B-145336, MAY 25, 1961

B-145336: May 25, 1961

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TO THE SECRETARY OF LABOR: REFERENCE IS MADE TO LETTERS DATED NOVEMBER 10. KIMMEL IS CHARGED OCCURRED DURING PERFORMANCE AS A SUBCONTRACTOR OF CERTAIN WORK UNDER CONTRACT GS-02B 5473. THREE EMPLOYEES WERE INVOLVED. WHO WAS PAID AT THE PRESCRIBED MINIMUM HOURLY RATE. WAS DETERMINED BY THE CONTRACTING OFFICER TO HAVE BEEN UNDERPAID $105 UNDER DAVIS-BACON ACT PROVISIONS AND $31.50 UNDER EIGHT HOUR LAW PROVISIONS. THE OTHER TWO EMPLOYEES WERE DETERMINED NOT TO HAVE BEEN UNDERPAID. ALTHOUGH THE ACTING SOLICITOR DESCRIBES THE WAGE ADJUSTMENTS WHICH ARE THE SUBJECT OF HIS RECOMMENDATIONS AS BEING "IN THE AMOUNTS AND TO THE EMPLOYEES FOUND BY THE CONTRACTING OFFICER TO BE ENTITLED THERETO. " THE ACTUAL DETERMINATIONS OF THAT OFFICER ARE DISREGARDED AND THERE IS ADVOCATED.

B-145336, MAY 25, 1961

TO THE SECRETARY OF LABOR:

REFERENCE IS MADE TO LETTERS DATED NOVEMBER 10, 1960, FEBRUARY 3, 1961, AND MARCH 2, 1961, FROM ACTING SOLICITOR OF LABOR HAROLD C. NYSTROM, (A) RECOMMENDING THAT SAMUEL KIMMEL, OWNER, AND THE KIMMEL ROOFING COMPANY BE DEBARRED FOR VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. 276A, (B) REQUESTING THAT AN ADMINISTRATIVE DEBARMENT "FOR AGGRAVATED AND WILFUL VIOLATIONS OF THE OVERTIME PROVISIONS OF THE EIGHT HOUR LAW" PURSUANT TO SECTION 5.6 (B) OF REGULATIONS, 29 CFR, SUBTITLE A, PART 5, BE RECOGNIZED THROUGH PUBLICATION AS A COOPERATIVE MEASURE OF THEIR NAMES ON OUR LISTINGS OF INELIGIBLES, AND (C) URGING THAT "THE MONEY WITHHELD IN THIS CASE BE DISTRIBUTED IN THE AMOUNTS AND TO THE EMPLOYEES FOUND BY THE CONTRACTING OFFICER TO BE ENTITLED THERETO.'

THE IRREGULARITIES WITH WHICH MR. KIMMEL IS CHARGED OCCURRED DURING PERFORMANCE AS A SUBCONTRACTOR OF CERTAIN WORK UNDER CONTRACT GS-02B 5473, WITH SMYTH BROTHERS, COVERING MISCELLANEOUS REPAIRS TO THE POST OFFICE AT ELMIRA, NEW YORK, DURING 1957. INVESTIGATION BY THE GENERAL SERVICES ADMINISTRATION OF COMPLIANCE WITH PERTINENT LABOR STANDARDS, INCLUDING PAYMENT TO EMPLOYEES OF PRESCRIBED MINIMUM WAGES, DISCLOSED THAT THE SUBCONTRACTOR HAD NOT REPORTED ALL OVERTIME HOURS WORKED AND IN THIS SENSE HAD FALSIFIED PAYROLL REPORTS. THREE EMPLOYEES WERE INVOLVED--- ELIZAH GRAY AND JOSEPH AND WALTER KOPCZYNSKI. ELIZAH GRAY, WHO WAS PAID AT THE PRESCRIBED MINIMUM HOURLY RATE, WAS DETERMINED BY THE CONTRACTING OFFICER TO HAVE BEEN UNDERPAID $105 UNDER DAVIS-BACON ACT PROVISIONS AND $31.50 UNDER EIGHT HOUR LAW PROVISIONS. THE OTHER TWO EMPLOYEES WERE DETERMINED NOT TO HAVE BEEN UNDERPAID. THE CONTRACTING OFFICER NOTIFIED THE CONTRACTOR THAT $136.50 HAD BEEN DEDUCTED FROM ITS CONTRACT PRICE TO COVER THE UNDERPAYMENTS TO ELIZAH GRAY AND, NO APPEAL HAVING BEEN TAKEN TO THIS DECISION, TRANSMITTED THAT SUM HERE FOR WAGE ADJUSTMENTS DIRECTLY WITH THE EMPLOYEES.

ALTHOUGH THE ACTING SOLICITOR DESCRIBES THE WAGE ADJUSTMENTS WHICH ARE THE SUBJECT OF HIS RECOMMENDATIONS AS BEING "IN THE AMOUNTS AND TO THE EMPLOYEES FOUND BY THE CONTRACTING OFFICER TO BE ENTITLED THERETO," THE ACTUAL DETERMINATIONS OF THAT OFFICER ARE DISREGARDED AND THERE IS ADVOCATED, INSTEAD, ADJUSTMENTS OF UNDERPAYMENTS AGGREGATING $124.01, DIVIDED AS FOLLOWS:

TABLE

DBA 8 HR

ELIZAH GRAY $48 $22.50

JOSEPH KOPCZYNSKI 26.13

WALTER KOPCZYNSKI 27.38

THE KOPCZYNSKI BROTHERS RECEIVED WAGES FOR ALL HOURS WORKED AT HOURLY RATES IN EXCESS OF THOSE PRESCRIBED. IF TIME AND ONE-HALF FOR OVERTIME PURPOSES IS COMPUTED ON THE BASIS OF PRESCRIBED MINIMUMS, THE WEEKLY WAGES PAID TO THEM EXCEED THOSE NEEDED BY CONSIDERABLE AMOUNTS. ONLY IF THE FULL RATE AT WHICH THE SUBCONTRACTOR COMPUTED WEEKLY WAGES IS USED AS A BASE CAN IT BE SAID THAT UNDERPAYMENTS OCCURRED. THE ACTING SOLICITOR ADOPTS THE FULL RATE BASE, APPARENTLY ASSUMING THAT IT IS AN ACTUAL REGULAR-TIME RATE AGREED TO BETWEEN EMPLOYER AND EMPLOYEE. IN THE LETTER OF FEBRUARY 3, 1961, HE STATED AS FOLLOWS:

"THE OVERTIME PREMIUMS IN THIS CASE WERE DETERMINED AT ONE-HALF THE ACTUAL RATE PAID THESE MEN ACCORDING TO THEIR RESPECTIVE EMPLOYMENT AGREEMENTS WITH THEIR EMPLOYER, KIMMEL ROOFING COMPANY. APPARENTLY, THERE IS SOME THINKING AMONG THE STAFF IN YOUR GENERAL COUNSEL'S OFFICE THAT ONLY THE PREDETERMINED RATES APPLICABLE TO A PROJECT SUBJECT TO THE DAVIS- BACON ACT SHOULD BE UTILIZED WHEN DETERMINING THE OVERTIME PREMIUMS DUE UNDER THE EIGHT HOUR LAWS TO LABORERS AND MECHANICS PERFORMING THEREON, EVEN THOUGH CERTAIN WORKERS MAY HAVE ACTUALLY BEEN EMPLOYED AT HOURLY RATES IN EXCESS OF THOSE PREDETERMINED BY THE SECRETARY OF LABOR FOR THEIR VARIOUS CLASSIFICATIONS.'

WHILE WE ARE UNAWARE OF THE OPINION ATTRIBUTED TO OUR STAFF, THE EVIDENCE FAILS TO SUPPORT AN ASSUMPTION OR CONCLUSION THAT THE PREMIUM WAGE RATES WERE AGREED TO AS BASIC REGULAR-TIME RATES. THE MATTER DOES NOT APPEAR TO HAVE RECEIVED ANY SPECIAL ATTENTION DURING THE INVESTIGATION AND THE TESTIMONY IS NOT ENTIRELY CLEAR, BUT SWORN STATEMENTS FAIL TO ALLEGE OR ESTABLISH IN ANY WAY THAT THE PREMIUM RATES WERE NOT UNDERSTOOD BY BOTH EMPLOYER AND EMPLOYEES TO INCLUDE AN ELEMENT OF COMPENSATION FOR A WORKDAY IN EXCESS OF EIGHT HOURS. BOTH BROTHERS (ONE OF WHICH PERFORMED CERTAIN SUPERVISORY DUTIES) ALSO WERE FURNISHED TRANSPORTATION, LODGING, AND TRAVEL EXPENSES, AND, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, IT WOULD APPEAR, AS ALLEGED, THAT ALL THESE ITEMS REPRESENT ADDED COMPENSATION FOR THE LONG HOURS INVOLVED. IN THE CIRCUMSTANCES, WE FIND NO ROOM FOR DISAGREEMENT WITH THE CONTRACTING OFFICER'S DETERMINATION THAT WAGE UNDERPAYMENTS DO NOT EXIST IN THE INSTANCE OF THESE TWO EMPLOYEES. WITHOUT QUESTIONING THAT THE LEGAL PRECEDENTS ADDUCED AT LENGTH IN THE ACTING SOLICITOR'S LETTERS IN APPROPRIATE CIRCUMSTANCES WOULD LEAD TO A CONCLUSION THAT UNDERPAYMENTS EXISTED, APPLICATION IN THE PRESENT SITUATION, AS WE ALREADY HAVE POINTED OUT, WOULD REQUIRE AN ASSUMPTION, CONTRARY TO THE EVIDENCE, THAT THE PREMIUM RATE AT WHICH THE SUBCONTRACTOR COMPUTED WEEKLY WAGES WAS AN AGREED REGULAR-TIME RATE.

ON THE OTHER HAND, THE EVIDENCE SUPPORTS A CONCLUSION THAT UNDERPAYMENTS OCCURRED IN THE INSTANCE OF ELIZAH GRAY, WHO WAS NOT PAID AT A PREMIUM RATE, ALTHOUGH SOME CONTRADICTION EXISTS IN VIEW OF THE FACT THAT THE FURNISHING OF LODGINGS BY THE SUBCONTRACTOR WAS IN ADDITION TO THE WAGE AGREED UPON. SEE EMPLOYEE'S SWORN STATEMENT DATED APRIL 1, 1958. WE ARE SATISFIED THAT DAVIS-BACON ACT WAGE UNDERPAYMENTS EXIST IN THE AMOUNT OF $48 AND CAN AGREE WITH THE DETERMINATION MADE BY THE CONTRACTING OFFICER FOR WITHHOLDING PURPOSES TO THAT EXTENT. SUCH SUM WILL BE DISBURSED IN DUE COURSE DIRECTLY TO THE EMPLOYEE. THE SUM OF $22.50 WITHHELD AS OVERTIME UNDERPAYMENTS ALSO WILL BE COLLECTED AND CREDITED TO THE CONTRACT APPROPRIATION. IN OTHER WORDS, IN THE INSTANCE OF ELIZAH GRAY, THE ACTING SOLICITOR'S RECOMMENDATIONS ARE ACCEPTABLE, EXCEPT THAT THE OVERTIME UNDERPAYMENT MAY NOT BE ADJUSTED DIRECTLY WITH THE EMPLOYEE. SEE 33 COMP. GEN. 496.

OPINIONS REACHED BY THE SOLICITOR OF LABOR'S OFFICE IN THE COURSE OF EXERCISING THE REGULATORY AND INVESTIGATIVE POWERS PLACED IN YOUR OFFICE BY PROVISIONS OF REORGANIZATION PLAN NO. 14 OF 1950, 5 U.S.C. 133Z-15, TO INSURE COORDINATION OF ADMINISTRATION AND CONSISTENCY OF ENFORCEMENT OF MINIMUM WAGE LAWS APPLICABLE TO CONSTRUCTION CONTRACTS, AND EXPRESSED TO US IN THE FORM OF RECOMMENDATIONS, ARE GIVEN CAREFUL CONSIDERATION. WILL BE RECOGNIZED, HOWEVER, THAT ACTIONS CONCERNING WAGE ADJUSTMENTS AND THE IMPOSITION OF DEBARMENT NECESSARY TO DISCHARGE OUR RESPONSIBILITIES UNDER SECTION 3 (A) OF THE DAVIS BACON ACT AND IN OTHER MATTERS MUST BE MADE IN THE LIGHT OF AN INDEPENDENT EVALUATION OF SUCH EVIDENCE AS HAS BEEN OBTAINED DURING THE COURSE OF INVESTIGATION AND INCORPORATED INTO THE WRITTEN RECORD. THIS FACTOR IS EMPHASIZED BECAUSE IT MAY HAVE BEEN ERRONEOUSLY ASSUMED (AS INDICATED BY THE QUOTATION ABOVE) THAT A BASIC DISAGREEMENT EXISTS AS TO A PRINCIPLE OF LAW INVOLVED, WHEREAS ANY DIFFERENCES IN THE CONCLUSIONS REACHED APPEAR TO BE ATTRIBUTABLE TO THE FACTS ESTABLISHED BY THE EVIDENCE AVAILABLE.

WITH RESPECT TO THE RECOMMENDATION FOR DAVIS-BACON ACT DEBARMENT, WHILE PAYROLL REPORTS CONTAINED FALSE AND IMPROPER ENTRIES CONCERNING HOURS OF WORK, WE ARE SATISFIED THAT THE EVIDENCE DOES NOT ESTABLISH THAT OBLIGATIONS TO EMPLOYEES WERE DISREGARDED INTENTIONALLY OR TO AN EXTENT WARRANTING IMPOSITION OF THE STATUTORY SANCTION. THE AGGREGATE UNDERPAYMENT ESTABLISHED IS $48 IN THE CASE OF A SINGLE EMPLOYEE. WITH RESPECT TO THE REQUEST FOR APPROVAL OF THE EIGHT HOUR LAW DEBARMENT BY LISTING, ONLY THE SMALL SUM OF $22.50 IN THE INSTANCE OF THE SAME EMPLOYEE IS ESTABLISHED. WE CANNOT AGREE UNDER THE CIRCUMSTANCES THAT THE VIOLATION WAS AGGRAVATED OR, IN VIEW OF THE PAYMENT FOR LODGINGS WHICH IS NOT SHOWN TO BE AN ELEMENT OF AGREED REGULAR-TIME COMPENSATION, THAT IT WAS WILFUL IN THE SENSE THAT IT WAS UNDERTAKEN DELIBERATELY FOR PROFIT. WE NOTE IN THIS CONNECTION THAT THE DEPARTMENT OF JUSTICE HAS DECLINED TO PROSECUTE CRIMINALLY (18 U.S.C. 1001).

PLEASE BE ASSURED THAT WE SHARE A MUTUAL DESIRE TO MAKE ENFORCEMENT OF THE MINIMUM WAGE LAWS INVOLVED AS EFFECTIVE AS POSSIBLE UNDER THE LAW.