M.Z. CONTRACTORS COMPANY INC., WAB No. 92-23 (WAB Aug. 16, 1993)

USDOL/OALJ Reporter

CCASE: .Z. CONTRACTORS COMPANY INC. DDATE: 19930816 TTEXT: ~1 [1] WAGE APPEALS BOARD UNITED STATES DEPARTMENT OF LABOR WASHINGTON, D. C. In the Matter of: .Z. CONTRACTORS WAB Case No. 92-23 COMPANY, INC. BEFORE: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member DATED: August 16, 1993 DECISION OF THE WAGE APPEALS BOARD This matter is before the Wage Appeals Board on the petition of the International Association of Heat and Frost Insulators and Asbestos Workers, AFL-CIO ("Union" or "Petitioner"), seeking review of the November 19, 1992 ruling issued by the Acting Administrator of the Wage and Hour Division. For the following reasons, the ruling of the Acting Administrator is affirmed. I. BACKGROUND A. Relevant Facts On December 10, 1990 the Philadelphia Housing Authority contracted with M.Z. Contractors Company, Inc. ("M.Z. Contractors") for asbestos removal and disposal and mechanical reinsulation of all crawl spaces in the low rise structures at Norris Homes in Philadelphia, Pennsylvania. Wage [1] ~2 [2] determinations for both building construction (General Wage Decision PA90-5) and residential construction (General Wage Decision PA90-25) were included in the contract. On May 6, 1991 M.Z. Contractors requested addition of an "insulator" classification to the wage determination applicable to building construction --General Wage Decision PA90-5. M.Z. Contractors described an "insulator" as a "laborer who applies asbestos-free, non hazardous fiberglass insulation." The contractor averred that "the applicable insulation [was] fiberglass wrapping, ready to use, [and that] the only tool involved is a knife to cut the proper length of insulation." M.Z. Contractors also stated that the proposed classification required no licensing or special training, knowledge or classification. The proposed wage rate was the same as the laborer's wage rate in Wage Decision PA90-5 -- $15.95 plus $5.65 in fringe benefits. A few days later, apparently after M.Z. Contractors had been advised that the residential construction wage determination (General Wage Decision PA90-25) was applicable to the project, the contractor submitted a request for addition of an "insulator" classification to the residential wage schedule. The proposed wage rate for the "insulator" classification was an $8.00 hourly rate plus $2.00 in fringe benefits, which were equal to the rates listed for laborers in General Wage Decision PA90-25. The lowest wage rate listed for a skilled classification was for the painter classification, at $8.86 per hour with no fringe benefits. B. Procedural History On July 1, 1991 the Director of the Division of Wage Determinations had approved the addition of a "mechanical insulator" classification to General Wage Decision PA90-25: $8.00 per hour and $2.00 in fringe benefits, which was the rate proposed by M.Z. Contractors. As noted, these rates were equal to the amounts in the wage determination applicable to the laborer classification. Petitioner sought review and reconsideration of the Director's decision by letter dated September 20, 1991. The Acting Administrator affirmed the Director's ruling on February 25, 1992. The Acting Administrator stated that the conformance regulation (29 C.F.R. 5.5(a)(1)(ii)(A)(3)) provides that a proposed classification and wage rate will be added to a wage determination only if the proposed wage rate bears a "reasonable relationship" to the rates for classifications listed in the wage determination. The Acting Administrator noted that the Union took the position that the duties and skills of mechanical insulators are comparable to those of plumbers or steamfitters and that since the wage rates for those classifications were higher than the proposed rate for a "mechanical insulator," Petitioner [2] ~3 [3] argued that the proposed rate did not bear a reasonable relationship to the rates listed in the wage determination. The Acting Administrator rejected the Union's argument, stating: "It has been a long-standing policy of the Department to require that the proposed rate for a skilled classification be equal to or exceed the lowest rate of the skilled classifications already contained in the WD." She added that an exception to this policy exists for "conforming a class within a clearly recognized group, such as power equipment operators. However, the instant request does not fall within this exception." The Acting Administrator concluded that "[s]ince the lowest wage rate paid to a skilled classification (painters) in Wage Decision No. PA90-25 is $8.86 per hour, a rate of $8.00 per hour plus $2.00 per hour in fringe benefits for a total of $10.00 per hour bears a reasonable relationship to the wage rates in the contract WD." The Petitioner appealed that ruling to the Board, which considered the petition in our decision in the matter of M.Z. Contractors, Inc., WAB Case No. 92-06 (Aug. 25, 1992)("M.Z. I"). C. The decision in M.Z. I The Board stated its view that the Wage and Hour policy of conforming classifications to the lowest-paid skilled or laborer's classification was reasonable in the ordinary circumstance, but noted that Wage and Hour had fashioned exceptions to that policy. Furthermore, the Board found the general policy was not reasonable under the facts of M.Z. I: In our view, flexibility in application of Wage and Hour's policy is also demanded to accommodate a situation such as that presented by this case -- where almost all the skilled classifications have wage rates higher than the laborers' rate but a few skilled classifications are below the rate established for the laborers. In such circumstances, it was unreasonable to set a wage rate for mechanical insulators by simply setting the rate for that skilled classification at the same level as the laborers' rate. Thus, we agree with Petitioner (Supplemental Statement, at p. 15) that under the circumstances of this case, and others where most of the wage rates and fringe benefits prescribed in a wage determination for "skilled" classifications are substantially higher than the wages and fringe benefits applicable to one or two other "skilled" classifications, mechanical adoption of the wage rate and fringe benefits applicable to the lowest paid "skilled" classification, or the wage rate and fringe benefits for the "Laborer" [3] ~4 [4] classification, whichever is higher, does not satisfy the requirement . . . that "[t]he proposed wage rate, including any fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination . . . ." .Z. I, at p. 4. The Board remanded the matter to Wage and Hour for reconsideration of a wage rate -- reasonably related to the wage rates contained in the wage determination -- for mechanical insulators. Emphasizing the need to investigate the work to be performed and the skills, training and tools required by the proposed conformed classification, the Board did not mandate any particular methodology for comparing skills of the proposed classification to skills of the listed classifications. Nor did the Board suggest that the same methodology be employed under all the varied situations presented by conformance cases in general. Rather, the Board left it "to the expertise of Wage and Hour to determine reasonable methods that will serve the interests of efficiency and fairness." Id. at p. 5. Upon reconsideration, the Acting Administrator determined that the skills of the proposed classification were most similar to those of the so-called "mechanical trades" listed in the wage determination: plumbers and steamfitters. A new wage rate was conformed for mechanical insulators at the wage determination rate for the lowest-paid mechanical trade which was $17.31 per hour plus $3.47 in fringe benefits for steamfitters. Petitioner appealed this ruling on remand to this Board. No new administrative record was submitted; however, the Acting Administrator's ruling on remand enclosed a letter from the contracting agency referring the Wage and Hour Division to the Dictionary of Occupational Titles, for a description of the tasks and tools necessary to complete the contract work. After filing of briefs, the Board conducted oral argument of the issues raised on July 30, 1993. II. DISCUSSION The Petitioner's principal argument is that the Acting Administrator's interpretation and application of the conformance regulation on remand remains unreasonable and should therefore be reversed. Petitioner argues that the new conformed rate ignores the "realities of the local construction labor market," since the applicable wage decision's prevailing rates for two mechanical trades --plumber and steamfitter -- were recognized as the collectively bargained rates. The Acting Administrator, argues Petitioner, should have recognized the pattern [4] ~5 [5] that prevailing rates for mechanical trades were the negotiated rates /FN1/ and therefore should have conformed a rate for mechanical insulator at the rate collectively bargained for the locality by Local No. 14, Heat and Frost Insulators and Asbestos Workers with the Philadelphia Insulation Contractors Association. The Board does not agree with this position for the following reasons. In the first place, it must be noted that Department of Labor regulations do not require a conformed rate to be either the collectively bargained rate or the "prevailing rate." If we were to adopt the Union's position in this case, the conformance process could thereafter become an essentially de novo wage determination procedure. 29 C.F.R. 5.5(a)(1)(ii)(A)(3) authorizes approval if the proposed rate "bears a reasonable relationship to the wage rates contained in the wage determination." (Emphasis supplied). Given the facts of this case, adoption of the Local No. 14 echanical Insulator rate would effectively constitute a determination that the collectively bargained rate was the prevailing rate for the classification where, in fact, there was insufficient data in the first instance to determine any rate -- whether collectively bargained or weighted average for a Mechanical Insulator under residential construction. The Board finds that it was not unreasonable under the regulation to find a reasonable relationship for mechanical insulator to the lowest mechanical trade's rate. Moreover, on these facts -- where the Local No. 14 collectively bargained rate is higher than the rate for all listed skilled classifications -- we could not conclude that Local No. 14's rate bore a reasonable relationship to the rates contained in the wage determination. Further, there is nothing in the record to support the conclusion that a mechanical insulator's skills are greater or training more extensive than for the skilled trades paid more than steamfitter which was the mechanical trade's rate chosen as the conformed rate on remand. With additional regard to this point, the Board takes note of the fact that Petitioner has not suggested that the skills or training of a mechanical insulator are in fact any greater than those of the other, listed mechanical trades. Thus, the Acting Administrator's conformance action on remand was reasonable under our earlier decision directing reconsideration in light of the work to be performed and the skills, training and tools required for the work. Our directive to Wage and Hour upon remand was to evaluate the skills, duties and tools to be utilized to perform the work on the Norris Homes project by Mechanical Insulators. This was done and -- as suggested by Petitioner in the first round of litigation -- the Acting Administrator determined that it was [5] /FN1/ WD PA90-25 contained no residential rate for the remaining mechanical trade of sheetmetal worker. [5] ~6 [6] reasonable to compare the skills, duties, and tools of the proposed classification to the mechanical trades group. In short, the Acting Administrator's new methodology in conforming the proposed classification to the lowest listed mechanical trade was not unreasonable. For the foregoing reasons, the ruling of the Acting Administrator is affirmed. BY ORDER OF THE BOARD: Charles E. Shearer, Jr., Chairman Ruth E. Peters, Member Gerald F. Krizan, Esq. Executive Secretary [6]

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