Miree Const. Corp. v. Dole
| Citation | 930 F.2d 1536 |
| Decision Date | 13 May 1991 |
| Docket Number | No. 90-7143,90-7143 |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
| Parties | 30 Wage & Hour Cas. (BN 502, 119 Lab.Cas. P 35,494 MIREE CONSTRUCTION CORPORATION, Plaintiff-Appellant, v. Elizabeth DOLE, Secretary of United States Department of Labor, Defendant-Appellee. |
Braxton Schell, Jr., Bradley, Arant, Rose & White, Birmingham, Ala., for plaintiff-appellant.
Linda Carol Arnold, Atty., U.S. Dept. of Labor, Washington, D.C., Frank W. Donaldson, U.S. Atty., D. Wayne Rogers, Jr., Asst. U.S. Atty., Birmingham, Ala., for defendant-appellee.
Terry R. Yellig, Nora H. Leyland, Sherman, Dunn, Cohen, Leifer & Yellig, Washington, D.C., John L. Quinn, Longshore, Nakamura & Quinn, Birmingham, Ala., amicus curiae.
Appeal from the United States District Court for the Northern District of Alabama.
Before KRAVITCH and ANDERSON, Circuit Judges, and ATKINS *, Senior District Judge.
The Davis-Bacon Act requires contractors working on federally funded construction projects to pay their employees a wage that is not less than the prevailing wage for similarly situated employees in the locality. This wage can be paid in cash or in a combination of cash and fringe benefits. Miree Construction Corporation made certain contributions to a fringe benefit plan and took credit for these contributions when calculating its wage obligations under the Act. A Department of Labor Wage and Hour Division Administrator found that Miree's contributions to the plan were excessive and therefore Miree could not credit all the contributions toward its prevailing wage obligations. A divided Wage Appeals Board affirmed the Administrator, and the district court affirmed the Wage Appeals Board.
Miree Construction Corporation worked on three construction projects in 1984 and 1985 that were subject to the wage determinations of the Davis-Bacon Act (the "Act"), codified at 40 U.S.C. Secs. 276a-276a-5. 1 Under the Act, contractors working on federally funded construction projects must pay their employees a wage that is not less than the prevailing wage in the locality for corresponding classes of employees. See 40 U.S.C. Sec. 276a(a). An employee's wage for purposes of the Act, is the total of all cash wages and non-cash fringe benefits paid by the contractor to the employee. Specifically, the Act provides:
for medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, for unemployment benefits, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying costs of apprenticeship or other similar programs, or for other bona fide fringe benefits, but only where the contractor or subcontractor is not required by other Federal, State, or local law to provide any of such benefits.
(emphasis added).
During its work on the Davis-Bacon projects, Miree paid cash wages to its employees and also made contributions to an apprenticeship program operated by the Associated Builders and Contractors of Alabama, Inc. (the "ABC plan"). The ABC plan is approved by the Department of Labor's Bureau of Apprenticeship and Training and is authorized to provide training in fourteen trades. The plan bills contractors $500.00 for tuition and books for each of the contractor's apprentices trained. Miree had one employee enrolled in the plan as an apprentice carpenter during the time Miree worked on the Davis-Bacon projects. Rather than pay the $500.00 fee, however, Miree made contributions into the plan of $.25 for each hour worked by Miree's carpenters, bricklayers, and laborers. These contributions totalled $11,293.52. Miree counted these $.25 per hour contributions as fringe benefits for the purpose of complying with the Act's prevailing wage requirements.
A Department of Labor Wage and Hour Division Administrator investigated Miree's contributions and disallowed most of the contributions. The Administrator stated that the Davis-Bacon Act only allowed Miree to receive credit for $500.00, the actual cost of enrolling Miree's one apprentice carpenter in the ABC plan. Furthermore, in determining the amount per hour that Miree could credit toward its prevailing wage obligations, the Administrator applied the "annualization principle." Under this principle, when converting the $500.00 into an hourly amount, the $500.00 was divided by the total number of working hours in the year, not just those hours spent working on Davis-Bacon projects. Finally, the Administrator allowed Miree a credit for the hourly amount only for its carpenters, not for its bricklayers and laborers. The Administrator reasoned that costs incurred for training one classification of employees could not be credited for meeting the prevailing wage requirements of another classification. In light of these determinations, the Administrator instructed the United States Army, the agency that had hired Miree, to withhold funds that were due Miree.
Miree appealed the decision of the Administrator to the Wage Appeals Board (the "Board"). In lieu of a hearing before an administrative law judge, Miree submitted ten stipulations of fact to which the Administrator responded. The Wage Appeals Board then made its determination based on the administrative record compiled to that point, plus the stipulations. The Board affirmed the decision of the Administrator.
In its appeal to the Board, Miree made three arguments as to why it should be allowed to claim credits for the total amount it paid into the ABC plan. First, Miree argued that the $.25 per hour payments were a "contribution" irrevocably made to a trustee of an approved plan, and therefore were allowable under section 276a(b)(2)(A). Miree contended that union contractors are allowed credits under this section, and Miree, a non-union contractor, had made payments in an amount consistent with payments considered reasonable when made by unions. Second, Miree argued that application of the annualization principle results in de facto government regulation of private construction contracts that were never intended to be covered by the Act. Third, Miree argued that its contributions should be allowed for all of its job classifications, not just the carpenter who was involved in the apprenticeship program. Miree claimed that as for its bricklayers, union contractors' contributions are routinely allowed as credits even though the union contractor may not have any apprentices enrolled at a given time. As for laborers, there is no statutory basis for excluding contributions made for the laborer classification. Furthermore, not to allow the contributions discriminates against non-union contractors because their employees frequently do different jobs while working on the same project, unlike union workers, who work only in one craft.
The opinion of the Board was written by Member Dunn, who affirmed the decision of the Administrator. Member Rothman concurred, and Chairman Andrews dissented. Dunn first distinguished between "funded" plans under subparagraph (A) of the statute and "unfunded" plans under subparagraph (B) of the statute. According to Dunn, a funded plan is a plan provided for in a collective bargaining agreement. An unfunded plan, according to Dunn, is a plan not provided for in a collective bargaining agreement. Dunn concluded that Miree's contributions of $.25 per hour could not be considered contributions to a funded plan because they were not made "pursuant to a fund, plan, or program"--the ABC plan did not require contributions of $.25 per hour, but rather required only a payment of $500.00 for each employee enrolled. See Wage Appeals Board Decision at 9 (R. 323) (emphasis original). Thus, rather than examining Miree's "rate of contribution" to a funded plan, Dunn assessed Miree's "rate of costs" to an unfunded plan. Dunn interpreted "rate of costs" to mean the actual costs paid by Miree into the ABC plan, in this case $500.00.
Dunn next addressed the issue of annualization. Dunn agreed with the Administrator that the annualization principle must be applied to Miree's payments into the ABC plan. As mentioned above, the annualization principle requires that when converting an employer's contribution to a plan into an hourly amount, the amount of payments must be divided by the total number of hours worked in a year, not just the number of hours worked on Davis-Bacon projects. Dunn reasoned that this principle prevents employers from receiving credit toward their Davis-Bacon wage obligations for compensation actually provided during non-Davis-Bacon work.
Lastly, Member Dunn addressed whether or not Miree could receive credit toward its wage obligations to its bricklayers and laborers when it did not have any bricklayers or laborers enrolled in the ABC plan. Dunn agreed with the Administrator that Miree could not make payments for training one class of workers and take credit for those payments against its wage obligations to other classes. Miree had argued that this rule discriminated against non-union contractors because non-union employees often move from one job classification to another during a given project. Although admitting that this...
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