Building and Const. Trades Dept. AFL-CIO v. U.S. Dept. of Labor Wage Appeals Bd.

Citation932 F.2d 985
Decision Date18 July 1991
Docket NumberAFL-CI,No. 90-5341,A,90-5341
Parties30 Wage & Hour Cas. (BN 497, 289 U.S.App.D.C. 369, 59 USLW 2702, 118 Lab.Cas. P 35,491, 37 Cont.Cas.Fed. (CCH) 76,099 BUILDING AND CONSTRUCTION TRADES DEPARTMENT,ppellee, v. UNITED STATES DEPARTMENT OF LABOR WAGE APPEALS BOARD, et al., Appellees. Midway Excavators, Inc., et al., Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeal from the United States District Court for the District of Columbia (Civil Action No. 84-00705).

Edward E. Shumaker, III, Concord, N.H., for appellants.

Fred E. Haynes, Asst. U.S. Atty., Dept. of Justice, with whom Jay B. Stephens, U.S. Atty., John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., Dept. of Justice, were on the brief, for appellees, U.S. Dept. of Labor Wage Appeals Bd., et al. Daniel Bensing, Washington, D.C., Asst. U.S. Atty., Dept. of Justice, also entered an appearance for appellees.

Terry R. Yellig, Washington, D.C., for appellee, Building and Const. Trades Dept., AFL-CIO.

Maurice Baskin, Washington, D.C., was on the brief, for amicus curiae, Associated Builders and Contractors, Inc., urging that the District Court's decision be reversed and Regulation 5.2(j) be invalidated as being inconsistent with the Act.

Charles E. Murphy and Robert P. Casey, Chicago, Ill., were on the brief, for amicus curiae, Associated General Contractors of America, urging that the District Court's decision be reversed.

Before WALD, SENTELLE and HENDERSON, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

Midway Excavators, Inc., et al. ("Midway") appeals from a district court judgment upholding a regulation promulgated by the Secretary of Labor ("the Secretary") pursuant to the Davis-Bacon Act ("the Act"), 40 U.S.C. Sec. 276a et seq. (1935). The challenged regulation, 29 C.F.R. Sec. 5.2(j) (1983), includes in the coverage of the Act truckdrivers employed by government contractors to transport off-site materials to the site of a federally-funded construction project. Midway contends that this regulation is inconsistent with the plain meaning of the Davis-Bacon Act, which requires government contractors to pay prevailing wages only to "mechanics and laborers employed directly upon the site of the work." 40 U.S.C. Sec. 276a(a) (emphasis added). We agree with Midway that this language unambiguously restricts the coverage of the Act to the geographical confines of the federal project's jobsite, and that nothing in the legislative history indicates a contrary meaning. Accordingly, the Secretary's regulation is contrary to that Act and we reverse the district court's decision.

I. STATUTORY AND REGULATORY FRAMEWORK

Congress enacted the Davis-Bacon Act to protect local contractors from being underbid on federally-funded construction projects by government contractors who based their bids on imported labor who would work for cheaper wages than those prevailing in the area. See 74 Cong.Rec. 6510 (1931) (statement by Rep. Bacon); Universities Research Ass'n v. Coutu, 450 U.S. 754, 773-74, 101 S.Ct. 1451, 1462-63, 67 L.Ed.2d 662 (1981). The Act applies to all government contracts for "construction alteration, and/or repair" and mandates that government contractors and subcontractors pay covered employees wages at least as high as those prevailing in the area where the public work is sited. See 40 U.S.C. Sec. 276a(a).

The critical portion of the Davis-Bacon Act provides in pertinent part:

(a) The advertised specifications for every contract in excess of $2,000 to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works ... and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the [area] in which the work is to be performed, ... and every contract based upon these specifications shall contain a stipulation that the contractor or his subcontractor shall pay mechanics and laborers employed directly upon the site of the work [the prevailing wages].

40 U.S.C. Sec. 276a(a) (emphasis added).

In 1941 the Secretary of Labor issued regulations to enforce this part of the Act. 1 The regulations define the statutory terms "construction," "alteration," and "repair" to include

all types of work done on a particular building or work at the site thereof ... all work done in the construction or development of the project, including without limitation, altering, remodeling, installation (where appropriate) on the site of items fabricated off-site, painting and decorating, the transporting of materials and supplies to or from the building or work by the employees of the construction contractor or construction subcontractor, and the manufacturing or furnishing of materials, articles, supplies or equipment on the site of the building or work ... by persons employed by the contractor or subcontractor.

29 C.F.R. Sec. 5.2(j) (emphasis added). The Secretary's regulations also define the "site of the work" as

limited to the physical place or places where the construction called for in the contract will remain when work on it has been completed and, as discussed in paragraph (l )(2) of this section, other adjacent or nearby property used by the contractor or subcontractor in such construction which can reasonably be said to be included in the "site."

29 C.F.R. Sec. 5.2(l )(1). In addition, the site of the work may include "fabrication plants, mobile factories, batch plants, borrow pits, job headquarters, tool yards, etc., ... provided they are dedicated exclusively, or nearly so, to the performance of the contract or project, and are so located in proximity to the actual construction location that it would be reasonable to include them." 29 C.F.R. Sec. 5.2(l )(2). Not included in the site of the work, however, are facilities "whose locations and continuance in operation are determined wholly without regard to a particular Federal or federally assisted contract or project," or which are "permanent, previously established facilities ... even where the operations for a period of time may be dedicated exclusively, or nearly so, to the performance of a contract." 29 C.F.R. Sec. 5.2(l )(3).

II. FACTUAL AND PROCEDURAL BACKGROUND

Appellant Midway was a prime contractor on eleven federally-funded construction projects subject to the Davis-Bacon and related Acts. 2 King Town Transportation, Inc. was a wholly-owned subsidiary of Mid way engaged in trucking operations for Midway and other companies. Midway employed two types of King Town truckdrivers for the federal projects at issue in this case: "non-delivery" truckdrivers who drove trucks on the job site as part of the construction work, and "material delivery" or "over-the-road" truckdrivers who picked up supplies from various independent commercial suppliers, transported the supplies to the job site, and unloaded the supplies. The material delivery truckdrivers spent ninety percent of their workday on the highway driving to and from the commercial supply sources, ranging up to 50 miles round trip. See Building & Constr. Trades Dep't, AFL-CIO v. United States Dep't of Labor, No. 84-0705, 1986 WL 32745, Memorandum Opinion ("Mem. Op. I") at 3 (D.D.C. Mar. 6, 1986). The drivers stayed on the "site of the work" only long enough to drop off their loads, usually for not more than ten minutes at a time. They also hauled materials for other contractors to non-federal projects. Midway paid the non-delivery drivers Davis-Bacon wages, but paid the material delivery drivers wages that were below the Davis-Bacon prevailing wage level.

In January, 1981, the Wage and Hour Division of the Department of Labor ("DOL") determined that Midway had violated the Davis-Bacon Act by paying its material delivery truckdrivers less than the prevailing wages set by the Secretary pursuant to the Act. As a result, DOL withheld from the payments due Midway on the government contracts the amount of backpay allegedly due to the material delivery truckdrivers. On May 15, 1981, Midway requested a ruling on the dispute from the Secretary of Labor ("Secretary") and a stay of the backpay withholding. Relying on the Secretary's regulation, 29 C.F.R. Sec. 5.2(j), the Assistant Administrator of the Employment Standards Administration, Wage and Hour Division of the Department of Labor, ruled that the material delivery truckdrivers were covered by the Act. After unsuccessfully requesting reconsideration of the decision, Midway appealed to DOL's Wage Appeals Board ("WAB"). The WAB reversed the Assistant Administrator's determination holding that the material delivery truckdrivers were acting in the place of "commercial suppliers" and, therefore, were not covered by the Davis-Bacon Act or the regulations enforcing that Act. See Wage Appeals Board Case No. 81-17, at 9 (Dec. 13, 1983).

The AFL-CIO challenged WAB's decision in district court. See 28 U.S.C. Secs. 1331, 1337. Midway cross-claimed for return of the retained back wages, plus interest. 3 The district court reversed the WAB, holding that there was no rational basis for its determination that 29 C.F.R. Sec. 5.2(j) did not cover the truckdrivers in this case. See Mem. Op. I at 13. However, the district court declined to address Midway's claim that 29 C.F.R. Sec. 5.2(j) is inconsistent with the Davis-Bacon Act. And, although it rejected WAB's reasoning that the truckdrivers were excluded from the Act and the regulation because they were the functional equivalent of...

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