Building and Const. Trades Dept., AFL-CIO v. Reich

Decision Date16 February 1995
Docket Number93-5195,AFL-CIO,Nos. 93-5129,s. 93-5129
Citation40 F.3d 1275
Parties, 63 USLW 2394, 129 Lab.Cas. P 33,183, 2 Wage & Hour Cas.2d (BNA) 737 BUILDING AND CONSTRUCTION TRADES DEPARTMENT,, et al., Appellants, v. Robert B. REICH, in his official capacity as Secretary of Labor, Appellee. Associated Builders and Contractors, Inc., Movant Intervenor/Appellant.
CourtU.S. Court of Appeals — District of Columbia Circuit

Terry R. Yellig, Washington, DC, argued the cause, for appellant Building and Const. Trades Dept., AFL-CIO. Gary L. Lieber, Washington, DC, argued the cause, for appellant Nat. Elec. Contractors Ass'n of America, Inc., and Sheet Metal and Air Conditioning Contractors Nat. Ass'n. With them on the briefs were Scott Robins, Washington, DC, and Stephen Burton, St. Paul, MN. Judith E. Rivlin, Washington, DC, entered an appearance for appellant Sheet Metal Workers' Intern. Ass'n, Local Union 213.

Matthew M. Collette, Atty., U.S. Dept. of Justice, Washington, DC, argued the cause, for appellee. On the brief, for appellee Robert B. Reich, Secretary of the U.S. Dept. of Labor, were Frank W. Hunger, Asst. Atty. Gen., Eric H. Holder, Jr., U.S. Atty., and William Kanter and Lowell V. Sturgill, Jr., Attys., U.S. Dept. of Justice, Washington, DC. Robert M. Loeb, Washington, DC, entered an appearance.

Maurice Baskin, Washington, DC, argued the cause and filed the brief, for intervenor Associated Builders and Contractors, Inc.

Before EDWARDS, Chief Judge, and SENTELLE and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting opinion filed by Chief Judge EDWARDS.

SENTELLE, Circuit Judge:

The Building and Construction Trades Department, AFL-CIO, and certain local labor organizations and contractor associations (collectively, "the unions") appeal the district court's grant of summary judgment in favor of Robert B. Reich, the Secretary of Labor (hereinafter "the Secretary" or "Labor"), in an action to review a decision by Labor's Wage Appeals Board that the unions' job targeting programs ("JTPs") violate the Davis-Bacon Act and Labor's regulations. See Building and Constr. Trades Dep't v. Reich, 815 F.Supp. 484, 486 (D.D.C.), reconsideration denied, 820 F.Supp. 11, 14 (D.D.C.1993). Associated Builders and Contractors, Inc. ("ABC") appeals the district court's denial of its motion to intervene and seeks to intervene on appeal. For the reasons set forth below, the decision of the district court is affirmed and the motion to intervene on appeal is denied.

I. BACKGROUND

In 1988, ABC, a national trade association of construction employers, requested that the Administrator of Labor's Wage and Hour Division rule on the legality of deductions taken from the wages of workers to fund JTPs, which are union-initiated programs designed to maintain or improve the unions' share of certain construction markets by subsidizing the wage costs of union employers who bid on certain projects. Under a JTP, an employer takes out of its employees' wages payroll deductions authorized by the membership of the union, which are then paid into a union-managed fund. The union unilaterally decides what jobs to target and uses this fund to provide a wage subsidy either to the contractor or directly to the employees on the targeted job. Deductions from employees' pay to fund JTPs and the provision of JTP subsidies to union contractors occur on both public and private construction projects.

The Copeland Act, 18 U.S.C. Sec. 874 (1988), provides criminal penalties for anyone who forces a construction worker employed on a public project to give up any part of the compensation to which he is entitled under his employment contract. The Davis-Bacon Act, 40 U.S.C. Sec. 276a(a) (1988), provides that all construction contractors on public construction projects are required to pay laborers and mechanics employed directly on the site of the work the "prevailing" wage and that wage has to be paid "without subsequent deduction or rebate on any account," "regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics...." Labor has issued anti-kickback regulations under the Copeland Act, which are also designed to aid in the enforcement of the prevailing wage provisions of the Davis-Bacon Act. See 29 C.F.R. Sec. 3.1 (1994). Section 3.5 provides that certain enumerated deductions may be made without application to and approval of Labor. Subsection 3.5(i) specifically permits deductions to pay regular union initiation fees and membership dues, not including fines or special assessments. 29 C.F.R. Sec. 3.5. Section 3.6 states that some payroll deductions are permissible with Labor's approval and any contractor or subcontractor may apply to Labor for permission to make any deduction not permitted under section 3.5. 29 C.F.R Sec. 3.6. Labor may grant such permission whenever it finds that the "contractor, subcontractor, or any affiliated person does not make a profit or benefit directly or indirectly from the deduction either in the form of a commission, dividend, or otherwise...." 29 C.F.R. Sec. 3.6(a).

The Administrator determined that while the JTP funds collected by the unions are not wage kickbacks prohibited by the Copeland Act, JTP deductions violate prevailing wage rate requirements of the Davis-Bacon Act and are not permissible under either section 3.5 or section 3.6 because such deductions benefit employers. The unions petitioned the Wage Appeals Board to review and overturn the Administrator's decision, and Labor and ABC opposed the petition.

In Building and Construction Trades Unions Job Targeting Programs, Wage App. Bd. Case No. 90-02 (June 13, 1991), the Wage Appeals Board upheld the determination that JTPs violate the Davis-Bacon Act prevailing wage rate requirements and the relevant regulations. The Board reasoned that the Davis-Bacon Act requires the payment of prevailing area wages and that Labor's regulations, which generally prohibit payroll deductions unless specifically enumerated or approved by Labor, are intended to effectuate that end. While the unions claimed that the JTP deductions are authorized under section 3.5(i) as membership dues, the Board concluded that JTP deductions are not union membership dues as that term is ordinarily understood. The Board considered the effect of Communications Workers of America v. Beck, 487 U.S. 735, 745, 108 S.Ct. 2641, 2648, 101 L.Ed.2d 634 (1988), which held that periodic dues under section 8(a)(3) of the National Labor Relations Act ("NLRA"), 29 U.S.C. Sec. 158(a)(3) (1988), were limited to funds expended for the core functions of collective bargaining, contract administration, and grievance adjustment. One Board member relied on Beck in finding that JTP deductions from non-union employees' wages violate the Davis-Bacon Act because they go beyond the funds needed for the core functions. The other two Board members, however, found the discussion of Beck unnecessary to their decision.

The unions sought review of the adverse decision of the Wage Appeals Board in the district court, and ABC requested intervention as of right or, in the alternative, permissive intervention. The district court, adopting the report and recommendation of Magistrate Judge Kay, denied ABC intervention, reasoning that the Davis-Bacon Act was enacted to protect employees rather than employers. See United States v. Binghamton Constr. Co., 347 U.S. 171, 176-77, 74 S.Ct. 438, 441-42, 98 L.Ed. 594 (1954). Considering cross-motions for summary judgment, the district court granted Labor's motion on the basis that Labor's interpretation of its own regulations are reasonable and consistent with the purposes of the Davis-Bacon Act.

The district court first held that the Wage Appeal Board's conclusion that wages withheld under JTPs are not membership dues is not plainly erroneous or inconsistent with section 3.5(i) and that the Board's interpretation was consistent with the relevant regulations as a whole. Specifically, the court found it consistent to disallow contractors from making JTP payroll deductions without Labor's approval under section 3.5(i) when Labor could not approve such deductions under section 3.6 because the contractor would benefit, directly or indirectly, from the deduction. In determining whether the regulation was, in turn, consistent with the Davis-Bacon Act, the court employed the analysis mandated by Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984) (court reviewing agency's interpretation of statute it administers faces two questions: did Congress directly speak to the precise question and, if not, is the agency's interpretation based on a permissible construction of the statute). Applying the first step of the Chevron analysis, the district court ascertained that the language of the Davis-Bacon Act did not reveal a clear congressional intent inconsistent with the regulation at issue.

Although concluding that the statute does not speak directly to the issue, the court observed that the fact that JTPs collect wages from employees in order to pay contractors in exchange for continued or increased employment is inconsistent with the purpose of the Davis-Bacon Act, which is to prevent contractors using cheap labor from unfairly winning contracts by underbidding their local competitors. See Universities Research Ass'n v. Coutu, 450 U.S. 754, 773-74, 101 S.Ct. 1451, 1462-63, 67 L.Ed.2d 662 (1981). Thus, in the second step under Chevron, the district court easily determined that Labor's interpretation of the statute is plainly reasonable and consistent with the Davis-Bacon Act's purpose of protecting local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area. Se...

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