CCASE:
DONAHUE FAVRET CONTRACTORS INC.
DDATE:
19930430
TTEXT:
~1
[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
DONAHUE FAVRET WAB Case No. 92-13
CONTRACTORS, INC.,
Prime Contractor
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: April 30, 1993
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of the Acting Administrator of the Wage and Hour Division for
review of a June 25, 1992 decision and order issued by
Administrative Law Judge ("ALJ") James W. Kerr, Jr. The ALJ ruled
against the Department of Labor on the issue of the liability of
prime contractor Donahue Favret Contractors, Inc. ("Donahue") for
unpaid wages and overtime compensation. The ALJ also ordered the
U.S. Postal Service to pay interest to Donahue on the funds
withheld by the Postal Service from contract payments. The Acting
Administrator seeks review of the ALJ's decision and order as it
pertains to the payment of interest on the withheld funds. For the
reasons stated below the petition for review is granted, and the
ALJ's decision and order regarding payment of interest by the
Postal Service is reversed. [1]
~2
[2] I. BACKGROUND
On July 17, 1986 the Postal Service awarded Donahue a
$2,525,000 contract for construction of a main post office and
vehicle maintenance facility in Gretna, Jefferson Parish,
Louisiana. Donahue entered into a subcontract with Jones Concrete
Pumping, Inc. ("Jones"), for completion of the building slab work.
Jones performed the slab work from November 13, 1986 through
February 10, 1987. The contract and subcontract were subject to
the labor standards provisions of the Davis-Bacon Act (40 U.S.C.
[sec] 276a et seq.) and the Contract Work Hours and Safety
Standards Act (40 U.S.C. [sec] 327 et seq.) ("CWHSSA").
In January 1987 several of Jones' employees cashed pay checks
at D & H Drug Store ("D & H"), but their pay checks were dishonored
and returned to D & H by the Corpus Christi Parish Credit Union,
upon which the checks were drawn, for "Not Sufficient Funds"
("NSF"). On August 9, 1989 the Wage and Hour Division notified
Donahue that back wages totaling $11,205.92 were due as a result of
prevailing wage violations by Jones. The amount of back wages
alleged to be due was reduced to $7,354.93 on April 16, 1990. The
amount withheld by the Postal Service at the time of the ALJ
hearing was $11,192.93, including $2,694.60 for the NSF checks paid
by D & H.
Donahue requested a hearing before an ALJ, and a hearing was
held April 6-8, 1992. In his opening statement, counsel for the
Acting Administrator stated that the back wage claim had been
reduced to "four to five thousand dollars." By the conclusion of
the hearing, the amount claimed was $46.53 in unpaid overtime
compensation and $2,694.60 in unpaid wages resulting from the NSF
checks paid by D & H.
In the decision and order dated June 25, 1992, the ALJ
concluded that the Department of Labor had not met its burden of
proof with respect to the claim of unpaid overtime compensation.
The ALJ also concluded that Donahue was not liable to D & H for the
NSF checks. The ALJ reasoned that the employees had received full
payment from D & H. Furthermore, D & H had never pursued the
employees for reimbursement of the checks when they were dishonored
by the credit union, and D & H was now foreclosed from obtaining
reimbursement from the employees because the statute of limitations
had run. Therefore, the ALJ stated, the employees had received
their wage payments free and clear, and any further payments would
constitute a windfall to the employees.
The ALJ further concluded that Donahue was entitled to
interest on the withheld funds as compensation for loss of use of
its money. The ALJ ordered the Postal Service to release the funds
withheld to Donahue and to pay interest on the funds from the date
of withholding pursuant to 28 U.S.C. [sec] 1961. In [2]
~3
[3] response to Donahue's request for attorney's fees and costs, the ALJ
stated that because Donahue had offered no legal or factual basis for
the request, he would entertain such a request later if Donahue would
submit a supporting memorandum.
II. DISCUSSION
The Acting Administrator offers three bases for the argument
that the ALJ erred in ordering the Postal Service to pay interest
to Donahue on the withheld funds: (1) The Postal Service was not
a party before the ALJ; (2) the ALJ exceeded the authority granted
to ALJs by the Department's regulations; and (3) principles of
sovereign immunity barred the award of interest. As explained
below, the Board agrees with the Acting Administrator on the first
two points, and does not reach the sovereign immunity issue.
As to the first point, the Acting Administrator notes that
there were three parties in this matter -- Donahue, Jones, and the
Acting Administrator -- all of whom were represented at the ALJ
hearing. The ALJ, however, ordered the Postal Service to pay
interest to Donahue, even though the Postal Service was not
represented at the hearing and did not have notice of any claim
against it. We agree with the Acting Administrator that the ALJ
offended due process by ordering the Postal Service to pay interest
on the withheld funds without first providing the Postal Service
the opportunity to participate as a party to the proceeding.
We also agree with the Acting Administrator that the authority
granted by the Department's regulations (29 C.F.R. 6.30) to an ALJ
to conduct hearings in Davis-Bacon enforcement proceedings does not
expressly include the authority to order another government agency
to pay interest. Furthermore, the Order of Reference in this case
authorized the ALJ to decide only the issue whether employees were
owed back wages. Board precedent specifies that an ALJ may not
decide issues that are beyond the scope of the Order of Reference.
See R.C. Foss & Son, Inc., WAB Case No. 87-46 (Dec. 31, 1990), at
p. 9 and authority cited therein.
Finally, the Acting Administrator makes the following points
regarding the sovereign immunity question. First, principles of
sovereign immunity bar [3]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ On July 10, 1992, Donahue filed with the ALJ an application
for attorney's fees and costs totaling $21,108.84 under the Equal
Access to Justice Act ("EAJA"), 5 U.S.C. [sec] 504. The Regional
Solicitor filed a response on July 27, 1992, arguing that the EAJA
does not apply to administrative proceedings under the Davis-Bacon
Act. In the petition for review, counsel for the Acting
Administrator advised the Board that Donahue's application for
attorney's fees was still pending before the ALJ (Petition, at p.
4 n.2). [3]
~4
[4] payment of interest by the government absent express consent by
Congress. See United States v. Louisiana, 446 U.S. 253, 264-265
(1980). The Acting Administrator acknowledges that the Supreme
Court has interpreted the 1970 Post Reorganization Act (39 U.S.C.
[sec] 101 et seq.) as a legislative waiver of the Postal Service's
immunity from interest awards. Loeffler v. Frank, 486 U.S. 549,
556 (1988). The Acting Administrator argues, however, that "by
specifically applying the Davis-Bacon Act to the Postal Service, 39
U.S.C. 410(b), Congress has withdrawn the waiver of sovereign
immunity in this limited circumstance where the Postal Service is
not acting as a private commercial enterprise" (Petition, at p.
10). Because the first two issues raised by the Acting
Administrator in support of the argument that the ALJ erred in
ordering the Postal Service to pay interest to Donahue are
dispositive of this matter, the Board declines to reach the issue
of sovereign immunity.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [4]
