B-141112.OM, NOV 23, 1959

B-141112.OM: Nov 23, 1959

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

PRECIS-UNAVAILABLE COMPTROLLER GENERAL: HEREWITH ARE THE FILES CONCERNING VIOLATIONS OF THE DAVIS-BACON ACT. WHILE KNOWING FULL WELL THAT THEY WERE FALSE AS TO THE RATES. ATTENTION IS INVITED TO THE VOLUNTARY STATEMENT OF CURTIS F. IN WHICH HE ADMITS THAT (1) EMPLOYEES WORKED IN EXCESS OF 40 HOURS IN A WEEK AND 8 HOURS IN A DAY (2) EMPLOYEES WERE PAID STRAIGHT TIME FOR ALL HOURS WORKED (3) PAYROLLS WERE FALSE AS TO GROSS PAY AND NET PAY RATE MADE TO EMPLOYEES WHERE EMPLOYEES WORKED IN EXCESS OF 40 HOURS IN A WEEK AND 8 HOURS IN A DAY (4) THE RATES SHOWN ON THE PAYROLLS WERE IN SOME INSTANCES FALSE AND (5) CERTAIN EMPLOYEES WERE IMPROPERLY CLASSIFIED AND PAID LESS THAN THE MINIMUM WAGE RATES FOR WORK PERFORMED IN HIGHER PAYING CLASSIFICATIONS.

B-141112.OM, NOV 23, 1959

PRECIS-UNAVAILABLE

COMPTROLLER GENERAL:

HEREWITH ARE THE FILES CONCERNING VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, AND THE EIGHT HOUR LAW, 40 U.S.C. 324, BY OWEN INDUSTRIES, SUBCONTRACTOR, PRINCESS ANNE, VIRGINIA, DURING PERFORMANCE OF CONTRACT NO. GS-A3B-5706, DATED JUNE 26, 1957, AWARDED TO VIRGINIA CAROLINA ELECTRICAL WORKS, INC., FOR CERTAIN CONSTRUCTION WORK ON THE U. S. POST OFFICE AND COURTHOUSE, NORFOLK, VIRGINIA.

THE PAY DATA APPEARING ON CERTIFIED PAYROLLS SUBMITTED BY THE SUBCONTRACTOR INDICATED THAT ALL ITS EMPLOYEES HAD BEEN PAID FOR ALL HOURS OF CONTRACT WORK AT THE MINIMUM RATES PRESCRIBED FOR THE JOB CLASSIFICATIONS SHOWN THEREON. THESE PAYROLLS DID NOT SHOW ANY INSTANCE IN WHICH AN EMPLOYEE WORKED ON THE JOB SITE IN EXCESS OF 40 HOURS IN A WEEK OR 8 HOURS IN A DAY. HOWEVER, THE EVIDENCE PRESENTED CLEARLY SHOWS THE SUBCONTRACTOR SUBMITTED THESE PAYROLLS TO THE GOVERNMENT TO SIMULATE COMPLIANCE WITH THE LABOR STANDARDS PROVISIONS OF THE DAVIS-BACON ACT AND THE EIGHT HOUR LAW, WHILE KNOWING FULL WELL THAT THEY WERE FALSE AS TO THE RATES, CLASSIFICATIONS AND HOURS OF WORK PERFORMED BY EMPLOYEES. IN THIS CONNECTION, ATTENTION IS INVITED TO THE VOLUNTARY STATEMENT OF CURTIS F. OWEN, OWNER OF THE FIRM (EXHIBIT 14), IN WHICH HE ADMITS THAT (1) EMPLOYEES WORKED IN EXCESS OF 40 HOURS IN A WEEK AND 8 HOURS IN A DAY (2) EMPLOYEES WERE PAID STRAIGHT TIME FOR ALL HOURS WORKED (3) PAYROLLS WERE FALSE AS TO GROSS PAY AND NET PAY RATE MADE TO EMPLOYEES WHERE EMPLOYEES WORKED IN EXCESS OF 40 HOURS IN A WEEK AND 8 HOURS IN A DAY (4) THE RATES SHOWN ON THE PAYROLLS WERE IN SOME INSTANCES FALSE AND (5) CERTAIN EMPLOYEES WERE IMPROPERLY CLASSIFIED AND PAID LESS THAN THE MINIMUM WAGE RATES FOR WORK PERFORMED IN HIGHER PAYING CLASSIFICATIONS. EVIDENCE OF THE AFORESAID VIOLATIONS ADMITTED BY OWENS IS FURTHER SUPPORTED BY STATEMENTS OF EMPLOYEES (EXHIBITS 3 THROUGH 13) AND TIME RECORDS PREPARED BY ONE JOSEPH A. TALIAFERRO, DESIGNATED AS TIMEKEEPER, ACTING FOREMAN AND LABORER ON THE PROJECT.

ON THE BASIS OF EVIDENCE AVAILABLE, IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT DAVIS-BACON ACT WAGE UNDERPAYMENTS TO 19 EMPLOYEES AMOUNTED TO $2,728.06; THAT 32 EMPLOYEES WERE UNDERPAID OVERTIME WAGES TOTALING $1,167.47 IN VIOLATION OF THE EIGHT HOUR LAW; THAT PENALTIES AMOUNTING TO $2,430 WERE ASSESSED FOR 486 VIOLATIONS OF THE EIGHT HOUR LAW; AND THAT 1455 PAYROLL FALSIFICATIONS RELATING TO DATES, HOURS WORKED BY AND RATES AND WAGES PAID TO EMPLOYEES, WERE UNCOVERED DURING THE INVESTIGATION. IN THIS CONNECTION, IT IS TO BE NOTED THAT ON MAY 5, 1959, A 17 COUNT INDICTMENT WAS RETURNED AGAINST CURTIS F. OWEN BY A GRAND JURY AT NORFOLK, VIRGINIA, FOR VIOLATION OF TITLE 18 U.S.C. 1001.

BY LETTER OF JULY 28, 1959, THE GENERAL SERVICES ADMINISTRATION RECOMMENDED THE INELIGIBLE SANCTIONS BE INVOKED AGAINST THE FIRM AND ITS OWNER FOR FLAGRANT VIOLATIONS OF THE LABOR LAWS. IN A REPORT DATED OCTOBER 1, 1959, THE ACTING SOLICITOR OF LABOR CONCURS IN THE RECOMMENDATIONS OF THE GENERAL SERVICES ADMINISTRATION AND REQUESTS THAT THE NAMES OF OWEN INDUSTRIES AND CURTIS F. OWEN, INDIVIDUALLY, OWNER, BE PLACED ON THE DEBARRED LIST FOR VIOLATIONS OF THE EIGHT HOUR LAW. IT IS TO BE NOTED THAT THE GENERAL SERVICES ADMINISTRATION MADE ITS RECOMMENDATION WITH THE UNDERSTANDING THAT ADMINISTRATIVE ACTION WILL NOT BE TAKEN AGAINST MR. OWEN WITHOUT WRITTEN PERMISSION FROM THE CRIMINAL DIVISION, DEPARTMENT OF JUSTICE.

UNDER DATE OF SEPTEMBER 2, 1959, THE ACTING SOLICITOR OF LABOR FORMALLY CHARGED THE FIRM AND ITS OWNER WITH THE VIOLATIONS OF THE DAVIS-BACON ACT AND THE EIGHT HOUR LAW AND AFFORDED THEM AN OPPORTUNITY TO REBUT THE ALLEGATIONS OF THE GOVERNMENT. TO DATE, THERE HAS BEEN NO REPLY TO THE CHARGING LETTER.

WE BELIEVE THE EVIDENCE PRESENTED CLEARLY ESTABLISHES THAT THE SUBCONTRACTOR DELIBERATELY UNDERPAID ITS EMPLOYEES IN CONTRAVENTION OF THE LABOR STANDARDS PROVISIONS OF THE DAVIS-BACON ACT AND THE EIGHT HOUR LAW, WHILE ATTEMPTING TO CONCEAL SUCH WAGE UNDERPAYMENTS THROUGH THE SUBMISSION OF FALSE PAYROLLS TO THE GOVERNMENT INDICATING COMPLIANCE WITH THE MINIMUM WAGE REQUIREMENTS OF THE STATUTES AND CONTRACT. IT SEEMS CLEAR THAT WAGE UNDERPAYMENTS TO EMPLOYEES UNDER SUCH CIRCUMSTANCES, CONSTITUTE VIOLATIONS WHICH REQUIRE THE IMPOSITION OF THE DEBARMENT SANCTION. ACCORDINGLY, IT IS OUR RECOMMENDATION THAT THE NAMES OF OWEN INDUSTRIES AND CURTIS F. OWEN, INDIVIDUALLY, PRINCESS ANNE, VIRGINIA, BE PLACED ON THE DEBARRED LIST FOR HAVING DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES WITHIN THE MEANING OF SECTION 3(A) OF THE DAVIS-BACON ACT. SINCE WE BELIEVE THAT THE EVIDENCE FIRMLY SUPPORTS THE FINDING OF THE ACTING SOLICITOR OF LABOR THAT THE FIRM AND ITS OWNER WERE IN WILFUL AND AGGREVATED VIOLATION OF THE OVERTIME PAY PROVISIONS OF THE EIGHT HOUR LAW, WE FEEL THAT COMPLIANCE WITH HIS REQUEST TO PLACE THE NAMES OF OWEN INDUSTRIES AND CURTIS F. OWEN, INDIVIDUALLY, OWNER, ON THE DEBARRED LIST AS VIOLATORS OF THE EIGHT HOUR LAW, IS JUSTIFIED.

WITH RESPECT TO THE QUESTION OF ADJUSTING THE WAGES OF AGGRIEVED EMPLOYEES, THERE IS NOTHING ON RECORD INDICATING WHETHER THE PRIME CONTRACTOR OR SUBCONTRACTOR ARE TAKING APPROPRIATE STEPS TO ADJUST THE EMPLOYEES' WAGES OR THAT ANY FUNDS ARE AVAILABLE FOR WITHHOLDING TO COVER THE AMOUNT OF THE WAGE UNDERPAYMENTS. IN VIEW THEREOF AND THE PENDING SUIT AGAINST CURTIS F. OWEN, WE DO NOT CONTEMPLATE ANY FURTHER DEVELOPMENT OF THIS PHASE OF THE CASE UNTIL SUCH TIME AS FUNDS MAY BE FORWARDED HERE FOR OUR DISBURSEMENT TO EMPLOYEES. NO CLAIMS HAVE BEEN PRESENTED BY THE EMPLOYEES UNDERPAID.

INSTRUCTIONS ARE REQUESTED.

DIRECTOR, CLAIMS DIVISION

RETURNED. WE AGREE THAT OWEN INDUSTRIES AND CURTIS F. OWEN, INDIVIDUALLY, PRINCESS ANNE, VIRGINIA, SHOULD BE INCLUDED ON THE NEXT LISTING OF INELIGIBLES, AS VIOLATORS OF THE EIGHT HOUR LAW, IN COMPLIANCE WITH THE DEBARMENT ACTION AND REQUEST OF THE ACTING SOLICITOR OF LABOR DATED OCTOBER 1, 1959.

FURTHER CONSIDERATION OF INELIGIBILITY FOR VIOLATION OF THE DAVIS BACON ACT IS UNNECESSARY SINCE SUCH INELIGIBILTY WOULD OCCUR DURING THE SAME PERIOD.

THE AVAILABILITY OF FUNDS TO ADJUST EMPLOYEE WAGE DIFFERENCES SHOULD BE EXPLORED IN THE USUAL MANNER, AND DEVELOPMENT SHOULD INCLUDE A CONTACT WITH THE CRIMINAL DIVISION, DEPARTMENT OF JUSTICE, TO OBTAIN INFORMATION OF ANY STEPS TAKEN BY THE PROBATIONER (MR. OWEN) TO MAKE THE NECESSARY ADJUSTMENTS.