EUROSTYLE CONSTRUCTION CO., INC., WAB Nos. 88-18 and 88-19 (WAB Mar. 22, 1991)
CCASE:
ELDON FLETT re EUROSTYLE CONSTRUCTION
DDATE:
19910322
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matters of:
Appeal of ELDON FLETT re
EUROSTYLE CONSTRUCTION
COMPANY, INC., Prime Contractor WAB Case Nos. 88-18
88-19
and
TERRY MOORE ELECTRIC
COMPANY, INC., Subcontractor
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: March 22, 1991
DECISION OF THE WAGE APPEALS BOARD
This opinion considers the availability of a defense analogous
to that contained in the Portal-to-Portal Act (29 U.S.C. [sec] 255)
in a matter arising under the Davis-Bacon Related Acts ("DBRA").
The case is before the Wage Appeals Board on the petition of Mr.
Eldon Flett (hereinafter, "Flett" or "Petitioner") for review of an
August 15, 1988 ruling by the Administrator of the Wage and Hour
Division. That ruling amounted to a reversal of an award of back
wages to Mr. Flett and similarly situated employees. [1]
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[2] I. BACKGROUND
The petitioner is an employee who worked on the Main Post
Office in St. Louis, Missouri for Eurostyle Construction Company's
("Eurostyle"'s) subcontractor, Terry Moore Electric Company ("Terry
Moore"). Eurostyle had been awarded a contract for the
modernization of the fire alarm and sprinkler system in the post
office. This contract was governed by the Postal Reorganization
Act, as amended, 39 U.S.C. 410(b)(4)(c), and the regulations
governing Davis-Bacon Related Acts, 29 C.F.R., Part 5.
The contract in question contained a wage determination, which
in turn contained an electrician rate of $25.587 per hour
(including fringe benefits). After the contract was awarded, but
before work began, Eurostyle sought and obtained a wage rate for a
classification of "fire alarm installer" at a rate of $15.209
(including fringe benefits). The approval of this new
classification occurred on January 28, 1987; work on the post
office began during the next month.
In February of 1988, at the behest of Mr. Eldon Flett and
another Terry Moore employee, Wage and Hour informed Eurostyle that
approval of the fire alarm installer classification would be
withdrawn. Eurostyle protested, stating that work involving low
voltage fire alarm systems belonged to communications workers
rather than electricians, and hence properly should be paid at the
lower wage rate. The Administrator disagreed, and on March 25,
1988, ruled that fire alarm installation work should be considered
within the jurisdiction of the electricians, and that employees
should be paid at the higher rate retroactive to the first day of
work under the fire alarm installer classification.
When Terry Moore and Eurostyle petitioned the Wage Appeals
Board for review of the March 25, 1988 ruling, the Administrator
asked for and received a remand for further consideration. Thus,
in August of 1988, the Administrator ruled that the March 25, 1988
revocation of the fire alarm installer classification rate should
only apply prospectively, but that any work involving high voltage
should be compensated at the electrician rate. It is undisputed
that some of the work in question involved high voltage, but
substantial disagreement remains over the extent of that work.
In September of 1988, Eldon Flett, who had been paid at the
lower wage rate, appealed the August 15 ruling now before the
Board. Mr. Flett contends that all of the Eurostyle/Terry Moore
work should have been compensated at the higher rate. Mr. Flett
argues that a good faith reliance defense is not available to the
contractors because they did not fully inform the Department of
Labor regarding the nature and extent of work to be performed under
the fire alarm installer classification, and because they knew or
should have known that similar [2]
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[3] work was performed in the St. Louis area by electricians.
Mr. Flett also contends that fire alarm installers performed
electricians' duties, and that the contractors failed to notify
the Department of Labor accordingly.
The responses of Eurostyle and Terry Moore deny the
allegations made by Eldon Flett, plead the Portal-to-Portal Act as
a bar to Mr. Flett's claims, and ask the Board to uphold the Wage
and Hour position.
The statement of the Administrator opposes the petition for
review. The Solicitor argues that Eurostyle followed the proper
conformance procedure in seeking the fire alarm installer
classification and was entitled to rely on Wage and Hour's approval
until notified that the approval was under reconsideration. The
Solicitor, however, cites Glenn Electric Co. v. Donovan, 775 F.2d
1028 (3rd Cir. 1985) for the proposition that the Portal-to-Portal
Act does not apply in cases arising under the Davis-Bacon Related
Acts; thus, the Solicitor argues, reliance should be the standard
by which the contractors' liability should be measured (Statement
of the Administrator, p. 12). The Solicitor also argues that it
would be premature to assess arguments regarding whether and to
what extent high voltage work was performed on the job site; and
that even if such arguments were timely, the proper forum for their
aeration would be at the investigation phase. Finally, in the face
of the contractors' prayer for an order from the Board directing
the release of withheld contract funds, the Solicitor argues that
release would be premature prior to a Wage and Hour investigation
of the nature and extent of high voltage work on the project. From
this argument the Board infers that the St. Louis Post Office
contract is or is about to be under investigation.
II. DISCUSSION
It is apparent that basic fairness should allow a private
party to rely on the advice of his government, particularly where
that party has no real ability or opportunity to make an
independent determination. On the other hand, a private party
should not be permitted to take advantage of the mistakes made by
government agents, particularly where that party knew or should
have known the decision was incorrect, and especially where other
citizens are disadvantaged as a result. Many statutes attempt to
balance these competing equities: one such law is the
Portal-to-Portal Act, 29 U.S.C. [sec] 255, which provides in
pertinent part:
[N]o employer shall be subject to any liability or punishment
for or on account of the failure of the employer to pay
minimum wages . . . under the . . . Davis-Bacon Act if he
pleads and proves that the act or omission complained of was
in good faith conformity [3]
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[4] with, and in reliance on any written administrative
regulation, order, ruling, approval, or interpretation
of the agency . . . .
Although, as noted, the Portal-to-Portal Act is not applicable
to the Davis-Bacon Related Acts, its requirements are considerably
stricter than the "reliance" measure espoused by the Solicitor.
The Portal-to-Portal Act requires good faith in an objective sense;
i.e., whether, as stated by the petitioner, the employer acted as
a reasonably prudent employer should have acted under similar
circumstances and without notice of facts which would warrant
further inquiry (Mr. Flett's Petition for Review, p. 4). In short,
the employer may not cultivate ignorance in order to create a
defense even if its conduct is otherwise objectively prudent and in
good faith. Intentional or grossly negligent misrepresentation of
relevant facts to the representatives of the Department of Labor
would, in the Board's view, preclude a finding of good faith.
The Portal-to-Portal Act requires the employer to act in
conformity with and in reliance on a written agency position. As
this is the case at hand, we need not speculate on whether an
extreme situation involving the absence of action by the Department
of Labor would give rise to a reasonable reliance by an employer.
However, we note that in that situation, the absence of complaints
by groups of employees or their representative organization would
be highly relevant.
In addition to the factors embodied in the Portal-to-Portal
Act -- the relevance of which is espoused by Mr. Flett
(Petitioner's Reply Brief, p. 4, n.3) -- the Board would require
a demonstration of other factors relating to the basic fairness of
the situation at hand. Was the employer's reliance "detrimental"
in an economic sense; i.e., has the Government already benefitted
by virtue of the lowest bid; or would the position of the
Department, if adopted, result in the difference between a
profitable or losing undertaking by the contractor? Conversely,
has an already profitable contract become more profitable by virtue
of the agency's or employer's position; i.e., is there something
similar to unjust enrichment resulting from the adoption of a
particular position? Would the adoption of a particular position
result in some demonstrable injury to the workers affected or
create an undesirable (inefficient) economic result? These "plus"
factors are not intended to be exhaustive and would vary depending
on the circumstances at hand. They collectively permit the
exercise of discretion in a particular case.
In summary, the Board acknowledges the existence of an
equitable defense. It is narrower than the Portal-to-Portal
analogy espoused by Mr. Flett and the contractors, and far narrower
than the "reliance" espoused by the Solicitor. We therefore remand
this matter to Wage and Hour with instructions to describe which of
the elements contained in the Portal-to-Portal Act are present;
which relevant "plus" factors are present; and whether additional
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[5] information should be presented to the Board. We hope that
Wage and Hour would respond at its earliest opportunity in order
for the Board to render a decision for the parties.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
_______________________________
Gerald F. Krizan, Esq.
Executive Secretary [5]
