B-117954, APRIL 20, 1954, 33 COMP. GEN. 496

B-117954: Apr 20, 1954

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WHETHER SUCH WAGES ARE A PART OF THE LABORERS' AND MECHANICS' PREVAILING WAGE OR ALL OF IT. THERE IS NO AUTHORITY FOR DISTRIBUTION BY THE GOVERNMENT OF SUCH WITHHOLDINGS TO WORKERS WHO HAVE NOT BEEN PAID OVERTIME FOR WORK IN EXCESS OF 8 HOURS PER DAY. 1954: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 7. IT IS YOUR VIEW THAT SINCE THE EFFECT OF SUCH NEW LANGUAGE IS TO ESTABLISH A CONTRACTUAL RIGHT TO WITHHOLD FUNDS. DID NOT EXTEND TO INSTANCES WHEREIN NO WAGES HAVE BEEN PAID. TO WITHHOLD MONEYS DUE A CONTRACTOR IN ANY INSTANCE WHERE THERE IS A CLEAR FAILURE TO PAY LABORERS AND MECHANICS THE FULL AMOUNT OR WAGES REQUIRED BY THE CONTRACT. EXPRESS STATUTORY AUTHORITY MUST EXIST FOR THE RELEASE OF SUCH WITHHELD MONEYS BY THE GOVERNMENT DIRECTLY TO LABORERS AND MECHANICS WHO HAVE FAILED TO RECEIVE THE FULL AMOUNT OF THEIR WAGES.

B-117954, APRIL 20, 1954, 33 COMP. GEN. 496

CONTRACTS - PAYMENTS - WITHHOLDING FOR NON-PAYMENT OF LABORERS AND MECHANICS - DAVIS-BACON ACT UNDER PROVISIONS INSERTED IN CONSTRUCTION CONTRACTS ( STANDARD FORMS 23 AND 23A) AS REQUIRED BY THE DAVIS-BACON ACT, AS AMENDED, FOR WITHHOLDING BY CONTRACTING OFFICERS AMOUNTS THAT MAY BE CONSIDERED NECESSARY FOR PROTECTION OF LABORERS AND MECHANICS FROM FUNDS DUE CONTRACTORS, CONTRACTING OFFICERS MAY WITHHOLD FUNDS EQUAL TO ANY WAGES FOUND DUE LABORERS AND MECHANICS FROM ACCRUED PAYMENTS OR ADVANCES DUE THE CONTRACTORS, WHETHER SUCH WAGES ARE A PART OF THE LABORERS' AND MECHANICS' PREVAILING WAGE OR ALL OF IT. THE WITHHOLDING PROCEDURES OF THE DAVIS-BACON ACT DO NOT GOVERN THE WITHHOLDING AND DISPOSITION OF AMOUNTS REPRESENTING OVERTIME WAGE DIFFERENCES AND, WHILE CONTRACTORS AND GOVERNMENT MAY AGREE THAT THERE MAY BE WITHHELD FROM MONEY OTHERWISE DUE A CONTRACTOR AMOUNTS REPRESENTING NON -PAYMENTS OF OVERTIME COMPENSATION, THERE IS NO AUTHORITY FOR DISTRIBUTION BY THE GOVERNMENT OF SUCH WITHHOLDINGS TO WORKERS WHO HAVE NOT BEEN PAID OVERTIME FOR WORK IN EXCESS OF 8 HOURS PER DAY.

ACTING COMPTROLLER GENERAL WEITZEL TO THE ADMINISTRATOR OF GENERAL SERVICES, GENERAL SERVICES ADMINISTRATION, APRIL 20, 1954:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 7, 1953, REQUESTING A DECISION AS TO THE PROPER DISPOSITION OF FUNDS WITHHELD FOR THE PROTECTION OF LABORERS AND MECHANICS UNDER THE PROVISIONS IN CONSTRUCTION CONTRACTS ( U.S. STANDARD FORM NOS. 23 AND 23A, AS REVISED BY GSA GENERAL REGULATIONS NOS. 9 AND 13 OF JULY 24, 1951, AND MARCH 19, 1953, RESPECTIVELY).

THE NEW WITHHOLDING LANGUAGE PRESCRIBED BY SUCH REGULATIONS AUTHORIZES THE CONTRACTING OFFICER TO WITHHOLD FROM THE CONTRACTOR SO MUCH OF THE ACCRUED PAYMENTS OR ADVANCES AS MAY BE CONSIDERED NECESSARY TO PAY LABORERS AND MECHANICS "THE FULL AMOUNT OF WAGES REQUIRED BY THE CONTRACT.' IT IS YOUR VIEW THAT SINCE THE EFFECT OF SUCH NEW LANGUAGE IS TO ESTABLISH A CONTRACTUAL RIGHT TO WITHHOLD FUNDS, A CONTRACTING OFFICER MAY WITHHOLD FUNDS WHERE THE CONTRACTOR HAS MADE WAGE PAYMENTS AT A LESSER RATE OR HAS FAILED TO MAKE ANY PAYMENT, AS WELL AS WHERE A CONTRACTOR FAILED TO PAY FOR OVERTIME WORK AT ONE AND ONE-HALF TIMES THE BASIC WAGE RATE.

YOU REFER, IN THAT CONNECTION, TO THE DECISIONS OF THIS OFFICE REPORTED AT 20 COMP. GEN. 233 AND 21 ID. 197. THE LATTER DECISION HELD THAT THE PROVISIONS OF THE DAVID-BACON ACT, 40 U.S.C. 276A, AUTHORIZING THE WITHHOLDING FROM CONTRACT PAYMENTS AND THE PAYMENT DIRECTLY TO THE LABORER OR MECHANIC BY THE GENERAL ACCOUNTING OFFICE, DID NOT EXTEND TO INSTANCES WHEREIN NO WAGES HAVE BEEN PAID. THE FORMER DECISION HELD THAT THE WITHHOLDING PROVISION IN ARTICLE 17 OF U.S. STANDARD FORM NO. 23, REVISED- -- PRIOR TO JULY 24, 1951--- DID NOT PERMIT THE WITHHOLDING OF WAGE DIFFERENCES BETWEEN PREVAILING RATES ESTABLISHED PURSUANT TO THE CONTRACT AND THE OVERTIME RATES REQUIRED UNDER THE PROVISIONS OF THE EIGHT-HOUR LAW, 40 U.S.C. 324-326.

THERE WOULD APPEAR TO BE NO QUESTION THAT THE NEW CONTRACT LANGUAGE WOULD VEST IN A CONTRACTING OFFICER A LEGAL, VALID RIGHT, INDEPENDENT OF STATUTE, TO WITHHOLD MONEYS DUE A CONTRACTOR IN ANY INSTANCE WHERE THERE IS A CLEAR FAILURE TO PAY LABORERS AND MECHANICS THE FULL AMOUNT OR WAGES REQUIRED BY THE CONTRACT. HOWEVER, THAT FACT ALONE DOES NOT CLOAK SUCH WITHHOLDINGS WITH A DAVIS-BACON ACT CHARACTER SO AS TO PERMIT THEIR DISTRIBUTION TO AGGRIEVED LABORERS AND MECHANICS BY THE GENERAL ACCOUNTING OFFICE UNDER THE DIRECT PAYMENT PROVISIONS OF SECTION 2 OF THE ACT. OTHER WORDS, EXPRESS STATUTORY AUTHORITY MUST EXIST FOR THE RELEASE OF SUCH WITHHELD MONEYS BY THE GOVERNMENT DIRECTLY TO LABORERS AND MECHANICS WHO HAVE FAILED TO RECEIVE THE FULL AMOUNT OF THEIR WAGES.

THE DAVIS-BACON ACT IS A REMEDIAL LABOR STANDARDS STATUTE WHICH, IT HAS BEEN HELD, IS TO BE LIBERALLY CONSTRUED TO EFFECTUATE THE BASIC PURPOSES OF ITS ENACTMENT. SEE GILLOIZ V. WEBB, 99 F.2D 585, AND THE CASES COLLECTED AT 163 A.L.R. 1302. SECTION 1 OF THE ACT, PROVIDING FOR THE WITHHOLDING OF A "DIFFERENCE" BETWEEN THE RATES OF WAGES REQUIRED BY THE CONTRACT AND THOSE RECEIVED, MUST BE READ IN CONJUNCTION WITH, AND IN THE LIGHT OF, THE DIRECTION CONTAINED IN SECTION 2 TO THE COMPTROLLER GENERAL TO PAY DIRECTLY FROM SUCH WITHHOLDINGS "ANY WAGES FOUND DUE" LABORERS AND MECHANICS. ALSO, IT IS FUNDAMENTAL THAT A STATUTE IS TO BE CONSTRUED AS A WHOLE SO AS TO GIVE EFFECT AND MEANING TO ITS LEGISLATIVE INTENT. THE ANNOUNCED LEGISLATIVE INTENT OF THE DAVIS-BACON ACT IS TO INSURE THAT LABORERS AND MECHANICS EMPLOYED ON GOVERNMENT CONTRACTS BE PAID THEIR FULL PREVAILING WAGE RATES ( HOUSE REPORT NO. 2453, 71ST CONGRESS, 3RD SESSION), AND TO ENFORCE THE PAYMENT OF FULL PREVAILING WAGES BY THE WITHHOLDING PROCEDURE ( SENATE REPORT NO. 1155, 74TH CONGRESS, ST SESSION). THE DIRECTION TO THE COMPTROLLER GENERAL THAT HE PAY FROM THE WITHHELD EARNINGS OF A CONTRACTOR "ANY WAGES FOUND DUE" MUST BE GIVEN GREAT WEIGHT IN DETERMINING THE EXTENT OF THE WITHHOLDING REQUIREMENT IN SECTION 1. THUS, TO EFFECTUATE THE PLAIN PURPOSES OF THE ACT, SECTION 1 MUST BE GIVEN SUCH A REASONABLE CONSTRUCTION AS WOULD INSURE THAT EVERY LABORER AND MECHANIC BE PAID "ANY WAGES FOUND DUE," REGARDLESS OF WHETHER THEY BE A PART OF HIS PREVAILING WAGE OR ALL OF IT. ANY OTHER CONSTRUCTION WOULD RENDER THE STATUTE MEANINGLESS AS TO THOSE WHO WERE LESS FORTUNATE IN NOT RECEIVING ANY WAGE PAYMENT WHATEVER THAN THOSE WHO RECEIVED A PART OF THEIR PREVAILING WAGE.

HENCE, IT IS CONCLUDED THAT ANY AMOUNTS WITHHELD FROM ACCRUED PAYMENTS OR ADVANCES, WHETHER THEY REPRESENT WAGE UNDERPAYMENTS OR THE NONPAYMENT OF ANY WAGES, ARE TO BE HANDLED AS TRUST FUNDS IN ACCORDANCE WITH PROCEDURES PRESCRIBED BY CIRCULAR LETTER A-34106, DATED FEBRUARY 28, 1936. TO THE EXTENT THAT THE DECISION IN 21 COMP. GEN. 197 IS INCONSISTENT HEREWITH, IT NO LONGER WILL BE FOLLOWED.

IN CONNECTION WITH THE EMPLOYMENT OF CONTRACTORS' EMPLOYEES IN EXCESS OF 8 HOURS PER DAY, WHICH IS PERMITTED BY THE EIGHT-HOUR LAW, 40 U.S.C. 324- 326, UPON THE CONDITION THAT ONE AND ONE-HALF TIMES THE REGULAR WAGE RATE BE PAID, IT IS STATED THAT SUCH REQUIREMENTS SHOULD BE CONSIDERED AS AN EXTENSION OF THE PREVAILING WAGE RATE UNDER THE DAVIS-BACON ACT AND, THEREFORE, THE PROCEDURES OF THAT ACT WOULD GOVERN THE WITHHOLDING AND DISPOSITION OF AMOUNTS REPRESENTING OVERTIME WAGE DIFFERENCES.

HOWEVER, IN THE ABSENCE OF EXPRESS STATUTORY AUTHORITY VESTING SUCH OVERTIME WAGE DIFFERENCES WITH A DAVIS-BACON ACT AND, THEREFORE, THE PROCEDURES OF THAT ACT WOULD GOVERN THE WITHHOLDING AND DISPOSITION OF AMOUNTS REPRESENTING OVERTIME WAGE DIFFERENCES.

HOWEVER, IN THE ABSENCE OF EXPRESS STATUTORY AUTHORITY VESTING SUCH OVERTIME WAGE DIFFERENCES WITH A DAVIS-BACON ACT STATUS, I AM CONSTRAINED TO ADHERE TO THE POSITION HERETOFORE TAKEN BY THIS OFFICE IN 20 COMP. GEN. 233. AS WAS STATED IN THAT DECISION, THE EIGHT-HOUR LAW DOES NOT REQUIRE THE PAYMENT OF TIME AND ONE-HALF BUT MERELY PERMITS THE EMPLOYMENT OF LABORERS AND MECHANICS IN EXCESS OF 8 HOURS PER DAY. WHILE THE EMPLOYMENT OF WORKERS IN EXCESS OF 8 HOURS PER DAY IS PRECLUDED BY THE ACT, NO REMEDY IS PROVIDED THE GOVERNMENT OTHER THAN THE IMPOSITION OF THE STATUTORY PENALTY UNLESS OVERTIME FOR EXCESS WORK IS PAID. THE EIGHT-HOUR LAW IMPOSES NO OBLIGATION ON THE GOVERNMENT TO DISTRIBUTE EARNED MONEYS OF CONTRACTORS TO AGGRIEVED WORKERS FOR FAILURE TO PAY OVERTIME COMPENSATION, AND NONE MAY BE IMPLIED FROM THE LAW. THUS, IT WOULD APPEAR THAT NO LEGAL BASIS EXISTS FOR CONSIDERING OVERTIME PAY CONTEMPLATED BY THE EIGHT-HOUR LAW AS AN EXTENSION OF THE PREVAILING WAGE RATE UNDER THE DAVIS-BACON ACT, ESPECIALLY SINCE THE TWO ACTS ARE NOT PARI MATERIA OR CO-EXTENSIVE. WHILE, AS A MATTER OF CONTRACT, THERE MAY BE WITHHELD FROM MONEYS OTHERWISE DUE A CONTRACTOR AMOUNTS REPRESENTING NONPAYMENTS OF OVERTIME COMPENSATION SINCE THERE IS CLEARLY A FAILURE OF CONSIDERATION UNDER THE CONTRACT, THERE IS NO AUTHORITY OF LAW WHEREBY THIS OFFICE OR ANY OTHER AGENCY OF THE GOVERNMENT COULD DISTRIBUTE SUCH WITHHOLDINGS TO WORKERS WHO HAVE NOT BEEN PAID OVERTIME FOR WORK IN EXCESS OF 8 HOURS PER DAY. A COPY OF THIS DECISION IS BEING FURNISHED THE SECRETARY OF LABOR FOR HIS INFORMATION.