M&H Construction Co., WAB No. 77-17 (WAB Oct. 16, 1978)
CCASE:
MARVIN E. HIRCHERT
DDATE:
19781016
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR .
WASHINGTON, D. C.
In the Matter of
MARVIN E. HIRCHERT d/b/a M&H WAB Case No. 77-17
CONSTRUCTION COMPANY,
A.P.I. SPECIALTY CONSTRUCTION Dated: October 16, 1978
and SPRING CONSTRUCTION COMPANY,
Solano and Contra Costa Cos., CA
Decision by: Alfred L. Ganna, Chairman, William T. Evans, Member,
Thomas M. Phelan, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Marvin E. Hirchert d/b/a M&H Construction Company to review the
July 12, 1977, decision of the Administrator, Wage and Hour
Division, after a hearing in accordance with 29 CFR 5.6(c). It was
the recommendation of the Assistant Regional Administrator and
affirmed by the Administrator that Mr. Marvin E. Hirchert and the
related companies be placed on the Comptroller General's ineligible
bidders list in accordance with Section 3(a) of the Davis-Bacon
Act, as amended (40 U.S.C. 27[6]a et seq.) due to their disregard
of wage obligations to their employees subject to the Davis-Bacon
Act. Furthermore, it was also the determination of both officials
to invoke the ineligibility sanctions of 29 CFR 5.6(b), barring
Petitioners from doing business with the Government for a period of
not to exceed 3 years [1]
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[2] due to their aggravated and willful violations of the labor
standards provisions of the Contract Work Hours and Safety Standards
Act, (CWHSSA) 40 U.S.C. 327 et seq., the United States Housing Act of
1937, as amended, 42 U.S.C. 1416(2) (subsequently, amended and
recodified at 42 U.S.C. 1437j) and the Department of Labor Regulations
at 29 CFR Part 5, Subtitle A.
This appeal arose from the fact that Petitioner entered into
a contract for school alterations with the Contra Costa Housing
Authority in 1973. Funds for this project were provided in part by
the Department of Housing and Urban Development. Also in 1973,
Petitioner obtained three contracts with the Department of the Navy
for alterations and repair at two Naval facilities in California.
In April 1974, an investigation by the Wage and Hour Division of
Petitioner's operations under the aforementioned contracts
disclosed that Petitioner had failed to maintain accurate records
of hours worked by its employees and had also failed to pay certain
employees the applicable prevailing wage rates and the required
overtime rates. The certified payrolls submitted to the
contracting agencies simulated the payment of the required wage
rates and indicated no overtime had been worked by employees
who had worked overtime. In some instances certified payrolls
showed names of employees for whom no record existed to show that
they were employed by Petitioner. In other instances employees who
worked on the project were not reported on the certified payrolls.
On July 23, [2]
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[3] 1975, Petitioner paid a sum of $9,360 in back wages to its employees
as a result of prevailing wage violations. No dispute of the occurrence
of the violations is now being made.
On April 15, 1976, the Deputy Administrator, Wage and Hour
Division, advised Petitioner of the violations disclosed by the
investigation and oœ his findings that the violations and
submission of certified payrolls incorrectly indicating compliance
with the prevailing wage and overtime requirements constituted a
disregard of obligations to employees, and willful and aggravated
violations of the labor standards provisions. Petitioner was
advised of the possible imposition of ineligibility sanctions in
accordance with Section 3(a) of the Davis-Bacon Act and 29 CFR
5.6(b) unless the apparent violations could be explained.
At an informal hearing conducted in September 1976, by an
Assistant Regional Administrator, Wage and Hour Division,
Petitioner was invited to present any explanations pertinent to the
allegations in regard to the contemplated imposition of
ineligibility sanctions. In December 1976, the Assistant Regional
Administrator issued his decision finding no facts which might
justify the action of Petitioner in making subminimum wage
payments, failure to pay proper overtime rates and submitting false
payroll records to the agencies. The [3]
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[4] Assistant Regional Administrator concluded that the debarment action
was warranted and that Petitioner should be placed on the Comptroller
General's list of ineligible bidders.
Petitioner appealed this decision to the Administrator and
on July 12, 1977, the Administrator affirmed the Assistant Regional
Administrator's decision. On August 12, 1977, Petitioner requested
this review by the Wage Appeals Board.
The Board considered this appeal in executive session on
the basis of the Petition for Review, the Statement for the
Administrator and record filed by the Solicitor of Labor,
Petitioner's Reply Brief, Supplemental Brief and Addendum to
Supplemental Brief, and the Solicitor's Supplementary Statement for
the Administrator.
In its petition and subsequent statements to the Board,
Petitioner has argued that the violations on the projects under
consideration occurred during a time of great expansion of
Petitioner's business, that Petitioner did not have a personal
knowledge of the bookkeeping practices resulting in submission of
falsified payrolls and that Petitioner has been anxious to
demonstrate to the Wage and Hour Division current compliance on
subsequent contracts it has performed for the government, but that
Wage and Hour has declined to investigate their current practices.
Petitioner also is relying on two cases decided by this Board, In
re Vicon Corporation (WAB 65-03, December 15, 1965) and Tilo
Company, Inc., (WAB 76-01, June 6, 1977), where it appears the
decisions resulted in the respective firms not being barred under
circumstances that bear some similarity to this case. [4]
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[5] Finally, Petitioner is claiming in effect that it has been denied
access to certain proposed HUD projects during the pendency of this
investigation and therefore has already suffered a form of debarment for
nearly 3 years, and to debar it formally for 3 years at this time would
be inappropriate.
The Solicitor of Labor on behalf of the Administrator, Wage
and Hour Division, has argued that the facts surrounding
Petitioner's payment of wages far below the predetermined wage
rates contained in its contracts with the contracting agencies, its
submission of falsified certified payrolls and its relatively long
experi[en]ce with government construction contracts since its first
year of operations indicate that Petitioner had disregarded its
obligations to its employees and should therefore be debarred under
the terms of Section 3(a) of the Davis-Bacon Act. Furthermore, it
is also claimed that Petitioner's failure to pay prevailing wages,
its submission of falsified certified payrolls and failure to pay
required overtime rates constituted aggravated and willful
violations of the United States Housing Act of 1937, as amended,
and the Contract Work Hours and Safety Standards Act. The
Solicitor argues that current compliance is inapplicable to excuse
violations under the Davis-Bacon Act, and that under the
Davis-Bacon related acts and CWHSSA the facts do not justify
excusing Petitioner for its violations of its contractual
obligations. Finally, the Solicitor argues that the Vicon and Tilo
decisions of this Board may be distinguished on the facts from this
case. [5]
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[6] The Board has considered the lengthy arguments presented
to it by the Petitioner and the Department of Labor. It seems to
the Board that Petitioner's actions in paying wage rates far below
the predetermined rate, submitting falsified certified payrolls and
failure to pay overtime cannot be considered as anything short of
a disregard of Petitioner's obligations to its employees. These
actions being taken after several years of experience with
government construction contracts, after Petitioner had paid $2,000
for violations of a subcontractor in 1973 tend entirely to nullify
Petitioner's attempts to justify these actions because of its
burgeoning business during this period and the errors of its
bookkeeper. The Board has stated in a recent order in connection
with WAB Case No. 78-04, In re C.M. Bone, etc., (Sept. 13, 1978):
The contractor is and rightfully should be responsible
for the work performed by his clerical employees as well
as his laborers and mechanics in performance of the
contract. The failure to properly instruct the
secretary/bookkeeper in the preparation of the payrolls
seems to the Board to indicate that there was not only a
disregard of petitioner's obligation to the contracting
agency but also to his employees, many of whom were
underpaid as a result of his failure to observe his
obligations. The Board does not accept the arguments
that the errors of a clerical employee should serve to
excuse her employer from meeting his legal and
contractual obligations.
Petitioner's desire to demonstrate current compliance to the
Wage and Hour Division is not appropriate in a situation where the
violations are of Section 3(a) of the Davis-Bacon Act, as amended.
There is no language in Section 3(a) which indicates the Department
of Labor can recommend mitigation of debarment because of alleged
current compliance. [6]
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[7] It also seems to the Board that debarment is required by
Petitioner's violations in connection with the contracts for school
building alterations for the Contra Costa Housing Authority under
the United States Housing Act of 1937 and CWHSSA. Although
current compliance in the Tilo and Vicon cases, supra, and the
delays experienced by the contractor in Tilo before his appeal
reached the Board were included among the reasons cited by the
Board for not debarring the Petitioners in those cases, in neither
case was there present the factual situation surrounding the
violations which was found to exist in the present case. The Board
must take cognizance of the fact that the Petitioner here had
substantial prior experience with government contracting before
working on the contracts in question and that it had to pay back
wages on behalf of one of its subcontractors on one of the prior
contracts. Also, the Board considers the submission of falsified
payrolls to the contracting agencies, the omission of some of the
employees' names from the payrolls, the failure to keep accurate
records, or to pay the predetermined wage rates, or to pay the
required overtime an indication of aggravated and willful
violations of the labor standards provisions of the applicable
statutes and that these violations serve to distinguish this case
from either Tilo or Vicon. [7]
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[8] Finally, Petitioner claims in the Addendum to Supplemental
Brief that it has to some extent already been debarred for about 3
years because the Department of Housing and Urban Development in
one or more cases had not permitted a Housing Authority to accept
a bid œrom one of Petitioner's companies because of the violations
in these contracts. Nevertheless, in the same document Petitioner
admits that during this time period lt has received some limited
government work from other agencies. The Board assumes that
Petitioner's performance on these later contracts would form the
basis for Petitioner's claims of current compliance. If Petitioner
has had enough work on government contracting to demonstrate a
showing of current compliance it does not seem reasonable that the
Board should consider Petitioner's arguments that it has in effect
been debarred for 3 years following his problems which are the
subject of this appeal. It is obvious from Petitioner's own
documents that it has not been effectively debarred.
In view of these considerations, the decision of the
Administrator, Wage and Hour Division, is hereby affirmed and the
petition is dismissed.
BY ORDER OF THE BOARD
Craig Bulger, Executive Secretary
Wage Appeals Board [8]
