DOL Review Board Upholds Debarment of Construction Contractor under Davis-Bacon Act for Worker Misclassification and Non-Payment of Wages for Time Worked
The Department of Labor’s Administrative Review Board ( “ARB” ) recently upheld an ALJ’s determination that a New York contractor violated the Davis-Bacon Act and related laws by “willful underpayment of wages due to misclassification of workers and failure to pay for all hours worked.” Pythagoras General Contracting Corp. v. Administrator Wage and Hour Division, DOL, ARB Nos. 08-107, ALJ No. 2005-DBA-14 (ARB Feb. 10, 2011) (as reissued Mar. 1, 2011). The ARB’s decision also upheld the ALJ’s decision to debar the contractor from obtaining future federal contracts for up to 3 years and increased the penalty awarded by the ALJ from $447,670 to $792,397, finding that the contractor failed to rebut the Wage and Hour Division’s ( “WHD” ) calculations of back pay.
The Davis-Bacon Act and related acts (known collectively as the DBRA) require that contractors pay no less than the prevailing wage rates determined by WHD to various classifications of mechanics or laborers they employ. The DBRA also requires contractors to keep accurate payroll records.
The case stems from an investigation conducted by the WHD between 2002 and 2004 after the agency received complaints that the contractor was not paying prevailing wages. The investigation concluded that the contractor failed to pay prevailing wages by misclassifying several employees as performing the work of laborers rather than mason tenders and carpenters and failing to compensate the employees for work performed prior to their scheduled start time. This pre-shift compensable time was spent gathering materials and tools and receiving work assignments.
The ARB’s decision relied heavily on the burden-shifting framework set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). Under Mt. Clemens, the WHD administrator, as the party bringing the case, had the initial burden of proving that employees performed work for which they were improperly compensated. The burden then shifted to the contractor who had the burden to “negate the reasonableness of the inference to be drawn from the employee’s evidence.” The contractor contested that the administrator’s evidence of limited employee testimony regarding misclassification of employees as labors and the performance of compensable activities before the scheduled work day began had established a reasonable inference. The ARB instead ruled that in light of the contractor’s incomplete and inaccurate payroll records, some of which had been discarded, the employee testimony was not refuted and could be relied upon to serve as the basis of an award for even non-testifying workers.
The contractor’s failure to maintain complete and accurate records also played a key role in its debarment. The “incomplete and inaccurate records” that “reflected the misclassification of its workers” showed a willful violation of the act, as did the contractor’s failure to correct violations despite being placed on notice by the WHD’s investigation in 2002.