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During the period since July, 1967, respondent has entered into and performed under some 13 or more contracts with the military services providing for the furnishing of food service activities all of which were or are subject to the Act.
In this case, it is stipulated that the Government charged respondent with failure to pay requisite minimum wages under the Act and under contracts held by respondent in that respondent required employees to launder their own uniforms and related items, failed to compensate for all hours of work by its employees by requiring in some instances early reporting, by failing to compensate idle periods in the course of a workday during which an employee could not effectively use the time for his own purposes exclusive of his employment, and failed to pay certain employees requisite vacation pay.
Respondent, by agreement with the Government, has paid to Wage and Hour and Public Contracts Divisions, United States Department of Labor, $50,000 for distribution to its employees and former employees. That sum is paid upon acceptance by respondent of the position taken in this case by the Government.
Respondent prior to the initiation of these proceedings had been investigated to determine its compliance with the Act in its performance of other contracts which were subject to the Aet. Such investigations were terminated by payment by respondent to its employees of agreed amounts of wage underpayments :
(a) In November, 1968, respondent paid a substantial part of $25,904.47 due to 998 of its employees performing services for it at Fort Benning, Georgia.
(b) In November, 1968, respondent paid $6,316.89 to 86 of its employees performing service for it at Williams Air Force Base, Arizona.
(c) During March, April and May, 1968, respondent paid $7,933.00 to 122 of its employees performing service for it at the United States Naval Base, Charleston, South Carolina.
(d) In October, 1967, respondent paid $1,030.00 to 76 of its employees performing service for it at Jacksonville Naval Air Station, Jacksonville, Florida.
By reason of its aforesaid breaches of contract and violations of the Act and regulations, as evidenced both by prior investigation and by contentions in these proceedings, respondent, Dynamic Enterprises, Inc., has become subject to the provisions of section 5(a) of the Act whereby it and any firm, corporation, partnership or association in which it has a substantial interest, may be denied the awarding of any contract with the United States until three years have elapsed from the date of publication by the Comptroller General of the list naming it as having been found to have violated the Act, unless the Secretary of Labor recommends otherwise.
Even now, the respondent requests that the case be dismissed for failure to prove violations. In my opinion this is without merit. The testimony of Government witnesses establishes violations of contract provisions and also the requirements of the Act. As a consequence, fifty thousand dollars has been paid for distribution to employees as wages which they long ago were entitled to receive, and for which they have waited so long. This failure to pay wages required was widespread and continued for a substantial period of time, Moreover, previously, when investigated by the Department of Labor, the respondent belatedly paid substantial sums as wages which were required to be paid in the first place. Therefore, the record in this case does not permit the examiner to recommend that the Secretary of Labor take the necessary action to relieve the respondent from the ineligibility sanctions of the Act. In other words, where as here there has been a substantial history of noncompliance and where this noncompliance has been established at great expense of time and money to the Government of the United States, it is concluded by this hearing examiner that he cannot recommend a lifting of the ineligibility imposed by the Congress of the United States on firms who violate the wage provisions of their Government contracts.
Upon consideration of the entire record it is recommended : That the Secretary of Labor take no action to relieve respondent from the ineligible list provisions of section 5(a) of the Act. This recommendation rests upon the lack of reliance which may be reposed in respondent based upon its history of noncompliance with the Act and its contracts virtually during its entire existence.
E. WEST PARKINSON,
Hearing Examiner. Dated at Washington, D.C., this 24th day of September, 1970.
U.S. Department of Labor, Wage and Hour and Public Contracts Divisions
DECISION OF THE ADMINISTRATOR The Hearing Examiner, in a decision dated September 24, 1970, found, on the basis of stipulations agreed to by the parties and some four days of testimony, that respondent had violated the minimum wage requirements of the Service Contract Act of 1965. The violations were found to have resulted in underpay. ment of respondent's employees in the amount of $50,000, which sum has been paid in full by respondent to the Wage and Hour and Public Contracts Divisions for distribution to its employees.
By reason of the violations of the Act, respondent has become subject to the provisions of Section 5(a) of the Act whereby it and any firm, corporation, partnership or association in which it has a substantial interest, may be denied the awarding of any contract with the United States until three years have elapsed from the date of publication by the Comproller General of the list naming it as having been found to have violated the Act, unless the Secretary of Labor recommends otherwise. The Hearing Examiner recommended that the Secretary of Labor take no action to relieve respondent from the ineligible list provisions of Section 5(a) of the Act.
The duty of the triail examiner to ascertain the facts as to charged violations must be performed according to procedure outlined in the Rules of Practice, under which he has discretion to accept stipulations of fact. If his acceptance constitutes a reasonable exercise of such discretion, the stipulation is binding as to the facts contained therein. There is nothing in this record to suggest, nor does respondent suggest on appeal, that the Hearing Examiner's acceptance of the stipulation of fact in this case in any way constitutes other than a reasonable exercise of his discretion. The stipulation as to the occurrance of violations and the sum representing underpayments due in the instant proceedings is accordingly binding on respondent and the Examiner's finding in this regard will be affirmed.
The only remaining issue before me is the question of whether I should concur in the Hearing Examiner's recommendation that the Secretary take no action to relieve respondent from the ineligible list provisions of Section 5(a) of the Act, which, in turn involves the question of whether, on the basis of this record, I believe respondent can be relied upon to comply with the Act in the future.
The record discloses that the violations related to hours worked for which compensation was not paid and through respondent's practice of imposing on its employees the expense of cleaning their uniforms.
With respect to hours worked, the record shows that certain employees were regularly required to shorten their meal breaks in order to feed early chow. When this occurred, the early feeding time was not entered on respondent's payrolls and was not, therefore, compensated.
The imposition of laundry expense to the extent that it impinged the minimum wage required by the contracts occasioned additional violations.
141 U.S.C. 351 et. seq.
See Decision of the Administrator, dated April 30, 1970, in The Matter of Inland Service Corporation (SCA-35) in which the Government's position in this regard was for the first time considered and upheld in adminstratve proceedng under the Act.
On May 12, respondent issued a policy letter to "All Superintendents and Employees" in an effort to assure compliance with the Act in all future operations. This directive, among other things, is intended to assure specifically that its supervisory and management personnel comply with the requirement that uniforms be laundered at respondent's expense. In addition it seeks to assure compliance by such personnel with all departmental rulings and interpretations under the Act and to assure that hours actually worked by employees are accurately recorded and compensated.
The Policy Letter reads in relevant part as follows:
"It is firm corporation policy that Dynamic Enterprises will comply with all pertinent national labor legislation. Such compliance will go not only to the letter of the law, but will also embrace the intent of the law as expressed by various United States Department of Labor publications and past court decisions. Dynamic Enterprises fully accepts the position expressed by the Department of Labor, particularly as it relates to a requirement that the expense incurred in laundering of uniforms be borne by the employer. All management and supervisory personnel will be required to give compliance their complete, genuine support. Nominal support, or lip service will not be tolerated. Substandard wages, in addition to being contrary to the law of land, are extremely unfair to the workers on whom we depend to perform our contracts. Company support of these laws is genuine and complete.
"This policy letter will not attempt to duplicate explanations of pertinent legislation which have already been published by the Wage and Hour and Public Contracts Division of the United States Department of Labor. Rather, all such publications are incorporated by reference and made a part of this policy. As a minimum, the following publications will be posted on the bulletin board at every company location :
“WHPC Publication 1143—Hours Worked Under the Fair Labor Standards Act of 1938, as amended.
"WHPC Publication 1199-A Quick Look at Hours Worked Under the Fair Labor Standards Act as Amended in 1966.
"WHPC Publication 1220—A Guide to the McNamara-O'Hara Service Contract Act of 1965.
“The applicable wage determination, if any.
"Notwithstanding the employees signature on sign-in sheets and weekly time cards, it shall be the responsibility of each superintendent to assure that each employee is fully paid for all hours that he or she has worked. Any payroll errors inadvertently made by either the superintendent or home office payroll personnel will be promptly corrected by payment of any wages due. * * *"
There is nothing in this record that would indicate repsondent is not acting in good faith in setting up a program to assure future compliance with the statute. On the basis of the record before me at this time, I am convinced that respondent can be relied upon in the future to comply with the Act. Until such time as subsequent events show otherwise, I cannot concur with the Hearing Examiner in his recommendation.
Accordingly, upon consideration of the entire record, including the fact that respondent paid in full the liquidation damages found due and has established a positive program to assure future compliance, it is, recommended : That the Secretary of Labor take affirmative action to relieve respondent from the ineligible list provisions of Section 5(a) of the Act. Signed at Washington, D.C., this 25th day of January 1971.
ROBERT M. MORAN, Administrator. Mr. O'HARA. The first document is a complaint filed August 4, 1969 by Deputy Solicitor charging Dynamic Enterprises with violations of the Service Contracts Act under 13 separate contracts.
These violations, which were finally admitted by Dynamics Enterprises, took place at military bases in Bell Chase, Louisiana ; Charleston, South Carolina ; Dothan, Alabama; Fort Stewart, Georgia, Glynco, Georgia; Gulfport, Mississippi; Jacksonville, Florida; Meridian,
Mississippi; Pensacola, Florida ; Savannah, Georgia; and Yorktown, Virginia.
The second document is a brief filed by the Solicitor's Office July 27 last year urging that Dynamic Enterprises not be relieved from the blacklisting provision of the Service Contracts Act of 1965.
The brief, I might add, Mr. Chairman, lists four additional violations over and above the 13 mentioned in the complaint, additional violations which had not been included in the original complaint because Dynamic Enterprises had already made restitution to the employees involved.
These violations and the amounts involved took place at military installations in the following area : Jacksonville, Florida, $1,030 to 76 employees, October 1967; Charleston, South Carolina, $7,933 to 122 employees, March to May 1968; Fort Benning, Georgia, $25,901.47 to 998 employees, November 1968; Williams Air Force Base, Arizona, the matter mentioned by the witness, $6,316.89 to 86 employees, November 1968.
The brief states, Mr. Chairman, that Dynamic Enterprises agreed to pay damages of $50,000 for violations of the 13 contracts included in the complaint and I quote:
... plus back wages due employees disclosed by an investigation of the Respondent pay practices in connection with performance of a contract subject to the Act at Corpus Christi, Texas.
Page 7 of the brief says: We can only conclude on the basis of Respondent's past record that violations of the Act have resulted from such a careless and indifferent attitude toward its obligations as to constitute wilfullness or that violations were indeed the result of various schemes to avoid the full impact of the Act.
On page 7 the Solicitor's Office concludes:
The Wage and Hour Division has already investigated the firm's employment practices in the performance of 18 or more contracts subject to the Act, all of which have revealed various violations. .
Hundreds of man hours and thousands of dollars have already been spent investigating and litigating the activity of the respondent. Can the government be asked to continue policing the Respondents employment practices? The obvious answer is no.
The third document I have is the Hearing Examiner's decision, which we have referred to before, and I have entered now in the record, dated September 24, 1970, which details the continued and flagrant violation of the law extending over a three-year period including systematically cheating already low-paid employees by requiring them to launder their own uniforms, by requiring long breaks in the work day for which they are not paid, by requiring them to report early and not paying for time worked and failing to pay vacation pay.
The Hearing Examiner strongly recommended that Dynamic Enterprises not be relieved from the blacklisting provisions of the Service Contracts Act, saying:
This recommendation rests upon the lack of reliance which may be reposed in Respondent based upon its history of non-compliance with the Act and its contracts during virtually its entire existence.
The fourth document, Mr. Chairman, is dated January 25, 1971 and it's entitled: "Decision of the Administrator."
The Administrator is Mr. Robert D. Moran, Work Place Standard Administrator. This decision overturns the Hearing Examiner's decision saying:
On the basis of the record before me at this time, I am convinced that Respondent can be relied upon in the future to comply with the Act.
Now, Mr. Chairman, I understand that at this very moment the Labor Department is investigating further violations of the law by Dynamic Ênterprises at other locations.
Dynamic Enterprises is also apparently in trouble on other fronts.
The final documents I would like to put in the record are two recent articles in the Colorado Springs "Sun", written by Earl Bradshaw.
(The documents referred to follow :)
(From Colorado Springs Sun, Mar. 17, 1971]
By Earl Bradshaw Corporate hanky-panky on a grand scale, laced with political overtones, has slipped into Ft. Carson, via a $141,895 contract for trash and garbage collection,
Ft. Carson officials cite regulations they say justify the contract even though evidence in their possession indicates the contract was secured illegally.
"We do not disturb an existing contract," said Hazen C. Kramer, civilian contracting officer at the Carson procurement office.
Dynamic Enterprises, Inc., of Dunn, N.C., submitted a solicitation, offer and award form July 6, 1970, signed by George F. Marshall, vice president, which contains a stated federal requirement that an applicant understands he is complying with U.S. Code 2304 (A-1) stipulating an applicant shall not have had annual sales or receipts for the preceding three years in excess of $1 million.
FORT CARSON TRASH COLLECTION BID OFFERED ILLEGALLY?
The contract was accepted by Ft. Carson officials July 24. "
The SUN has a copy of a letter dated Nov. 17, 1970, from the Small Business Administration (SBA), addressed to Kramer at Ft. Carson, stating Dynamic "is not a small business for federal procurement purposes."
The SBA secured data from Marshall contending the size of Dynamic makes is ineligible for its original bid.
Syndicated SUN columnist Jack Anderson revealed in his column March 11 that Dynamic and Marshall escaped a Labor Department blacklisting in 1967 and 1968, by “making back payments to 1,272 civilian employees at military bases is Arizona, Georgia, Florida and South Carolina."
"But Dynamic worked behind the scenes with North Carolina Republicans to bring pressure on the Labor Department,” Anderson's column said.
A fiinal Labor Department decision on the company's peccadillos is still pending, with at least one congressman, Rep. James O'Hara, D-Mich., pressing for an administrative decision against the firm.
Charges against the firm in the Labor Department included short-changing employees, and a strong recommendation to bar the firm from further federal contracts.
The SUN sought copies of material in the Ft. Carson procurement office files concerning Dynamics last week, and was advised to apply in writing and copies could be obtained.
Lt. Col. G. D. Barrante, head of the public information office, was given the requested letter Friday.
Barrante talked with two SUN reporters Monday by telephone to advise “The judge advocate's office says the information does not come under the Freedom of Information Act, but if a SUN reporter came to Ft. Carson he could see all the material and take notes freely."
Barrante repeated this assertation by telephone Tuesday morning. ;
When a SUN reporter went to Carson Tuesday, Barrante was flanked by Horace Demarest, counsel general (civilian) to the staff judge advocate and Kramer with Harry Haroldsen of the civilian procurement office staff.