CCASE:
CARABETTA ENTERPRISES, INC.
DDATE:
19750128
TTEXT:
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[1] UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF LABOR
WAGE APPEALS BOARD
WASHINGTON, D. C.
IN THE MATTER OF
CARABETTA ENTERPRISES, INC. WAGE APPEALS BOARD
CRW Systems Inc., HUD Project
Nos. 017-44134LDP, 017-44135LDP, Case No. 74-04
Bella Vista Projects I, II,
New Haven, Connecticut Dated: January 28, 1975
Carabetta Enterprises, Inc., and CRW Systems Inc.
PETITIONERS
APPEARANCES:
David E. Blum, Esquire,
Kennelly, Blum and Wall,
Washington, D. C.
for the Petitioners
Hal E. Nelson, Esquire,
Office of the Solicitor,
United States Department of Labor
Nicholas R. Loope,
United Brotherhood of Carpenters
& Joiners of America,
Washington, D. C.
Charles Hutsler,
International Association of Bridge
Structu[r]al and Ornamental Ironworkers,
Washington, D.C. [1]
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[2] APPEARANCES (continued):
Henry S. Saracusa,
Office of Labor Relations,
United States Department of
Housing and Urban Development
Boston, Massachusetts
Richard S. Allan,
Office of Labor Relations,
United States Department of
Housing and Urban Development,
Washington, D. C.
BEFORE: Oscar S. Smith, Chairman,
Wage Appeals Board; and
Stuart Rothman and
Clarence D. Barker, Members
DECISION AND ORDER
In this petition, Carabetta Enterprises, Inc., and C.R.W.
Systems, Inc., Carabetta's wholly owned subcontractor, seek review
of a Department of Labor determination finding 56 employees of
C.R.W. Systems were underpaid $66,433.80 when using the
"Rouse-Wates" system in erecting and installing precast concrete
wall and floor sections at the Bella Vista Project, New Haven,
Conn[ecticut]. Bella Vista is a residential housing project for
the elderly consisting of two seventeen story buildings with 620
dwelling units financed under Section 236 of the National Housing
Act. It is undertaken pursuant to a HUD program to discover
innovative ways to construct housing, a program known as OPERATION
BREAKTHROUGH. In this case a HUD feasibility letter [2]
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[3] was issued in July, 1971, the closing was held in September, and
construction commenced in December, 1971.
In August 1972, petitioner Carabetta, determining the work of
erecting precast concrete panels should be assigned to carpenters,
began to pay the carpenters wage rates under the Secretary of
Labor's area wage determination, AM-1593. In October, 1972 it
entered into a labor agreement with Local No. 79, United
Brotherhood of Carpenters and Joiners of America AFL-CIO. These
dates are not without significance as to the setting in which this
case comes to the Board.
During the period of construction which extended at least to
March 1973, the Carpenters International Union was in that state of
limbo known as "non-compliance" with the construction industry
disputes machinery for the settlement of jurisdictional disputes,
without participating in or feeling bound, as were other unions, by
National Joint Board decisions.
Local Union 424, International Association of Bridge,
Structural and Ornamental Ironworkers was unhappy with the
situation, claiming that the installation and erection work in
whole or in part, belonged to them. The Ironworkers International
Union was not in limbo having access to the National Joint Board
for Settlement of Jurisdictional Disputes. It took the matter
there, obtaining a ruling that the installation and [3]
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[4] erection of precast concrete wall panels, floor and roof slabs at the
Bella Vista site should be assigned to the ironworkers. /FN1/
Carpenters Local 79 did not consider itself bound by the
Ironworkers' unilateral proceeding before the National Joint Board.
Petitioner, Carabetta, similarly did not consider himself bound by
this ruling. /FN2/ The petitioner, C.R.W. Systems, Inc., [4]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The basic hourly carpenter wage rate under Determination
AM-1593 was $6.35; the basic hourly ironworker wage rate under this
same predetermination was $9.30.
/FN2/ Additionally, petitioner could have claimed during the period
of construction, and appears to have claimed during oral hearing on
this matter, that not only was it not bound by National Joint Board
determinations but that the National Joint Board ruling in this
case was based upon general trade practice which may or may not be
the same as area local practice, the key consideration in
Davis-Bacon practice to determine work in the locality. Under its
procedures the National Joint Board was required to base its
decision upon (1) previous decisions of record or recorded
agreements as defined in the procedures or (2) if no such decision
or agreement existed the established trade practice and prevailing
practice in the locality. Consistent with these procedural
requirements a job decision based on trade practice or prevailing
locality practice could be effective only on the particular job on
which the dispute occurred. Davis-Bacon wage rates, under the
statute, must be based on locality prevailing wages for projects of
a similar nature and are the minimums that may be paid on covered
work. These rates are to be determined by independent evaluation
of the facts as they exist in the locality. A jurisdictional award
under the disputes procedures of the construction industry may, by
reason of contractual commitments within the industry, require
payment of a wage that is higher than that determined under the
Davis-Bacon Act but this does not operate to change the applicable
statutory minimums for the job. The responsibilities of the Wage
Appeals Board and of the Labor Department are limited to the
statutory minimums and do not extend to, or prevent, the payment of
higher rates if such are required by other commitments of the
parties to a particular dispute. [4]
~4a
[4a] Carabetta's wholly owned subcontractor, continued to erect
and install the precast panels using employees at the Carpenter's
rate.
At the oral hearing petitioners requested: (1) relief from
the Department of Labor-Housing and Urban Development back pay
assessment of $66,433.80 in underpaid wages which the Department of
Labor believes should have been computed at the ironworkers and not
the carpenters minimum rates; (2) the establishment by the Wage
Appeals Board of a new classification utilizing the Rouse-Wates
System of erection and installation of precast concrete wall and
floor sections and a concomitant wage rate at carpenter's rates in
the locality; [4a]
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[5] (3) access to certain Department of Labor
file information in the form of employee statements made upon
investigation which it said was in the file, without making clear
whether failure to see such information was prejudicial or not; it
does not know whether it was prejudicial until it sees what it is.
The Department of Labor, represented by Counsel for the
Solicitor, takes the position in this proceeding that, (1) the work
in question is properly classified as ironworkers' work to be paid
for at not less than the ironworkers' wage predetermination; (2)
this conclusion was reached finally after a local field survey
which confirmed as the area practice what the National Joint Board
had concluded was the trade practice in the industry; (3) the
Department of Labor was satisfied on the basis of the field study
that the disputed work was properly classified as ironworkers' work
because this was the practice of the largest user of a similar
system found in the locality at the time, the Blakeslee Company,
although Blakeslee was the largest because it was the only one
found; (4) because of petitioners uncooperative attitude in
identifying employees involved and the times they engaged upon work
to be paid for at te ironworkers' rate, petitioners have left the
Department of Labor iin a bad spot in computing the amount of
back pay with no alternative but to apply the formula approach
under Fair Labor Standards Act computation principles, citing [5]
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[6] Anderson v. Mt. Clemens, 328 U.S. 680; and (6) with this sorry
state of affairs as the Department of Labor sees it, having
concluded that the Blakeslee Company's use of ironworkers reflects
the area practice, the Department of Labor concluded that a fair
formula would be one based upon 25% of the time of 48 named
employees spent on ironworker's assignments and full time for eight
other employees classified as carpenters. Absentcooperation that
would produce a more exact computation, a back pay liability of
$66,433.80 was assessed.
The Petitioner contends that the Blakeslee project was
relatively small when ompared with Bella Vista's 620 unis, and
for this and other unspecified reasons the Department of Labor's
conclusions yielded an "arbitrary" result. However, petitioner
clearly conceded at the hearing tha Gananda had requested in
February 1973. What did the Buffalo area director do with it when
he received it? Accepting his August 27, 1973 letter on its face,
he sent it to the Assistant Secretary of Labor Relations of HUD in
Washington. It was not received by Gananda until September 10th.
Although all parties knew that this wage predetermination,
73-NY-272, not some other, was a prerequisite to going ahead
with construction work under the Urban Growth and New Community
Development Act of 1970, /FN4/ Gananda went ahead before it was
received. In June 1973, Gananda had invited bids on certain of the
work and on August 7, 1973, "initial bids were let," i.e.,
accepted. In the absence of the requested schedule, Petitioner [8]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ The Urban Growth and New Community Development Act of 1970
does not contain an exception found in certain other housing acts
that permits a developer to proceed notwithstanding failure to
incorporate in the bid documents the appropriate wage
predeterminations as issued by the ESA for the project. See for
example the National Housing Act, Section 212(a) and 29 CFR 1.7.
The record contains no explanation of why the August 23rd wage
determination did not reach Petitioner Gananda until September 10th
since the HUD Buffalo Area Office, [8][FN4 CONTINUED ON PAGE 9]
based on general experience with the Davis-Bacon Act, would know
that the appropriate wage schedule of August 23, 1973, must be
applied to the project from the commencement of construction and
could not be modified thereafter. It is clear that this schedule
was in the hands of the Buffalo Area Office on August 27th the date
upon which Gananda's petition states that construction was
commenced. [END FN4] [9]
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[9] Gananda states that it secured a wage scale from "other
projects similar to this project and in particular a project known
as the "Lysander Project" near Syracuse, New York, also in a rural
county of upstate New York. This project is a new community
project under the auspices of the Department of Housing and Urban
Development." Petitioner was vague as to what other Davis-Bacon
wage schedules it examined before selecting Lysander, although
administrative notice is taken that there were Davis-Bacon
schedules previously issued for Wayne County.
According to Petitioner's explanation which the Board accepts,
an understanding then developed after September 10, 1973 between
the appropriate office of HUD and Petitioner Gananda that it would
be permissible for Gananda to continue to use the set of wage rates
it had adopted when soliciting bids and to substitute these for the
Wayne County determination expressly made by the Secretary of Labor
by reason of [9]
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[10] Petitioner's request. Gananda agreed with
HUD, we are told, that it would challenge the determination of the
Department of Labor and if the challenge should go for naught, it
would pay the prevailing rate of wages as determined by the
Secretary of Labor to the employees affected. Petitioner Gananda
said that it had "escrowed" the funds, but no accounts were set up
for individual employees and the necessary funds have not been
duly sequestered. In the meantime mechanics and employees entitled
to the protection of the Davis-Bacon and related Acts have not been
paid as the Copeland Act requires. /FN5/
Although Petitioner states that no one told it to use the
rates from an Onandago County project near Syracuse instead of the
specific rates found by the Labor Department to prevail for a Wayne
County project near Rochester, the Board concludes that
Petitioner's gambit on its own could not have started or continued
without the knowledge and consent of the appropriate office of
HUD.[10]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN5/ 40 U.S.C. 276c. [10]
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[11] Petitioner Gananda initially requested this Board to review
Wage Schedule No. 73-NY-272 on November 21, 1973. This Board
referred the matter to the Employment Standards Administration for
reconsideration. The ESA on February 11, 1974 denied Petitioner's
reconsideration as untimely, i.e., after the "award and/or the
beginning of construction". Gananda has argued that its petition
is timely because it was made within a reasonable time after
receipt of the predetermination. This argument could have merit
only if bids had not been awarded and construction commenced in
advance of the predetermination. Gananda also seeks by
continuation of its petition, guidance as to the adequacy of ESA
methods and procedures for arriving at wage determinations for
future contracts on the Gananda project. But as Petitioner has
also rejected out of hand the wage schedule ESA said must be paid
on the two contracts awarded on August 7, 1973, the Board's more
immediate and demanding concern is what to do about the blithe
adoption of, and HUD's concurrence in, a bogus set of wage
rates.[11]
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[12] The Department of Housing and Urban Development which
could have enlightened the Board made no appearance and has offered
no explanation of how the mismanagement in this case arose. For
purposes of what it has to say in this decision, the Board will
assume that the administering agency failed to act out of some kind
of error or misunderstanding, notwithstanding the fact that any
area office of HUD would be familiar with the operation of the
Davis-Bacon Act and related acts under other housing acts.
* * *
Among other purposes, the Wage Appeals Board was established
more than ten years ago to meet a need for an impartial review
board as Secretary of Labor Wirtz said, to be "as independent as it
can be made by the Secretary", to consider and grant relief where
justified in a case of alleged misfunction of administration or
error of interpretation under the Davis-Bacon Act. In this
capacity, the Board on a case-by-case basis, has protected many
parties -- labor organizations, individuals, sponsoring agencies
and contractors, -- from misfunction or misinterpretation of the
Act by administering agencies. [12]
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[13] The Board on a case-by-case basis has "adjudicated"
respective claims of contracting agencies, employers, labor
organizations and individuals and has sought through clarification
and guiding principles to bring about an harmonious and coordinated
administration of the Davis-Bacon Act and related Acts. Seldom
have we had a case that has called more for some guiding statement
of administration than the facts underlying this petition as we are
told those facts to be.
29 CFR 1.7(a) and 1.7(b) provide:
[Sec] 1.7 Use and effectiveness of wage determinations
(a)(1) Project wage determinations initially issued shall
be effective for 120 calendar days from the date of such
determinations. If such a wage determination is not used
in the period of its effectiveness it is void. If it
appears that a wage determination may expire between bid
opening and award, the agency should request a new wage
determination sufficiently in advance of the bid opening
to assure receipt prior thereto. However, when due to
unavoidable circumstances a determination expires before
award and after bid opening, the Administrator upon a
written finding to that effect by the head of the Federal
agency in individual cases may extend the expiration date
of a determination whenever he finds it necessary and
proper in the public interest to prevent injustice or
undue hardship or to avoid serious impairment in the
conduct of Government business. /FN6/
* * *[13]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN6/ 29 CFR 1.7(a). [13]
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[14] (b)(l) All actions modifying an original project wage
determination prior to the award of the contract or
contracts for which the determination was sought shall be
applicable thereto, but modifications received by the
Federal agency (in the case of the Federal-Aid Highway
Acts as codified in 23 U.S.C. 113, the State Highway
department of each State) later than 10 days before the
opening of bids shall not be effective except when the
Federal agency (in the case of the Federal-Aid Highway
Acts as codified in 23 U.S.C. 113, the State highway
department of each State) finds that there is a
reasonable time in which to notify bidders of the
modification. Similarly, in the case of contracts
entered into pursuant to the National Housing Act,
changes or modifications in the original determination
shall be effective if made prior to the beginning of
construction, but shall not apply after the mortgage is
initially endorsed by the Federal agency. A modification
in no case will continue in effect beyond the effective
period of the wage determination to which it relates.
/FN7/
We hold that Petitioner Gananda has presented no information
of merit that would justify this Board in relieving it from
compliance with Wage Determination 73-NY-272 effective at the
commencement of work. To entertain this case on the contention
that the Department of Labor's survey was in error, after work
commenced and the contract firmly awarded would permit a
construction contractor, sponsoring agency, and a [14]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN7/ 29 CFR 1.7(b). [14]
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[15] like-minded governmental regional underling, sua sponte, inter
sese, and pendente lite to take it upon themselves to dismantle the
administration of the Act whenever they are unhappy with a
Department of Labor wage predetermination action. Under
Regulations, 1.7(a) requests for modifications must be received and
processed before work starts or award made in accordance with the
terms of the regulation. Under the requirements of the Copeland
Act, an employee is entitled to the amount of wages due him each
week. There is nothing in the administration of the Davis-Bacon
Act that warrants withholding of wages under circumstances such as
present in this case. With thousands of Davis-Bacon wage
predeterminations annually finding their way into bidding
documents, the administration of the Act would be reduced to
shambles if any regional administrator were to permit a contractor
to pick and choose the rates he would apply subject to payment of
the correct wages due to affected employees if at some subsequent
time the Department of Labor were to catch up with the violation.
The scheme of things, as the Copeland Act shows, is to the
contrary. The wage predetermination schedule must be successfully
challenged in a timely fashion, or it must be [15]
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[16] included in the bid and contract documents, and must be paid. The
fundamental requirement of the Davis-Bacon Act, that the contract
specifications will contain the wage predetermination of the
Secretary of Labor does not permit the kind of end run attempted
here. But for the participation of the regional office of HUD this
would be the kind of case that would warrant consideration for
recommended debarment.
In view of this case the Board suggests that the respective
governmental agencies directly responsible for the administration
of the Davis-Bacon and related Acts re-examine their
responsibilities. The Board suggests to the Department of Labor to
take another look at Reorganization Plan 14 of 1950 out of
precaution to avoid a recurrence of this kind of situation.
Petitioner Gananda was concerned not only with the application
of Wage Determination 73-NY-272 to the work in progress, but the
manner and means in which the Labor Department will survey wage
rates for future contracts on the Gananda project. This decision
is without prejudice to Petitioner's right to seek review of a
future Labor Department [16]
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[17] wage predetermination when timely brought. It is also without
prejudice to the rights of Allied Building Trades Council to seek review
in a new wage predetermination of individual craft rates or other matters.
The Board prefers to deal only with the proper application of Wage
Determination 73-NY-272 in this case.
The cross-petitioner, Allied Building Trades Council
Rochester, New York, has asked the Board to direct the ESA to add
to the wage determination 73-NY-272 a part of the negotiated wage
rate that was not in the employees' paycheck at the time the survey
was made because it was withheld in escrow pending reconsideration
by the Construction Industry Stabilization Committee of the total
amount of the negotiated increase. There are reasons in favor of
this proposition. However, considering the overall mechanics of
Davis-Bacon administration and the ephemeral nature of wage
controls when viewed in perspective, the Wage Appeals Board will
not disturb the practice of the ESA. Based upon limited
information available in this case, the establishment of such a
practice would appear to create more difficult problems in
Davis-Bacon administration than it would solve. [17]
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[18] ORDER:
The Petition of Gananda Development Corporation is denied.
The Petition of Allied Building Trades Council, Rochester, New
York, is denied.
SO ORDERED:
(s) Oscar S. Smith, Chairman
(s) Stuart Rothman, Member
(s) Clarence D. Barker, Member [18]
wage stabilization
program that prevents increases in the economic package (wages and
fringes) from going into effect without prior governmental
approval. This program, applicable to newly negotiated wage
increases and to step or deferred increases in 1972 has had a
significant delaying effect upon increases in wages actually paid
in the construction industry. A wage rate due in a particular week
might be delayed and not be in a paycheck until much later pending
governmental approval. Surveys are based on "payroll" data. The
most thorough and persuasive analysis would have to be made of this
factor alone upon the wage rates paid in any given week in 1972
before it could be said that the construction industry in the
District had accepted a change in the structure of the industry
with respect to high-rise residential housing. [14]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN9/ As previously noted (see footnote 1, 4 and 7 supra) the data
submitted in connection with Edgewood Terrace I appear in certain
instances to be less than the predetermined rates included in the
contract provisions. [14]
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[15] In earlier decisions we have indicated that the Wage
Appeals Board has no self-starter. Whether the data is derived
from a government survey or one independently prepared by a
Petitioner makes no difference. Whatever information Petitioner
wants to use, the burden is upon it to make its case. The Wage
Appeals Board does not take the position that there is any special
or extraordinary burden of proof upon a Petitioner to establish by
rational processes that an error has been made. The kind of proof
required depends on the particular issue in each case. Although
the case was ably presented on behalf of Petitioner, the Board
concludes that it takes a more solid and convincing record than has
been presented to establish that the ESA acted unreasonably when it
continued to include high-rise residential construction in the
District of Columbia wage schedules for general building
construction.
AWARD
The relief requested by Petitioner is denied. The Petition is
dismissed.
SO ORDERED
Oscar S. Smith, Chairman,
Stuart Rothman, Member,
Clarence D. Barker, Member [15]
pan under usual Davis-Bacon Act practices, he shall use
a time span of 12 months preceding December 14, 1971. In no event
shall he use a period less than 6 months. [18]
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[19] 2. The Administrator shall include in his determination the
total number of employees by classes of laborers and mechanics
under the construction contract awarded for the Mixing Bowl Project
and not only those who worked in the tunnel portion of that
project.
3. The Administrator shall include all other heavy
construction-type projects in Arlington County during the base
period which he may consider, as a fair choice of judgement under
Davis-Bacon principles to be of a character similar to the Segment
C-7 contract work.
4. The Administrator shall include the number of employees by
classes of laborers and mechanics engaged upon project Chairman
(s) Stuart Rothman, Member
(s) Clarence D. Barker, Member [17]
