.A. § 3141 et seq. (West Supp. 2003).
2 Although the Building and Construction Trades Department, AFL-CIO, gave notice of its intent to participate in this case as an "interested person" and to file a reply brief and/or a rebuttal brief, no brief was received.
3 Although the ALJ ruled that CZI claimed improper credit for its health plan contributions as a fringe benefit toward the prevailing wage requirement under the DBA, the ALJ nevertheless held that CZI permissibly claimed credit for the hourly cash equivalent of their health plan contributions based on the hours worked by the employees in the previous year.
4 The invocation or claim of privilege must follow the "personal consideration of the matter" by the Administrator and the Administrator must "personally review" the documents or statements to be withheld, in accordance with the Secretary's Order 5-96 § 4b(2)(a), (d)-(e), 62 Fed. Reg. 107 (Jan. 17, 1997), applicable at the time of the hearing in this claim. Thus, Secretary's Order 5-96 § 4b(2)(a), (d)-(e), regarding the Administrator's delegated authority to invoke the informant's privilege, contemplates discovery of investigative materials and, we note, has been more recently reaffirmed in Secretary's Order 5-2001 § 4b(2)(a), (d)-(e), 66 Fed. Reg. 17762 (Apr. 3, 2001).
5 CZI's payroll supervisor testified that the job superintendent would also keep his own record of how much time each employee spent performing skilled work and laborer work on a "scratch pad" "piece of paper," which the supervisor would review in conjunction with the employees' time cards in determining their employees' paychecks. See HT at 630-631. However, CZI's payroll supervisor testified that the job superintendent's records or papers were not retained or kept and were not available for the Investigator's review. See HT at 630. CZI's payroll supervisor also testified that he was not present at the work site every day and only a portion of any day if he did go to the work site. See HT at 631-632.
6 In contrast, a panel of the United States Court of Appeals for the Ninth Circuit explicitly rejected the EAJA theory relied upon by the Tenth Circuit in Adamson and reasoned that theFederal Rules of Civil Procedure, having been authorized by Congress, provide the basis for a waiver of sovereign immunity. See Mattingly v. United States, 939 F.2d 816, 818 (9th Cir. 1991); see also Barry v. Bowen, 884 F.2d 442, 444 (9th Cir. 1989) (suggesting that theFederal Rules of Civil Procedure, having been authorized by Congress, may provide the basis for a waiver of sovereign immunity). These cases have been questioned, however. See Timothy J. Simone, Comment, Rule 11 and Federal Sovereign Immunity: Respecting the Explicit Waiver Requirement, 60 U. Chi. L. Rev. 1043, 1052-57 (1993); see also Schanen v. United States Dep't of Justice, 798 F.2d 348, 350 (9th Cir. 1986)(imposing monetary penalty against government under Rule 60 without addressing sovereign immunity); United States v. National Med. Enters., Inc., 792 F.2d 906, 910-11 (9th Cir. 1986)(upholding penalty against government under Rule 37 without addressing sovereign immunity); cited in United States v. Gavilan Joint Cmty. College Dist., 849 F.2d 1246, 1251 (9th Cir. 1988)(because the circuit had ordered the government to pay costs and attorney's fees under Rules 60 and 37 in Schanen and National Med. Enters., respectively, "no independent justification exists for barring Federal Rules of Civil Procedure sanctions under sovereign immunity; nevertheless, as attorney's fees were properly awarded under the EAJA, imposition of the same sanctions under the Federal Rules of Civil Procedure are unnecessary).
7 The Sixth Circuit has held in a similar case arising under the Federal Employees Compensation Act (FECA) that waivers must be strictly construed in favor of the sovereign, citing Library of Congress v. Shaw, 478 U.S. 310, 318 (1986), and held that FECA benefit determinations are not adversary adjudications, citing Fidelity Constr. Co. v. United States, 700 F.2d 1379 (Fed. Cir. 1983). Owens v. Brock, 860 F.2d 1363, 1366-67 (6th Cir. 1988). Thus, the Sixth Circuit held that Congress intended under the EAJA and FECA to preclude review of administrative denials of EAJA petitions in FECA cases, see Owens, 860 F.2d at 1369. The Sixth Circuit also specifically criticized the Ninth Circuit's holding in Escobar Ruiz v. INS, 838 F.2d 1020 (1988) that INS deportation proceedings were adversary adjudications. See Owens, 860 F.2d at 1365.
As a general rule, contributions to profit sharing plans providing pension benefits may not be creditable towards meeting a contractor's or subcontractor's prevailing wage obligation because of the uncertainty or discretionary nature of the contribution provisions of the plan. Since by its nature a profit sharing plan is only operative if there are profits, there is no guarantee that any contributions will be made on behalf of an employee.
Section 15f13(b) of the "Wage and Hour Field Operations Handbook."
9 CZI also acknowledged before the ALJ that it failed to account for their employee co-payments when claiming the employee health plan contributions as a fringe benefit and credit toward the prevailing wage requirement under the DBA. D. & O. at 35. Thus, the ALJ found back wages due for this violation.
10 Although CZI contends on appeal that using the blended rate benefits the employee with family coverage, CZI ignores the fact that by using the blended rate, CZI took credit for more than it actually contributed for its employees with individual coverage.
11 The ALJ noted that 29 C.F.R. § 3.5(d)(4) (2002) allows for a deduction for health care plan contributions from the prevailing wage requirement under the DBA so long as "[t]he deductions shall serve the convenience and interest of the employee," and found that it was unclear how the deductions claimed by CZI for the health benefit premiums of employees with individual coverage based on the blended premium rate over and above the amount that CZI actually paid on their behalf serves the convenience and interest of the employees with individual coverage. Contrary to the ALJ's speculation, the Copeland regulations at Section 3.5 apply to deductions for employee contributions to fringe benefit plans, but do not apply to employers' fringe benefit contributions, which is at issue in this case. See Builders, Contractors, and Employees Ret. Trust and Pension Plan, WAB No. 85-06, slip op. at 1, 4-5 (Dec. 17, 1986).
12 Although the Administrator arguably could interpret the statute differently, we do not find the Administrator's interpretation, as set forth in the FOH, unreasonable. We therefore give it deference.
13 As CZI contends, an employee's health insurance credit would vary per month, based on the hours worked by the employee, even though the annual health insurance premium is the same.
14 CZI contends that the holdings in Mistick and Miree approve of the annualization formula for fringe benefits such as CZI's health care plan. The approval of the annualization principle in those cases was based on the fact that it ensured that a disproportionate amount of a year-long fringe benefit is not paid for out of wages earned on Davis-Bacon work. SeeMistick, 54 F.3d at 905 n. 4; Miree, 930 F.2d at 1546. Neither of those cases states or addresses, however, the appropriate period of contribution for the fringe benefits involved in those cases and what effect that may have on the annualization principle, which is at issue here.
15 The WAB issued final agency decisions pursuant to the DBA and its related statutes from its establishment in 1964 until creation of the Administrative Review Board in 1996.
16 The ALJ also found that CZI improperly claimed credit for vacation and holiday leave toward the prevailing wage requirement under the DBA for employees who were ineligible for vacation or who had not taken or did not receive vacation, failed to pay an employee of one of its subcontractors for 62 hours of work, and improperly reduced its overtime compensation rate based on its claimed fringe benefits and, therefore, found back wages due for these violations. D. & O. at 37-39. These findings of the ALJ are not raised or challenged on appeal. Finally, the Administrator does not raise or challenge on appeal the ALJ's finding that Elwood Smith was a superintendent of CZI and not subject to the DBA's prevailing wage requirements. D. & O. at 39-40.
17 Section 15f11(c) of the FOH states in relevant part:
the total actual hours worked in the previous month or in the same month in the previous year may be used to determine (i.e., estimate) the hourly equivalent credit per employee during the current month. Any representative period may be utilized in such cases, provided that the period is reasonable.
See CX 13; Section 15f11(c) of the "Wage and Hour Field Operations Handbook."
18 Under those circumstances, the very establishment of a health benefit could be undermined, since it would be far easier for an employer to simply pay cash and not be at hazard. This would disadvantage employees who otherwise cannot readily obtain health coverage at group rates.
19 Of course, the relevant deference analysis applies to adoption and application of the FOH provisions as well. The cited FOH interpretations appear reasonable and meet the appropriate criteria for deference in the instant case.