JOSEPH MORTON CO., INC., WAB No. 80-15 (WAB July 23, 1984)
CCASE:
JOSEPH MORTON COMPANY
DDATE:
19840723
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
JOSEPH MORTON COMPANY, INC. WAB Case No. 80-15
New York, NY Dated: July 23, 1984
BEFORE: Stuart Rothman, Member, Thomas X. Dunn, Member and
Gresham C. Smith, Alternate Member /FN1/
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Joseph Morton Company, Inc., (hereinafter Morton) requesting
a review of the November 3, 1980 decision of the Assistant
Secretary of the Employment Standards Administration (acting in
the absence of the Administrator, Wage and Hour Division). The
Assistant Secretary affirmed two earlier decisions of an
Administrative Law Judge (ALJ) after hearings held in accordance
with regulation 29 CFR [sec] 5.11(b). In his decisions the ALJ
found that Morton (1) had committed record keeping violations on a
Federal construction project, (2) had failed to pay the prevailing
wage to five laborers and (3) had failed to pay overtime at the
rate of time and one-half for each hour worked over eight hours
in a day or forty hours in a week. The ALJ ordered Morton to
pay $53,143.40 to the Employment Standards Administration for
distribution to seven employees as back wages. [1]
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/FN1/ Chairman Alvin Bramow withdrew from consideration of this
appeal and did not participate in this decision. [1]
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[2] On March 24, 1981 petitioner Morton appealed the Assistant
Secretary's decision to the Wage Appeals Board claiming that the
individuals which the ALJ found to be employees of Morton were
actually bona fide independent subcontractors. Morton asserts
that these individuals were not subject to the Davis-Bacon Act
and applicable labor standards provisions. He further asserts
that the certified payrolls submitted to the contracting agency
were accurate.
The pertinent facts in this appeal are as follows: Morton
was awarded the prime contract by the General Services
Administration for renovation, modernization and alteration of the
United States Courthouse at Foley Square in New York City in
June, 1974 for $3,234,700. Labor standards provisions of the
Davis-Bacon Act and the Contract Work Hours and Safety Standards
Act were included in Morton's contract.
During construction an investigation by the Wage and Hour
Division for labor standards compliance disclosed that Morton
had not included five laborers on its certified payrolls to the
contracting agency, had failed to pay them the prevailing wage
rate, and had failed to pay them and two mechanics time and
one-half for overtime hours. Further, the investigation showed
Morton did not maintain accurate records as required by the
Davis-Bacon Act, the Contract Work Hours and Safety Standards
Act and its contract with GSA.
The certified payrolls showed that Morton employed only two [2]
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[3] employees on a $3.23 million construction pro[j]ect. These
two employees received proper compensation for straight time hours.
Five other workers on the Foley Square project received
compensation only from Morton's cash disbursements account for the
project. Morton's position is that these five workers were
bona fide subcontractors not subject to the requirements of the
Davis Bacon Act; for this reason the certified payrolls it
submitted are accurate.
Wage and Hour asserts that the work performed by the five
laborers was carried on under Morton's site supervision and
control and did not conform to the usual standards of an
independent contractor. The workers did not own their own tools or
equipment and had no history of employment as independent
contractors prior to this project.
The Wage and Hour Division relies on an earlier decision of
this Board and a Comptroller General's opinion /FN2/ which held
that the protection of the Davis-Bacon Act was intended to
apply to persons engaged as laborers and mechanics on Federal
and federally assisted construction projects. Such coverage is
not defeated by calling an employee an independent contractor if
in fact he is a laborer or mechanic on the job. [3]
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/FN2/ The Matter of Edwards Home Improvement Co., WAB Case No.
77-28 (Sept. 18, 1978). Matter of TWP Company Comp. Gen. No.
B-196356, 80-1 CPD para. 295 (24 Apr 1980), U.S. ex rel. Southern
G-F Co. v. Landis & Young, 16 F. Supp. 832 (1935). [3]
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[4] In order to determine the wages which petitioner should
have paid, the Wage and Hour Division had to reconstruct the
back wages due using such information as was available and had
to make reasonable inferences as to the hours worked and the
classifications utilized. Wage and Hour contends that the burden
falls upon petitioner to come forward with evidence of the
precise amount of work performed by each employee at the risk
of a judgment for the amount shown by the government if it disputes
these figures.
Wage and Hour cites cases which have approved these practices
and relies particularly on Anderson v. Mt. Clemens Pottery Co., 328
U.S. 680 (1946). Wage and Hour points out that petitioner failed
to present any evidence of the hours worked or the classifications
employed. And after May 19, 1975, Wage and Hour claims petitioner
Morton refused Wage and Hour's investigator any further access to
its payroll records. After this occurred, Wage and Hour
constructed back wages due from testimon[]y supplied by GSA guards,
Morton's cash book, the Wage and Hour investigator's observations,
sign-in sheets and statements from Morton's owner concerning lump
sum payments made to the laborers engaged on the project.
Petitioner made no effort at the ALJ hearing to dispute Wage and
Hour's case with reference to the reconstructed wages.
* * * [4]
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[5] The Wage Appeals Board considered this appeal on the basis
of the Petition for Review, the record of the case made before
the Administrative Law Judge and the Wage and Hour Division, and
a statement on behalf of the Assistant Secretary filed by the
Solicitor of Labor. No request for a hearing was received by
the Board.
Upon review of the record and the information provided in
the Petition for Review and the Assistant Secretary's statement
the Board has concluded that there was ample evidence in the
record to support the findings of the ALJ. The practice of the
Wage and Hour Division to reconstruct payrolls when the employer
has been found to have falsified payrolls or not to have kept
payrolls at all, as in this case, has been approved by the
Supreme Court. Mt. Clemens Pottery Co., (supra). There the
court said at 688:
... where the lack of accurate records grows out of a
bona fide mistake as to whether certain activities
or non activities constitute work, the employer,
having received the benefits of such work, cannot
object to the payment for the work on the most accurate
basis possible under the circumstances.
There has been no significant showing that any of these
five laborers possessed the time accepted criteria of being
independent contractors. A conventional construction project
is not built with two regular employees. The employees on this
project were non-English speaking persons who did not press
their employer for the predetermined wages. The fact that they [5]
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[6] were unfamiliar with the prevailing wage statutes or their
rights thereunder does not make them independent contractors in
the eyes of the petitioner. The Board concludes that the
petitioner exhibited a callous unfairness and a disregard of his
obligations to his employees by not keeping proper records or
in not paying the prevailing wage rates as the contract requires.
Fairness to unsuccessful bidders on this project requires
compliance with the predetermined wages rates at the enforcement
stage.
The hearing before the ALJ took 4 days, included 30 exhibits
and resulted in over 800 pages of transcript. The Board finds
ample support in this record for the ALJ's findings in each
decision. The procedures followed by the Wage and Hour Division
in their investigation have been fair to petitioner.
The Board has no problem with the Wage and Hour Division's
procedures of reconstructing wage payrolls from whatever best
evidence is available in instances where the payrolls, either
through inadvertence or deliberately are not kept or are not
made available to the Wage and Hour investigator. Without it
the Wage and Hour Division must reconstruct the figures.
A disputing contractor is free to contradict or disprove the
reconstructed payrolls. If petitioner had information to dispute
Wage and Hour's assertion of wages due, petitioner should have
brought it forth. [6]
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[7] In view of the foregoing considerations, the decision of
the Assistant Secretary affirming the ALJ's decisions is sustained.
Morton's Petition[] for Review is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board
