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PENNSYLVANIA PREVAILING WAGE APPEALS BOARD v. STEVE BLACK (11/05/76)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: November 5, 1976.

PENNSYLVANIA PREVAILING WAGE APPEALS BOARD, COMMONWEALTH OF PENNSYLVANIA
v.
STEVE BLACK, INC., APPELLANT

Appeal from the Order of the Pennsylvania Prevailing Wage Appeals Board in case of In Re: Appeal of Steve Black, Inc., dated March 12, 1976.

COUNSEL

Norman I. White, with him C. Grainger Bowman and McNees, Wallace & Nurick, for appellant.

David A. Ody, Assistant Attorney General, for appellee.

President Judge Bowman and Judges Crumlish, Jr. and Blatt, sitting as a panel of three. Opinion by Judge Blatt.

Author: Blatt

[ 27 Pa. Commw. Page 23]

Steve Black, Inc. (appellant) appeals from an order of the Pennsylvania Prevailing Wage Appeals Board (Board), dated March 12, 1976, which affirmed a decision of the Secretary of Labor and Industry (Secretary), dated November 26, 1975. The Secretary's decision held that the appellant had intentionally violated Section 5 of the Pennsylvania Prevailing Wage Act*fn1 (Act), 43 P.S. § 165-5.

The appellant, a mechanical contractor having its principal place of business at R.D. No. 1, Carlisle, Pennsylvania, had contracts to do the plumbing, heating, ventilation, and air-conditioning (HVAC) work at the Central Senior High School in York, the plumbing and heating work at the Big Spring Middle School in Newville, and the pipelaying work at the New Junior High School in the Central Dauphin School District.

On June 4, 1974, a field inspector for the Prevailing Wage Division of the Department of Labor and Industry (Department) conducted a "routine checkup" at the Big Spring project and learned that several of the appellant's plumbers employed there were not receiving the prevailing minimum wage. This finding was followed by audits of the appellant's payroll records which indicated that not only had it failed to pay the prevailing minimum wage on the Big Spring

[ 27 Pa. Commw. Page 24]

    project, but that it had also underpaid its workmen on the Central Senior High School and the New Junior High School projects. Hearings were held on April 7, 1975 and August 4, 1975, after which the Secretary found the appellant guilty of intentionally violating Section 5 of the Act, 43 P.S. § 165-5, and ordered it to pay the aggrieved employes a total of $2,428.12 in back wages.*fn2 The Secretary also ordered the General Counsel of the Department to notify all public bodies that no contract could be awarded to the appellant for a period of three years from the date of notice, such action being required whenever the Secretary finds that a contractor has intentionally violated the Act. Section 11(e) of the Act, 43 P.S. § 165-11(e). The Board affirmed the Secretary's decision and the appellant then appealed to this Court, reasserting three contentions: (1) that this proceeding should be dismissed because it was brought pursuant to Department regulations which had not been properly promulgated in accordance with the requirements of the Commonwealth Documents Law*fn3 (Law); (2) that this proceeding should be dismissed because the Secretary does not have the authority to institute independently any such investigations as were instituted here; and (3) that the record does not support the findings of the Secretary (as recommended by the Hearing Examiner and as affirmed by the Board) that the appellant

[ 27 Pa. Commw. Page 25]

    corporation was guilty of an intentional failure to pay its workmen the prevailing wage rates.

Section 44 of the Administrative Agency Law,*fn4 71 P.S. § 1710.44, limits our scope of review to determining whether or not the "Findings of Facts" are supported by substantial evidence, whether or not an error of law was committed, or whether or not the appellant's constitutional rights were violated. Williams v. Civil Service Commission, 457 Pa. 470, 327 A.2d 70 (1974); General Electric Corp. v. Human Relations Commission, 18 Pa. Commonwealth Ct. 316, 334 A.2d 817 (1975).

In making its assertion that this proceeding should be dismissed because it was formally brought pursuant to improperly promulgated Department regulations, the appellant relies on our recent decision in Burlington Homes, Inc. v. Kassab, 17 Pa. Commonwealth Ct. 329, 332 A.2d 575 (1975). This reliance, however, is misplaced. In Burlington Homes, supra, we held that an administrative regulation, which banned the primary movement of fourteen-foot wide mobile homes on State highways after February 28, 1974, was invalid because it had not been promulgated pursuant to the requirements of the Commonwealth Documents Law, and that, therefore, the Pennsylvania Department of Transportation had no grounds upon which to base its rejection of applications for special hauling permits. See also Newport Homes, Inc. v. Kassab, 17 Pa. Commonwealth Ct. 317, 332 A.2d 568 (1975). In the present case, however, the Department proceeded strictly in accordance with and pursuant to statutory provisions and, therefore, there being no Department regulations relied upon here, Burlington Homes, supra, is not controlling.

[ 27 Pa. Commw. Page 26]

The appellant alternatively urges us to dismiss this proceeding because the Secretary, the Prevailing Wage Bureau and the Board were all without jurisdiction to proceed against the appellant. This, it argues, is because the Secretary does not possess the authority to conduct independent investigations. Although it is true that the Act does not expressly grant such power to the Secretary,*fn5 we believe that the broad authority found in Section 2203 of The Administrative Code of 1929*fn6 (Code), 71 P.S. § 563, is sufficient. It provides that: "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 the Industrial Board." (Emphasis added.) We believe, therefore, that the Secretary is empowered to supervise compliance with the Act by authorizing field inspectors to make "routine checkups" at job sites and to audit payroll records independently to determine whether or not a contractor has failed to pay the minimum wage rates.*fn7 Such authority is necessary to prevent contractors from frustrating the purpose of the Act (which is to insure that all workmen on public works receive a minimum wage rate) by coercing their employes to

[ 27 Pa. Commw. Page 27]

    accept less than the prevailing minimum wage in exchange for a guarantee of continued employment.

The appellant, argues, however, that this commingling of prosecutorial and adjudicative functions in the Secretary violates due process because it prevents that officer from impartially viewing the record to determine whether or not a violation has occurred. We addressed a similar contention in Rayne v. Edgewood School District, 19 Pa. Commonwealth Ct. 353, 339 A.2d 151 (1975). In that case, a board had conducted an investigation, prepared charges, and made a preliminary determination of "guilt" prior to granting a hearing. We held there that although there may be some cases which demonstrate a bias or appearance of bias indicative of a violation of due process, such an administrative procedure as that involved here is not per se constitutionally impermissible. See Withrow v. Larkin, 421 U.S. 35 (1975); Barr v. Pine Township Board of Supervisors, 20 Pa. Commonwealth Ct. 255, 341 A.2d 581 (1975); See also 2 Davis, Administrative Law Treatise § 13.02 (1958). We find Rayne, supra, to be dispositive of the issue raised here and, therefore, having found no bias or appearance of bias in the proceedings below, we must conclude that the appellant's due process rights were not violated.

The final issue presented in this case is whether or not there was substantial evidence to support the finding of the Secretary that the appellant corporation was guilty of an intentional failure to pay prevailing wage rates.*fn8 The appellant does not now contest

[ 27 Pa. Commw. Page 28]

    that it failed to pay prevailing wage rates at the three construction projects, and it has in fact complied with that part of the Secretary's order which requires supplemental payments to individuals who received less than the required rates. What the appellant does dispute is the finding that its failure to pay the required rates was intentional, and it reasserts the contention raised below that any underpayments were the result of reasonable misunderstandings on its part concerning the applicability of the Act. The appellant attempts to assert a separate justification for each individual violation which resulted in the payment of less than the prevailing wage rates. We will discuss each purported excuse separately.

The appellant explains that it did not pay the prevailing wage rate to its journeymen plumbers on the Big Spring School project because it felt that the Act did not apply to contracts on public works where the contract price was less than $25,000.*fn9 In justification of this interpretation, the president of the appellant corporation testified that a Department employe had informed the appellant's bookkeeper that the Act only applied to contracts in excess of $25,000 and that he had relied on this information in submitting the bid for the plumbing work. He also testified that he had relied on the regulations found in 4 Pa. Code § 63.172 which then provided that "[t]he provisions of the [Act] are not applicable to contracts costing less than $25,000."*fn10 The Hearing Examiner correctly pointed out that the "regulation" cited by the appellant had been promulgated by the Department of Property and Supplies and, therefore, was not an

[ 27 Pa. Commw. Page 29]

    authoritative interpretation of the dollar threshold requirement of the Act. Moreover, a fair reading of the Act indicates that its provisions shall apply to all contracts involved in a public works project where the estimated total cost of the entire project exceeds $25,000. See Section 2(5) of the Act, 43 P.S. § 165-2(5). The estimated total cost of the Big Spring School project was $450,000, and, therefore, the appellant's plumbing contract was clearly within the purview of the Act.

The Hearing Examiner did not find the appellant's testimony to be credible*fn11 and concluded that the appellant's failure to pay the prevailing wage rate evidenced an intent to violate the requirements of the Act. And our review of the record discloses sufficient evidence to substantiate this conclusion. The specifications for the Big Spring School project put the appellant on notice that the prevailing minimum wage provisions would apply to all contracts on the project and the predetermined rate for plumbers was included therein. In addition, the appellant submitted weekly wage certificates for the project which certified that all workmen employed by it had been paid their wages in full and that it had complied with all provisions of the Act. It is, of course, also of considerable significance to the final determination of an intentional violation that the appellant was unable to present a credible justification for underpayment of wage rates.

We, therefore, must affirm the Board's decision with respect to the intentional failure to pay the prevailing minimum wage rate at Big Spring School project and, there being no discretion as to the penalty provided in Section 11(e) of the Act, the Secretary's

[ 27 Pa. Commw. Page 30]

    order that no contract shall be awarded to the appellant for a period of three years must also be affirmed.*fn12 See Dale D. Akins, Inc. v. Department of Labor and Industry, 16 Pa. Commonwealth Ct. 191, 329 A.2d 869 (1974).

In regard to both the Central Senior High School project and the New Junior High School project, the Hearing Examiner also found that the appellant had employed apprentices in excess of its approved apprentice-to-journeyman ratio.*fn13 The appellant asserts that it had interpreted the apprentice-to-journeyman ratio to apply only on a shop-wide basis and not also on a job-site basis.*fn14 The Secretary held that, in the light of the appellant's experience in the construction

[ 27 Pa. Commw. Page 31]

    industry, its interpretation was unreasonable and its excessive use of apprentices itself evidenced a knowing disregard of its workmen's rights resulting in an underpayment of wages. We agree with this conclusion and accordingly must also affirm the Board's decision in this regard.

Finally, the Hearing Examiner found that the appellant had underpaid its plumbers employed at the New Junior High School project. The appellant attempted to justify this underpayment of wages by explaining that pipe laid beyond five feet of the walls of a building is laborer's work; that the workmen in question, although classified as plumbers on the payroll records, were doing pipelaying work outside the five-foot perimeter; that a laborer's wage is less than a plumber's wage; and that, therefore, the appellant could pay its plumbers less than the plumbers' prevailing minimum wage rate. The Hearing Examiner held that the appellant did not adduce competent evidence which demonstrated that pipelaying done five feet beyond the outer walls of a building was within the special province of those workers classified as laborers and had not in fact shown that his plumbers had actually done such work at the New Junior High School. In light of the appellant's inability to justify the underpayments and in view of the overall context of this case, we again must affirm the Board's decision that the underpayments involved on the New Junior High School were intentional. We, therefore, affirm the decision of the Pennsylvania Prevailing

[ 27 Pa. Commw. Page 32]

Wage Appeals Board and dismiss the appeal of Steve Black, Inc.

Order

And Now, this 5th day of November, 1976, the appeal of Steve Black, Inc. is dismissed and the decision of the Pennsylvania Prevailing Wage Appeals Board is hereby affirmed.

Disposition

Affirmed.


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