M & C LAZZINNARO CONSTRUCTION CORP., WAB No. 88-08 (WAB Mar. 11, 1991)
CCASE:
M & C LAZZINNARO
DDATE:
19910311
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matters of:
M & C LAZZINNARO WAB Case No. 88-08
CONSTRUCTION CORPORATION; ("Lazzinnaro I")
ADELAIDE CONSTRUCTION CORPORATION;
TRIPLE L. CONSTRUCTION CORPORATION;
and MARIO LAZZINNARO, President
and Owner; and CORRADINO LAZZINNARO,
Owner
and
SHNAY CONSTRUCTION WAB Case No. 89-12
CORPORATION, Prime Contractor; ("Lazzinnaro II")
and M & C LAZZINNARO CONSTRUCTION
CORPORATION; ADELAIDE CONSTRUCTION
CORPORATION; and MARIO LAZZINNARO,
President and Owner
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: March 11, 1991
DECISION OF THE WAGE APPEALS BOARD
The above-captioned cases are before the Wage Appeals Board
on petitions from debarment orders and findings of underpayments of
wages and overtime. In the earlier case ("Lazzinnaro I"),
petitioners (hereinafter, collectively, "Lazzinnaro" or
"Petitioner") question the findings of fact, allocation of the [1]
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[2] burden of proof, and conclusion that Lazzinnaro engaged in
aggravated and willful violations of Davis-Bacon Related Acts. They
ask us to find the Recommended Decision and Order ("D & O";
Attachment) of the Administrative Law Judge ("ALJ") clearly
erroneous and to "dismiss the complaint in its entirety".
Essentially the same arguments and prayers are made in Lazzinnaro
II, with the added assertion that, in the latter Davis-Bacon
Related Acts case, "unusual circumstances exist, warranting the
dissolution of the ALJ's debarment order," in the event a violation
is found to have occurred.
For purposes of efficiency, the Board elects to address these
cases together. It is the Board's hope that this single recitation
will prove useful for future reference.
I. LAZZINNARO I
In Lazzinnaro I, petitioner was both the prime contractor and
two of the subcontractors on the Hudson Piers residential
rehabilitation project in New York City during the 1982-1984
period. Hudson Piers was subsidized by the Department of Housing
and Urban Development ("HUD") and was subject to the U. S. Housing
Act of 1937, 42 U.S.C. [sec] 1437j, as well as the Contract Work
Hours and Safety Standards Act as amended, 40 U.S.C. [sec] 327 et
seq. ("CWHSSA"). Lazzinnaro kept overall payroll records, certified
payroll records, and time books specific to the Hudson Piers
project. Information obtained from individual employees, however,
led Wage and Hour to conclude that 34 employees had worked on
Hudson Piers but were not listed on the certified payrolls and had
been paid less than prevailing wages; furthermore, 19 employees had
worked in excess of 40 hours per week at Hudson Piers without being
paid overtime. (Tr. 436; D & O, p. 2). Total underpayments exceeded
$98,000.
As Lazzinnaro did not keep accurate payroll records, Wage and
Hour relied on survey results and individual testimony to prove the
underpayments. This inferential proof was introduced and accepted
in accordance with the principles of Anderson v. Mt. Clemens
Pottery, 328 U.S. 680 (1946) and Structural Services, WAB Case No.
82-13 (June 22, 1983). Lazzinnaro attempted to counter this showing
through the testimony of two employees, the first of whom could not
remember if the employees who testified worked at Hudson Piers, and
the second of whom could not remember where else they may have
worked. (Tr. 595-599). Lazzinnaro did not introduce documentary
evidence showing which employees worked at what site, or for what
hours. In short, based on his assessment of the credibility of the
witnesses and the absence of countervailing documentary evidence,
the ALJ upheld the Wage and Hour determination. [2]
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[3] The ALJ also found, based on his assessment of the
credibility of the witnesses, that Lazzinnaro "deliberately omitted
the names of employees on the Hudson Piers project on the certified
payrolls in an attempt to conceal violations of the prevailing wage
rates."
In its petition for review, Lazzinnaro attacked the ALJ's
credibility determinations, the admission of written statements by
nontestifying employees, and the use of three prior Davis-Bacon Act
audits to show that Lazzinnaro knew or should have known the legal
requirements applicable to the Hudson Piers contract.
II. LAZZINNARO II
From the end of 1982 through June, 1984, Lazzinnaro was the
masonry and concrete subcontractor on HUD housing projects known as
Fulton Park and St. Marks Avenue in Brooklyn, New York. These
contracts were subject to the U. S. Housing Act of 1937, as
amended, supra; the National Housing Act, as amended, 12 U.S.C.
[sec] 1715c; and CWHSSA. A Wage and Hour investigation determined
underpayments of $5,308.38 on the Fulton Park project; over $18,500
in prevailing wage and overtime violations on the St. Mark project;
and payroll falsifications on both.
At trial, the ALJ awarded back wages to five employees in the
total amount of $3,905.56. However, the ALJ disallowed back wages
to 14 employees who did not testify despite Compliance Officer
Catherine Quinn's computations based on available documentation and
interview statements (Tr. 146-148, 392; Government's Exhibits 8-11,
15, 17-30). The ALJ gave this testimony "no weight" because Ms.
Quinn repeated the employee statements and submitted calculation
sheets rather than use other evidentiary techniques. From the
language used in the Decision & Order at pages 8 and 9, it appears
that the ALJ effectively excluded Ms. Quinn's testimony as
inadmissable hearsay.
The ALJ concluded by finding Lazzinnaro disregarded its
"obligations to its employees under the Davis-Bacon Act" insofar as
it had failed to pay the prevailing minimum wages and failed to
keep adequate payroll records. The Board is unable to determine
what consideration, if any, was given to the Davis-Bacon Related
Acts charges.
In its petition for review, Lazzinnaro claims the ALJ erred
in finding the employees had met their burden under Mt. Clemens
Pottery, supra, that the credibility determinations were erroneous,
and that the ALJ erred in determining that it "disregarded its
obligations under Davis-Bacon. " To these arguments the petitioner
adds the alternative claim that such unusual circumstances exist
that dissolution of the debarment order is warranted. [3]
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[4] III. DISCUSSION
A. Lazzinnaro I
The Board's review of the entire record in this matter
compels the conclusion that the ALJ's credibility determinations
should not be overturned. It is uncontested that the witnesses
knew the nature of the investigation and the possibility that back
wages could be awarded. It is also uncontested that these witnesses
did not all have perfect recollections of events occurring several
years before. The laws and fundamental fairness place the burden of
recordkeeping on the employer, not on the employee. Had Lazzinnaro
kept the proper records in the first instance, this type of
evidence would have been unnecessary. See Glenn Electric Company,
Inc., WAB Case No. 79-[21] (Mar. 22, 1983).
By contrast, Lazzinnaro's challenges to the testimony amount
to questions regarding the precision of the recollections and the
assertion that some employees may have resented their employer.
These are insufficient to persuade this Board that the credibility
determinations were "clearly erroneous."
Lazzinnaro's second challenge, that the ALJ erroneously
received interview reports and questionnaires for the limited
purpose of showing that four employees worked at Hudson Piers, also
fails. The Statement of the Administrator correctly cites numerous
cases where hearsay was admitted in administrative proceedings, and
the Board notes with approval the controlled use of the documents
in question by the ALJ. The Board also notes, for future reference,
that these documents are of the type contemplated by the Federal
Rules of Evidence as adopted by the Secretary and incorporated in
the Department of Labor Regulations. 29 C.F.R. 18.803(24) ("Hearsay
Exceptions; availability of declarant immaterial") states in
pertinent part:
A statement . . . having equivalent circumstantial
guarantees of trustworthiness [may be admitted] if the
judge determines that (i) the statement is offered as
evidence of a material fact; (ii) the statement is more
probative on the point for which it is offered than any
other evidence which the proponent can procure through
reasonable efforts; and (iii) the general purposes of
these rules and the interests of justice will best be
served by admission of the statement into evidence.
This rule also contains safeguards against unfairness to the party
objecting to the introduction of the evidence. The Board sees no
unfairness to Lazzinnaro in the record before it. [4]
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[5] Lazzinnaro's challenge to the application of the Mt. Clemens
Pottery standards for the allocation of the burden of proof where
the employer has failed to keep adequate records also fails. The
Board's review of the record supports the ALJ's finding that Wage
and Hour, together with the testifying employees, had raised a more
than reasonable inference; indeed, the Board agrees that, under
these circumstances, it is difficult to see how a different
conclusion was warranted. By contrast, the testimony produced by
Lazzinnaro was counterproductive when viewed in its entirety:
neither witness had firsthand knowledge of who worked where, when,
or how often; all their testimony accomplished was buttressing the
conclusion that Lazzinnaro falsified its certified payroll.
Finally, the Board agrees with the ALJ that Lazzinnaro had
committed aggravated or willful violations of the Davis-Bacon
Related Acts and that debarment was warranted. It is clear that
Lazzinnaro grossly underpaid its employees. It is also clear that
Lazzinnaro falsified its certified payrolls. The fact that
Lazzinnaro had been audited three times in the past, coupled with
the specific language of the contracts from which this matter
arose, leads to the inescapable conclusion that Lazzinnaro knew or
should have known the requirements of applicable law; furthermore,
a reasonable person could view these facts as part of a pattern of
disregard of the statutory requirements.
Lazzinnaro's request for debarment of less than three years
is without merit based on the totality of the facts here present.
The seminal case on debarment, A. Vento Construction, WAB Case No.
87-51 (Oct. 17, 1990) (29 WH 1685), reaffirms the many earlier Wage
Appeals Board rulings that falsification of certified payrolls to
simulate compliance or to conceal violations constitutes
"aggravated or willful" violation of the Related Acts within the
meaning of 29 C.F.R. 5.12(a)(1), and warrants debarment. In
addition, the Board notes that a history of repeated violations of
similar nature, such as those involving minimum wage provisions or
recordkeeping provisions, precludes a finding of "extraordinary
circumstances."
In affirming the ALJ's Decision & Order in Lazzinnaro 1, the
Board notes that debarment is "recommended" pursuant to Section
3(a) of the Davis-Bacon Act. As this case arises under Davis-Bacon
Related Acts, the Order should debar pursuant to 29 C.F.R.
5.12(a)(1). The opinion otherwise employed the correct "aggravated
or willful" standard, and the findings and conclusions are more
than adequate to sustain debarment pursuant to the Secretary's
regulations. Accordingly, the Board modifies the debarment order
and otherwise affirms the ALJ. [5]
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[6] B. Lazzinnaro II.
In this second case, petitioner raises many of the objections
seen in Lazzinnaro I. As the Board is remanding this matter in its
entirety the specific arguments need not be addressed on this
occasion.
In Lazzinnaro II, as noted, the petitioner was charged with
violations of Davis-Bacon Related Acts, yet the ALJ found
"disregard of obligations" under the Davis-Bacon Act (Attachment).
The Board cannot determine the extent to which, if any, the
proceeding was conducted in light of the standards enunciated
in A. Vento, supra; or whether the policies embodied in the Related
Acts and the regulations thereunder were considered and the facts
related thereto were aerated. Accordingly, this matter is remanded
in its entirety for proceedings consistent with A. Vento, supra and
this opinion.
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 [6]
