CCASE:
REPP & MUNDT & GOEDDE PLUMBING
DDATE:
19840117
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
REPP & MUNDT, INC. & WAB Case No. 80-11
GOEDDE PLUMBING & HEATING
CO., INC., Evansville, Indiana Dated: January 17, 1984
BEFORE: Stuart Rothman, Member, Thomas X. Dunn, Member
Gresham Smith, Alternate Member /FN1/
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Repp and Mundt, Inc. and Goedde Plumbing and Heating
Company, Inc., for review of the decision of the Assistant
Secretary for Employment Standards dated July 22, 1980. This
decision upheld an earlier decision of the Administrative Law
Judge (hereinafter ALJ) and denied petitioner Goedde's exceptions
to the ALJ's ruling.
The facts of this appeal are simple and uncontroverted.
Repp and Mundt, Inc., was the prime contractor for the construction
of an EPA sludge sewage treatment plant at Princeton, Indiana.
Goedde was the plumbing and heating subcontractor on the project.
The prime contract and subcontract were subject to the Davis-Bacon
Act and the labor standards provisions of the regulations
applicable thereto. [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Chairman Alvin Bramow withdrew from consideration of this
appeal and did not participate in the decision. [1]
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[2] The collective bargaining agreement between Local 136 of
the United Association of Journeymen and Apprentices of the
Plumbing and Pipe Fitting Industry and the local plumbing
contractors association included specified ratios for the
employment of apprentices to journeymen. Goedde's apprentices
were registered by the Bureau of Apprenticeship and Training
(hereinafter BAT) of the Department of Labor and Goedde's
apprenticeship program was also duly registered with BAT.
It was stipulated at the ALJ hearing that in the event
that Goedde was found in violation of the Davis-Bacon Act, a
total of $11,231.09 in back wages was owed to seven of its
apprentices.
The aforementioned collective bargaining agreement applicable
to petitioner's project contained provisions concerning employment
of apprentices as follows:
83. Section 2. Employers employing one (1)
Journeyman and having employed one (1) Journeyman
steadily may be permitted to have one (1) Apprentice.
84.(a) Employers employing ten (10) Journeymen
and having employed ten (10) Journeymen steadily
may be given consideration for an additional
Apprentice.
Payroll records introduced at the hearing indicated that
Goedde employed apprentices on the project in excess of the
specified ratio and that these apprentices were not paid
the journeyman's wage rate, but instead, apprentice wage rates
varying from approximately $3.00 to $10.00 per hour. [2]
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[3] The ALJ's decision found that Goedde had employed apprentices
in excess of the specified ratio contained in the collective
bargaining agreement which had been approved by BAT. It was also
the ALJ's decision that those apprentices employed in excess of the
specified ratio should have been paid the predetermined rate for
plumber and steamfitter journeymen, or $12.18 per hour.
The petitioner filed exceptions to the ALJ's findings and
order but the Assistant Secretary for Employment Standards
upheld the ALJ and on August 15, 1980, petitioner filed a
Request for Further Review with the Wage Appeals Board.
Petitioner does not deny that it employed apprentices
in excess of the number permitted by the collective bargaining
agreement and the record supports this finding, but petitioner
argues that a practice had developed in the area for as many
as 15 years prior that employers and the union officials did
not adhere to the ratios enumerated in the working agreement
for the benefit, according to petitioner, of both the journeymen
and apprentices. Petitioner also asserts that those who worked as
apprentices in the area worked with the tools of the trade on a
progressive basis, during which time their hourly apprenticeship
rate of pay increased as their skills grew.
Because of these considerations, petitioner argues that the
ALJ's Decision and Order is contrary to law and [3]
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[4] not supported by substantial evidence on the record. Petitioner
relies upon the following provision of the collective bargaining
agreement to support what it claims is a common practice among
employers of employing more apprentices on their projects than
those permissible under apprenticeship portions of the working
agreement (Parts 83, 84):
The EMPLOYER and the UNION hereby pledge themselves
to the highest degree of harmony and good faith in
the performance of this Agreement. To the extent
that this goal depends on more than written words,
the parties have agreed upon certain fundamental
principles by which they are to be guided in the
interpretation and performance of this Agreement.
Furthermore, a witness called by the Department, the union's
business representative, admitted in his testimony that a practice
of contractors employing a greater number of apprentices than those
allowed by the working agreement had been allowed during times of
low employment, fostered by the parties to the agreement as a means
of keeping the apprentices working.
The Wage and Hour Division relies upon the uncontroverted
facts that petitioner employed apprentices in excess of the
approved ratios and did not pay them the appropriate predetermined
wage rate for plumbers and steamfitters which was $12.18 per hour,
but instead paid these apprentices wages ranging from $3.00 to
$10.00 per hour. It is Wage and Hour's position that the only
acceptable exception to the payment of [4]
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[5] the predetermined wage rate is for apprentices employed in
accordance with the regulations. This regulation (29 CFR [sec]
5.5(a)(4)(i)) states:
(1) the apprentice must be employed and be individually
registered in a bona fide apprenticeship program.
(2) the apprenticeship program must be registered with
the United States Department of Labor, Employment and
Training Administration, Bureau of Apprentic[e]ship and
Training (BAT) or with a state agency recognized by the
BAT.
(3) the allowable ratio of apprentices to journeymen
in the craft classification cannot be greater than the
ratio permitted to the contractor as to his entire
work force under the registered program.
Wage and Hour points out that this regulation which is a part
of petitioner's contract with the Environmental Protection
Agency, also provides that unless all of the necessary requirements
are met, an employee listed on a payroll at an apprentice wage rate
shall be paid the wage rate determined by the Secretary of Labor
for the classification of work he actually performed. It is not
required that such employee must have achieved journeyman status or
ability to receive the predetermined rate. Wage and Hour relies on
two decisions of this Board to support its position, In the Matter
of CRC Development Corporation and Don Harris Plumbing Co. WAB
77-01, 77-13, January 23, 1978, and In the Matter of Soule Glass
and Glazing Co., WAB 78-18, February 8, 1979. [5]
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[6] The testimony of three apprentices at the ALJ's hearing
and of the business manager of the union confirmed that the
duties performed by the apprentices were those of the
plumbers' and steamfitters' trade.
The Wage and Hour Division does not dispute petitioner's
position that it was occasionally the practice in the vicinity
of this project for contractors and the union to disregard the
ratio of apprentices to journeymen established in the collective
bargaining agreement. However, Wage and Hour's position is
that on projects subject to the Davis-Bacon and related Acts the
regulations' requirements concerning the employment of apprentices
must be strictly construed in order to assure the protection
afforded by the Act; i.e.: to insure that wages paid workers
employed on Federal construction projects are not depressed below
the prevailing wage in the area. Wage and Hour disputes
petitioner's claim that area practice sanctioned its deviation from
the specified ratios and argues that the aforementioned purpose of
the Act is defeated when contractors are allowed to hire excess
apprentices and pay them wages below that prevailing in the area
for the particular work classification.
The Wage Appeals Board considered this appeal on the basis
of the petition and reply brief filed by the petitioner, and the
statement for the Assistant Secretary of Labor for Employment
Standards and the record of the appeal before the Wage and [6]
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[7] Hour Division filed by the Solicitor of Labor. No request for
an oral argument was received. /FN2/
* * *
There is no disagreement between the parties as to the
facts. A review of the weekly certified payrolls submitted
by petitioner Goedde to the contracting agency over a period
from October 21, 1975 to July 26, 1977 indicates that for 45
weeks out of the 78 weeks for which payrolls were submitted,
petitioner employed more apprentices than were allowable
under the BAT registered and approved working agreement.
Generally, the violations consisted of more than one
apprentice being employed with a foreman, or with a foreman and
up to three journeyman plumbers, but in the week of October 28,
1975 an apprentice plumber worked briefly with no foreman
or journeyman listed on the payroll at all. On the payroll
of April 26, 1976, two apprentices worked on days when no
journeymen worked. There are examples of as many as
four apprentices working when only one to three journeymen
worked. The working agreement does not even contemplate a
contractor employing two apprentices until 10 journeymen are
regularly employed and the agreement is silent on the subject
of more than two apprentices working. [7]
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/FN2/ Petitioner moved to strike the statement for the Assistant
Secretary of Labor for Employment Standards. This motion is
denied. [7]
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[8] In its defense petitioner has asserted that the ratio of
apprentices to journeymen contained in the collective bargaining
agreement was not adhered to in the area in question when
employment was low in the construction industry. The Board
believes that petitioner would have to change the registered plan
with BAT before the Board could approve the practice of hiring
excess apprentices in Evansville and vicinity, contrary to the
ratio defined in provisions 83 and 84 of the collective bargaining
agreement. Although it is claimed that, from time to time, the
area contractors and the union allowed more apprentices to be
employed than were allowable under the working agreement, the Board
is also told that the working agreement was renegotiated every
three years and the provisions in question (83 and 84) were not
changed. This fact casts doubt upon the aforementioned assertion
that the practice of hiring in Evansville and vicinity was
different from that contained in the collective bargaining
agreement.
The language of Article 1 of the collective bargaining
agreement, Preamble and Declaration of Principles, (quoted on page
4 of this decision and relied upon by petitioner as sanctioning
petitioner's deviation from the working agreement's [8]
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[9] ratios) does not appear to the Board to have the significance
that petitioner attaches to it. /FN3/ [9]
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/FN3/ The fundamental principles referred to in the Preamble are
as follows:
First, the EMPLOYER and the UNION realize that they have
accepted an undertaking, the beneficiaries of which are the
employees who comprise the bargaining unit to which this
Agreement relates and the general public.
Second, This relationship as well as the policies inherent in
the legislations of the State and of our Nation, dictate that
the EMPLOYER pay wages and provide conditions of employment
which are at least equivalent to those which prevail in the
immediate locality for similar classes of work, to the end
that:
(a) The individual employee affected by this Agreement may
enjoy a degree of self-respect, economic independence and
comfort which corresponds to that of other similar workmen in
the locality; and
(b) The general public may enjoy the prosperity and freedom
from recurrent business depressions generated by competitive
wage rates and working conditions within and between
industries and the attendant sustaining effect upon the
purchasing power of the workman.
Third, the EMPLOYER being in the construction industry,
excellence and safety of endeavor are prime requisites to
the continuation and success of the EMPLOYER'S business.
Accordingly, it is of ultimate importance to the EMPLOYER that
its employees be craftsmen of highest qualifications and
experience. Therefore, the EMPLOYER and the UNION subscribe
fully to the principles of experience, length of time in the
industry as a skilled journeyman mechanic and craftsmanship.
Fourth, it is recognized that the work performed by the
employees covered hereby may be of an inherently dangerous
nature and is so interrelated that incompetence on the part of
one employee can endanger the health, safety and lives of
others. Consequently it is of cardinal importance that
employees be protected from such risks. [END FN3] [9]
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[10] Furthermore, the Board believes that the regulation,
29 CFR [sec] 5.5(a)(4)(i), permitting employment of apprentices
and quoted on page 5 of this decision was carefully worded
to reflect the possible existence of different apprenticeship
training plans in a locality approved by the BAT. The regulation
was not drafted to permit business agents to determine when the
ratios of apprentices to journeymen could be waived on an ad hoc
basis without BAT approval. The Board does not see how the
Davis-Bacon Act and its implementing regulations issued to
accommodate apprenticeship training programs can be administered at
the enforcement stage unless all bidders at the time of the
submission of bids can expect that the applicable contract
provisions and regulations which require BAT approved apprentices
to journeymen ratios will be applied as written. It seems to the
Board that the cost estimators for the sponsoring agency making the
award could only determine whether a job should be awarded by
taking into account costs based upon adherence to
apprentice-journeyman ratios per approved BAT programs in the
locality. When the successful bidder does not comply with these
ratios on a Davis-Bacon Act job, it would appear that the award has
been secured on either a misrepresentation or a misunderstanding
that the work would be performed in accordance with the approved
BAT apprentices to journeymen ratios. Any such misunderstanding
must be construed against the successful bidder in the absence [10]
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[11] of clear and convincing justification. In this case,
these ratios are to be found in the local collective bargaining
agreement as written. There has been an egregious violation
of the Act and its implementing regulations in this case.
There would be no way, at the time of bidding, that the
contracting agency's estimators could know in advance whether
the local business agent is going to waive the apprentice to
journeyman ratio at the beginning or during the life of the
project, or cancel a waiver once given. There is no way at
the enforcement stage for the enforcing agency to know what
position the local business agent took when the project was
awarded to the low bidder.
The Board is aware that this kind of case does not have
a perfect conclusion. The net result under the regulation is
that a number of apprentices will be receiving additional
compensation up to the journeyman's rate in a case in which the
union business agent has testified they have not been underpaid.
This is because the regulations, 29 CFR [sec] 5.5(a)(4)(i),
require the difference in the journeyman's to apprentice's wage
rate to be paid to the apprentices.
Here, the local union has, according to the business
agent's testimony, been permitting its contractors to undercut
the union's own area labor standards, in order to compete on
private construction work and in that way, for "economic reasons",
get the jobs which will give employment to its members. [11]
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[12] This is the effect of the local union's business agent's
testimony before the Administrative Law Judge. The Board does not
say that this is a deplorable situation. On the contrary, it
may be a commendable matter in order to permit the union-
oriented contractor to compete. However, at the enforcement
stage, the Davis-Bacon Act cannot be administered on the basis
that a local business agent will testify that with respect to
a particular project at a particular time of low employment of
its members there had been a relaxation of the apprentice
to journeyman ratio.
The Wage Appeals Board stated in Tollefson Plumbing and
Heating Co., WAB 78-17, September 24, 1979:
Nevertheless, the Board in its decisions has strictly
construed the apprenticeship provisions of the regulations
to insure that laborers and mechanics working on Federal or
federally-assisted projects received the protection to which
they were entitled by the statute.
In CRC Development Corporation, supra, the Board noted:
Payment of the apprentice wages are permitted under
the Davis-Bacon Act only to the very limited extent
that it is spelled out in the approved apprenticeship
agreement.
In this case, although petitioner apparently paid its
apprentices the proper apprentic[e]ship wage rate, it consistently
exceeded the number of apprentices permissible under the collective
bargaining agreement registered and approved by BAT.
It should be pointed out that this case does not decide [12]
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[13] what the situation would be and what the Board would do in
the case in which the local employing industry, a local contractor,
contractor's association and/or union went to the contracting
agency or the Department of Labor before bid opening and
directed attention to the fact that the apprentice to journeyman
ratios were no longer required to be observed in the locality and
further that all employing contractors operating in the locality
knew in advance what the substituted apprentice to journeyman
ratios were and that all were treated equally in that regard.
It would be expected that under such a circumstance, after
checking with BAT, there might be an adjustment in the bid
documents to reflect the situation and to put all bidders on notice
of their equality. This could then result in a lower project cost
to the contracting agency.
In view of these considerations, the Assistant Secretary's
decision upholding the ALJ is affirmed and the petitioner's Request
for Further Review is hereby denied.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
