Iron Workers II, WAB No. 90-26 (WAB Mar. 20, 1992)
CCASE:
Iron Workers II
DDATE:
19920320
TTEXT:
~1
[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
("Iron Workers II") WAB Case No. 90-26
Appeal of Decision of the Acting
Administrator in Connection with
the Establishment of an Additional
Classification to Project Decision
No. 86-VA-0144, Virginia
APPEARANCES: Dorothy P. Come for the International
Association of Bridge, Structural and
Ornamental Ironworkers
Terry R. Yellig, Esquire for the Building and
Construction Trades Department, AFL-CIO
Douglas J. Davidson, Esquire and Carol Arnold,
Esquire for the Acting Administrator, Wage and
Hour Division, U. S. Department of Labor
BEFORE:/FN1/ Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
DATED: March 20, 1992
DECISION OF THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of the International Association of Bridge, Structural and
Ornamental Iron Workers ("Iron Workers" or "Union") for review of
a January 10, 1990 ruling by the Acting Administrator of the Wage
and Hour Division. The ruling denied reconsideration of a June 30,
1989 determination by Wage and Hour which approved a request for an
additional classification and wage rate in the project [1]
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[2] wage determination applicable to construction at Langley Air Force
Base, Hampton, Virginia. In a July 30, 1991 decision (Iron Workers I)
in this matter, the Board denied the Acting Administrator's motion to
dismiss the Union's petition for lack of standing. The Board then held
oral argument on the merits of this case on September 11, 1991. For the
reasons stated below, the Board remands this matter to the Acting
Administrator for further proceedings consistent with this
decision./FN2/
I. BACKGROUND
KRM Construction Co., Inc. ("KRM") was a subcontractor on a
project at Langley Air Force Base, Hampton, Virginia, to which
Davis-Bacon Project Wage Decision No. 86-VA-0144 (dated March 19,
1986) applied. A June 5, 1987 letter from the contracting agency,
the Army Corps of Engineers, to prime contractor Shirley
Construction Corporation ("Shirley") stated that the contracting
agency had determined that KRM's work of installation of precast
concrete planks "falls under the Ironworker's classification [in
the applicable wage determination]." The Corps of Engineers
requested that payrolls and restitution receipts be submitted
"properly classifying and paying employees."
KRM wrote to the Corps of Engineers on June 29, 1987,
protesting the ironworker classification for the work of
installing precast concrete planks. The letter stated that KRM "is
the only company in the state of Virginia specializing solely in
precast concrete erection." KRM also claimed that its
classification of laborer for this work "has been accepted on
numerous projects KRM has completed under the Davis Bacon Act . .
. and has been accepted by the Department of Labor Employment
Standards Administration."
The ironworker wage rate in the applicable wage
determination was $11.26 per hour. On December 3, 1987 KRM and
Shirley's Request for Authorization of Additional Classification
and Rate was submitted, requesting that the classification of
"concrete erector, laborer" at a wage rate of $7.00 plus fringe
benefits be added to the applicable wage determination. The Corps
of Engineers recommended that the Department of Labor disapprove
the requested classification on the ground that "the work is
performed by the ironworker's trade." On June 30, 1989, however,
the Acting Director of the Division of Wage Determinations approved
the requested classification and wage rate.
By letter dated August 14, 1989, the Iron Workers requested
review and reconsideration of the Acting Director's ruling. The
letter from LeRoy E. Worley, the Union's General Secretary, claimed
that the record provided to the [2]
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[3] Union by the Department of Labor contained no supporting evidence
refuting the finding of the contracting agency that "the work fell
within the ironworker classification." On January 10, 1990, the Acting
Administrator of the Wage and Hour Division affirmed the Acting
Director's ruling. The Acting Administrator stated that the basis for
the Corps' disagreement with the requested classification was
"information relative to the union practice which had been provided by
Ironworker Local No. 79." The Acting Administrator added, however, that
under the principles set forth in Fry Brothers Corp., WAB Case No. 76-06
(June 14, 1977), "the proper classification for work performed on a
particular Davis-Bacon covered project by laborers and mechanics is that
classification used by firms whose wage rates were found to be
prevailing in the area and incorporated in the applicable wage
determination." Accordingly, the Acting Administrator concluded, "the
information supplied by Local Union No. 79 was not relevant to the
question at hand since the prevailing ironworker wage rate was not from
the union segment of the industry."
II. DISCUSSION
A. Introduction
As the petitioner in this case, the Union argues that the
Acting Administrator's decision violates the Department of Labor's
regulations governing the conformance procedure, as well as
guidelines set forth in the Department's Davis-Bacon Construction
Wage Determinations Manual of Operations (1986) ("Operations
Manual"). The flaw in the Acting Administrator's approach to this
case, contends the Union, stems from the Acting Administrator's
misapprehension of the principles enunciated by the Board in Fry
Brothers Corporation, WAB Case No. 76-06 (June 14, 1977) ("Fry
Brothers"). Counsel for the Acting Administrator, on the other
hand, argues that the ruling in this case is in accord with both
the Department's conformance procedure and Fry Brothers. Our
analysis of this matter begins below with an examination of the
conformance regulations.
B. The conformance regulations
The procedures for adding a classification and wage rate to
an existing wage determination are set forth at 29 C.F.R.
5.5(a)(1)(ii). The regulations outline the roles of the
Administrator of the Wage and Hour Division, contracting officers,
contractors, employees and employee representatives in the
procedure, and set out a three-part test for approval of a proposed
classification and wage rate. The regulations, at Section
5.5(a)(1)(ii)(A), specify that "[t]he contracting officer shall
require that any class of laborers and mechanics . . . which is not
listed in the wage determination and which is to be employed under
the contract [*] shall be classified in conformance with the wage
determination [*]" [*](emphasis [3]
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[4] supplied)[*], and further stipulates that the contracting officer
shall approve an additional classification and wage rate only when three
criteria have been met./FN3/ Thus, under the terms of the regulations a
proposed classification and wage rate may not be approved unless:
(1) . . . the work to be performed by the classification
requested is not performed by a classification in the wage
determination; and
(2) The classification is utilized in the area by the
construction industry; and
(3) The proposed wage rate, including any bona fide fringe
benefits, bears a reasonable relationship to the wage rates
contained in the wage determination. . . .
The regulations also specify at Section 5.5(a)(1)(ii)(B)
that if the contractor, employees (or their representatives), and
the contracting officer agree on the proposed classification and
wage rate, the contracting officer is to send a report to the
Administrator of the Wage and Hour Division. The Administrator, in
turn, "will approve, modify or disapprove every additional
classification action with 30 days of receipt and so advise the
contracting officer or will notify the contracting officer within
the 30-day time period that additional time is necessary." If the
contractor, employees or employee representatives, and the
contracting officer do not agree on the proposed classification and
wage rate, Section 5.5(a)(1)(ii)(C) provides that the matter --
including the views of interested parties and the contracting
officer's recommendation -- is to be referred to the Administrator
for a determination. The regulation again states that the
Administrator will issue a determination within 30 days, or will
notify the contracting officer within 30 days that additional time
is needed.
The current conformance regulations were first proposed in
1979 as part of a package of proposed Davis-Bacon regulations. 44
Fed. Reg. 77080. /FN4/ Since 1983, when the current conformance
procedure was implemented as a final regulation, this Board has
decided several conformance cases and has recognized that a
requested classification and wage rate may not be approved unless
all three criteria set forth in the Department's regulations have
been met. M.A. Mortenson [4]
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[5] Company, WAB Case No. 87-50 (Feb. 17, 1989), at p. 6 ("Thus the
request for new classifications and wage rates fails to meet any of the
three criteria, where for approval all three criteria must be met.").
For example, the Board has affirmed the Wage and Hour Division's denial
of an additional classification and wage rate where the record shows
that the third criterion has not been met because the requested rate
does not bear a reasonable relationship to the wage rates in the
applicable wage determination. E.g., Swanson's Glass, WAB Case No.
89-20 (Apr. 29, 1991). Likewise, the Board has affirmed denial of an
additional classification where the first criterion has not been met
because the work to be performed by the requested classification is
performed by a classification already listed in the wage determination.
E.g., More Drywall, Inc., WAB Case No. 90-20 (Apr. 29, 1991). Indeed,
Board precedent makes clear that in applying the first criterion it need
not be established that the classification listed in the wage
determination is the prevailing practice, but only that the work in
question is performed in that area by that classification of worker.
TRL Systems, WAB Case No. 86-08 (Aug. 7, 1986), at p. 6; Warren Oliver
Company, WAB Case No. 84-08 (Nov. 20, 1984), at pp. 8-9.
C. The Board's decision in Fry Brothers
In addition to the Department's conformance regulations, the
Board's 1977 landmark decision on classification and area practice
issues in Fry Brothers is also relevant to this case. The matter
addressed in the pertinent portion of the Fry Brothers decision was
resolution of classification and area practice questions when the
wage rate in the applicable wage determination is a negotiated
rate. The Board in Fry Brothers (at p. 17) both set forth the
standard for resolving such questions and provided the rationale
for the enunciated standard, stating:
When the Department of Labor determines that the
prevailing wage for a particular craft derives from
experience under negotiated arrangements, the Labor
Department has to see to it that the wage determinations
carry along with them as as fairly and fully as may be
practicable, the classifications of work according to job
content upon which the wage rates are based. If a
construction contractor who is not bound by the
classifications of work at which the majority of
employees in the area are working is free to classify or
reclassify, grade or subgrade traditional craft work as
he wishes, such a contractor can, with respect to wage
rates, take almost any job away from the group of
contractors and employees who work for them who have
established the locality wage standard. There will be
little left to the Davis-Bacon Act. Under the
circumstances that the Assistant Secretary determined
that the wage determinations that had been issued
reflected the prevailing wage in the organized sector it
does not make any difference at all what the practice may
have been for those contractors who do and [5]
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[6] pay what they wish. Such a contractor could change his own
practice according to what he believed each employee was
worth for the work he was doing.
An examination of Board decisions and the Department's
Operations Manual indicates that the Wage and Hour Division has
taken Fry Brothers into account in applying the first prong of the
three-part conformance test in the circumstances specifically
addressed in Fry Brothers -- that is, in cases where the wage rate
in the applicable wage determination reflects the negotiated rate.
Thus, in More Drywall the Acting Administrator, analyzing whether
the work that would be done by proposed classifications was
performed by classifications already listed in the wage
determination, noted that the wage determination reflected the wage
rates negotiated in collective bargaining agreements at the time of
the determination's issuance. Therefore, the Acting Administrator
stated, in keeping with Fry Brothers "we must look to the union
practice in the area to determine which craft performs the work in
question." Likewise, the Operations Manual (at pp. 41-42) poses an
illustrative example in which the negotiated rate is reflected as
the rate to be paid carpenters under a wage determination which
does not contain a wage rate for drywall installers. The
Operations Manual states that based on Fry Brothers, if a
subcontractor were to request the addition of a drywall installer
classification after contract award, and "if it can be determined
that carpenters subject to the governing collective bargaining
agreement in the locality do drywall work, the request for a
drywall installer wage determination will be denied."
The Operations Manual also offers guidance, based on Fry
Brothers, in resolving area practice questions not only in the
specific Fry Brothers situation -- where the wage determination
wage rate reflects the negotiated rate -- but also in "open shop,"
"mixed schedule" and "average rate" situations. Thus, in
explaining how to clarify area practice issues in connection with
a Davis-Bacon survey, the Operations Manual (at p. 59) begins by
providing guidance on negotiated rate situations, stating that
if the applicable wage determination reflected union
negotiated rates for the particular classifications in
question, it is necessary to determine how the work is
classified by those firms who are signatory to the
applicable collective bargaining agreements. This
is accomplished by contacting the respective unions and
asking if they perform the work in question and confirming
the information provided by the unions with management's
collective bargaining representative. . . .
The Operations Manual (at p. 60) then goes on to address other
situations, stating: [6]
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[7] On the other hand, if the applicable wage determination
reflects open shop (nonunion) rates for the classification
in question, it is necessary to conduct a survey on similar
projects built by open shop contractors. [*] If the
applicable wage determination is a mixed schedule (e.g.,
union electricians and open shop laborers), or it is based on
average rates of both union and non-union workers, it is
necessary to contact both union and open shop contractors
who do the work in question and/or their associates. [*]
[*](Emphasis supplied.)[*]
The guidance set forth in the Operations Manual is in line with the
position taken by Wage and Hour Division in Elmer Davis, WAB Case
No. 80-08 (May 4, 1984). The Board noted in Elmer Davis (at p. 6)
that the Assistant Administrator relied upon Fry Brothers "to
support its contention that where the craft in question reflects
both negotiated and open shop rates, both sectors of the industry
must be consulted to determine the prevailing practice for the
craft."
D. Application of the conformance procedure in this case
1. The first prong of the three-part conformance
test -- whether the work to be performed by
the requested classification is performed by a
classification listed in the wage
determination
As noted earlier, the Acting Administrator stated in this
case that under Fry Brothers "the proper classification for work
performed on a particular Davis-Bacon covered project by laborers
and mechanics is that classification used by firms whose wage rates
were found to be prevailing in the area and incorporated in the
applicable wage determination." Counsel for the Acting
Administrator further states before the Board (Statement, at p. 10)
that the applicable wage determination (No. 86-VA-0144) "reflects
that non-union wage rates had been determined to be prevailing on
building construction in the area for the ironworker
classification"; thus, counsel adds, in applying the conformance
test to determine whether the work to be done by the classification
requested by KRM was performed by a classification listed in the
wage determination, the Acting Administrator properly confined the
inquiry to consideration of evidence on area practice in the
non-union segment of the industry.
The Union responds that the Acting Administrator's first
mistake is to characterize the ironworkers' wage rate in the wage
determination as an "open shop" rate, when the record shows that
the rate is instead an "average" or "mixed" rate based on a
weighted average of the data received in the survey./FN5/ [7]
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[8] The Union's representative noted at oral argument that payment
evidence was submitted for about 25 ironworkers in the survey upon
which the applicable wage determination was based, and about five
of those employees were obviously ironworkers who were paid union
wages and fringe benefits. Counsel for the Acting Administrator
acknowledged at oral argument that the ironworkers' rate in the
wage determination was indeed a mixed rate, but added that the
contractors who determined the prevailing practice in the area were
open shop contractors; thus, in applying the conformance test in
this case it is necessary to look at the practice of open shop
contractors.
The Union contends, however, that if union ironworkers are
used to establish the ironworkers' rate in the wage determination,
it does not make sense to discard information about the work
performed by union ironworkers. Furthermore, the Union notes that
in the context of applying the first prong of the conformance test
in this case it is not necessary to establish the prevailing
practice in the area, but only to produce evidence of ironworkers
performing the type of work to be performed by the requested
additional classification. Finally, the Union argues that the
Acting Administrator's position that the type of work performed by
union ironworkers is irrelevant in this case is in direct
contradiction to the guidelines in the Operations Manual which, as
noted at p. 7, supra, states that if the wage determination "is
based on average rates of both union and non-union workers, it is
necessary to contact both union and open shop contractors who do
the work in question and/or their associates" in order to resolve
area practice questions.
On review, the Board is compelled to agree with the
Petitioner that the position taken by the Acting Administrator in
this case is inconsistent with previous expressions of policy in
the Operations Manual (see also discussion at p. 7, supra,
regarding the position taken by the Wage and Hour Division before
the Board in Elmer Davis). In the Operations Manual the Wage and
Hour Division has essentially taken the position, based on Fry
Brothers extrapolations, that if the pay experience of workers is
used to establish the wage rate listed in the wage determination,
then the types of work performed by those workers should be taken
into consideration for area practice purposes; thus, if the rate
in the wage determination is an average rate based on both
negotiated and open shop rates, then the type of work performed by
both union and non-union workers is relevant to the resolution of
area practice issues. In this case, on the other hand, the Acting
Administrator posited a different view of Fry Brothers and stated
that the relevant work classifications were those "used by firms
whose wage rates [8]
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[9] were found to be prevailing in the area. . ."; thus, in an average
rate situation where the prevailing practice is determined by open shop
contractors, the evidence that should be considered is evidence of the
type of work performed by non-union workers.
Of course, the Wage and Hour Division is entitled to
reexamine, review and revise its policies, with adequate
explanation. In this instance, however, the seeming inconsistency
between the guidelines in the Operations Manual and the position
taken by the Wage and Hour Division in this case has been neither
acknowledged nor explained. At bottom, the issue presented here is
the interpretation and application of the Department's conformance
regulations. The Board has recognized that the Administrator of
the Wage and Hour Division is likely in the best position to
interpret the Department's Davis-Bacon regulations in the first
instance. Titan IV Mobile Service Tower, WAB Case No. 89-14 (May
10, 1991), at p. 7. See also, A. Vento Construction, WAB Case No.
87-51 (Oct. 17, 1990), at p. 9. The Board has also explained,
however, that it cannot defer to an interpretation that "exhibits
an unexplained departure from past determinations." Titan IV Mobile
Service Tower, supra. Accordingly, the Board remands this matter
for reconsideration and explanation of the Acting Administrator's
interpretation of the first prong of the three-part conformance
test set forth in the Department's regulations -- in particular, an
explanation of whether (and why) it is relevant to consider the
type of work performed by all those workers whose pay experience is
used to establish the wage rate in the wage determination (as
indicated in the Operations Manual guidelines regarding area
practice matters), or only the work performed by those workers in
the prevailing sector (as indicated by the Wage and Hour Division
in the instant case).
Counsel for the Acting Administrator alternatively argues
before the Board that even if it were relevant to consider evidence
of the work performed by union ironworkers, Petitioner has
nevertheless failed to submit evidence that union ironworkers
installed precast concrete on any specific project in the Hampton
area prior to June 30, 1986, the award date for the Langley Air
Force Base project involved in this case. Counsel further notes
that under Board precedent a conformance determination should
relate back to the time of the making of the contract. See M.A.
Mortenson Company, supra, at p. 5; Determination of the prevailing
wage rates applicable to the dredging subcontract for Interstate
Highway Project No. I-95-1(15)84, WAB Case No. 69-03 (June 20,
1969), at p. 4.
The Board agrees with counsel for the Acting Administrator
that the evidence submitted by the Union of work performed in 1987
and 1988 is outside the relevant time frame. We also note,
however, the Union's contention at oral argument that the Wage and
Hour Division applied a double standard regarding the appropriate
period for submitting evidence in this case, since the Wage and
Hour Division supplemented the record with evidence regarding the
second prong [9]
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[10] of the conformance test (i.e., whether the proposed classification
is utilized in the area by the construction industry) on July 5, 1991 --
well after the Acting Administrator's decision denying reconsideration
in this case. The Union claimed at oral argument that it also would
have provided further information after completion of the conformance
proceeding had the Wage and Hour Division not been adamant that the
union ironworker experience was irrelevant to the conformance issue. We
do not know what further information, if any, the Union might have, nor
do we know whether such additional information would relate back to the
pertinent time frame -- the time of the making of the contract. Since
the Wage and Hour Division apparently continued to gather some evidence
after the denial of reconsideration, however, we think that in the
interest of fairness the Union should likewise have the opportunity to
submit the additional information which it claims to have available.
Accordingly, if on remand the Acting Administrator determines that it is
relevant in this average rate situation to consider the type of work
performed by both non-union and union workers, then the Wage and Hour
Division shall provide the Union and any other interested persons and
parties 30 days within which to submit additional information on this
point.
2. The second and third prongs of the three-part
conformance test -- whether the proposed
classification is utilized in the area by the
construction industry, and whether the proposed
wage rate bears a reasonable relationship to
the wage rates in the wage determination
Neither the initial June 30, 1989 conformance ruling nor the
January 10, 1990 decision on reconsideration in this case
specifically addressed the second and third prongs of the
conformance test set forth in the Department's regulations. If, on
remand, it is determined that the requested classification meets
the first prong of the conformance test, then the Wage and Hour
Division must go on to address whether the requested classification
also meets the other elements of the conformance test.
The second prong of the test requires that the proposed
classification be "[*] utilized [*] in the area by the construction
industry." (Emphasis supplied.) A focus of the discussion at oral
argument was the meaning of the term "utilized . . . by the
construction industry" and the minimum documentation needed to
demonstrate that this element of the conformance test has been met
-- whether, for example, it is sufficient to show that the
contractor requesting the additional classification has utilized
that classification in the past, or whether some additional
demonstration of use of the classification is required. A review
of Board precedent on conformance issues reveals a number of
decisions that discuss the first and third elements of the
conformance test, but no definitive discussion of what is needed to
meet the second prong of the test. Accordingly, if on remand it is
necessary for the Wage and Hour Division to reach the second prong [10]
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[11] of the test, the decision on remand should set forth the
Acting Administrator's interpretation of the regulatory term
"utilized in the area by the construction industry."
The third prong of the conformance test requires that the
"proposed wage rate . . . bear[ ] a reasonable relationship to the
wage rates contained in the wage determination." In this case, the
Wage and Hour Division approved the request for a $7 wage rate for
concrete erector-laborers, a rate which counsel for the Acting
Administrator notes is between the wage determination's $6.86
hourly rate for unskilled laborers and $7.30 rate for mortar
mixer-laborers. At oral argument, the Union's representative
questioned the "reasonable relationship" of the $7 conformance rate
to the wage determination's rates, at least suggesting that
the wide range of KRM's pay history for concrete erector-laborers
($7 to $11 according to the Acting Administrator (Statement, at p.
1), and up to $16.50 according to the Union (see Supplemental
Record)) could indicate that the pay of these workers was based on
the level of skill used in their work. If it is necessary on
remand for the Wage and Hour Division to reach the third prong of
the conformance test, the decision on remand should address the
Union's contention and its bearing on the reasonableness of the
relationship between the proposed wage rate for the requested
concrete erector-laborer classification and the rates for the
classifications listed in the wage determination.
3. The 30-day provision in the conformance
regulations
As discussed at p. 4, supra, the Department's conformance
regulation specifies that the Wage and Hour Division will act upon
a conformance request within 30 days of receipt, or will notify the
contracting officer within 30 days that additional time is needed.
The Union additionally challenges the conformance ruling in this
case on the ground that it was not issued within the 30-day period
called for in the regulation. However, the Board determined in
Swanson's Glass, WAB Case No. 89-20 (April 29, 1991) that this
30-day provision is not jurisdictional, and does not bar the Wage
and Hour Division from taking action outside the 30-day time
period. Furthermore, the regulations expressly reference the
possibility that additional time may be needed to complete action
on the conformance request. In addition, the regulations do not
specify that the failure of the Wage and Hour division to act
within 30 days effectively constitutes either the approval or
denial of the proposed classification or wage rate. In this case,
the Board adheres to the holding in Swanson's Glass. By so doing,
the Board does not express its approval of the routine issuance of
conformance rulings beyond the 30-day time period but instead
simply recognizes that the Department's own regulations do not
preclude the Wage and Hour Division from acting outside that 30-day
period. [11]
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[12] III. ORDER
This matter is remanded to the Wage and Hour Division for
further proceedings consistent with this decision. The decision on
remand shall be issued within 60 days from the date of this order.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Gerald F. Krizan, Esq., Executive Secretary [12]
[END NOTES]
FN1/ Member Patrick J. O'Brien participated in the oral argument of
this matter but did not participate in this decision.
FN2/ This matter is decided by this panel of Board Members pursuant
to the authority granted by Secretary's Order 1-91 (56 Fed. Reg.
4156). See [pars] 3, 4.d.
FN3/ The current version (29 C.F.R. 5.5(a)(1)(ii) (1991)) of the
regulations contains a fourth criterion, set forth at Section
5.5(a)(1)(ii)(A)(4), which pertains solely to the addition of a
helper classification to a wage determination.
FN4/ The conformance procedure was published as a final rule in
1981 (46 Fed. Reg. 4380, 4382, 4388); implementation of this
procedure and other Davis-Bacon regulations was subsequently
delayed to permit reconsideration (46 Fed. Reg. 41456), and a
revision was proposed to permit addition of a helper classification
through the conformance process (Id.). The conformance procedure
was implemented as a final rule in 1983 (48 Fed. Reg. 19540,
19544).
FN5/ The Department's regulations (at 29 C.F.R. 1.2(a)(1)) define
"prevailing wage" as the "wage paid to the majority (more than 50
percent) of the laborers or mechanics in the classification on
similar projects in the area during the period in question. If the
same wage is not paid to a majority of those employed in the
classification, the [*] prevailing wage [*] shall be the average of
the wages paid, weighted by the total employed in the
classification." [*](Original emphasis.)[*]
