Keystone Chapter of Associated Builders and Contractors, Inc. v. Com., Dept. of Labor and Industry

• Decision Date: 30 May 1980
• Parties: , 24 Wage & Hour Cas. (BNA) 1089 KEYSTONE CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF LABOR AND INDUSTRY, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 1129

414 A.2d 1129

51 Pa.Cmwlth. 586, 24 Wage & Hour Cas. (BNA) 1089

KEYSTONE CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF LABOR AND INDUSTRY, Respondent.

Commonwealth Court of Pennsylvania.

Argued March 11, 1980.

Decided May 30, 1980.

Stephen J. Weglarz, Susan R. Friedman, Lancaster, for petitioner.

Neil L. Hirsh, Asst. Atty. Gen., Dept. of Labor & Industry, James L. Cowden, Jerome H. Gerber, Handler & Gerber, P.C., Harrisburg, for respondent.

Daniel R. Schuckers, Asst. Atty. Gen., Harrisburg, co-counsel for respondent.

Edward C. First, Jr., Jason S. Shapiro, Harrisburg, for Mechanical Contractors Association.

Miles J. Gibbons, Jr., Morgan, Lewis & Bockius, Harrisburg, for amicus curiae, The General Contractors Association of Pa. Richard H. Greenberg, Allentown, for amicus curiae, Lehigh Valley Contractors Association, Inc.

F. Warren Jacoby, Dennis A. Martin, Philadelphia, for amicus curiae, Penn-Del-Jersey Chapter National Electrical Contractors Association.

MacPHAIL, Judge.

The Keystone Chapter of Associated Builders and Contractors, Inc. (Petitioner) is appealing an order of the Prevailing Wage Appeals Board (Board), which affirmed a final prevailing wage determination entered by the Secretary of Labor and Industry (Secretary), adopting the decision of the hearing examiner in a petition for review of the predetermination for the project "Additions to Solanco Senior High School, Lancaster County, Pennsylvania."

On October 4, 1978, the Solanco School District in Lancaster County filed a request with the Secretary for a predetermination of general prevailing minimum wage rates for inclusion in the specifications of its construction project. The Department of Labor and Industry (Department) promptly issued the predetermination in accordance with Section 7 of the Pennsylvania Prevailing Wage Act (Act), Act of August 15, 1961, P.L. 987, as amended, 43 P.S. § 165-7. Subsequently, Petitioner filed a petition for review of the predetermination under Section 8 of the Act, 43 P.S. § 165-8. At that point in the proceedings, the Pennsylvania Building and Construction Trades Council, AFL-CIO (Intervenor) was permitted to intervene. Hearings were held on November 13, 28, 29, and 30, and December 1, 1978, before a Department hearing examiner appointed by the Secretary.

At the hearings, Petitioner and Intervenor were permitted to present testimony and documentary evidence, and were given the opportunity to examine and cross-examine witnesses concerning prevailing wage rates. The Petitioner's evidence mainly consisted of 1) two computer print-outs, which allegedly indicated the number of men and hours worked at a certain hourly rate in various crafts or classifications in Lancaster County, and 2) the raw data on which the print-outs were based. The raw data, which additionally indicated type and location of construction projects, was compiled by college students under the direction of a Professor Kasperson.

Intervenor's evidence was composed of collective bargaining agreements and forms prepared by contractors and union representatives. This evidence included the hourly pay and fringe benefit rates purportedly paid on construction projects in Lancaster County, and also indicated the number of hours and workmen paid at each rate and the location and type of construction project.

After completion of the hearings and consideration of the evidence, the hearing examiner issued a report recommending to the Secretary prevailing minimum wage rates to be applied to the Solanco project. The Secretary adopted these rates and the Board affirmed the Secretary's decision. This appeal followed.

Our review of the Board's decision is limited by Section 704 of the Administrative Agency Law to determining whether "the adjudication is in violation of the constitutional rights of the appellant, or is not in accordance with law, or that the provisions of Subchapter A of Chapter 5 (relating to practice and procedure of Commonwealth agencies) have been violated in the proceedings before the agency, or that any finding of fact made by the agency and necessary to support its adjudication is not supported by substantial evidence." 2 Pa.C.S. § 704. In its appeal to this Court from the Board's order, the Petitioner raises numerous issues which are within our scope of review.

First, Petitioner contends that the Department has made an error of law in its interpretation of the statutory term "locality." Petitioner also makes the argument that the Act is unconstitutional on its face and in its administration, and as such denies Petitioner its constitutional right of equal protection. Furthermore, Petitioner alleges that its constitutionally-guaranteed right to due process has been denied in the proceedings before the Department. Lastly, Petitioner urges that the Department's findings are not supported by substantial evidence.

Interpretation of Statutory Term, "Locality"

Petitioner argues that the Board's conclusion that Lancaster County is the proper "locality" in determining a prevailing minimum wage rate for the Solanco project manifests the Board's ignorance of the clear statutory language of the Act. Section 7 of the Act provides in pertinent part that:

"The secretary shall . . . determine the general prevailing minimum wage rate in the locality in which the public work is to be performed for each craft or classification of all workmen needed to perform public work contracts during the anticipated term thereof."

The term "locality" as used in the Act is defined in Section 2(2) of the Act, 43 P.S. § 165-2(2):

" 'Locality' means any political subdivision, or combination of the same, within the county in which the public work is to be performed. When no workmen for which a prevailing minimum wage is to be determined hereunder are employed in the locality, the locality may be extended to include adjoining political subdivisions where such workmen are employed in those crafts or trades for which there are no workmen employed in the locality as otherwise herein defined."

Petitioner asserts that, correctly interpreted, the above sections of the Act require the "locality" to be "within the county;" in other words the "locality" may be any political subdivision or combination thereof with boundaries inside the county's boundaries. The "locality" may be expanded to the county or a larger area only when no workmen of a specific class are employed within the chosen "locality."

Petitioner argues that "Solanco School District" or "Quarryville," which is located in the center of the Solanco School District, should be designated the "locality" on which the determination is based. Petitioner advocates the use of Quarryville because Quarryville is a political subdivision within which several complex, substantial commercial and industrial construction projects have been completed in the last two years requiring a large number of man-hours put in by non-union skilled workmen. Petitioner believes those skilled workmen performing in Quarryville are capable of the Solanco job.

Petitioner adds that its interpretation of the Act's language is consistent with the Act's purpose. Petitioner states that the purpose of the Act as well as that of the federal Davis-Bacon Act, 40 U.S.C. § 276a et seq., after which the Pennsylvania Act is modeled, is to preserve jobs for the local workmen employed in the place where the public project is to be built. Therefore, Petitioner argues, the locality should first be determined on as small a geographical basis as possible Quarryville in this instance.

We do not find Petitioner's arguments convincing. Nothing in the Act precludes the Secretary, hence the Board, from determining the "locality" to be Lancaster County. We interpret Section 2(2) of the Act to mean that the geographical area encompassing a political subdivision or combination of political subdivisions need not be less than the whole county, although a combination of political subdivisions may not initially overlap county lines. The Act vests the Secretary with discretion to determine the appropriate "locality." The legislature could have employed language to restrict the "locality," for example, to the place of construction, but instead it chose to allow the Secretary considerable flexibility. The practicality of the Secretary's designation of Lancaster County as the "locality" is demonstrated by Petitioner's own evidence, which is based on a survey of wages paid on construction projects throughout Lancaster County, and in Petitioner's conclusions therefrom which are likewise made on a county-wide basis.

We find that designating Lancaster County as the "locality" is also consistent with the purpose of the Act as we construe it. The fundamental purpose of prevailing wage legislation is to protect the workmen employed on a government project from payment of substandard wages keeping in mind that the lowest responsible bidder is customarily awarded public contracts. United States v. Binghamton Construction Co., 347 U.S. 171, 74 S.Ct. 438, 98 L.Ed. 594 (1954). By guaranteeing such protection, the legislation helps to assure the employment of skilled craftsmen on the job. Since the Act's purpose is not to preserve jobs for local craftsmen, but to assure the local craftsmen who are employed standard wages, the local workmen in this case are afforded the wage protection with the prevailing wage rate based on Lancaster County in its entirety. Therefore, we hold that the Board made no error of law in affirming the Secretary's designation of Lancaster County as the "locality" for the purpose of determining the prevailing minimum wage rates for the Solanco project.

Constitutionality of the Act and its Interpretation by the Department

Petitioner raises three issues concerning the constitutionality of the Act and its interpretation by the Department: 1) Petitioner alleges that the Act...