CCASE:
PROGRESSIVE DESIGN & BUILD INC
DDATE:
19900221
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
PROGRESSIVE DESIGN & BUILD INC., WAB Case No. 87-31
& Halfway Siding Company &
Raymond Cook, President Dated: February 21, 1990
APPEARANCES: Jonathan Kronheim, Esquire, for the Administrator,
Wage and Hour Division, U.S. Department of Labor
BEFORE: Jackson M. Andrews, Chairman, Stuart Rothman,
Member and Thomas X. Dunn, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
the Administrator, Wage and Hour Division, seeking review of the
decision and order dated June 24, 1987, of the Administrative Law
Judge (hereinafter ALJ). In his decision, the ALJ held that
subcontractor Halfway Siding Company and its president, Raymond
Cook (hereinafter respondent or Halfway) were not subject to the
Davis-Bacon Act labor standards provisions and could not be held
liable for back wages due their employees as a result of prevailing
wage and overtime violations. The ALJ also ruled that even if the
Davis-Bacon labor standards applied, debarment was not warranted. [1]
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[2] The appeal arose from the following factual situation.
The prime contractor, Progressive Design and Build, Inc.,
(hereinafter Progressive) was awarded the contract for the
construction of an apartment complex in Elkton, Michigan,
which was financed in September, 1983 in part by the Farmers
Home Administration and in part by the Department of Housing
and Urban Development. Following a Wage and Hour investigation of
the project, the Wage and Hour Administrator issued an Order of
Reference to the Office of Administrative Law Judges seeking a fact
finding hearing to determine if $18,797.43 in back wages was due to
Halfway's employees. The Administrator also sought debarment of
the firm and its president, Raymond Cook for willful or aggravated
violations of the labor standards provisions of the U.S. Housing
Act of 1937 and the Copeland Act.
The prime contractor, Progressive, did not appear at the
ALJ's hearing on December 16, 1986. Halfway appeared and argued
that the Davis-Bacon labor standards did not apply because the
provisions of the regulations and the predetermined wage rate
schedule did not physically appear in its subcontract. If Halfway
was liable for back wages, payment should be limited to one month
in 1981 only. Further, Halfway did not submit falsified certified
payrolls and it was Progressive that was primarily liable for any
violations.
Although the ALJ found that the prevailing wage rate [2]
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[3] violations, overtime violations and record keeping violations
had occurred, his decision and order held that Halfway and
its president were not subject to the Davis-Bacon labor standards
provis[i]ons because the provisions were not included in Halfway's
subcontract with Progressive. As a result, the ALJ concluded that
the issue of noncompliance was moot and that debarment could not be
imposed. Finally, the ALJ ruled that Progressive was solely liable
for the violations for payment of the back wages due, $18,797.43.
The Wage and Hour Administrator appealed the ALJ's decision
and order to the Wage Appeals Board on September 21, 1987. On
November 4, 1987 counsel for Halfway Siding Company and Raymond
Cook filed a brief in opposition to the Administrator's Petition
for Review. The Wage Appeals Board scheduled an oral hearing of
this appeal on April 18, 1989. The Administrator was represented
by counsel, but the respondent did not participate in the hearing.
Respondent relied on its arguments contained in briefs filed
earlier with the Board.
The Board considered this appeal on the basis of the record of
the case before the Wage and Hour Division, the record of the ALJ's
hearing, the petition for review filed on behalf of the
Administrator by the Solicitor of Labor, the testimony elicited at
the Board hearing and the briefs filed in opposition to the
petition of the Administrator by the respondents. [3]
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- - -
[4] The Board notes that the ALJ made definite findings that
subcontractor Halfway Siding paid its employees less than the
predetermined wage rates, did not pay overtime for hours worked in
excess of 8 hours per day or 40 hours per week and violated the
Copeland "Anti-Kickback" Act. In the face of these rulings by the
ALJ, the Board does not accept the ALJ's further ruling that
because the labor standards provisions found in the prime contract
were not physically copied into the subcontract, Halfway can avoid
liability for unpaid back wages, unpaid overtime or Copeland Act
violations.
The subcontracts all contained references to the applicable
labor standards provisions, albeit these provisions were marked "do
not apply", and incorporated them by reference into the
subcontracts signed between Progressive and Halfway. Even if
Halfway did not know what its obligations were under the labor
standards provisions, it agreed to abide by these provisions in the
subcontracts and cannot be permitted to avoid paying its employees
the wages they were entitled to by operation of law by claiming
ignorance of the provisions in question. These questions, if
they were valid, could easily have been resolved by inquiries
directed to the contracting agencies.
The record shows that Halfway continued to pay its employees
only about one/half of the predetermined wages due to its employees
according to the wage determinations posted [4]
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[5] on the project according to Mr. Cook's testimony at the ALJ's
hearing. This shows that Mr. Cook had observed and was aware of the
prevailing wage determination. This does more than suggest that Halfway
and Raymond Cook were unmindful of their obligations to their employees
and [] that this conduct constitutes willful and aggravated violations
of the labor standards provisions. The preparation and submission of
falsified certified payrolls to the contracting agencies was admitted by
Halfway's representatives and constitutes willful and aggravated
violations of Halfway's obligations to its employees.
For these reasons considered as a whole the Board does not
agree with the ALJ that debarment of Halfway and its president,
Raymond Cook, was not warranted.
The respondent has urged to the Board in a subsequent
letter-brief that the statute of limitations in the Portal-
to-Portal Act should apply to this proceedings and that
respondent's motion to dis[m]iss the Administrator's petition for
review should be granted. This Board has held in 16 Units Low
Income Apartment Building, WAB Case No 87-42, July 7, 1989, J.
Slotnik Company and Vermont Heating & Ventilating Co., WAB Case No.
80-5, March 22, 1983, and a companion appeal, Glenn Electric Co..
Inc. WAB Case No. 79-21, March 22, 1983, that the statute of
limitations provisions of the Portal-to-Portal Act do not apply to
Department of Labor Davis-Bacon administrative proceedings. [5]
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[6] See also, Unexcelled Chemical Corporation v. U.S., 345 U.S.
59 (1953), Ready-Mix Concrete Co. v. U.S., 130 F. Supp. 390 (1955)
and Glenn Electric v. Donovan. 755 F.2nd 1028 (3rd Cir. 1985).
In considering debarment, however, the Board is aware that
there were mitigating circumstances in connection with Halfway's
performance on the project under consideration. It is apparent
from the record that Halfway prepared the falsified certified
payrolls only after Progressive threatened to remove Halfway from
the project. Progressive had threatened Halfway that it would
complete Halfway's contractual obligations using another contractor
at wages far in excess of what Halfway was required to pay and to
sue Halfway for the balance if Halfway did not do as it was told.
However, the coercion shows knowledge by Halfway of a Davis-Bacon
violation.
As a consequence of the coercion used to obtain the falsified
payrolls, the customary sanction of 3 years debarment appears harsh
to the Board. As a result the Board [6]
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[7] applies an 18 month debarment from performing government contracts
to respondents Halfway Siding, Inc. and its president, Raymond Cook.
The decision and order of the Administrative Law Judge is reversed as
herein discussed.
The Board expresses no view on the status of the contractual
obligations between Progressive Design and Halfway Siding Company.
BY ORDER OF THE BOARD
Craig Bulger, Esquire
Executive Secretary,
Wage Appeals Board [7]
