CCASE:
KOS KAM, INC.,
DDATE:
19910315
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
KOS KAM, INC.,
Repairs to Family Housing, WAB Case No. 88-29
Dolphin Gardens,
Groton, Connecticut
Project No. N62472-81-C-0085
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: March 15, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Kos Kam, Inc. ("Kos Kam" or "Petitioner"), for review of a March
29, 1988 decision by the Administrator of the Wage and Hour
Division regarding $761.05 in unpaid overtime compensation owed to
employees of subcontractor Shore Crest Construction, Inc. ("Shore
Crest"). For the reasons stated below, the Board denies the
petition for review.
I. BACKGROUND
Kos Kam was prime contractor on a federally funded project
(Project No. N62472-81-C-0085) in Groton, Connecticut, and Shore
Crest was a subcontractor. An October 8, 1986, letter from the
Assistant Regional Administrator of the [1]
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[2] Wage and Hour Division to the president of Kos Kam detailed
the preliminary findings of a labor standards investigation of
Shore Crest during the firm's performance on the Groton project.
The investigation disclosed that Shore Crest failed to pay proper
overtime compensation, as required by the Contract Work Hours and Safety
Standards Act ("CWHSSA") (40 U.S.C. [sec] 327 et seq.), to five
employees who worked in excess of eight hours per day. A total of
$761.05 in unpaid overtime compensation was assessed for the five
employees. The Assistant Regional Administrator advised Kos Kam
that pursuant to 29 C.F.R. 5.5(a)(6), a prime contractor is
responsible for a subcontractor's compliance with all the contract
clauses set forth at 29 C.F.R. 5.5, including the requirement
to pay all laborers and mechanics in accordance with applicable
prevailing wage and overtime standards.
By a November 6, 1986 letter, counsel for Kos Kam responded to
the October 8 letter of the Assistant Regional Administrator. Kos
Kam's counsel stated, among other things, that "[d]ue to the
distance of travel from the worksite to their home office, the
employees of [Shore Crest] elected to arrive and work three or four
days of the week for ten hours so that they would not have to
travel a fourth or fifth day." Counsel for Kos Kam also requested
a number of documents regarding the investigation of Shore Crest,
pursuant to the Freedom of Information Act ("FOIA").
The Administrator of the Wage and Hour Division, in a letter
dated March 29, 1988, again advised Kos Kam that a prime contractor
is responsible for a subcontractor's compliance with the contract
clauses set forth at 29 C.F.R. 5.5, including the requirement to
pay laborers and mechanics according to applicable prevailing wage
and overtime standards. The Administrator further advised Kos Kam
that it is the Department of Labor's position that "the prime
contractor is responsible for the payment of the back wages when a
subcontractor fails to do so."
In addition, the Administrator advised Kos Kam that if the
firm believed that relevant facts were in dispute, Kos Kam was
permitted to submit within 30 days a statement detailing the facts
alleged to be in dispute. The Administrator further stated that if
Kos Kam did not contest the facts but desired a review of the March
29 ruling, Kos Kam could file a petition with the Wage Appeals
Board within 30 days. If Kos Kam did not respond within the
specified time period, the Administrator stated, the findings
regarding the overtime compensation violations would become final;
if Shore Crest also failed to respond, the Administrator added, the
Department would request the contracting agency to take the
necessary action to have the back wages disbursed to the affected
employees.
By letter dated May 16, 1988, the Administrator replied to Kos
Kam's FOIA request for information regarding the Department's labor
standards [2]
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[3] investigation of Shore Crest. The Administrator
provided Kos Kam with copies of the back wage computation sheets
and the back wage summaries, but determined that other documents in
the investigation file were exempt from disclosure under the FOIA.
The Administrator again requested that Kos Kam respond within
30 days as to whether Kos Kam desired review by the Wage Appeals
Board of the Administrator's March 29, 1988 decision regarding
unpaid overtime compensation, or desired a hearing before an ALJ.
Kos Kam subsequently petitioned for review of the March 29
decision.
II. DISCUSSION
Kos Kam argues on appeal that the CWHSSA has been amended to
eliminate the requirement that overtime be paid to employees who
work more than 8 hours in a day. However, the CWHSSA provision
(Section 102(a)) in effect during the period of performance on the
Groton contract required the payment of overtime compensation "for
all hours worked [*] in excess of eight hours in any calendar day
[*] or in excess of forty hours in the workweek, as the case may
be." [*](Emphasis supplied.)[*] Furthermore, Kos Kam's contention
that Shore Crest's employees chose to work 10-hour days is
unavailing, since the CWHSSA also provided (Section 102(b)(1)) that
"[n]o contractor or subcontractor . . . [*] shall require or permit
[*] any laborer . . . to work in excess of eight hours in any
calendar day or in excess of forty hours in such workweek except in
accordance with the provisions of this Act." [*](Emphasis
supplied.)[*]
In short, the federal law in effect during performance on the
Groton contract required contractors and subcontractors to pay
overtime compensation to employees who worked more than eight hours
in a day. Kos Kam's additional contention that Connecticut law
"has always accepted the 40 hour rule rather than the 8 hour/day
rule" does not change the obligation of contractors and
subcontractors to pay overtime compensation according to the
applicable provisions of federal law.
Kos Kam also argues that "[s]ince we are not privy to Shore
Crest's business records and the Dept. of Labor refuses to release
results of investigations actually made on Shore Crest's records or
even make admission of the fact that there was an actual
investigation conducted, we cannot possibly be held responsible for
alleged violations by Shore Crest." However, we first note that
Kos Kam's attorney essentially admitted the overtime violations in
this matter when he stated in a November 6, 1986 letter to the
Assistant Regional Administrator that Shore Crest's employees
"elected to arrive and work three or four days of the week for ten
hours." In addition, the CWHSSA violations were explained to Kos
Kam's president, construction manager, and superintendent at a
November 19, 1985 final investigation conference. Furthermore,
although the Administrator [3]
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[4] did respond to Kos Kam's FOIA request by stating that the
FOIA does not require release of investigation records compiled for
law enforcement purposes, the Administrator also provided Kos Kam
copies of the back wage summaries and back wage computation sheets.
The Administrator also apprised Kos Kam of its right to allege that
factual matters were in dispute and to request a hearing before an ALJ.
In light of all these circumstances, the Board concludes that the
record contains no indication that Kos Kam was deprived of sufficient
information to evaluate or contest the back wage assessment.
Finally, the responsibility of prime contractor Kos Kam for
the unpaid overtime compensation owed to the employees of
subcontractor Shore Crest is clear. The CWHSSA itself provides
(Section 101(b)(2)) that in the event of overtime violations, "the
contractor and any subcontractor responsible therefor shall be
liable to such affected employee for his unpaid wages." The Board
has also repeatedly held that a prime contractor is obligated to
pay back wages owed to a subcontractor's employees when the
subcontractor fails to do so. E.g., R.C. Foss & Son, Inc., WAB
Case No. 87-46 (Dec. 31, 1990), at p. 7 and cases cited therein.
The petition for review is denied. The March 29, 1988
decision of the Administrator is affirmed.
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 [4]
