CCASE:
BALL, BALL AND BROSAMER, INC.
DDATE:
19901129
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.
In the Matter of
Ball, Ball and Brosamer, Inc., WAB Case No. 90-18
Prime Contractor
Red Rock Products, Inc.,
Subcontractor
BEFORE: Jackson M. Andrews, Chairman
Ruth E. Peters, Member
Stuart Rothman, Member, Concurring Separately
DATED: November 29, 1990
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition of
Ball, Ball and Brosamer, Inc. ("Ball" or "Petitioner"), seeking
review of a decision of the Acting Administrator of the Wage and
Hour Division dated February 6, 1990. The Acting Administrator,
upon an investigation by the Wage and Hour Division, determined
that Red Rock Products, Inc. ("Red Rock") was a subcontractor on a
federal construction project, and that Red Rock had failed to pay
its employees pursuant to the prevailing wage requirements of the
Davis-Bacon Act (40 U.S.C. [sec] 276a et seq.) and the overtime pay
requirements of the Contract Work Hours Safety Standards Act
("CWHSSA") (40 U.S.C. [sec] 327 et seq.). The Wage and Hour
Division determined that Red Rock owed $60,976.71 in back wages.
[1]
~2
[2] Petitioner, the prime contractor, alleges that the Davis-
Bacon Act is inapplicable here because Red Rock did not perform on
the site of work and was a materialman. For the reasons stated
below, the Board denies the petition for review.
I. BACKGROUND
Petitioner is a general construction contractor, specializing
in earthwork, road work, dam construction and canal construction.
Petitioner, a California corporation, has its principal place of
business in California (Tab B, p. 3; Tab E [par] 2).
On March 29, 1985 the Bureau of Reclamation of the U.S.
Department of the Interior ("BOR") awarded a $43.5 million contract
(Contract No. 5-CC-30-02830) to Petitioner to perform construction
work at Tucson Aqueduct Reach 1B and Reach 2, Tucson Division,
Central Arizona Project ("CAP") (Tab B, p.3). On September 20,
1985, BOR awarded Petitioner a contract valued at $14,557,920.90
(Contact No. 5-CC-30-03560) to perform earthwork and to construct
13 miles of concrete lined canal, earth dikes and other structures
at Tucson Aqueduct Reach 3 of the CAP project (Tab A, p. 3; Tab B,
p. 3). The contracts were subject to the requirements of the
Davis-Bacon Act and the CWHSSA, Department of Labor regulations,
and the prevailing rate classifications and basic hourly rates
specified in Wage Determination No. AZ 84-5005, dated March 8,
1984, as modified through Modification No. 5, dated November 9,
1984 (Tab A, pp. 13-19; Tab D, p. 1; Tab M, p. 1).
Petitioner, according to Ball, issued a purchase order on
December 14, 1985, for Red Rock to provide sand, gravel, concrete
[2]
~3
[3] and other aggregates needed by Petitioner to complete its
work on the Reach 3 project (Tab E, [par] 4). According to the
record Red Rock, an Arizona-based company, performed the agreement
between January and March 1986 (Tab I; Tab D, p. 2). In addition
to its responsibilities regarding the Ball contracts, Red Rock also
had obligations to fulfill with Bechtel Constructors Corporation,
a prime contractor on another CAP construction contract (No. 5-CC-
30-02770, dated April 5, 1985) (Tab D, p. 1; Tab M, p.1).
Red Rock established a sand and gravel pit which it had
subleased from Western Rock Products, Inc., and set up a portable
batch plant (Tab G; Tab D, p. 1; Tab M, p. 1). (FOOTNOTE 1) Red Rock
commenced its operations about November 1985, and began removing
material from the pit in January 1986 (Tab I; Tab D, p. 2; Tab M,
p. 2). (FOOTNOTE 2) The record contains two descriptions of the distance
of the pit and batch plant from the construction areas. The Wage
and Hour investigation determined that the pit and batch plant were
situated about 2 to 15 miles from the construction areas (Tab T, p.
2). Regarding Ball's Reach 3 project, Petitioner states that the
plant "is approximately 5 miles away from the closest portion of
the right of way for the Tucson Reach 3 project, and about 12 miles
from the middle of Reach 3," and about 19 miles from the farthest
point of the work (Statement of Reasons for Appeal at pp. 3, 10;
Tab E, [par] 4). [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 1) Western had leased the pit from the State of Arizona in about
March 1985 (Tab G; Tab H; Pet. App. 17-25).
(FOOTNOTE 2) According to the record, Red Rock went out of business during
March 1986, and another firm began providing concrete to the prime
contractors (Tab D, p. 2; Tab F). [3]
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[4] The BOR project officer for Arizona and the Wage and Hour
Director of Enforcement in Arizona met on December 23, 1985 and
agreed to determine whether Davis-Bacon Act requirements applied to
Red Rock (Tab B, p. 3). Wage and Hour initiated an investigation
of Red Rock in March 1986, and sought payroll records from Ball and
Red Rock (Tab B, p. 3; Tab D, p.1; Tab M, p. 1). Ball's office
manager said that the matter would be discussed with the Director
of Industrial Relations at the firm's home office in Danville,
California (Tab B, p. 3). Red Rock denied that it was subject to
the Davis-Bacon Act and the CWHSSA, and failed to submit weekly
certified payrolls, refused to make its payroll records available
for inspection, and refused to permit interviews of employees (Tab
D, pp. 1, 3; Tab M, p. 1).
Red Rock claimed that the firm was established for commercial
concrete sales in the area (Tab D, p. 1; Tab M, p. 1). At the
March 10, 1986 opening conference, Charles E. Martin, secretary-
treasurer of Red Rock, produced an undated "General Marketing
Survey" (Tab J) which he claimed was a basis for establishing a
commercial concrete plant in such a remote area (Tab D, p. 1; Tab
M, p. 1; Tab J). When questioned, however, Martin said the survey
was conducted in January 1986, which is the same month that Red
Rock began removing materials from the pit, and a month or two
after it commenced operations in about November 1985 (Tab D, p. 2;
Tab M, p. 2). Following the March 1986 conference Wage and Hour,
in an April 4, 1986 letter, noted that Red Rock had failed to
comply with the request for records. Wage and Hour requested that
BOR notify Red Rock in writing to produce the records (Tab K). [4]
~5
[5] Red Rock went out of business in March 1986, apparently
because of financial difficulties (Tab L; Tab D, p. 2, Tab M, p.
2). The defunct firm made its records available on July 13, 1988,
after a phone call to Martin (Tab D, p. 1; Tab M, p. 1). Red Rock
claimed that the firm was neither a contractor or subcontractor to
the prime contractors, and was a material supply vendor (Tab D,
p.1; Tab M, p. 1).
As a result of its investigation, Wage and Hour concluded that
both the operation of the pit and the batch plant were covered by
the Davis-Bacon Act. Wage and Hour further concluded that Red Rock
had paid its employees less than the required rates (Tab D). Wage
and Hour determined that Red Rock paid its employees time and a
half their regular hourly rates of pay for all hours worked in
excess of 40 per week. However, Wage and Hour concluded that
violations of the overtime pay requirements of the CWHSSA had
occurred because Red Rock had paid less than the required
prevailing basic hourly rates (Tab M).
Wage and Hour allocated the amount of back wages owed on the
government contracts based on the amount of concrete Ball and
Bechtel purchased from Red Rock. Based on information provided by
Ball and Bechtel, Wage and Hour concluded that Ball had purchased
4,115 cubic yards (or 70.16% of Red Rock's production) for its two
contracts, Bechtel had purchased 1,500 cubic yards (or 25.58% of
Red Rock's production), and that the firm produced 250 cubic yards
(or 4.26%) for non-Government accounts (Tab D, p. 2; Tab M, p. 3).
Regarding the amount of unpaid wages owed, Wage and Hour concluded
that for the Ball work, Red Rock owed $57,782.44 to 23 employees
[5]
~6
[6] for Davis-Bacon violations (Tab D, p. 3) and $3,194.27 to 17
employees for overtime pay violations (Tab M, p. 3), for a total of
$60,976.71.
Wage and Hour, by letter dated July 28, 1988, advised the BOR
contracting officer that the investigation had disclosed
violations, and requested that BOR withhold $30,000 on the Ball
contract payment pending final resolution (Tab N). BOR, by letter
dated August 8, 1998, informed Ball that it was retaining $30,000
from future progress payments, and would not release the funds
until authorized to do so by the Department of Labor at the
conclusion of the Department's investigation (Pet. App. 37a). Wage
and Hour amended the withholding request to $60,976.71 by letter
dated November 22, 1988 (Tab O). BOR, by letter to Ball dated
March 12, 1990, stated that the amount had been withheld (Tab P).
By letter dated August 19, 1988, Wage and Hour transmitted to
Ball copies of the Wage Transcription and Computation Sheet, Form
WH-55, which listed the amounts due employees (Tab Q). Wage and
Hour informed Ball that the back wages due could be paid by check
either to the employees or to Wage and Hour (Tab Q). Ball
responded to Wage and Hour by letter dated September 16, 1988, in
which Ball denied that it was liable for the back wages owed to the
former Red Rock employees. (Pet. App. 42-43). Ball requested
review of the matter pursuant to 29 C.F.R. 5.11 (Pet. App. 42).
In addition, by letter dated September 8, 1988, Ball filed a
claim for $60,976.71 with BOR. By letter dated November 1, 1988,
BOR provided Ball with an "executed copy of Modification No. 026,"
the final decision of the contracting officer regarding the Red [6]
~7
[7] Rock matter (Tab B). The decision noted the contractor's claim
in the amount of $60,976.71, and Ball's statement that they were
not affiliated with Red Rock and that "[t]he purchase of materials
from this off-site vendor constitutes the only relation between us
and this entity" (Tab B, p. 2). The decision added that Ball's
claim involved an investigation by the Department of Labor, a
matter not within the jurisdiction of BOR (Tab B, p. 4).
Accordingly, the decision denied Ball's claim (Tab B, p. 4).
Ball filed a complaint under the Contract Disputes Act in the
United States Claims Court on October 18, 1989 (Tab E). The
request for relief included, among other things, judgment in the
amount of $60,976.71, release of the amount being withheld for
payment of back wages and interest on the amount being withheld
(Tab E, p. 5). The Department of Justice ("DOJ") moved to suspend
the proceedings pending a final decision by the Department of Labor
(Tab R), and Ball opposed the motion (Tab S).
Before the court ruled on the motion the Acting Administrator,
by letter to Red Rock dated February 6, 1990, affirmed the findings
of the compliance officer (Tab T, p. 3). The Acting Administrator
noted that Red Rock operated both a pit and a batch plant, and that
the record indicates that materials produced at the pit were used
exclusively by the batch plant (Tab T, p. 2). Furthermore, the
Acting Administrator stated, "approximately 96 percent (96%) of the
materials produced at the batch plant was used as construction
materials on the [Ball and Bechtel] contracts, which were segments
of the Central Arizona Project. Moreover, the record indicates
that the above-mentioned facilities were located at distances [7]
~8
[8] ranging approximately from two to 15 miles from areas where
construction work was being performed on the above contracts" (Tab
T, p. 2).
The Acting Administrator further stated that covered
contractors must pay Davis-Bacon prevailing wages to all the
laborers and mechanics employed on the site of work (Tab T, p. 2).
The Acting Administrator explained that under 29 C.F.R. 5.2(1)(2),
"the 'site of work' generally includes pits and batch plants which
are opened for the purpose of fulfilling contract requirements; are
located close enough to the actual construction site that it would
be reasonable to include them; and are dedicated exclusively, or
nearly so, to the performance of a covered project" (Tab T, p. 2).
The Acting Administrator concluded that Red Rock employees "who
performed work at the pit and batch plant are subject to the
applicable prevailing wage rates and overtime requirements" (Tab T,
p. 2).
The Acting Administrator stated that since there did not
appear to be a dispute over relevant facts, her letter constituted
a final ruling under 29 C.F.R. 5.11(c)(1) (Tab T, p. 3). If Red
Rock or the prime contractors believed relevant facts were in
dispute, the Acting Administrator stated, they should inform her
within 30 days, for purposes of referring the matter to the Chief
Administrative Law Judge for a hearing (Tab T, p. 3). If the facts
are not contested, the Acting Administrator added, Red Rock and the
prime contractors could file a petition for review with the Wage
Appeals Board (Tab T, p. 3). [8]
~9
[9]
The Acting Administrator also sent the February 6, 1990
decision letter to Ball (Pet. App. 48-49). Ball filed a petition
for review with the Board by letter dated March 8, 1990, and
requested that its statement in support of the petition be
postponed until the Claims Court ruled on DOJ's motion to suspend
the court proceedings (Tab W). The court granted DOJ's motion by
order filed April 11, 1990 (Pet. App. 51).
II. THE PARTIES' CONTENTIONS
Petitioner claims that the Red Rock plant was not "directly
upon the site of the work" within the meaning of the Davis-Bacon
Act, and thus was not covered by the Act (Statement of Reasons for
Appeal at p. 14). The Department of Labor's regulations, Ball
alleges, "essentially ignore[] the portion of the statutory phrase
'directly upon' in defining the site of work" (Statement, at p.
10). Ball also claims that under the terms of the Act, Red Rock is
a materialman and not a subcontractor (Id. at p. 15). In addition,
Petitioner claims that the Department of Labor's administrative
decision is barred by the two-year statute of limitations under the
Portal-to-Portal Act. Finally, Ball "maintains its position that
the Department of Labor is not authorized to adjudicate and decide
disputes such as the one here in issue" (Id. at p. 5), and that the
"sole authority of the Board . . . is to advise the contracting
officer" (Id. at p. 8).
The Solicitor, on behalf of the Administrator, states that
under Reorganization Plan No. 14 of 1950, the Department of Labor
is the appropriate administrative agency to issue an authoritative
[9]
~10
[10] ruling on whether Red Rock was covered by the Davis-Bacon
Act (Response at p. 12). Under the Department of Labor's
regulations and prior decisions of the Board, the Solicitor states,
Red Rock meets the requirements for coverage both by the proximity
of the pit and the batch plant to the site of construction (Id. at
p. 18), and by virtue of the fact that the pit and batch plant
"were established and dedicated almost exclusively to meet the
contract requirements of Ball and the other Federal construction
contractor on the CAP project" (Id. at p. 19). Petitioner, the
Solicitor argues, makes no effort to demonstrate that the facts in
this case are different from those in other cases where the Board
has found that the work in question was performed at the "site of
work," but instead Petitioner "merely asserts that those cases were
wrongly decided" (Id. at p. 19). Furthermore, the Solicitor
argues, under Department of Labor regulations and Board decisions
Red Rock was not a materialman (Id. at pp. 20-21). Finally, the
Solicitor argues that under the Board's consistent precedent,
administrative proceedings under the Davis-Bacon Act are not barred
by the Portal-to-Portal Act (Id. at pp. 22-23).
III. DISCUSSION
A. The requirement to pay the prevailing wage to laborers
and mechanics "employed directly upon the site of the
work"
Our analysis of whether the work at Red Rock's pit and batch
plant was subject to Davis-Bacon prevailing wage requirements
begins with an examination of the relevant statutory and regulatory
provisions. The Davis-Bacon Act provides, at 40 U.S.C. [sec] 276a,
[10]
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[11] that "the contractor or his subcontractor shall pay all
laborers and mechanics employed directly upon the site of the work.
. . ." The Act further provides, at 40 U.S.C. [sec] 276a-1, for
sanctions if laborers or mechanics employed "directly upon the site
of the work covered by the contract" are not paid according to the
prevailing wage rates determined by the Secretary of Labor.
The regulations of the Secretary of Labor implementing the
Davis-Bacon Act also address the meaning of the term "site of the
work" as that term is used in the Act. These regulations (29
C.F.R. 5.2(1)) provide, in pertinent part:
(1) The "site of the work" is 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 (1)(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."
(2) Except as provided in paragraph (1)(3) of this
section, fabrication plants, mobile factories, batch
plants, borrow pits, job headquarters, tool yards, etc.,
are part of the "site of the work" provided they are
dedicated exclusively, or nearly so, to performance of
the contract or project, and are so located in proximity
to the actual construction location that it would be
reasonable to include them.
(3) Not included in the "site of the work" are permanent
home offices, branch plant establishments, fabrication
plants, and tool yards of a contractor or subcontractor
whose locations and continuance in operation are
determined wholly without regard to a particular Federal
or federally assisted contract or project. In addition,
fabrication plants, batch plants, borrow pits, job
headquarters, tool yards, etc., of a commercial supplier
or materialman which are established by a supplier of
materials for the project before opening of bids, and not
on the project site, are not included in the "site of the
work". Such permanent, previously established facilities
are not a part of the "site of the work", even where the
operations for a period of time may be dedicated
exclusively, or nearly so, to the performance of a
contract. [11]
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[12] The Acting Administrator concluded that Red Rock employees
who performed work at the Red Rock pit and batch plant were subject
to the prevailing wage requirements of the Davis-Bacon Act and the
overtime requirements of the CWHSSA. Our review of the record in
this case leads the Board to conclude that the decision of the
Acting Administrator in this case is a straightforward application
of the pertinent statutory and regulatory provisions, is consistent
with Board precedent, and should be affirmed.
Under the Secretary's regulations (29 C.F.R. 5.2(1)) pits,
batch plants and other facilities are included within "the site of
the work" providing that the facilities in question meet two
requirements: (1) the facilities "are dedicated exclusively or
nearly so to performance of the contract or project"; and (2) the
facilities "are so located in proximity to the actual construction
location that it would be reasonable to include them." Likewise,
the Board has explained that its case precedent has utilized "an
exclusive or nearly exclusive use or dedication test, and a
geographical test for covering fabrication plants, batch plants,
and borrow or gravel pits located on adjacent or nearby property to
a covered construction site." ATCO Construction, Inc., WAB Case
No. 86-1 (Aug. 22, 1986), at pp. 3, 5, and cases cited therein.
The record in this case shows that the Red Rock pit and batch plant
meet both the functional and geographical tests for coverage.
First, the operations at the pit and batch plant meet the
functional requirement set forth in the regulations and Board
cases. As noted at p. 3, supra, Red Rock began removing materials
from the pit in January 1986, months after award of the prime [12]
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[13] contracts to Ball and Bechtel. No material was being
excavated from the pit prior to January 1986. Furthermore, Red
Rock set up a portable concrete batch plant, and all the materials
from the pit were used at the batch plant. Information provided by
Ball and Bechtel indicated that about 96% of Red Rock's concrete
production was provided to Ball and Bechtel for use on their CAP
contracts -- 4,115 cubic yards for Ball and 1,500 cubic yards for
Bechtel, compared with only 250 yards for non-Government accounts.
Given these factual circumstances, the Board is satisfied that Red
Rock's pit and batch plant were established and dedicated nearly
exclusively to meet the contract requirements of the two prime
contractors.
The Red Rock pit and batch plant also meet the geographical
test, in that they were "so located in proximity to the actual
construction location that it would be reasonable to include them
[in the site of the work]." 29 C.F.R. 5.2(1)(2). As the Acting
Administrator noted (Tab T, p. 2), the record indicates that the
facilities were located about 2-15 miles from the construction
areas. Given the nature of the construction work on the CAP
project (for example, the Reach 3 contract awarded to Ball was for
performing earthwork and constructing 13 miles of concrete lined
canal, earth dikes and other structures) and the proximity of the
facilities to the construction areas, it is entirely reasonable to
include them within the "site of the work." See, e.g., United
Construction Company, Inc., 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
[13]
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[14] 1.8 miles to 55 miles) between the batch plant and the
locations of the individual construction sites" are within the site
of work). (FOOTNOTE 3)
Apparently conceding that the Acting Administrator's decision
is within the contours of the Secretary's regulation and Board case
precedent, Petitioner argues (Statement, pp. 11, 13) that the line
of Board cases applying the functional and geographical tests were
wrongly decided, and that the Secretary's regulation setting forth
these same tests "is so disparate in relationship to the clear and
conclusive phrasing of the statute that the regulation must be
declared to be ultra vires." In this regard, Petitioner notes
(Statement, p. 14) the D.C. Circuit's remand to the district court
in Building & Construction Trades Dep't, AFL-CIO v. U.S. Dep't of
Labor Wage Appeals Board, 829 F.2d 1188 (D.C. Cir. 1987) for
resolution of the issue whether this regulation is consistent with
the statutory term, "directly upon the site of the work."
Petitioner can take no comfort from the district court's decision
on remand, however, for the U.S. District Court for the District of
Columbia upheld the Secretary's site of work regulation as
"entirely consistent with the statutory objective of the
Davis- [14]
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(FOOTNOTE 3) As the Solicitor notes (Response, at p. 18 n.6), Petitioner
did not dispute the facts as set forth in the Acting
Administrator's decision, although Petitioner was advised of its
right to do so (see p. 8, supra), but now states that regarding the
Reach 3 project the facilities were about 5 miles from the closest
point of the right of way for the project and about 19 miles from
the farthest point of the work (see p. 3, supra). We note that the
Board is, under its governing regulations, "an essentially
appellate agency." 29 C.F.R. 7.1(e). However, these very minor
differences raised by Ball, even if accepted into the record at
this late date, would not affect the Board's determination that the
Red Rock pit and batch plant meet the geographical test for
inclusion within the site of work. [14]
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[15] Bacon and related Acts." Building & Construction
Trades Dep't, AFL-CIO v. McLaughlin, C.A. No. 84-0705 (WBB) (Aug.
17, 1990), slip op. at p. 8.
Petitioner also relies upon a 1963 Comptroller General
decision (43 Comp. Gen. 84) as support for Petitioner's argument
that the Department of Labor's site of work interpretation is
"ultra vires." However, we direct Petitioner's attention to the
Board's decision in Mayfair Construction Company, WAB Case No. 81-
16 (April 16, 1983), wherein the Board noted (at p. 4) that the
Comptroller has subsequently agreed that coverage of the Act
" 'could extend to offsite construction activities which are
dedicated to the performance of the contract and are located in
close proximity to the actual construction site.' "
In sum, the Board finds no basis in Petitioner's argument for
abandoning the long-standing use of the functional and geographical
tests for assessing whether facilities are within the "site of the
work."
Petitioner additionally argues (Statement, at pp. 14-15) that
Red Rock was a materialman, and not a subcontractor. However, the
Board has explained that under its precedent, when a facility "is
located at or near the site of a federally financed construction
site for the exclusive or nearly exclusive purpose of fulfilling
the contract's material requirements, the operator of such a
facility has in effect undertaken the performance of a part of the
contract and as a result is a subcontractor working on the site for
the purpose of the prevailing wage requirements." Ontario
Pipeline, Inc., and Farmington Concrete Products, Inc., WAB Case
[15]
~
[16] Nos. 81-12 & 81-13 (Jan. 23, 1985) at pp. 4-5, 6 and cases
cited therein at pp. 4-5. (FOOTNOTE 4)
As discussed at pp. 12-14, supra, the record here indicates
that Red Rock's pit and batch plant were situated proximately to
the CAP construction areas and were dedicated nearly exclusively to
the Ball and Bechtel CAP contracts "to the general exclusion of
other contracts in the area." Ontario Pipeline, supra, at p. 6.
Indeed, only about 4% of the Red Rock batch plant production went
to non-Government accounts. The record indicates that Red Rock
claimed during the investigation that the firm was set up for
commercial concrete sales. Red Rock's secretary-treasurer produced
a "General Marketing Survey" and claimed that this undated survey
was a basis for establishing a commercial concrete batch plant in
that remote area. However, the Red Rock official also stated that
the survey was conducted in January 1986 -- the same month that Red
Rock began removing materials from the pit and a month or two after
Red Rock commenced operations in November 1985.
Given these circumstances, the Board finds no infirmity in the
Wage and Hour investigation's determination (Tab D, p. 2; Tab M, p.
2) that the survey was apparently conducted to assess whether
commercial concrete sales could sustain the business in the event
that Red Rock lost Ball and Bechtel's CAP project business.
Furthermore, Red Rock did go out of business in March 1986, [16]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 4) The Board notes that the Davis-Bacon regulation defining the
term "construction" explicitly includes the "furnishing of
materials . . . on the site of the building or work . . . by
persons employed by the contractor or subcontractor." 29 C.F.R.
5.2(j). [16]
~17
[17] apparently because the two prime contractors discontinued
using Red Rock's production (Tab D, p. 2; Tab M, p. 2). Based on
the circumstances present in this case, and consistent with Board
precedent, the Board concludes that Red Rock's status was that of
subcontractor. (FOOTNOTE 5) See, e.g., United Construction, supra, at p.
8 (the Board has considered and rejected the notion that a
company's operations are not covered by the Davis-Bacon Act simply
because of the company's hopes for future sales).
B. The Department of Labor's administrative action is not
barred by the Portal-to-Portal Act
Petitioner additionally argues that the Department of Labor's
administrative action regarding the liability of the prime and
subcontractor for back wages is barred by the 2-year statute of
limitations of the Portal-to-Portal Act (29 U.S.C. [sec] 255).
Resolution of this contention is squarely controlled by Board
precedent, since the Board has consistently held that the Portal-
to-Portal Act does not apply to administrative proceedings under
the Davis-Bacon Act. See, e.g., Martell Construction Co., Inc.,
WAB Case No. 86-26 (July 10, 1987), at pp. 2-3 and cases cited
therein. In so holding, the Board explained in Martell, the Board
has followed the Supreme Court's ruling in Unexcelled Chemical
Corp. v. United States, 345 U.S. 59 (1953), that an admin-
istrative [17]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
(FOOTNOTE 5) The responsibility of Ball, as prime contractor, for the
unpaid wages due to the employees of subcontractor Red Rock is
clear under Board precedent. As the Board has explained, "the
Davis-Bacon Act itself creates a contractual obligation on the part
of the prime contractor to pay the sums which its subcontractor
owes to the subcontractor's employees." Northern Colorado
Constructors, Ltd., WAB Case No. 86-31 (Dec. 14, 1987).[17]
~18
[18] proceeding is not an "action" within the meaning of the
statute of limitations under the Portal-to-Portal Act. See also
Glenn Electric Co. v. Donovan, 755 F.2d 1028, 1033 n.7 (3d Cir.
1985). Based on this precedent, the Board rejects Ball's
contention that the Portal-to-Portal Act's statute of limitations
applies in this case.
C. The Department of Labor's authority to resolve the
issue whether Red Rock's operations were covered by
the Davis-Bacon Act
Finally, the Board rejects Ball's contention (Statement, at
pp. 5-8) that the Department of Labor lacks authority to rule
dispositively on the Davis-Bacon Act coverage issues involved in
this matter. We agree with the Solicitor that Petitioner's attempt
to cast this matter as a "jurisdictional" dispute is unavailing.
The contracting agency (BOR) agreed to the withholding requested by
the Department of Labor, and stated that the issue of the Ball/Red
Rock relationship was a matter to be addressed by the Department of
Labor (Tab B, p. 4). The Department of Labor's authority to
resolve coverage issues under the Davis-Bacon Act and the Related
Acts is provided by Reorganization Plan No. 14 of 1950 (5 U.S.C.
App.). With the aim of assuring uniformity in enforcement of these
labor standards provisions, the Reorganization Plan explicitly
vests the Secretary with the authority to "prescribe appropriate
standards, regulations, and procedures" to be observed by federal
agencies, and to "cause to be made by the Department of Labor, such
investigations, with respect to compliance and enforcement of such
labor standards, as he deems desirable." Under this grant of
authority of 40 years' standing the Department of Labor has issued
[18]
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[19] regulations addressing coverage and other matters. In
addition, the Board has often ruled on coverage issues such as
those presented in this case, and has affirmed the Department of
Labor's authority under the Reorganization Plan to rule
dispositively on Davis-Bacon matters. See generally United
Construction, supra, at p. 6; Arbor Hill Rehabilitation Project,
WAB Case No. 87-4 (Nov. 3, 1987), at pp. 20-22 (Bramow, concurring)
(regarding final authority of the Department of Labor under the
Reorganization Plan to interpret the labor standards provisions of
the Related Acts). To accept Ball's contention here that the
Secretary of Labor does not have authority to rule dispositively on
questions of coverage under the Davis-Bacon Act "would defeat the
primary objective of the Reorganization Plan, i.e., the protection
of the workers which varied from agency to agency [before the
Reorganization Plan]." Arbor Hill, supra, at p. 21.
Accordingly, the Board rejects Ball's contention that the
Department of Labor is without authority to decide the coverage
issues presented in this case. The decision of the Acting
Administrator in her letter of February 6, 1990 is affirmed. The
petition for review is denied.
MEMBER ROTHMAN, CONCURRING
I find myself in agreement with the reasoning of the majority
decision. I write separately because in my view it is necessary to
reaffirm a Board rule which has been in effect since 1969 with
respect to newly opened gravel pits, other kinds of borrow pits,
and batch plants. This rule establishes a prima facie case when
[19]
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[20 the Administrator demonstrates that such facilities have
been newly opened on a temporary basis with temporary equipment in
proximity to highway, river improvements, lock construction, dam
construction, canal irrigation and similar projects. The burden
then shifts to the employing contractor to show by relevant and
persuasive evidence that the work performed is not construction
site work within the requirements of the Davis-Bacon and Davis-
Bacon Related Acts. By defining when the Administrator makes a
"prima facie" case of Davis-Bacon coverage, the gravel pit and
batching plant segments of the construction industry are put on
notice that should an operator contend that it has engaged in
nothing more than the normal commercial materialman's operations
the burden will be upon such claimant to prove it.
In Ross Brothers Construction, Inc., WAB Case No. 87-36 (Nov.
21, 1988) Ross Brothers, the prime contractor, was awarded a
highway grading and paving contract in Oregon. Aggregate was
supplied by a Roseburg, Oregon company, Umpqua, from a sand and
gravel bar in the Umpqua River, about 24 miles from the highway
project. Umpqua obtained a temporary permit from the Oregon State
Lands Division to mine, crush and remove aggregate from the bar.
The aggregate was trucked from a portable crushing plant to a
storage yard about a half mile from the highway project.
In Ross Brothers, the Board cited with continuing approval Big
Six, Inc., WAB Case No. 75-3 (July 21, 1975) with regard to a batch
plant operation:
. . . [T]he Board believes [] that in the case of an
established commercial batching plant, it is not expected
when work is awarded that the prime contractor will do
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[21] the work to provide the material that normally
comes from such sources. It is for this reason, too, the
established commercial quarry or batching plat is said to
be a "materialman". In such cases the established
commercial operator continues to do its own thing in its
own same way at the same place. But where the prime
contractor must do the work with his own forces because
no commercial operator is established and ready to
perform, another contractor who takes on a part of the
contractor's obligation to do this becomes subject to the
Davis-Bacon Act in the same way.
Big Six, Inc., supra, at p. 11.
Further, in Ross Brothers, supra, at p. 4, the Board referred
with approval to its decision in T. L. James, WAB Case No. 69-2
(Aug. 13, 1969):
In T. L. James [citation omitted] one of the earlier
decisions of the Wage Appeals Board, the Board stated at
pp. 5 & 6, in a case that also dealt with a borrow pit
for a highway contractor:
. . . based upon experience in the
construction industry where but for the
contemplated construction of a highway project
in the locality, borrow pits or waste areas
would not be opened, the opening of such pits
or areas primarily in and substantially
devoted to the prosecution of the highway work
will establish a "prima facie" case that the
work performed in connection with the borrow
pits or waste areas is a part of the
construction activity of the project, and the
employees who do the work are entitled to the
same protection accorded the construction
workers elsewhere on the project. . . .
In another Board decision, Sweet Home Stone Company, WAB Case
No. 75-01 and -02 (Aug. 14, 1975), the prime contractor for a river
and dam improvement project on the Arkansas River in Oklahoma
contracted with Sweet Home, an established Oklahoma commercial
quarry operator to supply stone. Sweet Home opened three new or
defunct quarries in proximity to the project. It made no sales in
the public market, closing the quarries upon completion of its
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[22] contract. The Board held that when a quarry is opened and
becomes devoted exclusively to fulfilling the material requirements
of a Davis-Bacon project the supplying contractor is considered to
have undertaken a part of the construction work of the prime
contract itself and is a subcontractor for purposes of Davis-Bacon
Act coverage.
The Board's three lead cases in gravel pit, borrow pit, or
batch plant cases have been T. L. James, Big Six, and Sweet Home.
Together with the more recent decisions cited in the Board's
decision, I would reaffirm the "but for" rule announced in T. L.
James which establishes a "prima facie" case for Davis-Bacon Act
coverage in the case of newly opened temporary facilities of this
kind in the proximate vicinity of the construction project to be
served. An operator that opens such a facility should have every
opportunity and is not precluded from showing that under the
circumstances of its operations the performance of its contract to
supply the project with materials is that of and should be deemed
to be the performance of a materialman, but it should be aware from
the beginning of the undertaking that the burden will be upon it to
do so and it can and should determine the nature of its operation
accordingly.
For the factual considerations set forth in the Board's
opinion, Ball, Ball & Brosamer and Red Rock Construction Co. have
not met the burden of relevant and persuasive evidence to show that
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[23] Red Rock was a materialman and not a subcontractor. For
these reasons I concur in the Board Order.
BY ORDER OF THE BOARD:
Gerald F. Krizan, Esq.
Executive Secretary [23]
