MAP MAINTENANCE AND CONSTRUCTION CO., INC., 1986-DBA-0178 (ALJ July 6, 1990)
CCASE:
MAP MAINTENANCE AND CONSTRUCTION
DDATE:
19900706
TTEXT:
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[1] [90-33.WAB]
U.S. Department of Labor Office of Administrative Law Judges
1111 20th Street, N.W.
Washington, D.C. 20036
In the Matter of: Dated: JUL 6, 1990
Disputes concerning the payment
of prevailing wage rates and
overtime and proper classification by:
MAP MAINTENANCE AND CONSTRUCTION Case No.: 86-DBA-0178
COMPANY, INCORPORATED,
NIGEL PARKINSON, PRESIDENT
With respect to laborers employed by
the above contractor under Department of
the Army Contract: No. DADA-84-C-0215, Walter
Reed Medical Center; Department of the Air
Force Contract No. F49642-84-C-0189, Bolling
Air Force Base; Department of the Navy
Contract No. N62477-3031, Washington, D.C.
CAROL FEINBERG, Esquire
Office of the Solicitor
U.S. Department of Labor
For the Complainant
BARTON MOORSTEIN, Esquire
For the Respondents
Before: JULIUS A. JOHNSON
Administrative Law Judge
DECISION RECOMMENDING DEBARMENT
Statement of the Case
This proceeding arises under the provisions of the
Davis-Bacon Act (hereinafter,"the Act"), 40 U.S.C. [sec] 276 et
seq., and the applicable regulations at 29 C.F.R. Part 5. [1]
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[2] A formal hearing was held on December 14, 1989 in
Washington, D.C. regarding alleged violations of the Act by
respondents during the execution of three separate military
contracts.
The Government maintains that the respondents have violated
the Act by "disregarding their obligations to employees" pursuant
to Section 276a-2. Specifically, the Government alleges that
respondents, with full knowledge of the prevailing law,
misclassified employees, underpaid employees, and falsified
certified payroll records in violation of the Act. Consequently,
the Government seeks the debarment of respondents from government
contracts for three years.
The respondents fully deny any intentional violations of
the Act and submit that any violations that did occur were
unintentional and negligible ("de minimis"). Respondents assert
that once they were made aware of the possible violations,
measures were taken to correct the situations and prevent any
further violations. Therefore, respondents maintain that no
purpose would be served by a three year debarment.
At the conclusion of the hearing, the parties were allowed
sixty days from the hearing date to submit proposed findings of
fact and conclusions of law, or memoranda. At the request of the
parties, the filing date for these post-hearing submissions was
extended to February 20, 1990, by which time all submissions were
received.
Findings of Fact and Conclusions of Law
Background
Respondent Map Maintenance and Construction Company, Inc.
("Map Maintenance"), is a general construction company which has
been doing construction work in the Washington, D.C. metropolitan
area since its formation on January 6, 1983. Respondent Nigel
Parkinson is the founder and president of Map Maintenance.
(Transcript (T) 194-95) Respondents undertook performance on
three contracts with the federal government in 1984.
Wage Determination No. 84-3009, which applies to all three
contracts involved in this claim, required that all individuals
employed in the following jobs receive the following hourly
wages, including fringe benefits: carpenter - $16.48; demolition
laborer - $8.73; laborer - $8.71. (Admissions 19A-19C, 20A-20C;
Government's Exhibit (GE) Q; Admissions 43A-43C, 44A-44C, GE R;
Admissions 67A through 67C; GE T) [2]
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[3] The Navy Contract
On or about September 20, 1984, respondents were awarded
Navy Contract No. N62477-84-C-3031, under which Map was to be
paid $49,045.00 to provide interior alterations to Building 166
at the Washington Navy Yard in Washington, D.C. (GE P) The Navy
contract required that all persons employed for the purposes of
that contract be paid in accordance with Wage Determination No.
DC 84-3009, dated April 6, 1984, including Modifications 1 and 2.
(Admission No. 8; GE Q; T 108) Respondents employed four
individuals to work on the Navy contract: James Jackson,
Clinton Reese, Sidney Jackson, and George Williams. (Admissions
Nos. 5, 8, 11, 14)
The Air Force Contract
Respondents were awarded Air Force Contract No. F49642-84-
C0189 on or about September 28, 1984. The terms of the Air Force
contract stated that Map Maintenance would be paid $108,954.00 to
provide interior repairs and alterations to Civil Engineering
Building 516 at Bolling Air Force Base. (GE D-2; R) The Air
Force contract required that persons employed to work under that
contract be paid in accordance with Wage Determination No. DC 84-
3009, dated April 6, 1984, including Modifications 1 through 4.
(Admission No. 42; GE R) The following four individuals were
employed by Map Maintenance for the purposes of the Air Force
contract: James Jackson, Clinton Reese, John Majsiak, and
Sidney Jackson. (Admissions Nos. 22, 24, 26, 28)
The Army Contract
On or about September 20, 1984, respondents were awarded
Army Contract No. DADA-15-84-C0125 which provided that Map
Maintenance be paid $29,659.00 for interior repairs to Building
101 in the Forest Glen Section (Walter Reed) in Silver Spring,
Maryland. (GE D-3; S) The Army contract required that persons
employed by Map Maintenance for work under that contract be paid
in accordance with Wage Determination No. DC 84-3009, dated
April 6, 1984, including Modifications 1 and 2. (Admissions No.
66; GE T; T 112) Map Maintenance hired four individuals to
work on the Army contract: James Jackson, Clinton Reese, Sidney
Jackson, and George Williams.
The Department of Labor Investigation
John M. Glyder, a compliance officer with the U.S.
Department of Labor Wage and Hour Division, conducted an [3]
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[4]
investigation of Map Maintenance and Mr. Parkinson to determine
if they were in compliance with the Act. (T 106-7, 151, 242)
Mr. Glyder's investigation covered the time period from late
September 1984 through approximately April 1985. (T 157)
At the hearing, Mr. Glyder testified that he had met with
Mr. Parkinson and had requested copies of all three military
contracts, wage decisions, certified payroll records and regular
payroll records. Mr. Glyder explained that Map Maintenance kept
"regular" payroll records in addition to the "certified" payroll
records required by the Act. (T 120) According to Mr. Glyder,
Mr. Parkinson provided the company's regular payroll records. (GE
A-l, T 120) Mr. Glyder obtained copies of the contracts, wage
decisions and certified payroll records from the contracting
agencies. (GE A-2; A-3; A-4; T 107-112, 121, 128-129, 139-140)
Mr. Glyder stated that during the course of his investigation,
Map Maintenance never provided him with revised certified payroll
records. (T 127, 139, 144)
Mr. Glyder also obtained a copy of an Air Force memorandum
dated February 7, 1985 which informed Map Maintenance of specific
alleged Davis-Bacon Act violations, namely, the nonlisting and
misclassification of certain employees on the certified payrolls.
(GE W; T 130-133) At the hearing, Mr. Glyder explained that he had
obtained this document after speaking to Patricia Rhinehardt,
contracting representative for that particular Air Force contract,
and requested all information pertinent to Map Maintenance's
compliance with the Act. (T 132-33)
After reviewing all relevant documentary evidence, speaking
with contracting agency officials and conducting employee
interviews, Mr. Glyder concluded that Map Maintenance had
committed five different categories of violations of the Act with
respect to the three subject contracts: (1) misclassification of
working foremen who spent most of their time as carpenters and
were paid less than the required $16.48 per hour carpenter's
wage; (2) underpayment of demolition laborers who were paid
less than the applicable wage rate of $8.73 per hour; (3)
nonpayment of two employees for work performed on Saturdays;
(4) falsification of their certified payrolls; and (5) payrolls
not kept in accordance with the provisions of the Act.
Misclassification and Underpayment of Employees
The Government alleges that James Jackson and Clinton Reese
were misclassified as non-exempt foremen for the purposes of the
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[5] Navy contract. According to the Government, these two
employees worked as carpenters, but were paid a weekly salary that
amounted to less than the wage determination rate of $16.48 per
hour. In addition, the Government believes that two demolition
laborers were paid less than the required wage modification rate.
In total, the Government calculates that the underpayments on the
Navy contract were $1,957.08. This amount was determined by the
compliance officer's calculations made from an examination of the
company's regular payroll records. (GE U)
Regarding the Air Force contract, the Government maintains
that James Jackson, Clinton Reese, and John Majsiak were
misclassified since they all performed carpentry work but were
paid less than the wage determination rate of $16.48 per hour
for carpenters. Also, Sidney Jackson, a demolition laborer, was
allegedly paid less than the wage determination rate of $8.73.
The Government asserts that the total underpayments on the Air
Force contract were $1,794.33. This total was determined by the
compliance officer's calculations using the regular payroll
records provided by Map Maintenance. (GE X)
With regard to the Army contract, the Government alleges
that James Jackson and Clinton Reese were misclassif[i]ed as
nonexempt foremen when they were actually performing carpentry
work. The Government states that these two men were paid less than
the wage modification rate for carpenters of $16.48 per hour.
Also, the Government asserts that two demolition laborers were paid
less than the hourly rate required by the wage modification.
According to the Government, the total underpayments on the Army
contract were $923.94, as determined by the compliance officer~s
calculations using the company's regular payroll records. (GE Y)
At the hearing, Mr. Clinton Reese, who had been employed by
Map Maintenance for the execution of all three contracts,
testified as to the nature of the work performed by himself and
the other men during those contracts. Mr. Reese stated that both
he and Mr. James Jackson had performed carpentry work on the Navy
contract. According to Mr. Reese, he and Mr. Jackson had
installed metal framing and drywall, and hung acoustical ceiling.
(T 80-81) In the course of their work, Mr. Reese stated that
they had used "all types of carpentry tools," such as "hammers,
nails and screws." (T 81)
With regard to the Air Force contract, Mr. Reese testified
that while he had spent "about 25 percent" of his time as a
supervisor, he had performed carpentry work most of the time
because there had not been enough workers to perform the work. (T
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[6] 82-3) Mr. Reese described the work performed by himself,
James Jackson and John Majsiak as carpentry work, specifically,
installing wood framing and acoustical ceiling, and hanging
doors, drywall, and paneling. (T 82-3)
Finally, in his testimony concerning the Army contract, Mr.
Reese stated that he had spent approximately "75 percent" of his
time engaged in carpentry work involving acoustical ceiling and
flooring. In addition, Mr. Reese stated that he had supervised
James Jackson who had also performed carpentry work. (T 77-8)
Falsification of Payroll Records
The most serious allegation against respondents is that
they falsified certified payroll records in violation of 29
C.F.R. [sec] 5.5(a)(3)(ii)(A). The regulations require that the
contractor submit complete and accurate certified payrolls on a
weekly basis to the government agency designated in the contract.
Respondents admit that the company's regular payroll records show
the correct amount paid to employees. (GE A-1); Admission No. 25)
It is also undisputed that the certified payroll records obtained
by Mr. Glyder from the contracting agencies are the payrolls
given to them by respondents.
Mr. Glyder explained the method by which the alleged
falsification of certified payroll records came to his attention.
(T 126-7, 137-8, 143-4) By comparing the wages paid to the
employees contained in the company's regular payrolls to those
listed in the certified payrolls, Mr. Glyder found that although
the certified payrolls showed that respondents' employees were
being compensated in accordance with the required rates, the
company's payroll record showed actual wages that did not meet
the minimum rates. (GE U; X; Y)
The Government alleges that inaccurate certified payroll
records were submitted to the Navy. For example, the certified
payrolls show that employees James Jackson and Sidney Jackson
received at least the applicable wage decision rates, when in
fact they received less than the required minimum rate. (GE A-l;
A-2)
The Government also asserts that respondents submitted
inaccurate certified payrolls to the Air Force. For example, the
certified payrolls show that John Majsiak, James Jackson and
Sidney Jackson (beginning March 10, 1985) were receiving at least
the applicable wage determination rates, when in fact they were
receiving less than the required rate. (GE A-l; A-3; V) [6]
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[7] Finally, the Government offers evidence showing that
respondents submitted inaccurate certified payroll records to the
Army. For example, the certified payrolls reflect that Sidney
Jackson was earning the proper wage determination rate when he
was in fact earning less. (GE A-l; A-4)
The Sousa Contract
During the hearing, Mr. Nigel Parkinson, president of Map
Maintenance, professed his ignorance of the requirements of the
Act prior to being awarded the contracts at issue. Mr. Parkinson
maintained that, prior to his April 1985 meeting with Mr. Glyder,
he had been unaware of his requirements under the Act - an
awareness that the Government challenged. (T 207)
The Government refutes Mr. Parkinson's assertion by showing
evidence that Map Maintenance had been involved in several
contracts covered by the Act prior to the military contracts.
According to the Government, beginning in 1983, the respondents
were subcontractors on several government contracts. (GE E (101-
2)) In a deposition taken November 3, 1989, Mr. Parkinson stated
that his first government contract as the primary contractor was
the "Sousa" contract in 1984. On November 17, 1984, respondents
were awarded this contract under which Map Maintenance received
in excess of $2,000 for the modernization of the Sousa Junior
High School science lab for the District of Columbia government.
(GE G-1; T 106) This contract was performed by Map Maintenance
from approximately January 1984 through July 1984. (GE O;
Admission 79) Wage Decision No. 82-3031 and Modifications 1-13
were applicable to the Sousa contract, and the contract contained
the Davis-Bacon Act labor standards. (GE G-l; G-2; G-3; H) Mr.
Glyder found that the respondents had not paid employees the wage
rates required. (T 119-120)
The District of Columbia government conducted its own
investigation of respondents' compliance with the Act, and met
with Mr. Parkinson several times between July and October 1984 to
discuss the misclassification of foremen who primarily performed
carpentry work and the submission of accurate payrolls. (GE I)
At the hearing, Mr. Parkinson admitted on cross-examination that
in 1984, he had met with Ms. Sharon Jones from the District of
Columbia government regarding the Sousa contract. However, Mr.
Parkinson stated that he could not recall the details of that
conversation. (T 219)
In the November 1989 deposition, Mr. Parkinson stated that
he had met with "someone" from the D.C. government in 1984 [7]
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[8]
concerning the Sousa contract. Although Mr. Parkinson could not
remember to whom he spoke on that occasion, he did recall that
the conversation involved the problem of employees classified as
foremen who were performing carpentry work. (GE E (99-100))
Mr. James Haley, an employment standards investigator for
the District of Columbia Department of Public Works whose duties
consist of enforcing labor standards applicable to Department of
Public Works construction contracts, testified at the hearing
about the Sousa contract. (T 30) Mr. Haley stated that he was
familiar with the Sousa investigation because of discussions
between himself and Sharon Jones, the District of Columbia
government investigator involved with that contract. Mr. Haley's
testimony consisted primarily of authentication of documents
concerning the Sousa contract.
The Banneker Contract
At the hearing, the Government introduced evidence
involving the "Banneker" contract awarded to respondents subsequent
to the three contracts involved in the instant case. Respondents
had been awarded this contract in excess of $2,000 by the District
of Columbia government for the renovation of various recreation
sites at Banneker Recreation Center in Washington, D.C. (GE AA; T
236) By the Government's own concession, this matter was not fully
investigated since it was discovered at the end of Mr. Glyder's
formal investigation of the three military contracts. (T 241-2)
Therefore, since no determination of any violations of the Act
resulted, respondents' compliance - or non-compliance - with the
Act on the Banneker contract will not be considered in the
disposition of this case.
Total Amount of Wage Underpayments
With regard to the allegations concerning the execution of
the three military contracts, respondents maintain that even if
they had violated the Act, the fact that the calculated
underpayments have been repaid should mitigate any further
actions against them. Respondents contend that once they were
made aware of the underpayments in the three contracts, the sum
of $6,207.51 was paid to three employees over a four-month
period.
In response, the Government shows through the testimony of
Mr. Glyder that although Mr. Parkinson agreed to a release of
funds to pay the back wages, it was not until the "fifth or sixth
time" that Mr. Glyder had been back to the company that he [8]
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convinced Mr. Parkinson to release the funds. Moreover,
according to Mr. Glyder, Mr. Parkinson only remitted the final
release letter after Mr. Glyder told him that he was going to
consider the matter as a refusal to pay and refer it through the
Solicitor's office. (T 155) In a letter to Mr. Parkinson dated
January 14, 1986, the Employment Standards Administration, Wage
and Hour Division, acknowledged that full restitution had been
made to the underpaid employees. Specifically, back wages of
$5,730-07 and the overtime back wages of $477.44 totalling
$6,207.51 had been paid to employees involved in the three
military contracts. (GE 1)
Respondents argue that due to the short duration and
contemporaneous nature of the three contracts, there was no
continuous course of conduct in violation of the Act.
Furthermore, respondents contend that their inexperience with
performing military contracts at the time of the award of the
contracts should also serve to mitigate any sanctions imposed
against them. The Government asserts that the evidence shows
that respondents were not only aware of their duties under the
Act, but committed willful violations of them during their
execution of the Navy, Air Force, and Army contracts.
Disposition
It is undisputed that the three contracts involved in this
claim were subject to the requirements of the Davis-Bacon Act and
the applicable regulations. The record contains copies of each
contract which include the labor provisions required for
coverage. (GE P; R; S) Furthermore, in accordance with the Act,
each contract was for an amount exceeding $2,000 and laborers or
mechanics were employed for each one.
The standard for debarment in a Davis-Bacon Act proceeding
is set forth in the Act, 40 U.S.C. [sec] 276a-2(a), which reads in
pertinent part:
[T]he Comptroller General of the United States is . . .
authorized and is directed to distribute a list . . . of
persons and firms whom he has found to have [*]
disregarded their obligations [*] to employees and
subcontractors. [*](Emphasis added.)[*]
The Wage Appeals Board discussed this standard in Matter of
J & L Janitorial Services, Inc., WAB Case No. 86-10 (November 13,
1986). In its decision, the Wage Appeals Board explained: [9]
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[10] Two bases for debarment under the Act are: (1) failure
to pay the prevailing minimum wage, and (2) failure to
maintain adequate payroll records. In re RLQ Corp.,
82-DBA-32 (February 13, 1984). (Adopted ALJ Decision,
p. 6)
The regulations authorize debarment when a contractor or
subcontractor is found to have disregarded its obligation to its
employees. 29 C.F.R. [sec] 5.12(a)(2). Further, it is well
established that falsification of payroll records to simulate
wage compliance is prima facie evidence of a willful violation
and is a debarrable act. In re Kejdan and Trocki, 82-DBA-11
(November 4, 1983).
The evidence shows that respondents misclassified foremen
who performed carpentry work. The Government submitted ample
evidence supporting its allegations that respondents misclassified,
and subsequently, underpaid its workers in violation of the Act.
The documentary evidence and testimony of Mr. Glyder and Mr. Reese
were unrefuted by respondents and are determined to be credible in
support of the Government's case. The evidence also shows that
respondents submitted falsified certified payroll records to the
contracting agency in violation of the Act. The record contains
both the regular payroll records kept by the company and the
certified payroll submitted to the contracting agencies. A
comparison of these two sets of payroll records supports the
Government's finding of a discrepancy between the wages required by
the Act and those actually paid to the employees.
Respondents' assertions that they were unaware of their
obligations under the Act at the time of the subject contracts is
unsupported, and indeed, convincingly shown by the Government to
be unbelievable. Each of the military contracts at issue
included the applicable text of the Act as an addendum to the
body of the contract itself. Moreover, the evidence shows that
respondents had been involved in government contracts covered by
the Act prior to the subject contracts. In any event, the Wage
Appeals Board has held that the mere fact that violations occur
on a contractor's first Davis-Bacon Act job is not sufficient to
prevent that contractor from being placed on the ineligibil[i]ty
list for the purposes of debarment, absent some other
justification. See, C. M. Bone, Acme Painting Co., WAB 78-04
(June 7, 1978). Therefore, even if these alleged violations
had occurred during respondents' performance on initial Davis-
Bacon Act contracts, that maiden experience alone would not
forestall debarment. [10]
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[11] Moreover, respondents believe that since they have made
restitution to the underpaid workers in accordance with Mr.
Glyder's investigation for the Wage and Hour Division, debarment
is too severe a penalty and would serve no prospective purpose.
Importantly, the evidence shows that it was with great
reluctance, and only after threat of more serious action by Mr.
Glyder that respondents released the funds for distribution to
the underpaid and misclassified workers. As the Wage Appeals
Board indicated In the Matter of J & L Janitorial Services,
Inc., WAB Case No. 86-10 (November 13, 1986), the sole penalty
for a violation of the Act is debarment. Significantly, the Wage
Appeals Board found that paying back wages is not a penalty on
the employer; it is merely restitution to the employees. See In
re Warren E. Manter, Co., Inc., 83-DBA-44 (1984). Thus, the fact
that the respondents here have already made restitution to the
underpaid employees has no bearing on the decision to debar since
it was respondents' violations of the Act which caused such
restitution to be necessary at all.
Respondents further argue that their current compliance
with the requirements of the Act should serve to mitigate any
penalty assessed against them. As shown by the applicable
regulations and the accompanying case law, "current compliance"
may only be considered as a basis for shortening the three year
debarment period for violations of Davis-Bacon related statues or
Acts. The language of the regulations expressly states that the
criterion found at 29 C.F.R. [sec] 5.12(c) only applies to
violations under the Davis-Bacon related acts listed under Section
5.1 of the regulations, not the Davis-Bacon Act itself. See
Jen-Beck Associates, Inc., WAB Case No. 87-02, (July 20, 1987).
Respondents' final argument is that Mr. Parkinson should
not be debarred because respondents' bookkeeper, Angelica Conner,
completed the payroll records. Attempts to reach Ms. Conner for
the purposes of testifying at the hearing were unsuccessful. The
Wage Appeals Board has consistently held that a contractor cannot
avoid debarment because his agent has erred. Notably, the Board
has repeatedly rejected the argument that the errors of clerical
employees should serve to excuse the employer from meeting his
legal and contractual obligations. Matter of J & L Janitorial
Services, Inc., supra, WAB Case No. 86-10; Matter of Martell
Construction Co., Inc., WAB Case No. 86-26 (July 10, 1987);
Matter of P.J. Stella Construction Corp., et al., WAB Case No.
80-13 (March 1, 1984). In the present case, it is undisputed
that Mr. Parkinson was the founder and president of Map
Maintenance, and as such, controlled the company's employment
practices. Mr. Parkinson admitted that he had hired Ms. Conner
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[12] as the bookkeeper and secretary for Map Maintenance.
Although Ms. Conner was authorized to prepare and sign payroll
records, she was at all times subject to Mr. Parkinson's
instructions. In view of the well-established case law, the
evidence shows that Ms. Conner's role in Map Maintenance in no way
absolves, or even mitigates, Mr. Parkinson's culpability under the
Act.
Conclusion
Under the Act, debarment for a three-year period is the
penalty for a respondent's disregard of its obligations to its
employees. In the instant case, the misclassification and
underpayment of respondents' employees were shown through
uncontroverted evidence and testimony. The evidence also shows
that respondents falsified their certified payroll records which
constitutes prima facie evidence of willful violation. There was
no evidence that any violations resulted from ignorance or
negligence, rather, in light of the record as a whole, they
appear to have been willful, consistent and substantial. None
were de minimis. Moreover, there was scant indication of
genuine cooperation with the investigation necessitated by
respondents' conduct. Likewise, respondents' request for
mitigation is unavailing after consideration of the willfullness
of the violations and reluctance with which they made
restitution. More importantly, the factors affecting mitigation
of the debarment period in the regulations at 29 C.F.R. [sec]
5.12(c) apply only to Davis-Bacon related Acts, not to the Act
itself.
Furthermore, allowing respondents to escape full liability
for their violations of the Act because back wages have already
been repaid would encourage employers to "buy their way out of
debarment" by paying past due wages when and if violations are
discovered. In essence, a great disincentive to adhere to the
obligations of the Act would result if violations could be
overlooked simply by an employer satisfying its pre-existing
duties under the Act through restitution prior to prosecution for
violations - even, as here, of the most flagrant type.
Therefore, upon finding the Government's assertions true,
it is determined that respondents, Map Maintenance and Nigel
Parkinson violated the Act pursuant to 40 U.S.C. [sec] 276a-2 and
the regulations at 29 C.F.R. [sec] 5.12(a)(2) by disregarding their
obligation to their employees. Pursuant to the regulations at 29
C.F.R. [sec] 5.12(b)(1), it should be recommended that the
respondents be debarred. [12]
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[13] RECOMMENDATION
It is recommended that Map Maintenance and Construction
Company, Inc., and Nigel Parkinson, be subject, pursuant to
Section 3(a) of the Davis-Bacon Act, to the ineligibility list
provisions barring any contract with the Federal government for a
period of three years.
JULIUS A. JOHNSON,
Administrative Law Judge,
Washington, D.C. [13]
