WINZELER EXCAVATING CO., WAB Case No. 88-10 (Oct. 30, 1992)
CCASE:
WINZELER EXCAVATING CO.
DDATE:
19921030
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
WINZELER EXCAVATING COMPANY
Bryan, Ohio WAB Case No. 88-10
BEFORE:/FN1/ Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
DATED: October 30, 1992
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of Winzeler Excavating Company ("Winzeler") for review of the
February 17, 1988 decision of Administrative Law Judge ("ALJ")
Rudolf L. Jansen. The ALJ's decision and order is affirmed to the
extent described below, and remanded to the ALJ for further
proceedings consistent with this decision.
I. BACKGROUND
A. Factual background
Winzeler contracted to construct sewers for the Indian Lake
Sanitary Sewer District, Logan County, Ohio. The Indian Lake
project was subject to the labor standards provisions of the
Federal Water Pollution Control Act, 33 U.S.C. [sec] 1372
("FWPCA"), a Davis-Bacon Related Act. [1]
/FN1/ Member Patrick J. O'Brien participated in the oral argument
of this matter but did not participate in this decision. [1]
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[2] The Indian Lake project required substantial amounts of stone
and gravel, which Winzeler obtained from four pits: Duff, National
Limestone, Kneedler-Williams, and Cummins. The first three of
those pits were commercial operations run by independent third
parties. The Cummins was operated by Winzeler under a leasing
agreement with pit owner Richard Cummins. Winzeler paid Davis-
Bacon prevailing wage rates for the time spent hauling material
away from the Indian Lake project, but not for the time spent
hauling gravel to the project site from the supply pits. In
addition, Winzeler did not pay prevailing wage rates to employees
working at the Cummins pit.
B. Procedural history
1. The ALJ's decision and order
In his February 17, 1988 decision and order, the ALJ
determined (ALJ's Decision ("ALJD") at p. 9) that the truck driver
employees hauling material to the project "fell within the
protections offered by the Davis-Bacon related acts." He also
determined (Id. at 10-11) that Winzeler's employees working at the
Cummins Pit should also have been paid at the prevailing wage rate,
since that pit was part of the "site of the work." The ALJ
concluded that Winzeler's failure to pay the prevailing wage rates
for employees engaged in those activities violated the labor
standards provisions of the the FWPCA and the Contract Work Hours
and Safety Standards Act (40 U.S.C. [sec] 327 et seq.) ("CWHSSA"),
and that Winzeler owed back wages totaling $95,052.76, as assessed
by the Wage and Hour Division.
2. The Midway Excavators decision
Petitioners requested the Wage Appeals Board to review the
ALJ's decision. While this matter was pending before the Board,
the United States Court of Appeals for the D.C. Circuit issued its
decision in Building and Construction Trades Department, AFL-CIO v.
United States Dep't of Labor, Wage Appeals Board (Midway
Excavators, Inc.) ("Midway Excavators"), 932 F.2d 985 (D.C. Cir.
May 17, 1991). The D.C. Circuit examined the Department of Labor's
definition of "construction" set forth at 29 C.F.R. 5.2(j), which
had encompassed within Davis-Bacon prevailing wage requirements ".
. . the transporting of materials and supplies to or from the
building or work by the employees of the construction contractor or
construction subcontractor . . . ." The court held that Section
5.2(j), "insofar as it includes off-site material delivery
truckdrivers in the [Davis-Bacon] Act's coverage, is invalid." The
court of appeals also specifically stated that it was not ruling on
the validity of the Department's site of work regulation -- 29
C.F.R. 5.2(l). [2]
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[3] 3. The Department of Labor's post-Midway Excavators
rulemaking activities
The Board held an oral hearing in the instant matter on May
31, 1991. On July 18, 1991, the D.C. Circuit denied the the
petition for rehearing and suggestion for rehearing en banc filed
by the Building and Construction Trades Department, AFL-CIO
("BCTD"). Neither the government nor the BCTD sought Supreme Court
review. The Acting Administrator requested that the Board to
refrain from deciding Midway Excavators-related issues until the
Department of Labor had taken rulemaking action in response to the
D.C. Circuit's decision.
On May 4, 1992 the Department of Labor issued an interim final
rule amending the definition of "construction" in 29 C.F.R. 5.2(j).
57 Fed. Reg. 19,204. The regulation was amended to eliminate the
provision of Section 5.2(j) that applied Davis-Bacon requirements
to ". . . the transporting of materials and supplies to or from the
building or work by the employees of the construction contractor or
construction subcontractor . . . ." In remarks accompanying the
interim final rule, the Department explained (Id. at
19,205-19,206):
Under this rule, those truck drivers who transport
materials to or from the "site of the work" would not be
covered for any time spent off-site, but would remain
covered for any time spent directly on the "site of the
work." Time spent transporting between the actual
construction location and a facility which is deemed a
part of the site of the work within the meaning of [29
C.F.R. 5.2(l)], and the materialman/supplier exception,
will continue to be applied as before.
On the same date, the Department also issued a notice of
proposed rulemaking and request for comments regarding the "site of
the work" definition at 29 C.F.R. 5.2(l). 57 Fed. Reg. 19,208. The
Department addressed two matters. First, the Department stated its
view that under Midway Excavators, "truck drivers who spend most of
their time off-site, as `site' is defined in the regulations, and
who come on-site only incidentally to deliver or pick up a load of
material and perform only those activities (such as loading,
unloading, waiting) that are essential to the delivery or hauling
of material to or from the site, should not be subject to the Act
even if they are employed by the construction contractor or
construction subcontractor." Id. at 19,209. On the other hand, the
Department added, "if truck drivers employed by a construction
contractor were to spend more than an incidental amount of time
`employed directly upon the site of the work', they should be
subject to the Act's protections for such time." (Emphasis
supplied.) Id. The Department proposed two options for determining
whether the time spent on "site of the work" by a material delivery
truck driver employed by a contractor or subcontractor was
"incidental." [3]
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[4] Second, the Department posed the question whether the
definition of "site of the work" in Section 5.2(l) should be
changed in light of the Midway Excavators decision. 57 Fed. Reg.
19,211. The Department stated (Id.):
Although the court went to some length to restrict its
decision to the particular facts in Midway, the court's
broad legal reasoning indicates that other traditional
coverage positions not directly at issue in Midway should
be carefully reexamined in light of Midway. The court's
statements, for example, that coverage is restricted in
a geographic sense to only those persons "employed
directly upon the site of the work" raise questions
concerning regulatory provisions that define the "site of
the work" in [sec] 5.2(l).
The Department requested comments on three issues (57 Fed. Reg.
19,211) (footnotes omitted):
(1) Is the regulatory definition of "site of the work" at
[sec] 5.2(l) viable or should it be revised, particularly
in paragraph (l)(2), which includes as a part of the
covered "site of the work" certain dedicated facilities
utilized by a covered construction contractor or
subcontractor that are not technically on the physical
site of the building or work under construction?
(2) If dedicated facilities should remain covered as part
of the "site," should truck drivers be covered for the
time spent hauling between such a dedicated facility and
the site of the actual construction?
(3) In light of Midway, would it be appropriate to
establish a maximum limit for the geographic proximity
test in [secs] 5.2(l)(1) and (2) of the site of the work
definition?
4. The positions of the parties in this case in light
of the Department's rulemaking activities
The Acting Administrator filed a supplemental statement in the
instant case on June 5, 1992. The Acting Administrator stated that
in order to conform to the amended version of 29 C.F.R. 5.2(j),
Wage and Hour was in the process of recomputing Winzeler's back
wage liability. Wage and Hour had determined, she stated, that
back wages are not owed for the time spent hauling to the
construction site from commercial supply sources. However, the
Acting Administrator added, it is Wage and Hour's position that
back wages continue to be owed for prevailing wage and overtime
violations connected with the hauling of material from the Cummins
Pit, as well as work performed by Winzeler [4]
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[5] employees at the Cummins Pit. The Acting Administrator requested
that the Board affirm the ALJ's determination that back wages are owed
for the work of hauling from the Cummins Pit and for the work performed
at the Cummins Pit, and remand the matter to the ALJ for a determination
of the amount of back wages owed.
The Acting Administrator also argued Winzeler contractually
agreed to comply with the Department's regulatory interpretations
of Davis-Bacon requirements. She noted that the labor standards
provisions (see 29 C.F.R. 5.5) contained in Winzeler's contract
specify that "[a]ll laborers and mechanics employed or working upon
the site of the work" will be paid the wages and fringe benefits
listed in the wage determination issued by the Secretary of Labor.
29 C.F.R. 5.5(a)(1). These provisions further state that "[a]ll
rulings and interpretations of the Davis-Bacon and related Acts
contained in 29 C.F.R. Parts 1, 3, and 5 are herein incorporated by
reference in this contract." 29 C.F.R. 5.5(a)(8). Accordingly, the
Acting Administrator argued, Winzeler contractually agreed to
coverage of hauling from a dedicated pit to the construction site,
and contractually agreed to pay employees Davis-Bacon rates for the
time spent at dedicated pits if their work fell within the
Department's regulatory interpretations set forth at 29 C.F.R. Part
5.
Winzeler argued that the Cummins Pit was a commercial supply
source rather than a pit dedicated exclusively to the Indian Head
project. Winzeler also challenged the continued validity of 29
C.F.R. 5.2(l) in light of the Midway Excavators decision. /FN2/
In its response to the Acting Administrator's supplemental
statement, the BCTD relied upon the federal district court decision
in Wheeler v. Graco Trucking Corp. ("Graco"), C.A. No. 90-5337
(E.D. Pa., Nov. 14, 1991), appeal pending No. 91-2040 (3d Cir.)
(oral argument held Sept. 22, 1992), for the proposition that
coverage under the Davis-Bacon Related Acts -- specifically, the
FWPCA -- is not limited to the "site of the work." Accordingly,
the BCTD requested that Winzeler's petition for review be
dismissed. [5]
/FN2/ While this matter was pending before the Board, counsel for
the Acting Administrator submitted to the Board a copy of a post-
Midway Excavators decision of the United States District Court for
the District of Columbia in Ball, Ball and Brosamer, Inc., Civil
Action No. 91-3266 (CRR)(Aug. 18, 1992), appeal docketed Oct. 9,
1992 (D.C. Cir.). In that case the district court affirmed the
decision of the Wage Appeals Board in Ball, Ball and Brosamer,
Inc., WAB Case No. 90-18 (Nov. 29, 1990), that work done at a
dedicated gravel pit near a dam construction project was performed
on the ``site of the work'' for Davis-Bacon coverage purposes. In
so doing, the court applied the Department's ``site of the work''
regulation (29 C.F.R. 5.2(l)) as a valid regulation, and also
determined that the contractor in that case had a contractual
obligation to pay prevailing wages. [5]
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[6] II. DISCUSSION
As discussed above, the Acting Administrator said in her
supplemental statement to the Board that in order to conform to the
amended version of 29 C.F.R. 5.2(j), Wage and Hour was
recalculating Winzeler's back wage liability. Wage and Hour had
determined that back wages were not owed for the time spent hauling
to the construction site from the commercial pits. However, Wage
and Hour continued to hold the position that back wages and
overtime compensation were owed for violations connected with
hauling of material from the Cummins Pit and with work performed by
Winzeler employees at the the Cummins Pit, which the ALJ had
determined was part of the "site of the work."
The Board concludes that, as requested by the Acting
Administrator, this matter should be remanded to the ALJ for a
determination of the amount of back wages owed by Winzeler. As an
initial matter the Board notes that Winzeler, in addition to
contesting the ALJ's determination that the Cummins Pit was part of
the "site of the work," has challenged the validity of the
Department's "site of the work" regulation -- 29 C.F.R. 5.2(l) --
in light of the D.C. Circuit's decision in Midway Excavators.
However, Section 5.2(l) is a duly promulgated regulation of the
Department of Labor which was in effect at the time Winzeler
performed work on the Indian Lake project and -- although the
provision is the subject of a notice of proposed rulemaking (see
pp. __, supra) and apparently is the subject of ongoing litigation
(see n.2, supra) -- remains in effect to this day. As such,
Section 5.2(l) is binding upon the Wage Appeals Board. See, e.g.,
California Human Development Corp. v. Brock, 762 F.2d 1044 (D.C.
Cir. 1985) (Department of Labor's actions must conform to its own
regulations). Accordingly, we will proceed with an analysis of
whether the Cummins Pit meets the "site of the work" definition set
forth in Section 5.2(l).
Section 5.2(l)(1) describes the "site of the work" as "limited
to the physical place or places where the construction called for
in the contract will remain when work on it has been completed and,
as discussed in paragraph (l)(2) of this section, other adjacent or
nearby property used by the contractor or subcontractor in such
construction which can reasonably be said to be included in the
`site.' " Section 5.2(l)(2) sets out a two-part test under which
fabrication plants, batch plants, tool yards and other facilities
are part of the "site of the work" if (1) "they are dedicated
exclusively, or nearly so, to performance of the contract or
project," and (2) they are "so located in proximity to the actual
construction location that it would be reasonable to include them."
With respect to the geographical test, the record indicates
that the Cummins Pit was approximately 12 1/2 miles from the Indian
Lake construction site. Given the nature of the Indian Lake
project and the proximity of the Cummins Pit to the construction
site, it is reasonable to include the Cummins Pit within the "site
of the work." See, e.g., United Construction Company, Inc., [6]
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[7] WAB Case No. 82-10 (Jan. 14, 1983), at p. 7 (given the physical
layout of the project, "the Board does not have difficulty finding that
the various distances (ranging from 1.8 miles to 55 miles) between the
batch plant and the locations of the individual construction sites" are
within the site of work).
We also agree with the ALJ that the Cummins Pit meets the
functional test for inclusion within the "site of the work," in
that during the period of Winzeler's lease agreement the pit was
dedicated "exclusively, or nearly so," to the Indian Lake project.
The ALJ found that Winzeler obtained a mining permit and entered
into the leasing agreement which allowed Winzeler to enter onto the
land, with the exclusive right to excavate gravel and aggragate in
whatever quantities Winzeler determined. The agreement also
stipulated that Winzeler would bear all the expenses of excavating
material from the pit. The pit had no pre-existing permanent
structures or equipment, and Winzeler used its own employees and
equipment to excavate and load material at the pit. The gravel
from the pit was used by Winzeler solely at the Indian Lake
project. A substantial portion -- 55.7 percent -- of all the
material used on the Indian Lake project came from the Cummins Pit.
The record indicates that during the lease period Mr. Cummins
removed material from the pit despite Winzeler's exclusive use
agreement, but he apparently removed only the oversize residue
material that was of no use to Winzeler, and used only one truck to
remove the material. Cummins' removal of the oversize residue does
not detract from the conclusion that during the lease period the
pit was "dedicated exclusively, or nearly so" to the Indian Lake
project. In short, the Board affirms the ALJ's conclusion that the
Cummins Pit was part of the "site of the work."
In sum, the Board affirms the ALJ's determination that back
wages are owed for the work of hauling from the Cummins Pit and for
the work performed at the Cummins Pit, and remands this matter to
the ALJ for a determination of the amount of back wages owed.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Gerald F. Krizan, Esq.
Executive Secretary [7]
