LABORERS' DISTRICT COUNCIL, WAB No. 92-11 (WAB Oct. 21, 1992)
CCASE:
LABORERS' DISTRICT COUNCIL
DDATE:
19921021
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
LABORERS' DISTRICT COUNCIL WAB Case No. 92-11
of the Metropolitan Area
of Philadelphia and Vicinity
With respect to review of
General Wage Decision No. PA91-25
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: October 21, 1992
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of Laborers' District Council of the Metropolitan Area of
Philadelphia and Vicinity ("Petitioner" or "LDC") for review of a
May 26, 1992 ruling by the Acting Administrator of the Wage and
Hour Division reaffirming the prevailing residential construction
wage determination for the Philadelphia, Pennsylvania area, General
Wage Decision ("GWD") No. PA91-25 (the Laborers had requested
reconsideration of that wage decision on April 1, 1992). Oral
argument was held before the Board in this matter on August 26,
1992. The Building and [1]
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[2] Construction Trades Department, AFL-CIO ("BCTD") participated in the
proceedings before the Board in support of the LDC. The Laborers'
International Union of North America, AFL-CIO ("LIUNA") also
participated in support of the Petitioner. For the reasons stated
below, this matter is remanded to the Wage and Hour Division for further
proceedings consistent with this decision.
I. BACKGROUND
The Philadelphia Regional Office of Wage and Hour conducted a
Davis-Bacon residential construction wage rate survey in five
counties in the Philadelphia area beginning October 8, 1987. The
counties included in the survey were Bucks, Chester, Delaware,
Montgomery and Philadelphia. Wage and Hour collected wage rate
data from 196 private residential construction projects which were
ongoing or completed during the period from August 1, 1986 through
July 31, 1987. Wage and Hour combined the data from the five
counties to issue one schedule of prevailing wage rates for all
five counties. The residential wage determination (GWD No.
PA91-25), issued for the five-county area contained a laborers'
prevailing wage rate of $10.00 (including fringe benefits).
On April 1, 1992 Petitioner requested redetermination of the
prevailing wage rate for laborers engaged in residential
construction in the City of Philadelphia. Petitioner argued that
the Department of Labor's regulations (at 29 C.F.R. 1.7(b)) bar the
commingling of wage data from rural and metropolitan areas. "We
believe the current wage determination, General Wage Determination
No. PA91-25, has resulted in an unfairly low prevailing wage
determination . . . for residential construction laborers," the LDC
stated, because "[t]his determination used survey information from
projects in four rural counties and Philadelphia County in a
Philadelphia regional computation."
The Acting Administrator reaffirmed GWD No. PA91-25 on May 26,
1992. In considering the acceptability of a wage survey, the
Acting Administrator stated, "[t]he overall usable response rate
for an otherwise acceptable survey must meet or exceed 25 percent."
She added that when a response rate is more than 50 percent a wage
rate for a job classification can be determined only when
information on at least three workers is received from two
contractors. Furthermore, the Acting Administrator said, in
instances where the response rate is less than 50 percent, "as is
the case for this survey, a job class can be determined under
established survey criteria only when information on at least six
workers is received from three or more contractors, provided none
of the contractors account for 60 percent or more of the total
reported employees." The Acting Administrator stated that
"[a]pplication of these guidelines to the Philadelphia area
residential survey data resulted in a determination to issue one
schedule of wage rates for all five counties." [2]
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[3] The Acting Administrator agreed that the Department's
regulations prohibit the commingling of wage data from metropolitan
and rural areas. However, she stated, the Department's Davis-Bacon
Construction Wage Determinations Manual of Operations (1986)
("Operations Manual") explains (at p. 39) that "For purposes of
Davis-Bacon, if a county is located in an area designated by the
Office of Management and Budget as Metropolitan Statistical Area
(MSA), it is to be classified as a metropolitan area for survey
purposes. If not included in such an area, it will be considered
rural." In this instance, the Acting Administrator added,
Delaware, Bucks, Chester, Montgomery and Philadelphia counties are
in an MSA and, accordingly, "it is proper to combine survey wage
data."
II. DISCUSSION
The Davis-Bacon Act (at 40 U.S.C. [sec] 276a(a)) provides that
mechanics and laborers on federal construction projects are to be
paid at a wage rate "based upon the wages that will be determined
by the Secretary of Labor to be prevailing in the city, town,
village or other civil subdivision of the State in which the work
is to be performed." In keeping with this statutory provision, the
Secretary of Labor has promulgated regulations (29 C.F.R. Part 1)
governing the method for ascertaining prevailing wage rates.
Section 1.7 of the regulations describes the geographic scope of
consideration for wage determination purposes. Section 1.7(a)
provides:
(a) In making a wage determination, the [*] area [*] /FN1/
will normally be the county unless sufficient current wage
data (data on wages paid on current projects or, where
necessary, projects under construction no more than one
year prior to the beginning of the survey or the request
for a wage determination, as appropriate) is unavailable
to make a wage determination. [*][Original emphasis.][*]
In addition, 29 C.F.R. 1.7(b) provides:
(b) If there has not been sufficient similar construction
within the area in the past year to make a wage
determination, the wages paid on similar construction in
surrounding counties may be considered, [*] Provided [*]
That projects in metropolitan counties may not be used [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The regulations (at 29 C.F.R. 1.2(b)) define "area" as
follows:
(b) The term [*] area [*] in determining wage rates under
the Davis-Bacon Act and the prevailing wage provisions of
the [Related Acts] shall mean the city, town, village,
county or other civil subdivision of the State in which
the work is to be performed. [Original emphasis.]
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[4] as a source of data for a wage determination in a rural
county, and projects in rural counties may not be used as
a source of data for a wage determination for a
metropolitan county. [*][Original emphasis.][*]
Petitioner's request that Wage and Hour conduct a
redetermination of the laborers' rate in GWD No. PA91-25 focused
primarily on the requirements of Section 1.7(b), which permits the
wages paid on similar construction in surrounding counties to be
considered for wage determination purposes if there has not been
enough similar construction in a particular county to make a wage
determination. Section 1.7(b) specifies, however, that data from
construction projects in metropolitan counties may not be used for
a rural county wage determination, nor may data from projects in
rural counties be used for a wage determination for a metropolitan
county. The LDC argued that wage data from the four counties --
Bucks, Chester, Delaware and Montgomery -- surrounding Philadelphia
County should not have been commingled with the Philadelphia data,
since the four surrounding counties (unlike Philadelphia) were
rural. In reaffirming GWD No. PA91-25, the Acting Administrator
responded that the Operations Manual states that a county in an
area designated as an MSA will classified as metropolitan for
Davis-Bacon wage survey purposes, and a county not included in an
MSA will be considered rural. In this case, she said, it was
appropriate to combine the wage data from Delaware, Bucks, Chester,
Montgomery and Philadelphia counties, since all five counties are
in an MSA.
In its petition for review, the LDC continued to focus on the
metropolitan/rural county distinction and questioned the use of
MSAs to delineate metropolitan and rural counties. "[T]he use of
MSA's to define metropolitan and rural counties without an
investigation as to the demographic diversity of the counties
within the MSA," Petitioner argued, "can only lead to the types of
inequity and unfairness that the Davis-Bacon Act was designed to
eradicate" (Petition, at p. 14). Petitioner noted that 29 C.F.R.
1.7(a) specifies that the wage determination "area" ordinarily will
be the county unless current wage data for the county is
insufficient for wage determination purposes. Thus, Petitioner
apparently assumed that "[s]ince the wage determination issued was
for all five area counties, it can be determined that the data from
each county was insufficient to determine a prevailing wage for
each county independent of the other four since determinations are,
when possible to be made on a county-by-county basis" (Petition, at
p. 3).
As the appeal progressed, however, Petitioner and other
litigants (BCTD and LIUNA) also contended that Wage and Hour had
violated 29 C.F.R. 1.7(a). Thus, LIUNA characterized the central
issue on appeal as whether Wage and Hour's "failure to utilize the
wage rate data available for Philadelphia County alone violates
section 1.7(a), which requires that `[i]n making a wage
determination, the area will normally be the county unless
sufficient current wage [4]
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[5] data . . . is unavailable to make a wage determination' " (LIUNA
Statement, at p. 2). Furthermore, BCTD, in questioning the application
of Wage and Hour's "useable response rate" criteria to wage survey data,
noted that "[i]t is assumed for the sake of discussion that the `useable
response rate' for Philadelphia [County] was less than 50 percent, but
more than 25 percent. The Administrative Record does not indicate the
county-by-county `useable response rate,' although a memorandum in Tab-F
of the Administrative Record indicates that the overall "useable
response rate" was 47 percent" (BCTD Statement, at p. 6 n.6). And at
the oral argument in this matter, Petitioner's leadoff point was that
Wage and Hour had violated Section 1.7(a) by issuing a wage
determination based on data from Philadelphia County and the four
surrounding counties, because Wage and Hour had failed to determine
whether the survey data for Philadelphia County alone was adequate for
wage determination purposes.
In response, counsel for the Acting Administrator conceded
that a county-by-county useable response rate had not been
calculated. Nonetheless, counsel requested that the Board affirm
the wage determination, arguing that at this point it would be
impossible to reconstruct a county-by-county response rate, that a
wage determination based on a new survey of Philadelphia and the
four surrounding counties would be issued shortly and, therefore,
that it would be an unnecessary strain on Wage and Hour's resources
to refigure the wage rates in the interim. In response to the
Acting Administrator's arguments Petitioner emphasized, among other
things, that the LDC was not requesting retroactive relief but did
want Wage and Hour's conceded error corrected prospectively.
Petitioner also argued that if the wage determination were left
standing, as requested, the wage rates in the current wage
determination could have an adverse effect on the wage rates
resulting from future wage surveys if the rates paid on public
projects were included in the survey data pursuant to 29 C.F.R.
1.3(d). /FN2/
The Board concludes that it would not be appropriate to affirm
the existing residential construction wage rate for laborers in
Philadelphia County. In this matter Wage and Hour did not first
ascertain whether the survey data from Philadelphia County alone
was adequate for wage determination purposes and then consider data
from surrounding counties after deciding that the data from
Philadelphia alone was inadequate; instead, Wage and Hour
apparently decided simply to issue a single residential
construction wage determination for Philadelphia and four
surrounding counties. [5]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ Section 1.3(d) provides, in pertinent part:
(d) In compiling wage rate data for building and
residential wage determinations, the Administrator will
not use data from Federal or federally assisted projects
subject to Davis-Bacon prevailing wage requirements
unless it is determined that there is insufficient wage
data to determine the prevailing wages in the absence of
such data. . . . [5]
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[6] The Board has previously addressed (in Southeast Idaho
Building and Construction Trades Council, AFL-CIO, WAB Case No.
86-22 (Feb. 4, 1987) ("Southeast Idaho BCTD")), the failure of Wage
and Hour to make a wage determination for a particular county, and
that precedent is instructive in reaching the appropriate
conclusion here. In Southeast Idaho BCTD, Wage and Hour found that
there was insufficient private construction data in two counties
during the survey period and enlarged the scope of the inquiry to
include other rural counties in southern and central Idaho. The
petitioner in that case argued that 29 C.F.R. 1.3(d) (see n.2,
supra) called for the use of Federal and federally assisted project
data from a particular county once it had been determined that the
private sector data for that county was insufficient for wage
determination purposes. Wage and Hour, on the other hand, argued
that it had great discretion in determining the appropriate "area"
for a wage determination. The Board concluded that 29 C.F.R.
1.7(b) does indeed provide that "where there has not been
sufficient similar construction in the area to determine prevailing
wage rates similar construction in surrounding counties may be
considered." The Board also decided, however, that Section 1.3(d)
must also be given effect. Thus, the Board stated that it "does
not agree that the Wage and Hour Division can disregard federal
project wage data where private sector data in a given county is
insufficient and thereby choose wage data from surrounding counties
in determining wage rates for that county." The Board remanded the
matter to Wage and Hour to issue separate prevailing wage
determinations for the two counties in question, based on data from
private and federally assisted construction in those two counties.
Southeast Idaho BCTD provides clear guidance for us in the
instant case -- that is, according to the Department's regulations
data from surrounding counties may be considered for wage
determination purposes if the data for a particular county is
determined to be inadequate, but the starting point for wage data
collection and evaluation is the county. 29 C.F.R. 1.7(a), (b).
It would be inconsistent with that Board precedent if in this case
we were to acquiesce to Wage and Hour's request to leave in effect
the laborers' wage rate for Philadelphia County listed in GWD No.
PA91-25. The Board recognizes that the pendency of a new wage
determination and the inability of Wage and Hour to reconstruct a
county-by-county response rate for the 1987-88 wage survey present
some peculiar circumstances for Wage and Hour on remand in this
case. However, Petitioner had no role in the acknowledged failure
to determine the sufficiency of the data on a county-by-county
basis, and should not have to suffer adverse consequences as a
result of that error. Furthermore, Wage and Hour has some degree
of latitude on remand. If, for example, a new wage determination
will indeed be issued shortly, Wage and Hour may decide simply to
pronounce a moratorium on the use of the existing laborers' rate in
GWD No. PA91-25 in Philadelphia County pending issuance of the new
wage determination. On the other hand, if it will be some time
before the new wage determination is published, Wage and Hour may
decide to issue an interim laborers' wage rate [6]
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[7] based upon a presumption of an adequate useable response rate from
Philadelphia County in the 1987-88 survey. The crucial stipulation upon
remand, however, is that the error acknowledged in this matter cannot
remain uncorrected nor, as Petitioner has noted (see pp. 4-5, supra)
should the error be perpetuated in future wage determinations.
III. ORDER
Accordingly, this matter is remanded to the Wage and Hour
Division for further proceedings. The Acting Administrator is
directed to complete reconsideration of this matter and take
appropriate action consistent with this decision within 60 days
from the date of this order.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [7]
