STRUCTURAL SERVICES, WAB No. 82-13 (WAB June 22, 1983)
CCASE:
STRUCTURAL SERVICES
DDATE:
19830622
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
STRUCTURAL SERVICES aka
Unique Services Engineering WAB Case No. 82-13
Company, Inc., California
Prime Contractor Dated: June 22, 1983
HUD Contract Nos. 122-79-452,
APPEARANCES: Florence Jackson, Esquire for Structural Services
Douglas J. Davi[d]son, Esquire for the Wage and Hour
Division, U.S. Department of Labor
BEFORE: Alvin Bramow, Chairman, Stuart Rothman, Member,
Thomas X. Dunn, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of Structural Services which seeks review of a Memorandum
Decision of the Administrator, Wage and Hour Division, dated
July 27, 1982. The decision affirms a decision of Administrative
Law Judge Henry B. Lasky finding prevailing wage violations
of the Davis-Bacon Act by the prime contractor, Structural
Services and by subcontractors Bob Lucas, R & R Services, V-W
Development Company, Special Services, Savala Roofing and
Da-Cor Company. Four Housing and Urban Development contracts
were involved calling for the rehabilitation and renovation of
old houses and apartments in Pasadena and the Watts area of
Los Angeles, California in 1978 and 1979. [1]
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[2] The Deputy Administrator, Wage and Hour Division, directed
that an Administrative Law Judge (ALJ) hearing be held pursuant to
29 CFR [sec] 5.11(b) to resolve disputed matters relating to the
alleged failure of petitioner and its subcontractors to compensate
employees in accordance with the applicable Davis-Bacon prevailing
wage rate for the classifications of work performed on the
contracts in question. The ALJ found that $121,240.44 was due
specified laborers and mechanics.
Petitioner filed six exceptions to the ALJ's decision. In
July, 1982, the Administrator affirmed the ALJ's decision in
all respects. Petitioner appealed the Administrator's decision
to the Wage Appeals Board on September 23, 1982.
The petitioner's main argument questions the sufficiency of the
back pay computation evidence presented by Wage and Hour and which
formed the basis of the ALJ's findings of violations of Davis-Bacon
prevailing wages. Petitioner claims that computation evidence
accepted by the ALJ was uncorroborated hearsay, and that such
material does not constitute substantial evidence required to
support valid findings. In the petition petitioner reproduced
pages of transcript from the ALJ's hearing as examples of the
supporting data which were in the record and which petitioner
claims were defective. Petitioner argues that the evidence in
question should not have been admitted into the record because it
was obtained by the compliance office from persons not subject to
cross examination. [2]
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[3] In order for HUD to cover alleged Davis-Bacon violations on
one contract (#122-79-452) HUD withheld sums owed by it to
Structural Services on another contract (#122-/9-483). Structural
Services moved that these sums be released to it. Judge Lasky
ruled that he did not have jurisdiction under the Order of
Reference from the Deputy Administrator to decide whether such
cross-withholding by HUD was proper. Petitioner claims that the
ALJ was in error on this ruling.
Based on these defects in the ALJ's proceedings the petitioner
claims that it was denied due process of law. Petitioner asks this
Board to determine that the Administrator's order be found
erroneous and be set aside.
The Wage and Hour Division defends the hearsay evidence which
consisted of statements from employees and subcontractors, payroll
records, check stubs and pay records and was admitted in the record
as having probative value and as corroborated elsewhere in the
record. Wage and Hour cites three Supreme Court decisions /FN1/
which define relevant evidence and indicate that hearsay is
admissible in administrative proceedings and can, under certain
circumstances, constitute substantial evidence. [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ Consolidated Edison v. NLRB, 305 U.S. 197 (1938), Opp
Cotton Mills v. Administrator, 312 U.S. 129 (1949) and Richardson
v. Perales, 402 U.S. 389 (1971) [3]
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[4] Structural Services' payrolls and those of the
subcontractors were inadequate and inaccurate. Even those payrolls
that were submitted to the contracting agency clearly showed
violations of the prevailing wage requirements. The compliance
officer had to reconstruct the payrolls in order to determine the
amounts of the prevailing wage violations.
Wage and Hour defends the necessity of these procedures and
cites Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (19[46]) to
show that the proper standard was applied by the ALJ in accepting
these payrolls in evidence. When it is necessary to reconstruct
payrolls, Mt. Clemens Pottery Co., (supra), requires the employer
to produce evidence of the precise amount of work performed, or
evidence to rebut the reasonableness of the inferred extent of the
violations, or the employees may be awarded back wages even though
the result may only be approximate.
The classification of workers by the compliance officer was
supported by descriptions of work contained in the contracts, work
write-up sheets and testimony of an expert familiar with the
classification of construction workers and testimony of foremen of
subcontractors. Petitioner, according to Wage and Hour, had an
opportunity to present refuting evidence but failed to do so. The
Wage and Hour Division asserts it is valid to consider the
materials used by the compliance officer to reconstruct the
payrolls, such as "out of Court" statements from [4]
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[5] employees and subcontractors, payroll records, check stubs and pay
records for employees kept by subcontractors and their foremen.
Concerning the issue of cross-withholding of sums from one
contract to satisfy claims against the petitioner for Davis-
Bacon violations on another contract with the same contracting
agency, Wage and Hour agrees with the ALJ that he did not have
jurisdiction to decide this issue because it was not within the
scope of the Deputy Administrator's Order of Reference. Wage and
Hour argues that the ALJ's jurisdiction is limited by the Order of
Reference. Wage and Hour also asserts that the question of
improper withholding would not be relevant in the ALJ hearing
unless it somehow constituted a defense to paying the required
prevailing wages and proper overtime pay. Additionally, it is Wage
and Hour's position that the Davis-Bacon Act applies to lower tier
contractors and not to just the prime contractor and the first tier
subcontractor, as claimed by petitioner.
Wage and Hour argues that petitioner was not denied due
process. It had the opportunity to cross examine all witnesses
called by the government at the hearing. This included the
compliance officer who could be examined concerning his
computations. Petitioner was entitled to call any witnesses of its
own and to present any evidence it had on its behalf. Wage and
Hour reasserts its argument that the Mt. Clemens [5]
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[6] Pottery Co. case (supra) does not require that petitioner be able to
cross examine the sources of all the information which formed the basis
of the compliance officer's determination of back wages due.
The Wage Appeals Board considered this appeal on the basis of
the Petition for Review, a post hearing statement filed by
petitioner, a brief from the Building and Construction Trades
Department, AFL-CIO, the record of the case before the Wage and
Hour Division, a statement on behalf of the Administrator filed by
the Solicitor of Labor and a hearing before this Board held on
April 26, 1983. All interested parties were present and
participated.
Upon a review of the record and the information elicited at the
hearing it is apparent to the Board that the alleged violations of
the labor standards provisions occurred. The President of
Structural Services stated that the work and the progress at all
the Los Angeles and Pasadena sites was out of the control of the
prime contractor. A number of subcontractors defaulted on their
contracts. Structural Services was required repeatedly to take
over the various phases of abandoned construction. Structural
Services' President stated at the Wage Appeals Board hearing that
property was stolen from the construction sites repeatedly. The
employees working on the sites were in many instances unproductive
and insufficiently skilled. With this confusion Structural
Services [6]
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[7] admits that neither it nor subcontractors kept the payroll records
required by its contract with HUD. Petitioner's primary concern lies
with the procedures the compliance officer and Wage and Hour used to
determine the amount of the underpayments and back wages due
petitioner's and the subcontractors' employees. The Board sees no
alternative but to accept Wage and Hour's determination of violations of
the labor standards obligations to Structural Services' and its
subcontractors' employees.
The Board stated in Glenn Electric Company, Inc., WAB Case
No. 79-02, (March 22, 1983) at p. 6:
With reference to the numerous allegations of
underpayments, misclassifications, overtime
violations and failures of record-keeping, the
Board must be conscious of the fact that if a
contractor fails to keep the accurate records,
time cards and payrolls that are required by
its contract with the contracting agency, it
cannot then rely on this fact to dispute the
government's investigation for labor standards
violations. Had the necessary records been
properly kept by petitioner, it would not have
been necessary for the Wage and Hour Division
to reconstruct some of the payrolls and rely
on evidence which may not have been the "best"
evidence in an evidentiary sense. It does not
serve the petitioner well to complain of this
when petitioner is the cause all payroll
information is not available in the first instance.
Upon a review of the calculations which formed the basis of
the compliance officer's assessment of back wages due, the Board
realizes that some of the calculations could be more precise.
There are certain calculations which, on first examination,
appeared to be out of line if considered to be daily wages. But on
closer and more careful examination it was apparent to the Board
that the sums in question represented [7]
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[8] weekly wages which were definitely within an acceptable range. As
the Board mentioned in Glenn Electric (supra), it is petitioner's
responsibility when accurate records are not available to substantiate
or dispute Wage and Hour's reconstructed back wages. The Board is not
willing to allow petitioner's employees to be financially penalized
unless the petitioner can demonstrate that the employees in question
worked less time than the hours calculated. The record does not show
this. Furthermore, there is evidence in the record that substantiates
the compliance officer's reconstruction of back wages. In the Board's
opinion, the Mt. Clemens Pottery Co. case (supra) amply supports the
procedures followed in arriving at the back wage calculations.
The Board warns contractors and subcontractors who take on
government contracts covered by Davis-Bacon and related acts that
they should be aware that they must keep accurate records of wages,
overtime and fringe benefits payments to their employees. Failure
to keep such records will be at the contractor's or subcontractor's
peril. Record keeping is the only method to substantiate the
actual wages and fringe benefits paid laborers and mechanics.
Without proper payroll records, the Wage and Hour compliance
officers are compelled to invoke the criteria set forth in the Mt.
Clemens case (supra).
With reference to the alleged lack of due process afforded
petitioner, it appears to the Board that petitioner was [8]
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[9] fully aware of the violations which were uncovered in the Wage and
Hour investigation, that it was given ample opportunity to rebut
the charges against it and was adequately represented by counsel at
the administrative hearing and before this Board. All of
petitioner's evidence has been considered in the administrative
procedure and it has had an opportunity to fully rebut the charges
against it. These procedures do not suggest an absence of basic
fairness.
With reference to the issue of cross-withholding from one
contract to satisfy sums alleged to be due on another contract with
the same contracting agency, the majority of the Board agrees with
the ruling of the ALJ that he did not have jurisdiction to decide
the question because the issue had not been specified in the Order
of Reference from the Deputy Administrator to the office of the
ALJ. Board Member Dunn believed the ALJ could have decided this
matter.
In view of the foregoing, the Board is of the opinion that
there has been no convincing showing made that the figures prepared
by the Wage and Hour Division are erroneous. For this reason the
Board will not reverse the Administrator.
The findings and conclusions of law of the ALJ, affirmed by the
Administrator, with the exception of the back wage findings for
Adelfonzo Rodrigues which was stipulated at the Wage Appeals Board
hearing, are supported by the record and [9]
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[10] are sustained by the Board. The petition is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [10]
