Building & Const. Trades' Dept., AFL-CIO v. Donovan, AFL-CIO

• Decision Date: 05 July 1983
• Docket Number: 83-1157,AFL-CIO,Nos. 83-1118,s. 83-1118
• Citation: 712 F.2d 611
• Parties: 26 Wage & Hour Cas. (BNA) 404, 229 U.S.App.D.C. 297, 98 Lab.Cas. P 34,403, 31 Cont.Cas.Fed. (CCH) P 71,368 BUILDING & CONSTRUCTION TRADES' DEPARTMENT,, et al. v. Raymond J. DONOVAN, Secretary of Labor, et al., Appellants. BUILDING & CONSTRUCTION TRADES' DEPARTMENT,, et al., Appellants, v. Raymond J. DONOVAN, Secretary of Labor, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 611

712 F.2d 611

26 Wage & Hour Cas. (BNA) 404, 229 U.S.App.D.C. 297,

98 Lab.Cas. P 34,403,

31 Cont.Cas.Fed. (CCH) P 71,368

BUILDING & CONSTRUCTION TRADES' DEPARTMENT, AFL-CIO, et al. v. Raymond J. DONOVAN, Secretary of Labor, et al., Appellants.

BUILDING & CONSTRUCTION TRADES' DEPARTMENT, AFL-CIO, et al., Appellants, v. Raymond J. DONOVAN, Secretary of Labor, et al.

Nos. 83-1118, 83-1157.

United States Court of Appeals District of Columbia Circuit.

Argued May 6, 1983.

Decided July 5, 1983.

Appeals from the United States District Court for the District of Columbia (D.C.Civil No. 82-01631).

J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., with whom Stanley S. Harris U.S. Atty., Carolyn B. Kuhl, Deputy Asst. Atty. Gen., Robert E. Kopp, Anthony J. Steinmeyer, Frank A. Rosenfeld, Attys., Dept. of Justice, and Karen I. Ward, Associate Sol., Dept. of Labor, Washington, D.C., were on the brief, for appellants/cross-appellees.

Laurence Gold and Terry R. Yellig, Washington, D.C., with whom Laurence J. Cohen and Robert J. Connerton, Washington, D.C., were on the brief, for appellees/cross-appellants. Linda Lipsett, Washington, D.C., also entered an appearance for appellee in 83-1118.

Thomas S. Martin, Washington, D.C., was on the brief for Associated Builders and Contractors, Inc., amicus curiae urging reversal in 83-1118 and affirmance in 83-1157.

G. Brockwel Heylin and Michael E. Kennedy, Washington, D.C., were on the brief for Associated Gen. Contractors of America, Inc., amicus curiae urging reversal in 83-1118 and affirmance in 83-1157.

Before EDWARDS, Circuit Judge, and McGOWAN and MacKINNON, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

This appeal brings before us on an expedited basis five provisions of certain final rules issued by the Secretary of Labor ("the Secretary") under the Davis-Bacon Act, 40 U.S.C. § 276a et seq. (1976), and the Copeland Anti-Kickback Act, 40 U.S.C. § 276c (1976). These statutes, essentially unchanged since their enactment or amendment in the 1930's, guarantee to workers on federal construction projects a minimum wage based on locally prevailing wage rates. Three of the new regulatory provisions of concern here would alter the method for finding the prevailing wage. Another set of regulations would allow federal contractors far greater freedom to use semiskilled helpers on projects than has previously been permitted. The Secretary asserts that this expanded use of helpers would better reflect the practice on private projects. The fifth provision is intended to ease the regulatory burden on federal construction contractors by reducing the detail required in their weekly submissions to the government regarding wages. All of the regulations under challenge are expected to reduce federal construction costs; the Secretary has estimated that the last two provisions alone would save the government or its contractors about $463 million per year. See 47 Fed.Reg. 23,657, 23,662, 23,664 (1982) (regulatory impact statement).

This action was brought by the AFL-CIO, sixteen AFL-CIO unions or departments, and the Teamsters union ("the unions"), seeking an injunction against implementation of the new regulations and a declaration that the rules are contrary to law. No claims of procedural irregularity were pressed. The District Court granted the requested relief in part. We affirm in part and reverse in part. We uphold all of the new regulations as within the broad administrative discretion contemplated by Congress, except for (1) the provision simplifying submissions of wage data to the government, which we find to be inconsistent with the language and purpose of the statutory command that the submissions contain wage data as to "each employee," and (2) part of the expanded permission to use helpers, which part we find similarly contrary to statutory language and purpose.

I

As noted, the Davis-Bacon Act was enacted during the Great Depression to ensure that workers on federal construction projects would be paid the wages prevailing in the area of construction. The evil sought to be remedied was that, with the precise specifications set out in federal contracts and the increasing standardization of building-material prices, the low-bidding contractor on a federal job was generally the one who paid the lowest wages. See generally S.REP. NO. 332, 74th Cong., 1st Sess. pt. 2, at 4 (1935) ("variations between bids submitted by competing contractors are due most frequently to different estimates of labor costs"). The contractor would accomplish this by taking advantage of widespread unemployment in the construction industry and hiring workers at substandard wages, often bringing a low-paid crew in from distant areas. Id. at 7-8.

This practice was deemed to be a problem for two reasons. First, and apparently most important, it tended to undercut one of the purposes of the massive federal building program of the times, which was to distribute employment and federal money equally throughout the country. S.REP. NO. 1445, 71st Cong., 3d Sess. 1-2 (1931). Local contractors and workers, used to a certain wage and living standard, could not compete with the migratory labor of the winning bidder. Id. at 2; see also 74 CONG.REC. 6510 (1931) (remarks of Senator Bacon) ("I think it is a fair proposition where the Government is building these post offices and public buildings throughout the country that the local contractor and local labor may have a 'fair break' in getting the contract."); 10 Comp.Gen. 294, 295 (1931) (" 'The Government should be the last employing agency to expect or countenance the performance of its construction contracts at the sacrifice of its citizens.' ") (quoting letter from Treasury Secretary proposing administrative predecessor of Davis-Bacon Act).

Second, the lower wages led to labor strife and to broken contracts by contractors who speculated on the labor market unwisely, thus preventing "the most economical and orderly granting of Government contracts." S.REP. NO. 332, supra, pt. 2, at 8; see also 74 CONG.REC. 6510 (1931) (remarks of Rep. LaGuardia) ("the workmanship of the cheap imported labor was of course very inferior"). Nevertheless, under a ruling by the Comptroller General, federal contracting agencies could not insist on contractors paying the prevailing wage because of the statutory requirement that federal contracts go to the lowest bidder. 10 Comp.Gen. 294, 301 (1931) (prevailing wage requirement would "remove[ ] from competitive bidding on the project an important element of cost and tend[ ] to defeat the purpose of the [low-bid] statute"). Thus, legislation was called for.

The original Davis-Bacon Act was enacted in 1931 and required that federal contractors on certain projects pay the prevailing wage in the area, as determined by the contractors. Any disputes over the contractors' determinations were to be referred to the Secretary for conclusive determination. Davis-Bacon Act, ch. 411, 41 Stat. 1494 (1931). Dissatisfaction with this arrangement surfaced quickly, however, as widespread violations and abuses were discovered. An attempt to provide for predetermination of the prevailing wage by the Secretary and penalties for failure to pay that rate was vetoed by President Hoover in 1932 as "obscure and complex and ... impracticable of administration," 75 CONG.REC. 14,589 (1932) (veto message); see id. at 14,590 ("The whole design of the new ... proposal requires an expansion of bureaucratic control over activities which now function effectively with the minimum of interference by the Government and that only when dispute arises.").

Congress had greater success in 1935. It passed wage predetermination and enforcement provisions that have remained essentially unchanged to this day. The Act now provides that the advertised specifications for every federal construction project in excess of $2,000 that requires 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 city, town, village, or other civil subdivision of the State, in which the work is to be performed.

40 U.S.C. § 276a(a) (1976). The construction contract must contain a stipulation requiring that the advertised wages be paid, and the applicable wages must be posted at the site. Id. The contracting agency is empowered to withhold payment to ensure compliance with the minimum wage requirements. Id.

In response to some of the abuses prevalent under the 1931 act, Congress in 1934 also passed the Copeland Anti-Kickback Act, which generally makes it a crime for a federal contractor to require or coerce workers to return a portion of their contractual pay to their employer. Copeland Anti-Kickback Act, ch. 482, § 1, 48 Stat. 948 (1934) (codified as amended at 18 U.S.C. § 874 (1976)). The section of the Copeland Act that is relevant here directs the Secretary to make reasonable regulations for federal contractors, "including a provision that each contractor and subcontractor shall furnish weekly a statement with respect to the wages paid each employee during the preceding week." 40 U.S.C. § 276c (1976).

The regulations at issue seek to implement these two statutes. They would alter the present regulatory scheme by (1) eliminating the so-called "thirty-percent rule" by which a locally prevailing rate could be set at the rate paid to a thirty-percent plurality of local workers; (2) combining data from adjacent rural counties but excluding any nearby urban counties when wage data in a given rural county is insufficient to determine a locally prevailing wage; (3) excluding from the prevailing-wage...