UNITED STATES
DEPARTMENT OF LABOR

USDOL/OALJ Reporter

94db023a.htm

DATE:  February 23, 1995

Case No:  94-DBA-23


IN THE MATTER OF:

Disputes concerning the payment
of prevailing wage rates by:               

Structural Concepts Inc.
  (Contractor)
                 and
Bonafide Construction, Inc.
  (Subcontractor)
                 and
Proposed Debarment for Labor 
Standards Violations by

Structural Concepts, Inc.,
(Contractor)

GEORGE MOUTIS, President,
Structural Concepts, Inc.

Bonafide Construction Inc.
(Subcontractor)

John Zaferiou
Despina Zaferiou
Eva Zaferiou

With respect to Laborers &
echanics employed by the
Contractor and Subcontractor on
Contract No. N62472-90-C-5297
(Jobsite: Naval Air Engineering
Center, Lakehurst, New Jersey


Appearances:  

     Bill Cosmas Giallourakis, Esq.
        For the Respondents, Structural Concepts, Inc. and
            George Moutis, President, Structural Concepts, Inc.

[PAGE 2]

     Louis De Bernardo, Esq.
        For the Plaintiff, U. S. Department of Labor

Before  RALPH A. ROMANO
        Administrative Law Judge


               RECOMMENDED DECISION AND ORDER

     This proceeding arises under the provisions of the Davis-
Bacon Act, 40 U.S.C. 276 et seq. (hereinafter "the
Act") and the regulations issued thereunder at 29 C.F.R. 5.

     By Order of Reference dated February 8, 1994 (ALJ 1)[1] ,
the Regional Administrator, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor referred this
matter for hearing, after which pre-hearing exchange (ALJ 7, 8)
was had, and Notice of Hearing (ALJ 12) issued.[2] 

     Trial of this matter was held on November 28-29, 1994 in New
York City, New York, after which the parties submitted their
briefs by February 8, 1995.

                            ISSUE

     The sole issue is whether Structural Concepts, Inc.
(hereinafter "the corporate respondent or "Structural") and/or
George Moutis, president of Structural, (hereinafter "the
individual respondent" or "Moutis") should be debarred under the
Act,[3]  and, if so, for how long a period of time.

                     SUMMARY OF EVIDENCE

     In September, 1990, Structural, as prime contractor, entered
into a construction contract with the United States, which
contract was admittedly subject to the terms of the Act (PX 1;
Tr. 26-53).  Thereafter, in November, 1990, Structural
subcontracted with Bonafide Construction Inc. (hereinafter
"Bonafide") for part of that construction work (PX 13).

     A central figure in this proceeding is John Zaferiou (who
has defaulted in this proceeding and has not been called by any
party as a witness herein), who was employed by Structural
as its project supervisor working full-time at the job site,
supervised Bonafide's employees in the ongoing subcontract work,
was responsible for ensuring compliance with the labor standards
under the subject contracts, reviewed Bonafide's certified 
[PAGE 3]
payrolls and reported work progress to Moutis, who, in turn,
transmitted such certified payrolls to the U.S. Navy for which
the construction work was being performed (PX 2, 3, 4, 11; Tr.
17, 31-33, 54, 59, 64, 82, 97, 99, 117, 211-212, 219, 252-253). 
The construction work being performed by Bonafide consisted of
the removal and replacement of roof drain pipes (Tr. 61-62, 80,
95, 96; PX 1), and such work is considered, in the work situs
geographic location, to be the work of plumbers and pipefitters
(Tr. 57).

     Three employees of Bonafide testified, in pertinent part,
that John Zaferiou sometimes handed them their (Bonafide)
paychecks (Tr. 65, 79, 101), and complained to him when such
checks bounced (Tr. 70, 83).

     John Warner, the U.S. Department of Labor investigator in
this case, testified that his investigation revealed that
Bonafide violated the Act by underpaying wages, i.e. paying less
than prevailing wages, due its employees.[4]   His calculation of
such underpayment of wages was later adjusted to $22,286 which
sum was voluntarily paid by Structural (Tr. 8, 14, 15), which, as
prime contractor, accepted responsibility for the subcontractor's
violation of the Act, and admitted Bonafide's submission of
falsified payrolls (Tr. 17).  Warner also proposed that
Structural and Moutis, among others (see. ftn 3 supra), be
debarred principally on the grounds that since Structural's
project supervisor (John Zaferiou) was the on-site supervisor of
the Bonafide subcontract work (and as such aware of the actual
wages paid, hours worked and job duties being performed by
Bonafide employees), he knew of the violations of the Act being
committed.  As such knowledge should, in effect, be imputed to
Structural and Moutis, its president, Warner concluded that
Structural and Moutis consequently disregarded their obligations
under the Act to employees, warranting the debarment proposal as
against them (Tr. 113-164).

     Respondents called Jeffrey Dobrowolski, who testified that
he was hired by Structural in October, 1993[5]  to ensure
compliance with labor standard provisions (Tr. 167-177).


     Moutis testified: that he was president and fifty percent
stockholder of Structural during the time at issue herein; that
he hired John Zaferiou, who reported to him, as project
supervisor for the Bonafide subcontract; that John Zaferiou's
duties (which were explained to him by Moutis) included
supervision of the work by Bonafide employees, and "...compliance
with the Labor Standard requirements"; that he prepared the 
[PAGE 4]
subcontract agreement between Structural and Bonafide; that he
discussed with John Zaferiou, during Moutis' periodic visits to
the work site, the progress of the work; that he assigned John
Zaferiou the responsibility of reviewing Bonafide's certified
payrolls; that he made sure that Bonafide's certified payrolls
were signed, but only "...glance[d] at the front of the payroll
report..."; that when he visited the job site, he had observed
the Bonafide employees removing and installing drain pipe; that
he did not know that John Zaferiou handed paychecks to Bonafide
employees or was recipient of employee complaints when such
paychecks bounced; that his prior work history included
experience in certifying payrolls for accuracy on federal
contracts and other projects subject to the Act; that he has
learned his lesson relative to compliance with the Act, has had
no Act violation citations pre-or post the subject contract time
period, and has satisfactorily performed on other federal
contracts (Tr. 205-257).

     Mrs. Moutis, who had no actual hands-on involvement with
Structural during the times in issue, testified as to the
development of labor standard controls installed at Structural
since the time period which is the subject of this matter (Tr.
257-278).

     Finally, Lt. Haynes of the U.S. Navy testified as to
Structural's satisfactory performance of other contracts with the
U.S. Navy, and his opinion of Moutis as a person of integrity
(Tr. 281-293).

                         DISCUSSION
           FINDINGS OF FACT AND CONCLUSIONS OF LAW

     That I lack discretion to lessen the three year period of
debarment as contained in 40 U.S.C. 276 a-2, is firmly
established, and no further elaboration of this certainty need be
made, U.S. Floors, Inc., WAB Case No. 91-33 (3/92);
Bob's Construction Co., Inc., WAB Case No. 87-25 (5/89);
G&O General Contractors, Inc., WAB Case No. 90-35
(2/91).[6] 


     Furthermore, while mitigating factors such as otherwise
satisfactory performance on other government contracts,
cooperation with investigations conducted under the Act and/or
voluntary restitution of underpayments of wages found due, may
impact upon the debarment issue under the labor standards
provisions of statutes other than the Davis-Bacon
Act, see 29 C.F.R. 5.12(a)(1), any such factors are
"...irrelevant to [the debarment issue here]", G&O General
Contractors, Inc. supra.[7] 

[PAGE 5]

     The only issue, therefore, appropriate for my consideration
in this matter is whether the corporate and/or the individual
respondents have "...disregarded their obligations to
employees..." under 40 U.S.C. 276a-2(a) and 29 C.F.R. 5.12(a)(2).

                 DEBARMENT AS TO STRUCTURAL

     I find that this record amply demonstrates that John
Zaferiou was aware of the violations of the Act with respect to
the employees of Bonafide.  He knew what those employees were
being paid, what kind of work they were doing, and therefore knew
by reference to the certified payrolls, that they were not being
job-classified appropriately, nor paid what the Act requires them
to be paid.[8] 

     As Respondents acknowledge (Br. at 22), "corporations can
act only through their agents and officers and know only what
their agents and officers know."  Structural accordingly knew of
the violation of the Act.  Moreover, the wrongful acts of
corporate agents and officers are imputable to the corporation,
Am. Society of Mechanical Engineers v. Hydrolevel Corp.,
456 U.S. 556 (1982).

     As Structural acted unlawfully through its agent, John
Zaferiou, I find that debarment as to Structural is appropriate.








                   DEBARMENT AS TO MOUTIS

     29 C.F.R. 5.12(a)(2), on its face, authorizes debarment
against "...responsible officers...who have been found to have
disregarded their obligations to employees....".[9] 

     This record reflects, and I so find:  that Moutis had a
previous work experience background in checking certified
payrolls for accuracy on federal contracts; that he knew of and,
in fact, explained the requirements of the Act to John Zaferiou;
that he observed the pipefitter/plumber job functions of Bonafide
employees; and that, although at one point he suggested that he
checked Bonafide's certified payrolls only to ascertain that they
were signed (Tr. 253), he also stated that he reviewed such
payrolls and found the substance of same (at least as to job 
[PAGE 6]
classification) accurate (Tr. 218-220).  Further, Moutis executed
Structural's contract with the government and Structural's
contract with Bonafide, and these contracts duly contained a
recitation of the obligations under the Act (Tr. 212).  And as
signatory, president and fifty percent stockholder of Structural,
outis assumed, on behalf of Structural, under 29 C.F.R.
5.5(a)(6), the prime contractor's obligations under the Act
including the responsibility "...for the compliance by any
subcontractor...with all the contract clauses in 29 C.F.R. 5.5".

     I find that, on this record evidence, it is established that
outis knew of the obligations imposed by the Act and knew of the
violations of the Act which were manifest in Bonafide's false
certified payrolls.  In simple, but nonetheless in my view no
less rational, terms, Moutis would have regarded his
obligations under the Act to Bonafide employees, if he had
reviewed Bonafide's certified payrolls, discovered the
underpayments and insured that the correct wages were paid.[10]  
outis may not fairly "...admit[ted] that he was responsible for
the acts of...[John Zaferiou]" (Resp. Br. at 23), yet insist that
he is not subject to debarment as a consequence thereof.[11] 

                            ORDER

     On the basis of the foregoing, I RECOMMEND that
Structural Concepts, Inc., George Moutis, Bonafide Construction,
Inc., John Zaferiou, Despina Zaferiou, and Eva Zaferiou, be
debarred for a period of three years under 29 C.F.R. 5.12(a)(2).



                                                          

                                   RALPH A. ROMANO
                                   Administrative Law Judge

Camden, New Jersey


     


[ENDNOTES]

[1]  References are: "ALJ" - Administrative Law Judge Exhibits;
"PX" - Plaintiff (government) Exhibits; "RX" - Respondent
Exhibits; "Tr." Trial transcript.

[2]  Respondents' motion to continue the hearing was denied (ALJ
16).

[3]  Respondents, Bonafide Construction Inc., John, Despina and
Eva Zaferiou, have not responded or appeared for trial.  By such
default, a recommendation for their debarment is hereinafter
made.

[4]  Warner concluded that, in part, Bonafide misclassified these
employees as other than plumbers and pipefitters, i.e., laborers,
and understated the hours worked.

[5]  The subject construction contract involved Structural from
September, 1990 through December, 1991, and, Bonafide, from
November, 1990 through July, 1991 (Resp. Br. charts at 3).

[6]  Respondents appear to concede this point (Resp. Br. at 20),
although such concession adds nothing to my finding in this
regard.

[7]  Indeed, Respondent's reliance upon the decision reached in
Facchiano Construction Co. Inc. v. U.S. Dept. of Labor,
987 F.2d 206 (3rd Cir., 1993) is misplaced for the very reason
that such decision involved non Davis-Bacon Act facts
under 29 C.F.R. 5.12(a)(1) as opposed to 29 C.F.R. 5.12(a)(2)
with which we are here dealing.

[8]  Respondents clearly agree (Resp. Br. at 22).

[9]  Also, 40 U.S.C. 276a-2(a) speaks of "...persons...who[m]
[have been] found to have disregarded their obligations to
employees...".  See also Facchiano, supra, at 214.

[10]  It is interesting to note that Structural had only
one subcontractor (Bonafide) working on this construction
contract (Tr. 218), and that one subcontractor had no more than
five (5) employees (PX 3), which suggests that Moutis
could have reviewed Bonafide's certified payrolls in detail in
relatively little time and with as much effort.

[11]  Fracchiano, supra, may indeed be read to
mandate such a conclusion in finding the status of president
alone to be insufficient to establish the wilful and aggravated
standard necessary for non Davis-Bacon Act debarment. 
Such status alone may, by negative implication, under
Fracchiano, justify debarment under the David Bacon Act,
Id, at 214.  In any event, the knowledge requirement found
essential in Fracchiano, has been found present here.