MARTELL CONSTRUCTION CO. INC., 1986-DBA-32 (ALJ Aug. 7, 1986)

USDOL/OALJ Reporter

CCASE: ARTELL CONSTRUCTION CO. INC. DDATE: 19860807 TTEXT: ~1 [1 -- WAB 86-26 ATTACHMENT] U.S. Department of Labor Office of Administrative Law Judges 2600 Mt. Ephraim Avenue Camden, New Jersey 08104 Telephone (609) 757-5312 In the matter of Disputes concerning the payment of prevailing wage rates and overtime and proper classifications by: ARTELL CONSTRUCTION CO., INC., Prime Contractor and Case No. 86-DBA-32 J.E.M. CONTRACTORS, Subcontractor and Proposed debarment for labor standards violations by: ARTELL CONSTRUCTION CO., INC. FRANK SANTUCCI, Vice President EUGENE MARTELL, Secretary-Treasurer and J.E.M. CONTRACTORS JOSEPH E. MICELI, Owner With respect to laborers and mechanics employed by the subcontractor under Department of the Navy Contract No. N62472-80-C-5030 (Repairs to Road & Drainage) Naval Air Engineering-Center, Lakehurst, New Jersey [1] ~2 [2] DECISION AND ORDER This is a proceeding arising under the Davis-Bacon Act, as amended, 40 U.S.C. Section 276(a), et seq. and implementing rules and regulations promulgated thereunder, 29 C.F.R. Parts 5 and 6. The Davis-Bacon Act governs the rate and wages paid to laborers and mechanics of private contractors for every contract in excess of $2,000 to which the United States or District of Columbia is a party, for construction, alteration or repair of public buildings or public works within the geographical limits of the United States or District of Columbia. Following the investigation conducted by the Wage and Hour Division of the Employment Standards Administration of the United States Department of Labor, the prime contractor, Martell Construction Company, Inc., and a subcontractor, J.E.M. Contractors, and the responsible officers were notified of alleged violations of the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act. J.E.M. Contractors and its owner, Joseph E. iceli, were notified on August 9, 1983 by letter that an investigation had disclosed that J.E.M. Contractors failed to pay certain of its employees the required prevailing wage rates and had failed to pay overtime compensation to employees who worked in excess of eight hours a day or 40 hours a week. Furthermore, the investigation disclosed that the firm had manipulated a certified payroll submitted in compliance with the Acts to make it appear that the required wage rates had been paid. J.E.M. Contractors was also notified that there was reasonable cause to believe that the violations of the Davis-Bacon Act constituted a disregard of obligations to employees under Section 3(a) of the Act and would subject the firm to debarment proceedings. Martell Construction Company, Inc. and responsible operators, Frank Santucci and Eugene artell, were notified by letter dated December 13, 1983 that the investigation had disclosed that the subcontractor had failed to pay certain of its employees the required prevailing wage rates and overtime compensation. Furthermore, the investigation found that certified payrolls submitted by Martell Construction Company falsely reflected compliance with the required prevailing wage rates. Martell was further notified that reasonable cause existed to believe that its submission of certified payrolls, which were false, constituted a disregard of obligations under Section 3(a) of the Act and was subjected to d[e]barment pr[o]ceedings. Martell Construction Company responded to the notification by letter dated January 12, 1985 denying the allegations in question. J.E.M. Contractors also responded to the notification and asked for administrative review of the decision. By Order of Reference, dated May 3, 1984, the Administrator of Wage and Hour Divisions, U. S. Department of Labor, referred the dispute to the Chief Administrative Law Judge for disposition in accordance with the law. A hearing was [2] ~3 [3] held on April 10 and 11, 1986 in Toms River, New Jersey, at which all parties were present and were afforded full opportunity to be heard. At the close of the government's case in chief, the plaintiff moved for leave to amend the complaint to add Silvio Martell as a party and responsible officer in the case. The court reserved ruling on the government's motion and directed that the parties submit written memoranda supporting or opposing the motion to amend. The record was left open for 30 days to receive briefs on the motion to amend and propose findings of fact and conclusions of law. By subsequent order of the court, the parties were granted additional time, until June 13, 1986, to submit briefs and propose findings of fact and conclusions of law. QUESTIONS PRESENTED 1. Whether the addition of Silvio Martell as a party to the proceedings on the last day of hearings, would cause an unnecessary delay, or prejudice his ability to adequately defend his interests. 2. Whether the statute of limitations contained in the Portal to Portal Act, 29 U.S.C. 255, prevents the initiation of administrative proceedings against a contractor for negligent violations of the Davis-Bacon Act after two years from the date of termination of the contract. 3. Whether a prime contractor's certification of payrolls for a subcontractor, submitted to the government without any effort to verify or substantiate the amounts and figures certified, and its failure to investigate the reporting by the subcontractor of unusual and odd fractions of hours worked constitute a disregard of its obligations to its employees, thereby, subjecting it to debarment. 4. Whether a subcontractor's willful and repeated underpaying of employees and submission of manipulated and falsified records reflecting compliance with federal minimum wage requirements, constituted a disregard of its obligations to its employees so as to subject it to debarment. [3] ~4 [4] STATEMENT OF THE CASE On September 29, 1980, Martell Construction Company, Inc. entered into contract number N62472-80-C-5030 with the United States Department of the Navy. (Exhibit J-3a). The contract provided that in return for $204,000, Martell Construction Company, Inc. would repair roads and drainage areas at the Naval Facilities Engineering Command in Lakehurst, New Jersey. (Exhibit J-2). It was further required that Martell Construction Company perform no less than 20 percent of the work on the contract. (Tr. page 15). The contract was subject to the Davis-Bacon Act, the Contract Work Hours and Safety Standards Act, and the applicable regulations issued thereunder. Subsequent to obtaining the contract with the United States Department of the Navy, Martell Construction Company, Inc. entered into a subcontract in the amount $159,540 with J.E.M. Contractors for the performance of all of Martell Construction Company's contractual duties under its contract with the federal government. The contract was duly signed by Silvio Martell, President of artell Construction Company, Inc., and Joseph E. Miceli, Owner of J.E.M. Contractors. (Exhibit J-3c). This subcontract was also subject to the Davis-Bacon Act, the Contract Work Hours and Safety Standards Act and applicable regulations. J.E.M. Contractors and its employees performed all of the work required by the contract. (Tr. page 139). In order to comply with the 20 percent requirement, Martell Construction Company, Inc. submitted certified payroll records for the period November 11, 1980 through February 31, 1981 (Payroll records 1-16), under the signature of Eugene Martell, Secretary-Treasurer of Martell Construction Company, Inc. J.E.M. was responsible for submission of the remaining payrolls. However, because of delays in payroll certification, Martell's field supervisor, Placido Arena, assisted J.E.M. in completion of payroll forms. At our near the time of the completion of the contract, Martell Construction Company, Inc. submitted certified payroll records for the period March 3, 1981 through November 7, 1981 (Payroll records 17-52) on behalf of J.E.M. Contractors, entered under the signature of Joseph E. iceli. Subsequent to the completion of the contract, an investigation was conducted by the Wage and Hour Division of the Employment Standards Administration of the U.S. Department of Labor into compliance by the prime and subcontractor with federal laws and regulations governing the determination and payment of wages and overtime. The investigation concluded that both prime and subcontractor had committed certain violations of the Davis-Bacon and Contract Work Hours and Safety Standards Acts. [4] ~5 [5] The investigation revealed that J.E.M. Contractors had failed to pay certain of its employees required prevailing wage rates. According to Wage Decision No. NJ-80-3013, J.E.M. was required to pay hourly rates of $11.20 to laborers, $11.35 to truck drivers, $13.89 to operators of front loaders and $16.88 to operators of backhoes. The investigation disclosed that J.E.M. Contractors had paid laborers wages ranging from $7.00 to $8.00 an hour, equipment operators wage ranging from $7.00 to $12.00 an hour and truck drivers, $11.21 an hour. Furthermore, it was evident from the investigation that J.E.M. Contractors had manipulated and falsified certified payrolls to falsely reflect compliance with the prevailing wage. In addition, it was discovered that the firm had failed to pay overtime compensation to certain employees who worked in excess of eight hours a day or 40 hours a week. The investigation, furthermore, disclosed the certified payrolls turned in and certified by Martell Construction Company, Inc., for payroll periods 1 through 16, falsely reflected compliance with the required prevailing wage rates. Back wages were computed by the compliance specialist, Enrique Lopez-Mena, to be $28,707.10 in prevailing wages and $285.23 in overtime compensation. (Government Exhibit 6). FINDINGS OF FACTS AND CONCLUSIONS OF LAW I. Before dealing with the merits of arguments on debarment of the prime and subcontractors and their responsible officers, we must first address the government's motion to add a party defendant. On April 11, 1986, at the completion of the government's case in chief, the plaintiff moved to add Silvio artell as a defendant and responsible operator in the case. As reason for making a motion to add a party at such a late date, plaintiff argued that its compliance officer, Enrique Lopez-Mena, had been mislead by Martell Construction Company, Inc. as to the participation and activity of Silvio Martell in conjunction with the contracted question. (Tr. page 212). The government claimed that until the testimony of Joseph Miceli the previous day, it had been unaware that Silvio Martell had taken an active part in contract negotiation. The plaintiff argues that it should be allowed to amend the caption in the case to include Silvio Martell pursuant to Rule 15b of the Federal Rules of [Civil] Procedure. However, Rule 15b deals with amendments to complaints in order to conform with the evidence produced at trial. The motion before this court is more correctly characterized as a motion to amend the complaint adding a party defendant, found at Rule 21 of the Federal Rules of Procedure. Rule 21 provides in pertinent part that "parties may be dropped or added by [5] ~6 [6] order of the court on motion of any party or of its own initiative at any stage of the action and on su[]ch terms as are just." Consequently, Rule 21 authorizes the addition of a party or person who through inadvertence mistake or other reason, had not originally been made a party and whose presence in the action is later found necessary or desirable. Truncale v. Universal Pictures Co., 82 F.Supp. 576, 578 (DCNY 1949). Rule 21, by its terms, allows parties to be added or dropped by order of the court at any stage of the proceedings. Hayward v. Clay, 456 F.Supp. 1156, 1161 (SDSC 1977). It has even been held that a court can properly add a defendant after a trial or when a case is up on appeal. See, Aerol Corp. v. Department of the Navy, 493 F.Supp. 558 (DC 1981); Hayward, 456 F.Supp. at 1161. A decision to grant or deny leave to amend a complaint adding or dropping party defendants or plaintiffs is solely within the discretion of the court. Intercon Research Assoc., Ltd. v. Dresser Industry, Inc., 696 F.2d 53 (7th Cir. 1982); U.S. v. Wyoming National Bank of Casper, 505 F.2d 1064 (1Oth Cir.). In determining whether or not to grant a motion to add or drop a party from the action, the court should take into consideration whether granting the motion would allow "maximum effective relief with minimum expenditures of judicial energy". Gentry v. Smith, 487 F.2d 571, 580 (5th Cir. 1973). The court should consider such factors as delay in the action and prejudice to the parties' ability to adequately defend its interests. See Bar Rubber Products Co. v. Sun Rubber Co., 425 F.2d 1114 (2nd Cir. 1970) cert. denied 400 U.S. 878; McLouth Still Corp. v. Nesta Mach. Company, 116 F.Supp. 689 (D.C. PA 1953) affir'd 214 F.2d 608 (3rd Cir. 1954) cert. denied 348 U.[].S. 873./FN1/ See also Sarne v. Fiesta Motel, 79 F.R.D. 567 (D.C. PA 1978); Jentry, 487 F.2d at 580. [6] /FN1/ In McLouth the defendant moved to add the factory owner's insurer after two years of pretrial maneuvering and only four days before the case was set for hearing. The court found that defendant's motion was not timely, and since the parties were prepared for trial, and witnesses had been brought from considerable distance, a motion to amend to amend the complaint was denied. [6] ~7 [7] The regulations governing the proceedings under the Davis-Bacon and related prevailing wage statutes contain similar concerns and standards as applied to Rule 21. 29 C.F.R. 6.31 provides that a complaint may be amended with the permission of the Administrative Law Judge at any time prior to the closing of the hearing record. It further stipulates that amendments shall be allowed "justice and the presentation of the merits are served thereby, provided there is no prejudice to the objecting party's presentation on the merits." Therefore, when considering a motion to amend the pleadings, the Administrative Law Judge must take into consideration justice and the presentation of the merits. However, the proviso of Section 6.31 limits granting of motions to amend to cases where the Administrative Law Judge determines that there will be no prejudice to the objecting party's presentation on the merits. Pr[o]ceedings were begun against Martell Construction Company, Inc., J.E.M. Contractors and their responsible officers in late 1983. A hearing was originally scheduled on August 15, 1984 and, at the request of the prime contractor and the Office of the Solicitor, U.S. Department of Labor, the matter was adjourned without date. The hearing was rescheduled and held April 10 and 11, 1986, almost three years after instigation of the action. All parties and witnesses were present and were afforded full opportunity to testify. It is the opinion of this court that to grant leave to the plaintiff to amend the complaint to add Silvio artell would cause unreasonable and unnecessary delay to a decision on the merits as to J.E.M. Contractors, Martell Construction Company, Inc. and the presently named responsible officers. Granting a motion to amend, to add a party at this late date, without continuing the hearing would seriously prejudice the proposed added party's ability to defend his interests. While granting the motion would cause delay, and would prejudice the proposed party's interests; denying the motion would result in no serious injustice or prejudice to the interests of the government. Although the government is prevented at this time from adding Silvio Martell as a defendant in this action, nothing would inhibit or prevent it from commencing subsequent pr[o]ceedings to determine the role of the proposed defendant in the contracting question or the merits of debarment as to him in particular. II. Another threshold question which must be dealt with is whether or not the government was prevented from seeking debarment of the prime contractor and its responsible officers by the statute of limitations contained in the Portal to Portal Act. The prime contractor argued in its Brief Offered in Opposition to Plaintiff's otion to Amend Complaint that the statute of limitations of the Portal to Portal Act contained in USC Section 255 prohibited the government from taking any action under the Davis-Bacon Act against artell Construction Company, Inc. and its responsible officers. 29 USC Section 255 provides in pertinent part: [7] ~8 [8] Any action commenced on or after May 14, 1947, to enforce any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938 as amended (29 U.S.C.A. Section 201 et seq.), the Walsh-Healey Act (41 U.S.C.A. Section 35 et seq.), or the Davis-Bacon Act (40 U.S.C.A. Section 276A et seq.) - (a) If the cause of action accrues on or after May 14, 1947 - may be commenced within two years after the cause of action accrued, and every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued. The statute, in essence, provides two different statutes of limitations: (1) a three year limitation on actions arising out of willful violation of the pertinent acts, and (2) a two year limitation for all other violations. The prime contractor argued in its brief that the two year statute of limitations of the Portal to Portal Act was applicable to the present case since they contended that they had no knowledge of J.E.M.'s failure to pay workers the prevailing wages and hence the two year statute of limitations applied absent evidence of intentional or willful violations of the Davis-Bacon Act. Martell further argued that since construction on the contract ended with the payroll submitted on the week ending November 7, 1981, the two year statute of limitations had run by November 7, 1983, one month before the Department of Labor notified Martell of the alleged violations on December 13, 1983. However, I find that the defendant's argument has no merit as the statute of limitations contained at 29 USC 255 is inapplicable to administrative proceedings initiated by the Department of Labor before an Administrative Law Judge. The statute of limitations of the Portal to Portal Act is specifically applicable to only three types of actions: (1) An action for unpaid minimum wages, (2) An action for unpaid overtime compensation or, (3) An action for liquidated damages. See 29 USC Section 255; Unexcelled Chemical Corp. v. United States, 345 US 59, 63 (1953). An administrative action for debarment is not prohibited by the statutory language. Furthermore, when Congress enacted 29 USC Section 255, it was addressing itself to conventional law suits and not administrative proceedings. See, Unexcelled Chemical Corp., 345 US at 66. The Wage Appeals Board has consistently held that [8] ~9 [9] administrative proceedings before an administrative law judge and before the Board are not barred by the statute of limitations contained in the Portal to Portal act. J. Slotnik Co., WAB Case Number 80-5 (March 22, 1983); Glen Electric Company, Inc., WAB Case Number 79-21 (March 22, 1983). Consequently, I find that these proceedings are not barred as to Martell Construction or its responsible officers. III. In cases where a prime contractor or subcontractor has violated a statutory duty to pay laborers or mechanics the prevailing wage as determined by the Secretary of Labor, Congress has authorized the government to terminate all or part of the work, withhold accrued payments, or debar the offending contractor from receiving future contracts. 40 U.S.C. Sections 276A-l, 276A-2. The Act advises and directs the Controller General of the United States to compile and distribute a list of persons or firms whom he has found to have disregarded their obligations to employees and subcontractors to all departments of the government. 40 U.S.C. Section 276A-2; 29 C.F.R. 5.12(2). The Act and regulations further provide that no government contract shall be awarded to any persons or firms appearing on the list for a period of at least three years. Id. Under the regulations, the Administrator of the Wage and Hour Division, Employment Standards Administration, of the U.S. Department of Labor is directed to notify any firm or person who, he finds reasonable cause to believe, has committed violations of the Davis-Bacon Act which constitute a disregard of his obligations to employees or subcontractors. 29 C.F.R. Section 5.12(b)(1). Any of the notified parties may then request a hearing before an administrative law judge as to whether debarment action should be taken. The Administrator then refers the case to the Chief Administrative Law Judge of the Department of Labor, who designates an administrative law judge to conduct a hearing as may be necessary. After the hearing, the administrative law judge then issues a recommendation to the Controller General as to whether the contractor or subcontractor should be debarred under Section 3A of the Act. 29 C.F.R. Section 5.12(b)(1). The standard for determining debarment is whether or not the defendant(s) is "...found to have disregarded...obligations to employees and subcontractors." 40 U.S.C. Section 276A-2. However, the phrase "disregarded their obligations to employees and subcontractors" is not defined any where in the Act or regulations. It seems to be left to the discretion of the administrative law judge, and the Controller General. Although there are few statutory guidelines as to the interpretation of these terms, it has been [9] ~10 [10] consistently held by the Wage Appeals Board that willful and repeated failure to pay the prevailing wage, falsification of payroll records and misclassifications of workers is a disregard of the contractor's obligation to its employees within the meaning of Section 3A of the Davis-Bacon Act. Vicon Corporation, WAB Case Number 65-3, December 15, 1965; see also Cosmic Construction Co., Inc., WAB Case Number 79-19, September 2, 1980. The evidence in the record establishes that J.E.M. Contractors and its owner, Joseph Miceli, although not aware of the specific rates, were fully aware at the time they entered into contract with artell Construction Company that said contract was subject to prevailing wage determinations. (Tr. page 157 through 158). Although Mr. Miceli did not know the exact amount that was required to be paid to each worker, the record establishes that he was fully aware from the onset of the contract that he was not paying the prevailing wage. As has been stipulated by the parties, wage decision number NJ-80-3013 was applicable to the contract in question. According to this wage decision, J.E.M. and Martell Construction were required to pay hourly rates of $11.20 to laborers, $11.35 to truck drivers, $13.89 to operators of front loaders and $16.88 to operators of backhoes. The record at the hearing amply demonstrates that J.E.M. Contractors, without exception, paid its employee's wages far below the required prevailing wage. Laborers were paid rates ranging from $7.00 to $8.00 an hour, equipment operators rates between $7.00 to $12.00 an hour, and truck drivers $11.21 an hour. Toward the end of the contract, when the government began investigation into compliance with the prevailing wage rates, Joseph Miceli and J.E.M. Contractors deliberately falsified certified payrolls by adjusting employee hours so as to make it appear that J.E.M. was in compliance with the prevailing wage rates. (Tr. page 70 through 73). None of the allegations against J.E.M. Contractors was disputed by any of the parties during the course of the proceedings. In light of J.E.M. Contractors and Joseph Miceli's failure to comply with prevailing wage and overtime regulations and the calculated falsification of certified payrolls, I find they have disregarded their obligations to employees as defined by the Act and regulations. I, therefore, recommend[] their debarment by the Controller General of the United States. Although the charged violations of the Davis-Bacon and applicable regulations by Martell and its responsible officers are not as gross or open as J.E.M.'s, I find that they, nevertheless, constitute a disregard of their obligations to employees under the Davis-Bacon Act. In its brief, Martell urges the court not to recommend debarment, on the ground that the facts and evidence establish that [10] ~11 [11] the contractor (Martell) was not actually involved in the underpayment of wages to employees. Martell also argues that in determining whether to recommend the penalty of debarment, the Secretary of Labor must find that the contractor deliberately or willfully violated the Act. (Defendant's Brief, proposed findings of fact and conclusions of law at 6). The defendant's argument has no merit. Nowhere in the statute, regulations or caselaw is any requirement of willful or deliberate violation imposed on debarment under the Davis-Bacon Act. The Act simply requires that in the discretion of the Controller General or Secretary of Labor, the persons or firm be found to have disregarded their obligations to employees and subcontractors. See 40 U.S.C. Section 276A-2(a). Cases of willful or deliberate falsification of records or underpayment of employees are clear cut cases of disregard of obligations to employees under the Act. That, however, does not prohibit a contractor from being debarred for violations of the Act which are not open and deliberate. In In re Bone, 23 WH 1054 (1978), a contractor whose secretary/bookkeeper failed to pay employees in accordance with the prevailing wage was found to have disregarded his obligations to employees, and was recommended for debarment under the Act. The Wage and Appeals Board specifically held that a contractor was responsible for work performed by clerical employees. They, furthermore, upheld the administrative law judge's determination of debarment on the ground that "failure to properly instruct the secretary/bookkeeper in the preparation of the payrolls seems...to indicate that there was not only a disregard of petitioner's obligations to the contracting agency but also to his employees." Id. The alleged violations of the Davis-Bacon and related acts by artell and its responsible officers in this case are, if anything, more egregious than those by the debarred contractor in In re Bone. From the outset of the contract, the actions and undertakings of artell Construction Company have evinced a reckless disregard of its obligations to employees and subcontractors under the Act. Although clearly required by 29 C.F.R. Section 5.5(a)(6) to insert in any subcontracts various paragraphs from the regulations, setting forth minimum wage and overtime requirements of a contract subject to the Davis-Bacon Act, the subcontract between Martell Construction Company and J.E.M. Contractors contained no reference to Davis-Bacon or the Contract Work Hours and Safety Standards Act. (Tr. page 262). Martell's certification of payrolls was completely irresponsible. Under the terms of the contract, Martell Construction Company was obligated to perform themselves 20 percent of the work at Lakehurst Naval Air Engineering Center. (Tr. pages 15, 19). In an effort to show compliance with the 20 percent requirement, Martell Construction Company submitted certified payrolls 1 through 16 for the employees of J.E.M. Contractors, in essence placing J.E.M. employees on their [11] ~12 [12] payroll. (Tr. page 15, Joint Exhibit 1). Although Martell submitted certified payrolls with the names of J.E.M. contractor's employees, J.E.M. itself was responsible for paying the wages of the employees whose names were submitted. This was accomplished by artell's field supervisor, Placido Arena, obtaining by telephone from Frank Medozzi, a J.E.M. supervisor, the names and days employees had worked on the site during the pay period in question. (Tr. page 78). r. Arena would then determine from the applicable wage determination the amount of money each employee should legally be paid. (Tr. page 78). He then entered that figure as the amount paid to each worker during the previous pay period. An employee in Martell's office would then figure out the amount of deductions, FICA, federal and state tax, etc. which should be withheld from each J.E.M. employee's paycheck. These deductions were then listed in the payroll submitted by Martell as deductions actually withheld from employee's paychecks. The payrolls were then certified and sent to the government under the signature of Eugene Martell, Secretary/Treasurer of Martell Construction Company,as evidence of Martell's compliance with the Davis-Bacon and related acts. This was all accomplished in total disregard to what J.E.M. was actually paying the employees. At no time was any effort made on the part of either Eugene Martell or Placido Arena to determine the actual amount of wages paid and deductions withheld to the employees for whom they had submitted certified payrolls. (Tr. page 80). After Martell had submitted certified payrolls 1 through 16 to the government, they had, for all appearances, satisfied the 20 percent requirement in their contract. Therefore, J.E.M. Contractors was responsible for the submission of the remaining payrolls. However, because of J.E.M.'s inability and inaction with submission of the remaining of the certified payrolls, Martell Construction Company, through its field supervisor, Placido Arena, assisted J.E.M. in the submission of certified payrolls, later found to be falsified, to the responsible government agency. Mr. Arena testified that he assisted the J.E.M. supervisor in submitting the certified payrolls by putting in the proper heading and employee's name, etc. on the proper government forms, while J.E.M. filled in the hours, numbers and wages. (Tr. page 84). When J.E.M. began submitting certified payrolls with fractions and odd numbers of hours worked, Martell Construction Company failed to investigate or question J.E.M. about the irregularities although they found the hours reported unusual. (Tr. page 106). Furthermore, it was the testimony of J.E.M.'s owner, Joseph E. iceli that he told Placido Arena of the plan to falsify the records to show compliance with the prevailing wage. (Tr. page 173). [12] ~13 [13] I find the evidence in the record sufficient to establish disregard of its obligations to its employees by Martell Construction Company and its responsible officers. The actions of artell and its officers to submit certified payrolls 1 through 16 without any effort on their part to substantiate the correct number of hours, amount of wages and deductions is, at best, reckless disregard of employee's rights and, at worst, conscious and willful. I also find that Martell Construction Company's failure to investigate or question J.E.M. Contractors on the irregular hours reported on certified payrolls which it submitted, constitute a blat[a]nt disregard of its obligations under the Act. 29 C.F.R. Section 5.5(a)(6) specifically states that the prime contractor "shall be responsible for the compliance by the subcontractor or lower tier subcontractor with all the contract clauses in 29 C.F.R. 5.5". In essence, this section of the regulations imposes a duty upon the prime contractor to assure that any subcontractors are in full compliance with the prevailing wages and standards required by the Act. The burden is, therefore, on the prime contractor to act on or investigate irregular or suspicious situations as necessary to assure that its subcontractors are in compliance with the applicable sections of the regulations. Cf. B&W Sportswear Inc., 6 Wage and Hour case, 1224 (1947).1 [sic] /FN2/ Considering all of the facts and evidence in the case at hand, I find that J.E.M. Contractors and Martell Construction Company and their responsible officers have disregarded their obligations to employees and subcontractors under the Act. I, therefore, find adequate reason to recommend to the Controller General debarment of the prime and subcontractor and their responsible officers. [13] 1 [sic] /FN2/ While B&W Sportswear is a case arising under an alleged violation of the Child Labor Law, it is analogous to the particular regulation in question. Child Labor Law makes it a violation of the law to hire under age minors for certain jobs. In B&W Sportswear, the Secretary of Labor found that, even though the employer did not know the age of the minor it had hired, it had, nevertheless, "knowingly" hired an under age minor where it failed to ascertain her age despite her youthful appearance. The Secretary reasoned that the Act imposes an obligation on government contractors to adopt such measures as may be necessary to avoid hiring child labor.[13] ~14 [14] IV. The Compliance Officer, Enrique Lopez-Mena, computed the back wages owing to employees to be $28,707.10 in prevailing wages and $285.23 in overtime compensation. (G-6). The money due the employees was subsequently withheld from the contract payments to artell. Martell then agreed to authorize disbursement of the withheld money to the proper employees. I find the $285.23 of back wages for overtime compensation to be accurately computed and owing to the specified employees. The $28,707.10 computed to be due the employees to meet the prevailing wage rates is correct and accurate except for 16 hou[rs] of work performed by Tony Mussaro which were not included in the computation. Joint Exhibit 1, certified payroll #1, shows Tony Mussaro having worked 16 hours during the pay period which ended November 16, 1980. The certified payrolls then show that Mr. Mussaro did not work again on the Lakehurst project until the pay period ending February 14, 1981. However, the Wage Transcription and Computation Sheet for Tony Mussaro filled out by the compliance officer incorrectly shows Mr. ussaro's first employment at Lakehurst as beginning with the pay period ending February 14, 1981. It therefore appears from the record that the 16 hours worked by Mr. Mussaro during pay period 1 were not accounted for in the wage computation. The record shows that Mr. Mussaro was paid $7.00 an hour by J.E.M., and that the prevailing wage rate for his position as a laborer was $11.20 an hour. (G-l). I therefore find that J.E.M. owes Tony Mussaro an additional $67.20 above and beyond the amount found by the compliance officer. ORDER 1. I hereby recommend to the Controller General of the United States that J.E.M. Contractors and its responsible officer, Joseph E. Miceli, as well as Martell Construction Company, Inc. and its responsible officer, Frank Santucci and Eugene Martell, be debarred and placed on the list containing the names of persons or firms whom he has found to have disregarded their obligations to employees and subcontractors. 2. It is ordered that all monies found by the Employment Standards Administration to be due and owing employees of the subcontractor and withheld from the contract be paid to those employees. 3. J.E.M. Contractors is hereby ordered to pay Tony Mussaro an additional $67.20 in back wages above the amount computed and withheld by the Employment Standards Administration. PAUL H. TEITLER District Chief Judge DATED: August 7, 1986