CCASE:
CODY-ZEIGLER, INC
DDATE:
19910430
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
CODY-ZEIGLER, INC.,
Project No. 209954-95-V-6002 WAB Case No. 89-19
Dublin, Ohio
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Patrick J. O'Brien, Member
DATED: April 30, 1991
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Cody-Zeigler, Inc. ("Cody-Zeigler" or "Petitioner"), for review of
a March 1, 1989 decision by the Administrator of the Wage and Hour
Division regarding unpaid wages owed to Petitioner's employees.
For the reasons stated below, the Board denies the petition for
review.
I. BACKGROUND
Cody-Zeigler was the contractor for general construction work
on the post office in Dublin, Ohio (Project No. 209954-95-V-6002).
The project was subject to the Postal Reorganization Act, as
amended (39 U.S.C. [sec] 410(b)(4)(C)) and the Contract Work Hours
and Safety Standards Act ("CWHSSA") (40 U.S.C. [sec] 327 et seq.),
both Davis-Bacon Related Acts.
By letter dated March 1, 1989, the Administrator informed
Petitioner of the results of a labor standards investigation of
Cody-Zeigler's performance on the post office project. The
investigation disclosed, the Administrator stated, that Petitioner
failed to pay the prevailing wage rates set forth in the applicable
wage determination. The Administrator noted that it was
Petitioner's opinion that [1]
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[2] "Christmas bonuses, interest free loans, golf parties and picnics
provided by your firm satisfied the difference between the required
prevailing wage rates and the wages paid." However, the Administrator
added, contractors on Davis- Bacon projects may satisfy prevailing
wage requirements by paying employees in cash or by paying employees
in cash and making contributions to bona fide fringe benefit plans
on the employees' behalf.
Interest free loans, golf parties and picnics are not bona
fide fringe benefits for purposes of satisfying prevailing wage
obligations, the Administrator stated. Similarly, she added,
"credit may not be given for Christmas bonuses because such
payments are not considered to be fringe benefits under the Davis-
Bacon Act." The Administrator also noted that contributions to an
apprenticeship training fund could only be credited for employees
performing carpenters' work on the project, since Cody-Zeigler had
only made contributions to the fund for the training of carpenters.
Back wages totaling $4,658.02 (including $25.29 in unpaid
overtime compensation) were assessed for 21 employees, and funds
have been withheld to cover the amount owed. Cody-Zeigler has
petitioned the Board for review of the Administrator's decision as
it pertains to the Christmas bonuses.
II. DISCUSSION
On review, the Board concludes that the Administrator's
decision declining to credit Christmas bonuses toward the
prevailing wage obligations owed by Petitioner to its employees
should be affirmed. The crux of the Administrator's decision is
that credit may not be given for the Christmas bonuses "because
such payments are not considered to be fringe benefits or wages
under the Davis-Bacon Act." With regard to fringe benefits, the
Solicitor notes (Statement of the Administrator in Response to
Petition for Review, at pp. 8-9) that cash bonuses are not included
among the examples of bona fide fringe benefits enumerated in
Section (1)(b)(2)(B) of the Davis-Bacon Act (40 U.S.C. [sec]
276a(b)(2)(B). (FOOTNOTE 1) Petitioner responds (Statement of
Cody-Zeigler, Inc. in Support of Its Petition for [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 1) Section(1)(b)(2) lists the following:
medical or hospital care, pensions on retirement or
death, compensation for injuries or illness resulting
from occupational activity, or insurance to provide any
of the foregoing, for unemployment benefits, life
insurance, disability and sickness insurance, or accident
insurance, for vacation and holiday pay, for defraying
costs of apprenticeship or other similar programs, or for
other bona fide fringe benefits, but only where the
contractor or subcontractor is not required by other
Federal, State, or local law to provide any of such
benefits. . . . [2]
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[3] Review) that Section (1)(b)(2)(B) specifically provides that a
contractor or subcontractor may use "other bona fide fringe
benefits" to meet its prevailing wage obligations, and that the
payments may be made in cash.
However, Petitioner's argument fails to address two essential
points -- first, that the Department of Labor has not recognized
cash bonuses as bona fide fringe benefits, and second, that
Petitioner's Christmas bonuses do not meet the requirements of the
Department's fringe benefits regulations. As to the first point,
the Solicitor acknowledges (Statement of the Administrator, at p.
10) that the Davis-Bacon Act (the "Act") does permit the Department
to recognize bona fide fringe benefits other than those listed in
the Act as those other benefits become prevailing. However, the
Solicitor adds (Id.), the legislative history of the 1964
amendments to the Act demonstrates that Congress viewed the Act as
listing all the benefits that were common to the industry at the
time of the amendments. "Congress did not include cash bonuses
among the enumerated items," the Solicitor states (Id.) "and since
cash bonuses were prevalent at the time the fringe benefit
amendments were enacted, it cannot seriously be argued that
Congress' omission of fringe benefits was anything but intentional.
Therefore, the Department of Labor has never recognized such
payments as bona fide fringe benefits." Petitioner has presented
no arguments in this matter that would warrant disturbing the
Department's approach regarding cash bonus payments.
Cody-Zeigler's efforts to take credit for the Christmas
bonuses in satisfaction of its prevailing wage obligations also
fail to meet various requirements set forth in the Department's
regulations. Thus, although the Act's so-called "open-end"
provision does contemplate recognition of "other bona fide fringe
benefits" in addition to those enumerated in Section (1)(b)(2)(B),
there is no indication in the record that Cody-Zeigler applied for
the approval of the Secretary of Labor, as called for in 29 C.F.R.
5.29(e), (FOOTNOTE 2) to take credit for the Christmas bonus payments.
Furthermore, while a contractor may satisfy its fringe benefit
obligations by making an additional cash payment in lieu of the
benefits, 29 C.F.R. [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 2) The Department's regulations provide, at 29 C.F.R. 5.29(d)
that "[n]o difficulty is anticipated in determining whether a
particular fringe benefit is `bona fide' in the ordinary case where
the benefits are those common in the construction industry and
which are established under a usual fund, plan, or program."
However, 29 C.F.R. 5.29(e) provides:
Where the plan is not of the conventional type described
in [Section 5.29(d)], it will be necessary for the Secre-
tary to examine the facts and circumstances to determine
whether they are "bona fide" in accordance with
requirements of the act. This is particularly true with
respect to unfunded plans. Contractors or subcontractors
seeking credit under the act for costs incurred for such
plans must seek specific permission from the Secretary
under [sec] 5.5(a)(1)(iv). [3]
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[4] 5.31(b)(3) provides that a contractor may do so only by paying
the full fringe benefit amount listed in the wage determination
directly to the employees, calculated on a hourly basis, and paid
weekly in accordance with 29 C.F.R. 5.5(a)(1). A Christmas cash
bonus paid annually obviously does not meet the requirements of
Section 5.31(b)(3) for regular weekly payments. And while fringe
benefits payments to a fund, plan or program may be made on a
quarterly basis under Section 5.5.(a)(1), Petitioner's annual
Christmas bonuses are not paid on a quarterly basis, and Petitioner
has not attempted to argue that the Christmas bonus constitutes a
"fund, plan or program" as that term is used in the Act and the
Department's regulations (see 29 C.F.R. 5.27).
Petitioner's argument that the Christmas bonus payments should
be credited toward wages similarly fails to take into consideration
the requirements of the Department's regulations. Thus, 29 C.F.R.
5.5(a)(1) requires the payment to employees of the full amount due
"not less often than once a week," and annual Christmas bonuses do
not satisfy that requirement. In addition, 29 C.F.R. 3.5 lists the
deductions that are permitted from the amount owed to employees
without application to or approval by the Secretary of Labor, and
Christmas bonuses or similar types of incentive or annual bonuses
are not listed. Section 3.6 does permit a contractor to seek the
Secretary's approval for deductions not listed in Section 3.5.
However, there is no indication in the record that Petitioner
sought or obtained the Secretary's approval under Section 3.6,
which also requires that any deduction for which approval is sought
either must be voluntarily consented to by the employees in advance
and in writing, or must be included in a collective bargaining
agreement.
The petition for review is denied. The 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]
