VAN DEN HEUVEL ELECTRIC, INC., WAB No. 91-03 (WAB Feb. 13, 1991)

USDOL/OALJ Reporter

CCASE: DECISION OF THE WAGE APPEALS BOARD DDATE: 19910213 TTEXT: ~1 [1] WAGE APPEALS BOARD UNITED STATES DEPARTMENT OF LABOR WASHINGTON, D. C. In the Matter of VAN DEN HEUVEL ELECTRIC, INC., Subcontractor WAB Case No. 91-03 With respect to Mirmar Apartment Project, Construction of a 14 unit apartment building, Contract No. 075-EH271-WPH/L8 BEFORE: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member Stuart Rothman, Senior Member DATED: February 13, 1991 DECISION OF THE WAGE APPEALS BOARD This case is before the Wage Appeals Board on the petition of Van Den Heuvel Electric, Inc.("Van Den Heuvel" or "Petitioner"), seeking review of a ruling by the Deputy Assistant Administrator of the Wage and Hour Division dated August 15, 1990, regarding $462.55 in back wages owed to three employees who were determined to have been improperly classified as trainees. For the reasons stated below, the Board denies the petition for review. [1] ~2 [2] I. BACKGROUND Meyer Construction ("Meyer") was the prime contractor on Contract No. 075-EH221-WPH-L8, awarded by the City of Green Bay Redevelopment Authority for the construction of a 14-unit low- income apartment building in Green Bay, Wisconsin. Petitioner Van Den Heuvel was the subcontractor on the project. The project was subject to the labor standards provisions of the U.S. Housing Act of 1937, as amended, 42 U.S.C. [sec] 1437j, and Department of Labor regulations, 29 C.F.R. Part 5. The applicable wage determination required payment of $10.60 per hour, including fringe benefits, for journeyman electricians. Both the prime contract and the subcontract contained the applicable labor standards provisions (29 C.F.R. 5.5.(a)(4)(ii)) concerning use of trainees. The Department of Housing and Urban Development ("HUD") conducted an investigation of Van Den Heuvel's performance as subcontractor. HUD notified the prime contractor of the investigation results on January 31, 1989. In an August 15, 1990 letter, the Deputy Assistant Administrator of the Wage and Hour Division also notified Van Den Heuvel of the investigation findings. The letter noted that 29 C.F.R. 5.5.(a)(4)(ii) permits a contractor to pay trainees at less that the predetermined wage rate only when they are employed pursuant to and individually registered in a program which has received prior approval of the Bureau of Apprenticeship and Training ("BAT") of the Department of Labor, Employment and Training Administration. The investigation disclosed, the Deputy Assistant Administrator added, that prevailing wage violations occurred when three employees were classified as residential trainees but were not employed pursuant to and individually registered in a program which had received prior approval from BAT. Therefore, these employees were due the electrician's hourly rate of $10.60, including fringe benefits. Back wages were computed in the amount of $462.55 for the three employees, the Deputy Assistant Administrator stated. Partial back wages of about $200 were withheld by the Government in this matter (Tab S). The Deputy Assistant Administrator informed Van Den Heuvel that the August 15, 1990 letter constituted a final ruling under the Department's regulations, and informed Van Den Heuvel of the right to petition the Wage Appeals Board for review of the ruling. This appeal followed. II. DISCUSSION The regulations of the Secretary of Labor implementing the Davis-Bacon Act specify the circumstances in which trainees may be paid less that the journeyman rate listed in an applicable wage determination. These regulations (29 C.F.R. 5.5(a)(4)(ii)) provide, in pertinent part: [2] ~3 [3] (ii) Trainees. Except as provided in 29 C.F.R. 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the U.S. Department of Labor, Employment and Training Administration. . . . Any employee listed on the payroll at a trainee rate who is not registered and participating in a training plan approved by the Employment and Training Administration shall be paid not less than the applicable wage rate on the wage determination for the classification of the work actually performed. Thus, under these regulations trainees may not be paid less than the predetermined wage rate unless they are employed pursuant to and individually registered in a program which has received prior approval from BAT. In this case, the ruling by the Deputy Assistant Administrator detailed the results of an investigation that disclosed prevailing wage violations that occurred when three employees of Van Den Heuvel were classified as residential trainees but were not employed pursuant to and individually registered in a program which had received prior approval from BAT. Upon examination of the record, the Board concludes that this ruling is unassailable and should be affirmed. Van Den Heuvel's only apparent defense on appeal to the Board is that payment of the training rate was authorized under the terms of its collective bargaining agreement, which contains wage rates and fringe benefits that differ from those listed in the applicable wage determination issued on December 18, 1987. This contention must fail for two reasons. First, although the bargaining agreement indicates that it was effective from September 1, 1988 to September 1, 1990, the agreement was not executed until July 5, 1989 -- after the period during which the prevailing wage violations occurred, and after HUD disclosed the results of its investigation. Furthermore, the collective bargaining agreement would not serve as a defense in this matter even if the agreement had been executed before the violations occurred. A collective bargaining agreement provision recognizing trainee status and establishing a trainee wage rate cannot supplant the regulatory requirements set forth at 29 C.F.R. 5.5(a)(4). We reaffirm the approach taken by the Board in Repp & Mundt, Inc., WAB Case No. 80-11 (Jan. 17, 1984) and Clevenger Roofing and Sheet Metal Co., WAB Case No. 79-14 (Aug. 20, 1980). Accordingly, the petition for review is denied. The August 15, 1990 ruling of the Deputy Assistant Administrator is affirmed. [3] ~4 [4] Senior Member Rothman, dissenting I respectfully dissent from the decision of my colleagues for the reasons expressed by the Board in its 1989 decision in Colonial Realty, Inc., WAB Case No. 87-37 (Feb. 22, 1989). It is the scheme of Davis-Bacon that prevailing wage and fringe predeterminations reflect prevailing local area practice and standards. To achieve this purpose Davis-Bacon is administered on a locality-by-locality basis. Where, as here, the wage and fringe predeterminations are based on locally negotiated collective bargaining agreements there are factors which go into the negotiation of the local agreements which cannot be turned aside. See, for example, the Board's decision in Fry Brothers, Corp., WAB Case No. 76-06 (June 14, 1977), with respect to work classifications. In the case in which a local construction employer applies its locally negotiated collective bargaining agreement to a public work subject to Davis-Bacon in the same way that the agreement would be applied to private commercial work in a locality, the employing contractor should not be penalized for doing on a public works project the same thing he would do on a private sector job in the same locality with the full concurrence of the concerned labor organization that provided both the Davis- Bacon wage and fringe base and other negotiated local terms, conditions, and classifications of employment. The principle that the Davis-Bacon Act was enacted for the benefit of employees and not employers or unions is not applicable in such a case. There is also a public interest. The employee on a union job under the same union contract receives only a windfall when on the government job for doing the same work under the same terms and conditions of employment that would apply when he was on a similar private commercial or industrial job. The locally negotiated agreement and supplement both effective June 1, 1988, established the local prevailing practice re trainee ratios. It is irrelevant when the petitioner, Van Den Heuvel, executed the agreement. Davis-Bacon does not countenance a double standard, one for the private local sector of the construction industry and one for the public sector at higher costs of operation. An administrative practice that does this does not mirror and reflect prevailing practice in the locality. To the extent that the argument is made that the Davis-Bacon Act must be used to enforce the rules and regulations of the Bureau of Apprenticeship and Training because of administrative difficulties in doing so, it is unfair to use Davis-Bacon enforcement to achieve such result when there has been a deliberately relaxed standard created in the locality by the same locally negotiated collective bargaining agreement that provides the wage and fringe package. To [4] ~5 [5] require an employer subject to a locally negotiated agreement to pay more on a government job than he is required to pay on a private job in the same locality under the same local prevailing practice under the same negotiated collective bargaining agreement that is used by himself and other employers on non-Davis-Bacon construction does not, in my view, advance or effectuate the purposes of the Davis- Bacon and Related Acts. I would remand this case to the Administrator under the same direction as in Colonial Realty, Inc., supra, namely the Administrator should take a no-enforcement position under the facts of this case. This case, based as it is on a singular local practice, should not be taken as an abandonment of the general rule on apprenticeship/trainee requirements where local practice is not as pronounced and unequivocal as here. 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 [5]

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