M & C LAZZINNARO CONSTRUCTION CORP., WAB No. 88-08 (WAB Mar. 11, 1991)

USDOL/OALJ Reporter

CCASE: & C LAZZINNARO DDATE: 19910311 TTEXT: ~1 [1] WAGE APPEALS BOARD UNITED STATES DEPARTMENT OF LABOR WASHINGTON, D. C. In the Matters of: & C LAZZINNARO WAB Case No. 88-08 CONSTRUCTION CORPORATION; ("Lazzinnaro I") ADELAIDE CONSTRUCTION CORPORATION; TRIPLE L. CONSTRUCTION CORPORATION; and MARIO LAZZINNARO, President and Owner; and CORRADINO LAZZINNARO, Owner and SHNAY CONSTRUCTION WAB Case No. 89-12 CORPORATION, Prime Contractor; ("Lazzinnaro II") and M & C LAZZINNARO CONSTRUCTION CORPORATION; ADELAIDE CONSTRUCTION CORPORATION; and MARIO LAZZINNARO, President and Owner BEFORE: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member Patrick J. O'Brien, Member DATED: March 11, 1991 DECISION OF THE WAGE APPEALS BOARD The above-captioned cases are before the Wage Appeals Board on petitions from debarment orders and findings of underpayments of wages and overtime. In the earlier case ("Lazzinnaro I"), petitioners (hereinafter, collectively, "Lazzinnaro" or "Petitioner") question the findings of fact, allocation of the [1] ~2 [2] burden of proof, and conclusion that Lazzinnaro engaged in aggravated and willful violations of Davis-Bacon Related Acts. They ask us to find the Recommended Decision and Order ("D & O"; Attachment) of the Administrative Law Judge ("ALJ") clearly erroneous and to "dismiss the complaint in its entirety". Essentially the same arguments and prayers are made in Lazzinnaro II, with the added assertion that, in the latter Davis-Bacon Related Acts case, "unusual circumstances exist, warranting the dissolution of the ALJ's debarment order," in the event a violation is found to have occurred. For purposes of efficiency, the Board elects to address these cases together. It is the Board's hope that this single recitation will prove useful for future reference. I. LAZZINNARO I In Lazzinnaro I, petitioner was both the prime contractor and two of the subcontractors on the Hudson Piers residential rehabilitation project in New York City during the 1982-1984 period. Hudson Piers was subsidized by the Department of Housing and Urban Development ("HUD") and was subject to the U. S. Housing Act of 1937, 42 U.S.C. [sec] 1437j, as well as the Contract Work Hours and Safety Standards Act as amended, 40 U.S.C. [sec] 327 et seq. ("CWHSSA"). Lazzinnaro kept overall payroll records, certified payroll records, and time books specific to the Hudson Piers project. Information obtained from individual employees, however, led Wage and Hour to conclude that 34 employees had worked on Hudson Piers but were not listed on the certified payrolls and had been paid less than prevailing wages; furthermore, 19 employees had worked in excess of 40 hours per week at Hudson Piers without being paid overtime. (Tr. 436; D & O, p. 2). Total underpayments exceeded $98,000. As Lazzinnaro did not keep accurate payroll records, Wage and Hour relied on survey results and individual testimony to prove the underpayments. This inferential proof was introduced and accepted in accordance with the principles of Anderson v. Mt. Clemens Pottery, 328 U.S. 680 (1946) and Structural Services, WAB Case No. 82-13 (June 22, 1983). Lazzinnaro attempted to counter this showing through the testimony of two employees, the first of whom could not remember if the employees who testified worked at Hudson Piers, and the second of whom could not remember where else they may have worked. (Tr. 595-599). Lazzinnaro did not introduce documentary evidence showing which employees worked at what site, or for what hours. In short, based on his assessment of the credibility of the witnesses and the absence of countervailing documentary evidence, the ALJ upheld the Wage and Hour determination. [2] ~3 [3] The ALJ also found, based on his assessment of the credibility of the witnesses, that Lazzinnaro "deliberately omitted the names of employees on the Hudson Piers project on the certified payrolls in an attempt to conceal violations of the prevailing wage rates." In its petition for review, Lazzinnaro attacked the ALJ's credibility determinations, the admission of written statements by nontestifying employees, and the use of three prior Davis-Bacon Act audits to show that Lazzinnaro knew or should have known the legal requirements applicable to the Hudson Piers contract. II. LAZZINNARO II From the end of 1982 through June, 1984, Lazzinnaro was the masonry and concrete subcontractor on HUD housing projects known as Fulton Park and St. Marks Avenue in Brooklyn, New York. These contracts were subject to the U. S. Housing Act of 1937, as amended, supra; the National Housing Act, as amended, 12 U.S.C. [sec] 1715c; and CWHSSA. A Wage and Hour investigation determined underpayments of $5,308.38 on the Fulton Park project; over $18,500 in prevailing wage and overtime violations on the St. Mark project; and payroll falsifications on both. At trial, the ALJ awarded back wages to five employees in the total amount of $3,905.56. However, the ALJ disallowed back wages to 14 employees who did not testify despite Compliance Officer Catherine Quinn's computations based on available documentation and interview statements (Tr. 146-148, 392; Government's Exhibits 8-11, 15, 17-30). The ALJ gave this testimony "no weight" because Ms. Quinn repeated the employee statements and submitted calculation sheets rather than use other evidentiary techniques. From the language used in the Decision & Order at pages 8 and 9, it appears that the ALJ effectively excluded Ms. Quinn's testimony as inadmissable hearsay. The ALJ concluded by finding Lazzinnaro disregarded its "obligations to its employees under the Davis-Bacon Act" insofar as it had failed to pay the prevailing minimum wages and failed to keep adequate payroll records. The Board is unable to determine what consideration, if any, was given to the Davis-Bacon Related Acts charges. In its petition for review, Lazzinnaro claims the ALJ erred in finding the employees had met their burden under Mt. Clemens Pottery, supra, that the credibility determinations were erroneous, and that the ALJ erred in determining that it "disregarded its obligations under Davis-Bacon. " To these arguments the petitioner adds the alternative claim that such unusual circumstances exist that dissolution of the debarment order is warranted. [3] ~4 [4] III. DISCUSSION A. Lazzinnaro I The Board's review of the entire record in this matter compels the conclusion that the ALJ's credibility determinations should not be overturned. It is uncontested that the witnesses knew the nature of the investigation and the possibility that back wages could be awarded. It is also uncontested that these witnesses did not all have perfect recollections of events occurring several years before. The laws and fundamental fairness place the burden of recordkeeping on the employer, not on the employee. Had Lazzinnaro kept the proper records in the first instance, this type of evidence would have been unnecessary. See Glenn Electric Company, Inc., WAB Case No. 79-[21] (Mar. 22, 1983). By contrast, Lazzinnaro's challenges to the testimony amount to questions regarding the precision of the recollections and the assertion that some employees may have resented their employer. These are insufficient to persuade this Board that the credibility determinations were "clearly erroneous." Lazzinnaro's second challenge, that the ALJ erroneously received interview reports and questionnaires for the limited purpose of showing that four employees worked at Hudson Piers, also fails. The Statement of the Administrator correctly cites numerous cases where hearsay was admitted in administrative proceedings, and the Board notes with approval the controlled use of the documents in question by the ALJ. The Board also notes, for future reference, that these documents are of the type contemplated by the Federal Rules of Evidence as adopted by the Secretary and incorporated in the Department of Labor Regulations. 29 C.F.R. 18.803(24) ("Hearsay Exceptions; availability of declarant immaterial") states in pertinent part: A statement . . . having equivalent circumstantial guarantees of trustworthiness [may be admitted] if the judge determines that (i) the statement is offered as evidence of a material fact; (ii) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (iii) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence. This rule also contains safeguards against unfairness to the party objecting to the introduction of the evidence. The Board sees no unfairness to Lazzinnaro in the record before it. [4] ~5 [5] Lazzinnaro's challenge to the application of the Mt. Clemens Pottery standards for the allocation of the burden of proof where the employer has failed to keep adequate records also fails. The Board's review of the record supports the ALJ's finding that Wage and Hour, together with the testifying employees, had raised a more than reasonable inference; indeed, the Board agrees that, under these circumstances, it is difficult to see how a different conclusion was warranted. By contrast, the testimony produced by Lazzinnaro was counterproductive when viewed in its entirety: neither witness had firsthand knowledge of who worked where, when, or how often; all their testimony accomplished was buttressing the conclusion that Lazzinnaro falsified its certified payroll. Finally, the Board agrees with the ALJ that Lazzinnaro had committed aggravated or willful violations of the Davis-Bacon Related Acts and that debarment was warranted. It is clear that Lazzinnaro grossly underpaid its employees. It is also clear that Lazzinnaro falsified its certified payrolls. The fact that Lazzinnaro had been audited three times in the past, coupled with the specific language of the contracts from which this matter arose, leads to the inescapable conclusion that Lazzinnaro knew or should have known the requirements of applicable law; furthermore, a reasonable person could view these facts as part of a pattern of disregard of the statutory requirements. Lazzinnaro's request for debarment of less than three years is without merit based on the totality of the facts here present. The seminal case on debarment, A. Vento Construction, WAB Case No. 87-51 (Oct. 17, 1990) (29 WH 1685), reaffirms the many earlier Wage Appeals Board rulings that falsification of certified payrolls to simulate compliance or to conceal violations constitutes "aggravated or willful" violation of the Related Acts within the meaning of 29 C.F.R. 5.12(a)(1), and warrants debarment. In addition, the Board notes that a history of repeated violations of similar nature, such as those involving minimum wage provisions or recordkeeping provisions, precludes a finding of "extraordinary circumstances." In affirming the ALJ's Decision & Order in Lazzinnaro 1, the Board notes that debarment is "recommended" pursuant to Section 3(a) of the Davis-Bacon Act. As this case arises under Davis-Bacon Related Acts, the Order should debar pursuant to 29 C.F.R. 5.12(a)(1). The opinion otherwise employed the correct "aggravated or willful" standard, and the findings and conclusions are more than adequate to sustain debarment pursuant to the Secretary's regulations. Accordingly, the Board modifies the debarment order and otherwise affirms the ALJ. [5] ~6 [6] B. Lazzinnaro II. In this second case, petitioner raises many of the objections seen in Lazzinnaro I. As the Board is remanding this matter in its entirety the specific arguments need not be addressed on this occasion. In Lazzinnaro II, as noted, the petitioner was charged with violations of Davis-Bacon Related Acts, yet the ALJ found "disregard of obligations" under the Davis-Bacon Act (Attachment). The Board cannot determine the extent to which, if any, the proceeding was conducted in light of the standards enunciated in A. Vento, supra; or whether the policies embodied in the Related Acts and the regulations thereunder were considered and the facts related thereto were aerated. Accordingly, this matter is remanded in its entirety for proceedings consistent with A. Vento, supra and this opinion. BY ORDER OF THE BOARD Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member Patrick J. O'Brien, Member Gerald F. Krizan, Esq. Executive Secretary [6]

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