CLINTONVILLE CONSTRUCTION, INC., WAB No. 79-18 (WAB May 19, 1980)
CCASE:
CLINTONVILLE CONSTRUCTION
DDATE:
19800519
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
CLINTONVILLE CONSTRUCTION, INC. WAB Case No. 79-18
Whitestone, New York Dated: May 19, 1980
Appearances: Denis B. Frind, Esquire for Clintonville
Construction, Inc.
Gail V. Coleman, Esquire, Arthur J. Corrado, Jr.,
Esquire for the Wage and Hour Division, U.S.
Department of Labor
Decision by: Alfred L. Ganna, Chairman, William T. Evans, Member,
and Thomas M. Phelan, Member
DECISION BY THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Clintonville Construction, Inc., seeking a review of the
Administrator's decision of September 7, 1979, affirming an earlier
decision of Assistant Regional Administrator John A. Craven, Jr.,
after a hearing in accordance with 29 CFR 5.6(c). It was the
decision of both officials that Clintonville Construction, Inc.,
and its President and Secretary should be placed on the ineligible
bidders list of the Comptroller General for violations of the labor
standards provisions of the U.S. Postal Reorganization Act of
1970), the U.S. Housing Act of 1937, as amended, and Section 3(a)
of the Davis-Bacon Act. Petitioner seeks review of the [1]
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[2] entire record and the Board is being asked to reverse the
recommendation of the Administrator of the Wage and Hour Division.
Clintonville Construction, Inc., has been a general contractor
or subcontractor on various federal and federally financed
construction projects in New York and New Jersey. These federal
contracts were all in excess of $2000 and the applicable Davis-
Bacon and Contract Work Hours and Safety Standards Act (CWHSSA)
labor standards clauses and wage determinations were included in
them. Five of the contracts, set forth more particularly in the
record, (p.2, Statement for the Administrator) were the subject
of an investigation for labor standards violations. On the basis
of this investigation Wage and Hour alleged that Petitioner had
failed to pay the prevailing wage rates required by the wage
determinations in the contracts, had failed to pay time and one-
half after 8 hours a day or 40 hours a week, had failed to comply
with federal recordkeeping requirements and had submitted false
certified payrolls to the government. As a result, back wages for
labor standards violations in the amount of $56,713.08 were found
due twenty-six employees working in various laboring occupations.
CWHSSA violations in the amount of $963.68 were found due eight
employees for overtime violations, and liquidated damages for $370
were also assessed for the overtime violations. Concerning the
question of Petitioner's alleged falsification of the bookkeeping
records, the investigation [2]
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[3] disclosed that Petitioner simulated compliance by reducing the
number of hours worked on the certified payrolls.
A conference was held in December, 1976 between
representatives of Petitioner and the Wage and Hour Division at
which the investigation findings were explained. Petitioner
provided no defense to these claims and refused restitution of the
back wages claimed due. Wage and Hour requested the various
contracting agencies for which Petitioner was working to withhold
future contract sums from Petitioner. This resulted in
approximately $35,000 being withheld for the approximately $58,000
claimed to be due.
A second conference was held in January, 1977 at which
counsel for Petitioner requested additional investigations to be
made. Wage and Hour complied with this request. Petitioner
supplied affidavits attesting to the accuracy of the company's
records. The affidavits were viewed of doubtful validity by Wage
and Hour and negotiations for the payment of back wages continued.
In March, 1977 Petitioner requested a hearing pursuant to 29 CFR
5.11(b).
A Notice of Hearing was issued on July 13, 1977 by the Chief
Administrative Law Judge. This notice stated that the hearing
would relate to payment of prevailing wage rates, overtime rates,
and proper classification of laborers and mechanics employed by
Petitioner, and further stated that Petitioner had allegedly failed
to pay the required prevailing wage rates and failed to comply with
recordkeeping requirements [3]
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[4] in that they allegedly submitted false certified payrolls.
The hearing was rescheduled for September 30, 1977 and a
pre-hearing conference was conducted September 15, 1977. At this
pre-hearing conference the Administrative Law Judge (ALJ) defined
the scope of his authority and issues to be heard by him.
Petitioner submitted affidavits from Petitioner's employees which
stated that correct wages had been paid to them. The hearing was
rescheduled to allow consideration of the affidavits, and then was
rescheduled again for December, 1977. Ultimately, the hearing was
cance[]led pursuant to a Settlement Agreement and Stipulation of
Dismissal entered between Petitioner and the Department of Labor on
January 25, 1978. This agreement dispensed with the hearing and
purported to dispose of all issues raised therein upon payment by
Petitioner of $30,000 in settlement of all wage claims made by the
Secretary of Labor on behalf of laborers and mechanics employed on
the projects. The settlement also contained a provision that it
was made without prejudice and did not constitute an admission of
any liability by Petitioner.
In August, 1978 the Deputy Administrator, Wage and Hour
Division, sent a letter proposing debarment of Petitioner pursuant
to Section 5.6(c), 29 CFR, because the alleged violations of the
Davis-Bacon Act constituted disregard of Petitioner's obligations
to its employees within Section 3(a) of the Act, and similar
violations of the U.S. Housing Act of 1937, as amended, and the
Postal Reorganization Act of 1970, [4]
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[5] as amended, and the submission of payrolls containing
inaccurate information constituted willful and aggravated
violations of labor standards provisions within the meaning
of Section 5.6(b) of Department of Labor Regulations, Part 5.
Pursuant to [sec] 5.6(c) Petitioner requested and was
granted an informal hearing on March 1, 1979 at which Petitioner
presented arguments and evidence to refute the allegations
underlying the proposed debarment. Petitioner also submitted a
written statement subsequent to the hearing for consideration by
the hearing officer. On April 5, 1979, Petitioner was informed by
letter that upon consideration of the investigation report and
evidence submitted at and after the hearing, the hearing officer
would recommend debarment pursuant to 29 CFR 5.6.
Petitioner filed objections to the hearing officer's
decision with the Administrator, Wage and Hour Division, and on
September 7, 1979, the Administrator affirmed the earlier decision.
On October 22, 1979, Petitioner filed a Petition for Review of the
Administrator's decision with the Wage Appeals Board.
Petitioner's argument to the Board is based on his belief
that the Settlement Agreement and Stipulation of Dismissal entered
into before the [sec] 5.11(b) hearing could be held settled all
issues pending before the ALJ, and that Petitioner understood this
to include the issues of alleged [5]
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[6] falsification of records and simulated compliance on certified
payrolls upon which the debarment determination would have to be based.
Petitioner states that he would not have agreed to the stipulation and
the payment of the $30,000 if he had not believed that all claims in
reference to the contracts would be settled.
Petitioner also argues that many issues remain in the
dispute that should have been decided by an ALJ after a trial-type
hearing. Petitioner protests the unfairness of debarment without
having had testimony from witnesses and the opportunity for
cross-examination. Petitioner cites several instances of
statements presented in support of Wage and Hour's position which
may be disputed or should be clarified before reliance could be
placed upon them.
The Administrator, Wage and Hour Division, argues that
debarment is appropriate where the contractor has knowingly and
willfully submitted false payroll information which they had
certified as accurate and which Petitioner has failed to explain
satisfactorily with contrary evidence. The Administrator asserts
that the settlement of the claims under the [sec] 5.11(b) hearing
do not foreclose Wage and Hour from pursuing debarment under 29 CFR
5.6 since the issues of whether Petitioner disregarded its
obligations to its employees and engaged in aggravated or willful
violations of labor standards provisions is left unresolved in the
[sec] 5.11(b) hearing. The Administrator [6]
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[7] disputes that Petitioner has been deprived of a fair hearing,
citing the various meetings, letters and the informal hearing in
which the nature of the charges against it and the possible
imposition of debarment sanctions were explained.
Finally, the Administrator disputes Petitioner's assertions
that provisions of the Administrative Procedures Act would require
Petitioner be furnished a forum in which it could present evidence
and cross-examine witnesses.
The Board considered this appeal on the basis of the petition
and the 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 and a hearing before this Board held on April
10, 1979 at which all interested parties were present and
participated.
A review of the record by the Wage Appeals Board discloses
that the Notice of Hearing from the Chief Administrative Law Judge
to the Administrative Law Judge prior to the [sec] 5.11(b) hearing
erroneously included matter in the Notice which may have misled
Petitioner as to the subject matters before the ALJ in the hearing.
Section 5.11(b) states in part:
In the event of disputes concerning payment
of prevailing wage rates or proper
classifications which involve significant
sums of money, large groups of employees, or
novel or unusual situations, the Secretary of
Labor may ... direct a hearing to be held.
The aforementioned Notice of Hearing states in the first [7]
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[8] paragraph, in part:
... the disputed matters referred to in the
caption of this Notice and described more
particularly in Paragraph II hereof are now
before the Secretary of Labor for hearing
as provided by Section 5.11(b) of said
regulations.
Paragraph II states, in part:
The disputed matters to be considered at
the hearing relate to the payment of
prevailing wage rates, overtime rates, and
proper classifications of laborers and
mechanics employed by . . . [Petitioners]
under the projects listed in the caption
of this Notice. Respondent firms allegedly
failed to pay the required prevailing wage
rates and failed to comply with recordkeeping
requirements in that they allegedly submitted
false certified payrolls . . . .
It is the position of Petitioner that when it entered into the
Settlement Agreement and Stipulation of Dismissal and agreed to pay
$30,000 in settlement of all claims against it, this also applied
to questions of possible irregularities in recordkeeping and
possible submission of false certified payrolls. Petitioner relies
on paragraph 2 of the Settlement agreement, which states in part:
(2) It is the intention of the Secretary
and Respondents [Petitioners] to dispense
with this proceeding and to dispose of all
issues raised therein by Respondents'
payment of $30,000.00 in settlement of all
wage claims made by the Secretary on behalf
of laborers and mechanics employed by
Respondents on the aforesaid project . . . .
The position of the Wage and Hour Administrator as expressed
at the hearing (Tr. pp. 60-66) is that the [sec] 5.11(b) hearing
could only deal with questions of payment of prevailing [8]
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[9] wage rates and proper classifications, and that any rulings of
the ALJ with regard to falsification of certified payrolls or faulty
recordkeeping were outside of the hearing officer's authority and
were treated as dicta. (Tr. p. 66) Consideration of falsification
of certified payrolls and faulty or improper recordkeeping are
concerns of a [sec] 5.6 informal hearing in connection with
possible debarment proceedings.
It is clear to the Board that this concept of the two
hearings for enforcement of alleged labor standards violations
reflects the Wage and Hour Division's practices. Nevertheless,
the Board is of the opinion that debarment is a serious sanction
and that procedures leading to debarment must be entirely free
of error before the government can enforce it.
In this case the Board finds that the Chief Administrative
Law Judge's specific reference to Petitioner's alleged failure
to comply with recordkeeping requirements in that they allegedly
submitted false certified payrolls was erroneous because it was
beyond the authority of the referral of the dispute from the
Wage and Hour Division in its Order of Reference dated June
22, 1977 to the Chief Administrative Law Judge. The Board agrees
with Petitioner that it was not unreasonable from the Petitioner's
point of view for it to have considered these matters included
in the Settlement agreement where it is stated that it is the
intention to dispense with the proceeding and dispose of all issues
raised therein. Petitioner specifically did not admit to the labor [9]
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[10] standards violations and its claim is persuasive that it
would not have agreed to settlement if it thought the issues of
debarment and underlying questions concerning falsification of
certified payrolls and faulty recordkeeping were not dispensed
with. Since there was no [sec] 5.11(b) hearing there was no record
for the Assistant Regional Administrator to consider at the [sec]
5.6 hearing other than the investigation report. The Board finds
that there was sufficient contradictory evidence between the
investigation report and affidavits submitted by Petitioner to
justify having the hearing to determine what violations may have
occurred.
The Board finds that there was a mutual mistake as to what was
encompassed in the Settlement Agreement and that mutual mistake so
effected the Settlement Agreement as to warrant setting it aside.
The Board therefore directs that the Settlement Agreement be set
aside and the parties return to the status quo before the Agreement
was concluded. A hearing under [sec] 5.11(b) shall be rescheduled
to resolve the dispute concerning payment of the prevailing wage
rates or proper classifications. The Petitioner shall be credited
with the $30,000.00 paid under the Settlement Agreement and that
credit shall be applied to the final determination of this matter
by the Department of Labor.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
