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DOL Home > OALJ > Davis-Bacon Act/Service Contract Act > R.C. FOSS & SON, INC., WAB No. 87-46 (WAB Dec. 31, 1990)
USDOL/OALJ Reporter

R.C. FOSS & SON, INC., WAB No. 87-46 (WAB Dec. 31, 1990)

CCASE: R.C. FOSS & SON, INC. DDATE: 19901231 TTEXT: ~1 [1] WAGE APPEALS BOARD UNITED STATES DEPARTMENT OF LABOR WASHINGTON, DC In the Matter of R.C. FOSS & SON, INC., WAB Case No. 87-46 Prime Contractor ATLANTIC PAINTING CO., INC., Subcontractor ALBERT COLBURN, President/Treasurer of Subcontractor BEFORE: Jackson M. Andrews, Chairman, Stuart Rothman, Member Ruth E. Peters, Member DATED: December 31, 1990 DECISION OF THE WAGE APPEALS BOARD This case is before the Wage Appeals Board on the petitions of Atlantic Painting Co., Inc. ("Atlantic"), and R.C. Foss & Son, Inc. ("Foss") for review of the September 11, 1987 decision and order (Attachment) of the Administrative Law Judge ("ALJ") regarding issues of prevailing wage violations and debarment. For the reasons set forth below, the Board denies the petitions for review. I. BACKGROUND Petitioner Atlantic was founded in 1974, and was a Massachusetts corporation engaged essentially in painting [1] ~2 [2] commercial buildings. Albert Colburn was Atlantic's principal owner, and its president/treasurer. (ALJ's Decision ("ALJD") at 3, 19; Tr. 675-676; 701-702). Atlantic was the painting subcontractor on seven federally funded or federally assisted projects involving six prime contractors. Petitioner Foss was the prime contractor for one of the projects -- the Turtle Creek Housing Project ("Turtle Creek") in Beverly, Massachusetts. The other projects, all in Massachusetts, were Hangars #1 and #2, Naval Air Station, South Weymouth ("Weymouth"); Veterans Administration Medical Center, Boston ("VA Hospital"); Bear Hill Nursing Center, Wakefield ("Bear Hill"); Chestnut Gardens Apartments, Lynn ("Chestnut Gardens"); U.S. Appraisers Store, Boston ("Appraisers Store"); and Dispensary/Dental Clinic, Hanscom Air Force Base, Bedford ("Hanscom"). (ALJD at 4). /FN1/ After the Department of Labor received a complaint that Atlantic was not paying its employees the prevailing wage rates, an investigation into Atlantic's performance on these seven contracts ensued. By an order of reference dated November 23, 1984, the Assistant Administrator of the Wage and Hour Division referred the matter to the Office of Administrative Law Judges for a hearing. In the order of reference, the Assistant Administrator stated that the matter was referred under the procedures mandated in Reorganization Plan No. 14 of 1950 (64 Stat. 1267), the Davis-Bacon [2] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN1/ The ALJ refers to all seven projects as within the ambit of the Davis-Bacon Related Acts (ALJD at 4). However, as the Solicitor notes (Statement, at p. 11 n.3), four of the seven contracts were subject to the Davis-Bacon Act itself. These four contracts were Hanscom, Appraisers Store, VA Hospital and Weymouth. [2] ~3 [3] Act (40 U.S.C. [sec] 276a et seq.), the National Housing Act (12 U.S.C. [sec] 1715c), the U.S. Housing Act of 1937 (42 U.S.C. [sec] 1437j), the Housing Act of 1959 (12 U.S.C. [sec] 1701q(c)(3), the Contract Work Hours and Safety Standards Act (40 U.S.C. [sec] 327 et seq.), and the regulations at 29 C.F.R. 5.11(b). The order of reference alleged the failure of Atlantic to pay employees at the applicable prevailing wage rates and the failure to pay proper overtime compensation. The order of reference also stated that pursuant to Reorganization Plan No. 14 of 1950 and 29 C.F.R. 5.12(b), the Administrator had found "reasonable cause to believe that Atlantic Painting Company, Inc. and its president/treasurer Albert L. Colburn, have committed willful or aggravated violations of the labor standards provisions of the National Housing Act, the U.S. Housing Act of 1937, and the Housing Act of 1959, and should, therefore, be debarred." The alleged violations, the order of reference stated, were the failure to pay employees the prevailing wage rates and the submission of inaccurate and falsified payroll records. After a hearing, the ALJ issued his decision and order. The ALJ found that the evidence "clearly establishes that the only fairly accurate record kept by Atlantic is the payroll cards . . . which accurately reflect the amounts paid by Atlantic to its respective employees. The certified payrolls, however, are purely contrivances falsified by Colburn to show compliance with his obligations under the applicable laws, regulations and contracts signed by him with respect to each of the seven projects which are [3] ~4 [4] the subject of this proceeding" (ALJD at 25-26). Colburn's own testimony, the ALJ stated, revealed that he intentionally submitted falsified certified payrolls (Id. at 26). /FN2/ The ALJ concluded that Atlantic failed in its duty to keep appropriate records, and that the contradictions and false information in the certified payrolls constituted aggravated and willful violations (ALJD at 27). The ALJ also concluded that Colburn, as president of Atlantic, was directly responsible for those aggravated and willful violations. In addition, the ALJ found that Colburn was performing the same functions for GAC Painting, owned by his wife, as he had performed for Atlantic; accordingly, the ALJ found that Colburn had a substantial interest in GAC Painting. (Id. at 27). [4] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN2/ Colburn's testimony is thoroughly reviewed in the ALJ's decision and order (ALJD at 19-22). In brief, Colburn testified that newly-hired employees were told that they would be paid at two wage rates, one for private jobs ($3.35 per hour) and one for government projects, and would start at a fixed amount of pay per week. The employees were also told that they would be moved back and forth among private and public jobs, and that the amount of working time they spent on public and private jobs would be "blended" to achieve the established weekly pay rate. (Id. at 19). Colburn testified that he sometimes made wage "adjustments" in the process of "blending" the wages for purposes of achieving the weekly pay rate (Id. at 23). "In other words," the ALJ stated, "there was not any attempt to apply the specific applicable prevailing rate to any particular individual who worked in the government project for the specific number of hours that the individual worked on that project" (Id. at 23). The testimony of the compliance officer is also summarized in the ALJD's decision (Id. at 12-18). Among other things, the compliance officer testified regarding the discrepancies in the certified payrolls (Id. at 12-16), and the failure of Atlantic to keep records of employees' work hours (Id. at 13). [END FN2] /FN3/ Colburn testified that Atlantic was no longer a functioning entity. He further testified that he was self-employed and working for a company called Architectural Estimating Management Co.; most [4] [FN3 CONTINUED ON 5] of the work he performed, however, was for GAC Painting, owned by his wife, and his duties for the company were essentially similar to those he performed for Atlantic. (ALJD at 22). [END FN3] [5] ~5 [5] As to back wages owed, the ALJ found that the Department of Labor had sustained its burden under Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946) ("Mt. Clemens"), of showing that Atlantic's employees performed work for which they were not properly compensated (ALJD at 25). The ALJ also found that the compliance officer's computations constituted the most reliable calculations available of the amount of back pay due Atlantic's employees (Id. at 27). The computations, the ALJ stated, were based in part on records kept by employees and on the compliance officer's estimates; however, he added, Atlantic's failure to keep adequate records necessitated reliance on such information (Id. at 27). Furthermore, the ALJ noted that an employer with the burden of keeping accurate records "cannot complain of an inaccurate back wage award when, if better records were kept, a more accurate award could have been made" (Id. at 25). The ALJ ordered that Atlantic and Colburn and their successors and assigns, and any entity in which Colburn has a substantial interest, pay the back wages totalling $95,575 (ALJD at 27). The ALJ further ordered that these same individuals and entities be debarred for a period of three years for aggravated and willful violations of the Davis-Bacon and Related Acts (Id. at 28). The ALJ specified that any back pay found to be due the employees of Atlantic which cannot be satisfied by the monies already withheld[5] ~6 [6] by the Department of Labor were, jointly with Atlantic, the responsibility of the prime contractors to repay (Id. at 28). II. DISCUSSION On review of the record in this case, the Board concludes that the petitions for review should be denied. On the issue of back wages owed, the petitions are essentially devoted to contesting the ALJ's credibility resolutions and the weight he accorded to the testimonial and documentary evidence. However, we find no basis for disturbing the ALJ's findings and conclusions on the back pay issue. Specifically, petitioners challenge the accuracy of the compliance officer's computations; however, the ALJ upheld those computations as the most reliable calculations available of the back wages owed Atlantic's employees. Furthermore, as the ALJ properly noted, under Mt. Clemens an employer who fails to keep adequate records is in no position to complain about a back wage award on the ground that the amount of wages due cannot be precisely determined. Petitioners' claim that the ALJ erred in awarding back wages to 24 non-testifying employees is also unavailing. It is permissible to award back pay to non-testifying employees based upon the representative testimony of a small number of employees. See, e.g., Donovan v. New Floridian Hotel, Inc., 676 F.2d 468 (11th Cir. 1982). The petitioners also contend that the interview statements of the non-testifying employees were inadmissible as hearsay evidence. However, as noted by the Solicitor (Statement, at p. 19), hearsay evidence is admissible in ALJ proceedings, and it is the duty of the ALJ to evaluate the [6] ~7 [7] weight to be given that evidence. As stated earlier, on review of the record the Board finds no basis for disturbing the weight accorded to the evidence by the ALJ in this case. Petitioner Foss also contests its responsibility as the prime contractor on the Turtle Creek project for back wages owed by subcontractor Atlantic. However, the Board recently explained that the responsibility of a prime contractor for unpaid wages owed to employees of a subcontractor is clear, for "'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.'" Ball, Ball and Brosamer, Inc., WAB Case No. 90-18 (Nov. 29, 1990), at p. 17 n.5, quoting Northern Colorado Constructors, Ltd., WAB Case No. 86-31 (Dec. 14, 1987). In addition, as noted by the Solicitor (Statement, at p. 20), the Secretary's regulations provide that "[t]he prime contractor shall be responsible for the compliance by any subcontractor or lower tier subcontractor with all of the contract clauses [set forth] in 29 CFR 5.5," and this provision of the regulation was included in the Turtle Creek contract between Foss and HUD. Atlantic also contests the ALJ's finding that Atlantic and Colburn committed debarrable violations. Debarment for violation of the Related Acts is governed by 29 C.F.R. 5.12, which provides in Section 5.12(a)(1): Whenever any contractor or subcontractor is found by the Secretary of Labor to be in [*aggravated or willful violation*] of the labor standards provisions of any of the applicable statutes . . . other than the Davis-Bacon Act, such contractor or subcontractor or any firm, corporation, partnership, or association in which such contractor or subcontractor has a substantial interest [7] ~8 [8] shall be ineligible for a period not to exceed 3 years (from the date of publication by the Comptroller General of the name or names of said contractor or subcontractor on the ineligible list . . .) to receive any contracts or subcontracts subject to [the Davis-Bacon Act or Related Acts]. [*(Emphasis supplied).*] In this case, the ALJ found that Atlantic falsified the certified payrolls to simulate compliance with the prevailing wage requirements -- an action which constitutes "aggravated or willful" behavior under Board precedent. See, e.g., A. Vento Construction, WAB Case No. 87-51 (Oct. 17, 1990) (29 WH 1685), at p. 15, and cases cited therein at p. 7 n.4. Accordingly, the Board affirms the ALJ's finding that Atlantic and Colburn committed violations that warrant debarment. On review of the record, however, the Board finds it necessary to modify the ALJ's decision and order in one respect. The ALJ stated that all seven contracts were within the ambit of the Related Acts (ALJD at 4), and concluded that Atlantic committed aggravated and willful violations of the Davis-Bacon and Related Acts (Id. at 27, 28). However, as we noted previously (see note 1, supra), four of the contracts involved in this case were subject to the Davis-Bacon Act itself. This has importance for the debarment issue, since the standard governing debarment for Davis-Bacon Act violations differs from the "aggravated or willful" standard governing debarment for Related Acts violations. The standard for debarment under the Davis-Bacon Act is set forth in Section 3(a) of the Act, which provides that a contractor shall be debarred for three years if it disregards its obligations to its employees. [8] ~9 [9] The Solicitor argues (Statement, at pp. 21-22) that the ALJ's failure to discuss the "disregard of obligations" standard is harmless error. The Board agrees with the Solicitor that falsification of certified payrolls warrants debarment under either the "aggravated or willful" standard or the "disregard of obligations" standard. However, we disagree with the Solicitor's argument (Id. at 21) that the ALJ correctly determined that Atlantic and Colburn should be debarred under both the Davis-Bacon Act and the Related Acts. The order of reference in this case did not allege that Atlantic had disregarded its obligations to its employees under the Davis-Bacon Act, nor did the order of reference state that Atlantic should be debarred for violations of the Davis- Bacon Act. Instead, as noted at page 3, supra, the order of reference stated only that Atlantic and Colburn should be debarred for willful and aggravated violations of the labor standards provisions of the National Housing Act, the U.S. Housing Act of 1937 and the Housing Act of 1959. Since the order of reference did not provide for a hearing on the issue of debarment for Davis-Bacon Act violations, the ALJ's findings, conclusions and order on this issue were beyond the scope of his authority. See Williams Fence Co., Inc., WAB Case No. 87-23 (Aug. 17, 1987), at p. 2; E.B. Fitzpatrick, Jr., Construction Corp., WAB Case No. 87-17 (July 9, 1987), at p. 2. Accordingly, the Board affirms the ALJ's findings and conclusions regarding the commission of violations warranting debarment only to the extent that the findings and conclusions relate to the contracts that were subject to the National Housing Act, the U.S. Housing Act of 1937 or the Housing Act of 1959. [9] ~10 [10] III. ORDER The petitions for review are denied. Paragraph (c) of the ALJ's order is modified to strike the reference to debarment for aggravated and willful violations of the Davis-Bacon Act, and to provide that the individuals and entities specified in paragraph (a) of the order shall be ineligible to receive any contracts or subcontracts subject to any of the statutes listed in 29 C.F.R. 5.1 for a period of three years. /FN4/ BY ORDER OF THE BOARD: ______________________________ Jackson M. Andrews Chairman [10] ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ /FN4/ In its petition, Atlantic did not request that the debarment period be reduced to less than three years. However, we note that in A. Vento Construction (at p. 14), the Board held that "aggravated or willful" violations of the labor standards provisions of the Related Acts warrant an order imposing a three- year debarment period absent extraordinary circumstances. See also A. Vento Construction, at p. 18 (Member Rothman, concurring) (falsification of payrolls warrants a three-year debarment period). Persons and firms placed on the ineligible list pursuant to 29 C.F.R. 5.12(a)(1) are permitted to request removal from the ineligible list after completing six months of the debarment period, pursuant to the procedure set forth at 29 C.F.R. 5.12(c). [10]