FIRST BANK AND TRUST CO., WAB No. 87-42 (WAB July 7, 1989)
CCASE:
FIRST BANK AND TRUST COMPANY
DDATE:
19890707
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
FIRST BANK AND TRUST COMPANY WAB Case No. 87-42
16 Units Low Income Apartment
Building, Murphysboro, Illinois Dated: July 7, 1989
BEFORE: Jackson M. Andrews, Chairman, Thomas X. Dunn,
Member, and Stuart Rothman, Member
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
the First Bank and Trust Company of Murphysboro, Illinois,
hereinafter the Bank, seeking review of the final decision of the
Administrator, Wage and Hour Division, dated September 1, 1987,
finding the Bank liable for back wages in the amount of $42,610.20.
This review of the Administrator's decision comes at the
enforcement stage of a Davis-Bacon Related Acts case. Although the
Petitioner originally requested an oral hearing before the Board,
Petitioner's attorney did not respond to repeated attempts by the
Board's Executive Secretary to schedule the requested hearing.
Furthermore, Petitioner did not respond to an Order dated January
9, 1989, to show cause why the Wage Appeals Board should not
consider this appeal on the basis of the record before the Board
without oral argument. As a result the Board has issued this
decision on the basis of the record [1]
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[2] before the Board.
The Board is asked to determine whether the Administrator
exceeded her authority in assessing back pay liability against the
petitioner bank. The Bank was an assignee of a relationship
between the Illinois Department of Commerce and Community Affairs
(DCCA) and a developer/construction contractor. The Bank had a
relationship with the construction company which had undertaken a
low income rehabilitation housing project subject to the United
States Housing Act of 1937, as amended, one of the Davis-Bacon
Related Acts (DBRA). The developer/construction contractor was
seriously in default by April 20, 1983. On that date the bank took
over the project agreement with DCCA, a contract identified as
Moderate Rehabilitation Contract No. IL-06-K127-002-32.
The transaction was designated an assignment and the Bank
became the assignee. The Bank does not deny or dispute that it was
an assignee.
This case comes to the Board under a special plea by the Bank.
The Administrator, contends the Bank, can "issue a ruling on any
issue of law known to be in dispute" (Regulations 29 CFR 5.11(c))
but such ruling can only relate to the labor standards provisions
and the required amount of payment. It does not extend to who may
be liable at the enforcement stage to make payment or restitution.
There is [2]
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[3] no provision in the applicable regulations, the petitioner bank
contends, that purports to allow the Administrator to "interpret" the
legal relationship that existed between it and the
developer/construction contractor which was in default.
The Bank also contends that under the Portal-to-Portal Act the
Administrator was barred from taking the enforcement steps in
dispute against the petitioner.
Finding the Administrator's decis[i]on on both of these points
correct, the Board affirms her decision and dismisses the petition.
Between August 14, 1982, and April 20, 1983, the initial
developer/construction contractor had incurred statutory and
contractual violations resulting in a back-pay liability of
$42,610.20. The Department of Labor's investigation and
calculations of amounts due were not, however, made and completed
until July, 1986, at which time the Bank was informed of the amount
of liability and who would now be legally required to pay it. The
Bank entered into a transaction on April 20, 1983, with the initial
developer/construction contractor, Mark Gates. In a letter dated
April 27, 1983, to DCCA, the bank president characterized the
transa[c]tion and the Bank's commitment as follows:
upon receipt of [DCCA's] letter to me dated April 21,
1983 (R., R), the . . . Bank . . . assumed the benefits
and obligations of the . . . Contract . . . to [3]
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[4] which Mark Gates was formerly a party[.]
For a time the Bank collected the federal rental assistance
monies provided for in the Moderate Rehabilitation Contract.
Thereafter the Bank obtained another contractor to complete the
contract. The Bank conveyed its interests and the Moderation
Rehabilitation Contract with DCCA to a new contractor for $350,000.
A new rehabilitation agreement was entered into by the DCCA and the
new owner.
The Administrator's posit[i]on in this case is that the
liability for DBRA and other statutory violations incurred up to
April 20, 1983, became the re[s]ponsibility of the Bank; they are
liabilities which the Bank must pay because it had "assumed" the
benefits and obligations of the DCCA contract to which the initial
developer/construction contractor had been a party.
The petitioner's contention is that liability for the payment
of back wages was in the nature of an obligation which was cut off
when the initial developer/construction contractor defaulted and
turned everything over to the Bank. This contention is without
merit. The Bank in April, 1983, at the time of the transaction
with the predecessor, acknowledged to the sponsoring agency, the
DCCA, that it had assumed all benefits and all liabilities. Under
the facts and circumstances of this case, the Administrator had
very little, if anything, to interpret. The issue here is
something else. Under the circumstances of this case, can an [4]
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[5] assignee be held liable for DBRA statutory and contract
violations (back-pay restitution) incurred prior to the date of the
assignment? Upon examination of the entire record and the
arguments in this case, the Board finds the conclusion inescapable
that because of the very serious DBRA violations by the initial
developer/construction contractor, the Bank went into the
assignment with its eyes wide open and, further, that it had
knowledge that there were DBRA wage nonpayments and underpayments
at the time. There had been individual employee "lien" actions
against the predecessor developer/construction contractor which
were pending and known to the Bank at the time of the assignment.
In its contention in this matter the petitioner has not contended
that the underpayments were not properly calculated or that it was
without knowledge concerning underpayments, or that it could not
have been reasonably expect to be on notice that such violations
were a part of the picture. Nor has the Bank contended or alleged
in this proceeding that under its arrangements with the predecessor
developer, the transaction even provided that the Bank would not
assume this kind of liability whether the amount owing employees
had already been calculated or the amount was still to be
determined by the Department of Labor.
This could well be a case where among other purposes, the Bank
as a good samaritan intended to do a good turn on behalf of local
low income housing, but its obligations as an [5]
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[6] assignee are clear. The Board cannot conclude under the regulations
that the Administrator at the enforcement stage of a proceeding cannot
take the Bank's letter of April 23, 1983, at face value -- as a
statement of fact, not interpretation -- of its obligations recognized
and worked out in a financial transaction in which the Bank's obligation
ran to DCCA, as much as the case may involve the obligation of the
predecessor who was the assignor.
The question whether the statute of limitations set out in the
Portal-to-Portal Act is applicable to DBRA administrative
proceedings has frequently been before the Board. In the following
cases the Board has held that the Portal-to-Portal Act does not
apply. In the Matter of J & L Janitorial Services. Inc., WAB Case
No. 85-08 (1985); In the Matter of Thomas J. Clements, Inc., WAB
Case No. 84-12 (1985); In the Matter of J. Slotnik Company, WAB
Case No. 80-05 (1983); and In the Matter of Glenn Electric Company,
WAB Case No. 79-21 (1983). This line of cases has been supported
by the courts. See Unexcelled Chemical Corp. v. U.S., 345 U.S. 59
(1953[)] (Portal-to-Portal Act time limits apply to judicial, not
administrative, enforcement proceedings), and Glenn Electric v.
Donovan. 755 F.2d 1028 (3rd Cir. 1985) (Portal-to-Portal Act limits
do not apply to Davis-Bacon Related Acts). The Board finds no
reason to apply the Portal-to-Portal Act limitation in the instant
case.
The Board further upholds the decision of the [6]
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[7] Administrator concerning the additional violations under the
Contract Work Hours and Safety Standards Act. The amounts assessed
under each Act have not been in dispute.
For the foregoing reasons the decision of the Administrator is
affirmed and the petition is dismissed.
BY ORDER OF THE BOARD
Craig Bulger, Esquire
Executive Secretary,
Wage Appeals Board [7]
