STATE BLDG. COUNCIL v. PREVAILING WAGE BD.

• Decision Date: 11 January 1999
• Citation: 722 A.2d 1139
• Parties: PENNSYLVANIA STATE BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL-CIO and its Affiliated Labor Organizations, Petitioners, v. COMMONWEALTH of Pennsylvania, PREVAILING WAGE APPEALS BOARD; and Commonwealth of Pennsylvania, Department of Labor and Industry, Respondents.
• Court: Pennsylvania Commonwealth Court

722 A.2d 1139

PENNSYLVANIA STATE BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL-CIO and its Affiliated Labor Organizations, Petitioners, v. COMMONWEALTH of Pennsylvania, PREVAILING WAGE APPEALS BOARD; and Commonwealth of Pennsylvania, Department of Labor and Industry, Respondents.

Commonwealth Court of Pennsylvania.

Argued May 6, 1998.

Decided January 11, 1999.

Irwin W. Aronson, Philadelphia, for petitioner.

Richard C. Lengler, Harrisburg, for respondent.

Lawrence S. Coburn, Philadelphia, for intervenors, Southeast Pennsylvania, et al. Stanley B. Edelstein, Philadelphia, for intervenor, Mechanical Contractors Ass'n.

Before COLINS, President Judge, and DOYLE, J., SMITH, J., PELLEGRINI, J., FRIEDMAN, J., FLAHERTY, J., and LEADBETTER, J.

DOYLE, Judge.

The Pennsylvania State Building and Construction Trades Council, AFL-CIO, and its affiliated labor organizations (collectively, Council) appeal from a determination of the Department of Labor and Industry's Prevailing Wage Appeals Board (Board). The Board upheld a decision of the Secretary of the Department of Labor and Industry (Department or Secretary) to use the results of a statewide wage survey to determine prevailing minimum wage rates under the Pennsylvania Prevailing Wage Act (PWA), Act of August 15, 1961, P.L. 987, as amended, 43 P.S. §§XXX-X-XXX-XX, and its applicable regulations.¹

Under the PWA, every public body that engages in the construction of a public work project must receive a determination from the Secretary as to the prevailing minimum wage rates to be paid to the workers employed on the project. Section 4 of the PWA, 43 P.S. §165-4. Traditionally, the Department had relied exclusively on collective bargaining agreements (CBAs) to set prevailing wage rates, as permitted by 43 Pa.Code §9.105(a). Criticism of this practice and a recommendation from the Independent Regulatory Review Commission prompted the Department to explore alternatives. In the fall of 1995, the Secretary elected to conduct a statewide survey to gather information to be used to calculate prevailing minimum wages. Accordingly, the Department entered into an agreement with Pennsylvania State University to design and conduct a statewide wage survey to determine prevailing wage rates for Pennsylvania on a county-by-county basis. In part, the survey was modeled after wage surveys performed by the United States Department of Labor to determine prevailing wages under the federal Davis-Bacon Act.²

On June 20, 1996, survey forms and instruction booklets were mailed to qualified construction employers throughout the state. Survey forms were distributed to others, including labor unions, upon request. Participation was voluntary and respondents were asked to provide information for privately funded contracts only, which were performed during the period from January 1, 1995, to May 31, 1996. The survey deliberately excluded all data regarding the rates paid to workers on public work projects. Survey respondents were instructed to provide "peak workweek"³ information for each occupation. Some job classifications were combined as a single occupation. The Department adopted certain methods for the verification and approval of survey responses. For example, the Department adopted the "50% + 1 rule." Under this rule, when a majority ("50% + 1") of the workers for a craft in a county were paid an identical wage rate, whether that rate derived from a CBA or otherwise, it was used as the prevailing wage. If no single wage was paid to a majority of workers, then a weighted average based on hours worked was used to determine the prevailing wage. Council filed a grievance with the Board challenging the Department's decision to initiate and utilize the survey. Numerous parties intervened in that proceeding. Initially, the Board dismissed the grievance, concluding that the matter was not ripe for adjudication because the Department had not resolved to use the survey data to determine future prevailing wage rates. While an appeal was pending before this court, on March 3, 1997, the Department began issuing wage rate determinations exclusively on the basis of the survey. On August 13, 1997, this Court issued an order remanding this matter to the Board to decide the merits of the issues raised.⁴ Thereafter, the Board held hearings on remand. On December 1, 1997, the Board denied the grievance on the merits, concluding that the Secretary's decision to conduct a wage survey and the design and methodology used by the survey to gather the wage data were a reasonable exercise of his discretion under the PWA. The Board opined:

It is apparent from the record that a survey is the best, if not only way, to determine what wage rates are being paid to workers in the localities where they work. Experts in the survey field designed the Secretary's survey.... All the experts, on both sides, differed on the various aspects of the design and methodology of the survey used. The record, however, shows the Secretary's survey was designed to produce the best results possible given the language of the Act, Regulations and the voluntary nature of its response. There was and has been no alternative method offered to the Secretary to accomplish the purpose imposed by his statutory duty.... [A]buse of discretion is a relative term.... When measuring abuse of discretion we want to know if it's better or worse than the alternative.

(Board's Decision, 12-1-97, at 11-12.) This appeal followed.⁵

On appeal, the Council and MCA, its supporting intervenor, challenge generally the use of a statewide survey to determine prevailing wages, and raise several allegations of error concerning the survey's design, methodology and implementation, including the following:

• The survey improperly excluded wage data from public works projects.

• The survey utilized the notion of a "peak week" as the unit of time for which wage data was collected.

• The survey was designed to determine prevailing wages on a county-by-county basis, rather than a project-by-project basis.

• The survey was not part of a continuing program to obtain and compile wage rates.

Council also asserts that the Board capriciously disregarded competent evidence and failed to resolve various evidentiary issues.

Our standard of review is limited to determining whether constitutional rights were violated, whether the Board committed an error of law, and whether necessary findings of fact are supported by substantial evidence.⁶ Section 704 of the Administrative Agency Law, 2 Pa.C.S. §704. Further, although our review of legal issues is plenary, our Supreme Court has recently reiterated the well-established principle that:

An interpretation by the agency charged with a statute's implementation is accorded great weight and will be overturned only if such a construction is clearly erroneous.

Cherry v. Pennsylvania Higher Education Assistance Agency, 537 Pa. 186, 188, 642 A.2d 463, 464 (1994); Masland v. Bachman, 473 Pa. 280, 290-91 n. 25, 374 A.2d 517, 522 n. 25 (1977). Similarly, "[u]nless plainly erroneous or inconsistent with the statute under which regulations were promulgated, an administrative agency's interpretation of its regulations is of controlling weight." Concerned Residents of the Yough, Inc. v. Department of Environmental Resources, 543 Pa. 241, 246, 670 A.2d 1120, 1122 (1995).

In addition, to the extent that Council's complaints relate to the manner in which the Secretary has carried out a discretionary function, unless some action of the Secretary is in direct violation of a statute or lawfully promulgated regulation, it must be judged by the abuse of discretion standard. Under that standard, we will not overturn an exercise of administrative discretion unless it is arbitrary or capricious. Bandy v. Commonwealth, 108 Pa.Cmwlth. 387, 530 A.2d 507, 511 (Pa.Cmwlth.1987), petition for allowance of appeal denied, 518 Pa. 614, 540 A.2d 535 (1988).

With regard to the question of whether the Secretary generally has the authority to conduct a wage survey, Section 2203 of the Administrative Code of 1929, Act of April 9, 1929, P.L. 177, as amended, 71 P.S. §563, grants the Secretary the power to conduct surveys. Section 2203 provides:

The Department of Labor and Industry shall have the power to make investigations and surveys upon any subject within the jurisdiction of the department, either upon its own initiative or upon the request of an advisory board, commission or committee of the department.

Moreover, there is no question that prevailing wage rates are a "subject within the jurisdiction of the Department." Section 7 of the PWA, 43 P.S. § 165-7 provides:

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 terms thereof....

Thus, because the aforementioned statutes provide for the conduct of surveys to determine prevailing minimum wage rates, the Secretary's decision to conduct a state-wide wage survey was not, in itself, an abuse of discretion.

We next consider Council's contention that the Secretary's decision to exclude wage data paid on public work projects is contrary to 34 Pa.Code §9.105(d), which mandates:

(d) The Secretary will conduct a continuing program for obtaining and compiling of wage rate information and shall encourage the voluntary submission of wage rate data by contractors, contractors' associations, labor organizations, public officials and other interested parties, reflecting wage rates paid to workmen in the various types of construction in the locality. Rates shall be determined for varying types of projects within the entire range of work performed by the building and construction industry. ...

34 Pa.Code §9.105(d) (emphasis added).

When the statewide wage survey was conducted, the Secretary deliberately excluded all public works...