828 F.2d 84 (2nd Cir. 1987), 87-6113, Janik Paving & Const., Inc. v. Brock

Docket Nº:Docket 87-6113.
Citation:828 F.2d 84
Party Name:JANIK PAVING & CONSTRUCTION, INC., et al., Plaintiffs-Appellants, v. William E. BROCK, III, as Secretary of the United States Department of Labor, et al., Defendants-Appellees. No. 1322.
Case Date:September 09, 1987
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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828 F.2d 84 (2nd Cir. 1987)

JANIK PAVING & CONSTRUCTION, INC., et al., Plaintiffs-Appellants,


William E. BROCK, III, as Secretary of the United States

Department of Labor, et al., Defendants-Appellees.

No. 1322.

Docket 87-6113.

United States Court of Appeals, Second Circuit

September 9, 1987

Argued May 26, 1987.

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Thomas E. Brydges, Buffalo, N.Y. (Jaeckle, Fleischmann & Mugel, Buffalo, N.Y., Wayne R. Gradl, of counsel), for plaintiffs-appellants.

Donald P. Simet, Asst. U.S. Atty., Buffalo, N.Y. (Roger P. Williams, U.S. Atty. for the W.D.N.Y., Buffalo, N.Y., Linda Jan S. Pack, Counsel for Appellate Litigation, Leif Jorgenson, Attorney, U.S. Dept. of Labor, Washington, D.C., of counsel), for defendants-appellees.

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Before FEINBERG, Chief Judge, and LUMBARD and MINER, Circuit Judges.

LUMBARD, Circuit Judge:

On this appeal, we are primarily asked to decide whether the Secretary of Labor has the statutory authority to "debar" a contractor which has violated overtime hours and pay provisions of the Contract Work Hours and Safety Standards Act ("CWHSSA"), 40 U.S.C. Secs. 327-333, from working on any contract or subcontract receiving federal funding under numerous specified statutes, for a period of up to three years. Appellants, Janik Paving and Construction, Inc. and William J. Janik, its president, appeal from an order of the district court for the Western District (Elfvin, J.), which dismissed their action. They challenge the Secretary's authority to debar them from such work, as well as the sufficiency of the evidence which the Department of Labor amassed in support of the debarment order. We affirm.

Janik Paving has been primarily engaged in the highway paving and construction business since 1979. Most of its business, according to appellants, involves work on highway paving and construction projects which receive federal funding. This appeal arises from Janik's performance on two such contracts.

In 1980, Janik was awarded the prime contract by the Town of West Seneca, New York for the construction of certain sidewalks, curbs, and drains ("the Edson Street contract"); the work was to be financed under the Housing and Community Development Act of 1974. That same year, Janik was also awarded the prime contract by the New York State Department of Transportation for the installation of concrete and asphalt pavement in Holland, New York ("the Route 16 contract"), with financing to be provided under the Federal-Aid Highway Act of 1956.

Both of these federal financing statutes contained "Davis-Bacon" provisions, which obligated Janik, as contractor, to pay the laborers and mechanics it employed on these contracts the wages prevailing for similar construction in the same localities. See Davis-Bacon Act, 40 U.S.C. Secs. 276a-276a-5 (1931); Federal-Aid Highway Act of 1956, as amended, 23 U.S.C. Sec. 113(a); Housing and Community Development Act of 1974, 42 U.S.C. Secs. 5310, 1440(g). Because both contracts involved federal assistance under statutes prescribing wage standards, Janik also was required to comply with the provisions of CWHSSA, which, in pertinent part, required contractors on federally-funded construction projects to pay their laborers and mechanics "time and one-half" for hours worked in excess of eight hours in one day or forty hours in one week. 40 U.S.C. Secs. 328, 329. 1

Under the statute then and now, a contractor found in violation of overtime pay and hour requirements may be held liable to its affected employees for failure to pay the required amounts and to the government for liquidated damages in the sum of $10 for each calendar day on which these employees were underpaid. 40 U.S.C. Sec. 328. A contracting governmental agency may withhold and pay directly to the affected workers any amounts in contract monies necessary to satisfy the contractor's overtime obligations. Id. at Sec. 330(a). Criminal penalties may also be assessed. 40 U.S.C. Sec. 332.

Enforcement of the CWHSSA is also subject to a regulatory regime which applies to sixty statutes prescribing labor standards for federal or federally-assisted contracts. See 29 C.F.R. Sec. 5.1 (1983) (listing the statutes, collectively referred to as "Davis-Bacon Related Acts"). As pertains here, the regulations provide that,

Whenever any contractor or subcontractor is found by the Secretary of Labor to be in aggravated or willful violation of [overtime hours and pay requirements of the CWHSSA or] the labor standards of any of the [other Davis-Bacon Related Acts], such contractor or subcontractor or any firm, corporation, partnership, or association in which such contractor or

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subcontractor has a substantial interest shall be ineligible for a period not to exceed 3 years ... to receive any contracts or subcontracts subject to any of the statutes listed in Sec. 5.1.

29 C.F.R. Sec. 5.12(a)(1) (the "debarment regulations").

Between February and June, 1981, the Department of Labor, through the Wage and Hour Division of its Employment Standards Administration, investigated Janik's performance of the Edson Street and Route 16 contracts. A Division investigator, Patrick Rafter, inspected payroll records and employee time cards which Janik kept for the two contracts. Rafter also interviewed, directly or through questionnaires, approximately 35 past and present Janik employees, 12 or 13 of whom complained about the insufficient overtime wages they had received on the Route 16 and Edson jobs. Based on Rafter's findings, the Division concluded that certain of Janik's employees had not been paid at overtime rates for all such hours worked and that certain of Janik's payroll records had been falsified. 2 On May 9, 1983, the Wage and Hour Division notified Janik Paving and William Janik of its finding and advised them that they would be debarred from future federally-sponsored work. On May 25, 1983, appellants challenged these findings and requested an administrative hearing. See 29 C.F.R. Secs. 5.11(b), 5.12(b).

More than two years later, on June 12 and 13, 1985, an evidentiary hearing was held before Administrative Law Judge ("ALJ") Edward J. Murty, Jr. The Division's case consisted of the testimony of six of Janik's former employees who had worked on the Edson Street project during the period in question, 1980, as well as the testimony of Rafter, the Division's investigator. 3

The former employees testified that they had consistently noticed that the hours which they recorded on the employee timecards submitted to the company were greater than those reflected on their pay stubs. All were aided in testifying by contemporaneous personal records which they kept of the hours they reported. Only two of the employees produced their records for the hearing, however, and only the records of one, Timothy Hart, were received in evidence. 4

Four of the employees further testified that they had consistently logged their hours on Janik's employee timecards in one-half hour increments. Janik's certified payroll records, however, showed that payments for overtime hours were made to the nearest quarter-hour. Finally, one of the former employees, Richard Pollard, testified that he visited Janik's offices at one point to ask about his hours and discovered that the timecards Janik had maintained on him were not the same as those he had submitted and that the hours on Janik's timecards were different from those he had reported. Pollard stated that William Janik then telephoned him and indicated that he would discharge him if he turned Janik in to the Department of Labor. John Wilczak, another employee-witness, testified that he, too, had been approached by Janik's president while working on the Route 16 contract, and that William Janik asked him to work 60 hours per week at straight time.

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Rafter testified he had concluded, from interviews with Janik's employees, that in 1980 Janik had a practice "of falsifying its payroll and reducing the hours and overtime situations so that when overtime was paid on reduced hours, straight time pay would result." He explained that many of the 20 to 22 workers who indicated no problems with their overtime pay had not worked for Janik during the period in question or had worked in capacities not subjecting their wages to the CWHSSA. He further testified the difference in time increments used by Janik and its employees in recording hours worked indicated improper recordkeeping. In his experience, Rafter stated, the use of quarter-hour increments could indicate that reported overtime hours were being manipulated to achieve straight time pay rates.

Janik presented three rebuttal witnesses. William Janik denied that his company had a policy of reducing overtime hours but avoided categorically denying that Janik had not reduced overtime hours. He further denied having ever asked employee Wilczak to work overtime at straight time rates or threatened Pollard with discharge if he reported Janik to the government. James Nowak, a...

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