CCASE:
THOMAS L MOORE
DDATE:
19790816
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
IN THE MATTER OF
THOMAS L. MOORE, President, WAB Case No. 79-05
and T.A.M., INC. Dated: August 16, 1979
APPEARANCES: Carol N. Park, Esquire for Thomas L. Moore & T.A.M.,
Inc.
Gail V. Coleman, Patricia M. Duryee for the Wage and
Hour Division, U.S. Department of Labor
DECISION BY: Alfred L. Ganna, Chairman, William T. Evans,
Member, Thomas M. Phelan, Member
DECISION BY THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Thomas L. Moore, President, and T.A.M., Inc. seeking review
of the Administrator's decision of October 6, 1978, affirming
an earlier decision of Area Director Richard Robinette after a
hearing in accordance with 29 CFR 5.6(c). It was the decision
of both officials that T.A.M. and Mr. Moore as president, and
individually, be placed on the Comptroller General's list of
ineligible bidders for violations of the Davis-Bacon Act due
to their disregard of their obligations to employees. Petitioner
seeks review of the decision and consideration of additional
evidence and affidavits, or remand with instructions for taking
additional evidence and issuing new or modified findings. [1]
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[2] T.A.M. was a subcontractor to the Small Business
Administration (SBA) for two construction contracts at NASA's
Kennedy Space Center. One contract for about $37,000 was for
paving work and the other contract for about $49,000 was for
building modifications. The two contracts ran concurrently for
most of the payroll periods. Both contracts were subcontracted by
T.A.M. to separate firms.
The subcontractor on the building modification contract
employed local laborers for the project and a NASA investigation
disclosed that the subcontractor had paid a laborer's rate to
some of the employees who were performing the work of skilled
crafts, that the informal records that were kept were destroyed
after the employees were paid, that he had not reported work hours
or wage rates to T.A.M. and claimed ignorance of a predetermined
wage scale.
When NASA advised Mr. Moore of T.A.M. of the results of their
investigation, he agreed to pay the men immediately and claimed to
do so but no cancelled checks or receipts were submitted to NASA,
and the next week seven of the affected employees claimed they had
not been paid. Subsequently, a Department of Labor (DOL)
investigation was undertaken in both Florida and T.A.M.'s home
office in Tennessee. On the basis of this investigation DOL
claimed that nine employees were misclassified, that incorrect pay
records were submitted by T.A.M. and that seven [2]
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[3] employees were induced to settle for less than the full amount of
back wages due. In addition to the aforementioned violations, DOL found
that five employees from Tennessee were sent to Florida and paid a flat
rate of $5/hour regardless of the type of work they performed, plus
lodging, board and transportation from Tennessee to Florida and return.
For these employees a set of payroll records was kept in Florida showing
actual wages and hours, and two other sets of certified payrolls were
submitted by T.A.M. to NASA purporting to show hours worked and
predetermined wages being paid.
The employees on the paving project received wage rates of
$3.00 to $4.00 per hour where the predetermined rate was $8.65 for
the work actually being performed. The payrolls maintained by the
subcontractor did not match the certified payrolls prepared by
T.A.M. and submitted to the contracting agency.
In September 1976, at a closing conference between T.A.M. and
NASA, DOL representatives presented information showing backwages
of $7,916.78 being due the employees of T.A.M. and the
subcontractors. T.A.M. paid these amounts by cashier checks and
also paid $370 in liquidated damages for violations of the
Contract Work Hours and Safety Standards Act.
In September 1977, the Deputy Administrator, Wage and Hour
Division, acknowledged the payment of back wages. Also he
discussed T.A.M.'s various violations of labor standards and found [3]
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[4] that there was reasonable cause to consider these acts to be
a disregard of T.A.M.'s obligations to its employees which could
result in d[e]barment under Section 3(a) of the Davis-Bacon Act.
An informal proceeding was held in February 1978, at which
Petitioner was present. After considering the information
presented by T.A.M. and SBA at the hearing and submissions of
material subsequent thereto, the hearing officer concluded that
T.A.M.'s actions constituted a disregard of T.A.M.'s obligations
to its employees within the meaning of Section 3(a) of the Act
and recommended debarment. In October 1978, the Administrator
affirmed the earlier decision and Petitioner immediately served
notice on the Board that a petition for review of the
Administrator's decision would be filed before the Wage Appeals
Board.
Petitioner's arguments to the Board primarily relate to
Petitioner's status as an inexperienced, disadvantaged businessman
in the SBA's Section 8(a) program. It is their position that SBA
should have been a party to the proceedings throughout so that
their program would be explained and spread in the record. This
SBA program was developed for the purpose of providing management
and technical assistance to both socially and economically
disadvantaged [4]
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[5] persons. The argument is made that in T.A.M.'s business
operations the Board is considering the conduct of an
inexperienced businessman whose "left hand did not know what
the right hand was doing," that the underpayments were not willful
and not deliberate or intentional but were due to inexperience. It
is claimed that as a result of T.A.M. making restitution to the
employees and paying liquidated damages, there was no lack of good
faith shown and that this was not taken into consideration by the
Administrator. It is also argued that the Administrator did not
consider T.A.M.'s current compliance and exemplary conduct on
recent contracts or the likelihood that debarment will force T.A.M.
out of business since virtually all of its contracts have been with
the government. Petitioner complains further that there was a lack
of due process during the informal hearing in that Petitioner did
not have a copy of the investigative report, and did not at first
have a complete record, and therefore did not have an opportunity
to respond to the specific charges. It is conceded by Petitioner
that the record before the Board is now complete.
Finally, Petitioner argues that this case involves two public
policy goals that are in conflict: the SBA program for assisting
and training disadvantaged contractors and businessmen, and the
Davis-Bacon Act to assure that laborers and mechanics receive the
minimum prevailing wage rate for their work.
The position of Petitioner was supported by a statement filed
with the Board on behalf of the Associated Builders and
Contractors, Inc. [5]
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[6] The Administrator, Wage and Hour Division, argues that the
Petitioner had knowledge of its obligations to its employees and to
the subcontractors' employees since the obligations are clearly
stated in the various Federal contracts T.A.M. has signed and
T.A.M.'s actions in preparing certified payrolls demonstrates
T.A.M.'s awareness of the Davis-Bacon Act requirements.
Wage and Hour asserts Petitioner was not denied due process
during its administrative procedures that led to this appeal in
that T.A.M. had the nature of the violations explained on several
occasions and claims that although T.A.M. has had ample opportunity
to rebut the evidence against it, it has not done so. Wage and
Hour points out that T.A.M. was represented by counsel at the Wage
and Hour hearing and given an opportunity to explain the
discrepancies in the certified payrolls. They note the fact that
T.A.M.'s explanations were not accepted by the Administrator or the
hearing officer does not constitute lack of due process.
Finally, Wage and Hour states its present debarment action is
based not only on the underpayments to employees, but on the
submission of false payrolls which it claims constitutes proof of
a disregard of Petitioner's obligations to its employees and the
subcontractors' employees. It is argued that these actions
demonstrate that T.A.M. and Thomas L. Moore, its president, have
violated Section 3(a) of the Davis-Bacon Act and that the
Administrator's recommendation that Petitioner be placed on the
Comptroller General's list of ineligible bidders should be upheld. [6]
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[7] The Board considered this appeal on the basis of the
petition and Petitioner's reply to the statement for the
Administrator filed by Petitioner, the Statement for the
Administrator, and the record of the case before the Wage and Hour
Division filed by the Solicitor of Labor, comments of the
Associated Builders and Contractors, Inc., filed by that
organization, and a hearing held on June 21, 1979 at which all
interested parties were present and participated.
It is apparent to the Wage Appeals Board that Petitioner is
relying heavily on its status as an inexperienced SBA Section 8(a)
contractor to explain, or more likely, excuse its violations of the
labor standards provisions of the Davis-Bacon Act. The submission
to NASA of reconstructed and erroneous certified payrolls cannot be
explained by lack of intention or inexperience if this action is
done to make it appear that there was strict compliance with the
labor standards provisions of the Davis-Bacon Act, when, in fact,
there was none. Such reconstruction of the payrolls by Petitioner
is an extreme form of disregard of its obligations to its
employees.
The Board cannot subscribe to the principle that a different
and lesser standard of compliance with labor laws should exist for
SBA's Section 8(a) contractors than for other contractors in the
construction industry. Petitioner has stated that what this case
gets down to is a conflict between two public policy goals. The [7]
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[8] Board does not agree that there is a conflict in these
goals. Assisting economically and socially disadvantaged
businessmen to achieve a competitive position in the marketplace
can and properly should be done in compliance with all of the laws
applicable to the businessmen in that marketplace. It was
never intended, moreover, that the 8(a) contractor's competitive
position would be achieved at the expense of the employees working
on the 8(a) contract, or that the 8(a) contractor would not be
responsible for any or all of the contract's terms. This is what
the Board would be condoning if it permitted Section 8(a)
contractors to conform to a lesser standard of compliance.
It seems to the Board that when SBA obtains certain projects
for its Section 8(a) contractors, thereby withdrawing these jobs
from other contractors and their labor forces, SBA is obligated
to educate and train its Section 8(a) contractors to conform
to the labor standards requirements and to insure that its
contractors do not abuse their obligations. If it does not do
so it is abdicating its responsibility to its Section 8(a)
contractors in this regard. That, however, still does not excuse
the 8(a) contractor from compliance with the terms of the
contract or the law.
Petitioner's claims of inexperience and the "left hand
not knowing what the right hand was doing" are not acceptable
when there exists a series of falsified payrolls submitted to
the contracting agency. On the contrary, it appears that the [8]
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[9] left hand knew exactly what the right hand was doing. It was
simulating compliance with the law. Petitioner started bidding
on Section 8(a) contracts in 1972 and these violations occurred
in 1976. The Board has held in a recent case, C.M. Bone, Acme
Painting Company, Subcontractor, WAB Case No. 78-04 (June 7, 1978)
that petitioner's claim of inexperience following several years
of work on government construction will not serve to excuse the
contractor for falsifying payrolls or paying less than the
predetermined rate. The rationale in that case is applicable here.
Finally, the Board does not agree that Petitioner was denied
due process in the administrative procedures. It seems to the
Board that Petitioner was fully informed of the violations which
occurred, was given ample opportunity to correct the underpayments,
was given an opportunity to rebut the charges against it and was
well represented by counsel at the administrative hearing and
before this Board. All of the Petitioner's evidence has been
considered in the administrative procedure and he has had an
opportunity to fully rebut all of the charges.
In the light of the foregoing the Board is of the view that
the Petitioner has disregarded its obligations to its employees
within the meaning of Section 3(a) of the Davis-Bacon Act and
therefore the decision of the Administrator, Wage and Hour
Division, is affirmed and the petition is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
