"Maintenance" is Subject to Prevailing Wages-$19,600 Penalty

Read the entire DIR Civil Wage Assessment against Crossroads Diversified Services, Inc 10/20/11 here.

Affected contractor Crossroads Facilities Services, Inc. (Crossroads) submitted a timely request for review of a Civil Wage and Penalty Assessment (Assessment in the amount of $19,656.55 in unpaid wages and penalties issued by the Division of Labor Standards Enforcement (DLSE) on November 2, 2010, with respect to work performed by Crossroads for the Napa Valley Unified School District (District). The work consists of refinishing 10 gymnasium floors (Project). A Hearing on the Merits occurred on April 20, 2011, in Sacramento, California; before Hearing Officer A. Roger Jeanson. Shaye Harrington appeared for Crossroads and Ramon Yuen-Garcia appeared for DLSE. The parties submitted post-Hearing briefs, and the matter was deemed submitted on June 3, 2011. The submission was vacated by order dated July 5, 2011, for the purpose of taking testimony from Lola Beavers, who determined the amount of penalty under Labor Code section 1775. 3 Ms. Beavers testified at a telephonic hearing on October 4, 2011, and the matter was submitted that day.

The issues for decision are:

- Whether the work is subject to the payment of prevailing wages under section 1771 because it is "maintenance work".

- Whether the Assessment incorrectly found that the prevailing wage rate for the Project was carpenters.

- Whether DLSE abused its discretion in assessing penalties under section 1775, subdivision (a).

- Whether Crossroads is liable for penalties under section 1813 for failing to pay the proper overtime rate of pay.

- Whether Crossroads is liable for liquidated damages under section 1742.1, subdivision (a).

The Acting Director finds that the work at issue is maintenance work subject to the California prevailing wage laws (CPWL) and that Crossroads has failed to meet its burden of showing that the work comes within the janitorial or custodial exception. The Acting Director further finds that Crossroads has failed to meet its burden of showing that carpenter is not the proper classification for the work or that DLSE has abused its discretion in assessing penalties under section 1775, subdivision (a). Therefore, the Acting Director issues this Decision affirming the Assessment. Crossroads is not liable for liquidated damages as it timely deposited a check in the full amount of the Assessment, including penalties, pursuant to section 1742.1, subdivision (b).

SUMMARY OF FACTS

On May 24, 2010, the District submitted a memorandum to three prospective contractors, including Crossroads, soliciting bids for a work of improvement known as the 2010 Gym Floor Refinishing. The work involved refinishing 10 school gymnasium floors. Crossroads submitted its bid on June 5, 2010, describing the scope of work as follows:

Screen Floor Surfaces with 100, 120 Grit Screen and SPP Pads.

Fill and Sand 10' Gouge at Napa High School Large Gym.

Remove All Debris and Dust.

Apply Coat Hillyard Basecoat Sealer Over Entire Floor Surfaces.

Apply One Coat Hillyard 1907 Oil Modified Waterborne Finish To 3-Point Line Areas.

Apply One Coat Hillyard 1907 Oil Modified Waterborne Finish Over Entire Floor Surfaces.

Allow Four Days For Drying And Curing Before Activity Is Resumed.

DLSE contends that the work falls within the scope of work for carpenter (Prevailing Wage Determination (PWD) NC-23-31-1-2010-1 for Carpenters and Related Trades), which includes "all types of wood flooring of any size, shape, or pattern, in all its branches and phrases including pre-finished wood and hardwood products, such as nailing, filling, laying, stripping, tongue and groove, underlayment, blocks-mastic work, sanding, edging, staining, finishing, basing, application of shellac, varnishes, sealers, waxing and related work."

Crossroads argues that if the work is covered by the CPWL, it either does not fall within any current work classification or, in any event, does not fall within the carpenter classification. Crossroads presented no alternative published PWD that might apply.

In a pre-bid conference, the prospective bidders, including Crossroads, were told by District that this would be a prevailing wage job. The bidders were not told what the prevailing wage rate was for the project or what classification of work applied.

Since District did not specify the applicable prevailing wage rate, Lawrence White, Crossroads' operations manager, understood that he had to investigate to determine the appropriate wage and work classification. Prior to submitting Crossroads' bid, White had his assistant contact District's payroll department to obtain this information. District referred the company to its website and to the salary schedules and position titles for District's classified employees. Based on White's experience with gym refinishing work for Crossroads, and previously, for school districts, he chose the work classification and wage rate from these schedules, specifically, the "day custodian" classification and custodian rate of pay. White did not check the website of the Division of Labor Statistics and Research (DLSR) for the published prevailing wage rate determinations of the Director of Industrial Relations (Director).

Crossroads was advised by letter from District dated June 8, 2010, that it had submitted the "low quotes" and was chosen to do the work. In that same letter, District stated, "as a reminder, these are prevailing wage projects and while we do not require certified payrolls, our history has been that these could be asked for and/or challenged by other agencies."

Sometime in July 2010, DLSE received a complaint concerning the Project. Deputy Labor Commissioner Amie Bergin investigated and concluded that the refinishing work fell within the scope of work for carpenter and that the proper prevailing wage rate for the work was as set forth in PWD NC-23-31-1-20 10-1 with a pre-determined increase in the prevailing wage effective July 1,2010. She issued and served the Assessment on November 2, 2010, using Crossroads' certified payroll records to determine the hours worked by and wages paid to Crossroads' employees for work performed on the Project.

Crossroads filed its Request for Review on or about November 23, 2010. On or about December 6, 2010, Crossroads deposited with DIR's Cashiering Unit pursuant to section 1742.1, subdivision (b), a check in the full amount of the Assessment, including penalties.

DISCUSSION

The Refinishing Work is Covered by the CPWL

...This section is applicable to contracts let for maintenance work.

"Maintenance" is defined in California Code of Regulations, title 8, section 16000 in relevant part as: Maintenance. Includes:

(1) Routine, recurring and usual work for the preservation, protection and keeping of any publicly owned or publicly operated facility (plant, building, structure, ground facility, utility system or any real property) for its intended purposes in a safe and continually usable condition for which it has been designed, improved, constructed, altered or repaired.

(2) Carpentry, electrical, plumbing, glazing, [touchup painting,] and other craftwork designed to preserve the publicly owned or publically operated facility in a safe, efficient and continuously usable condition for which it was intended, including repairs, cleaning and other operations on machinery and other equipment permanently attached to the building or realty as fixtures.

Janitorial work is excluded from the definition of maintenance: EXCEPTION 1: Janitorial or custodial services of a routine, recurring or usual nature is excluded.

It is DLSE's principal position that the gymnasium floor refinishing work is "maintenance work" under section 1771. Crossroads argues that the work is "janitorial or custodial" and, therefore, is excluded from the definition of maintenance. Crossroads has failed to meet its burden of proof.

To "preserve" something means to "keep [it] from harm, damage, ... etc.; protect; save" or "to keep up; carryon; maintain." To "protect" something means "to shield from injury, danger or loss; guard; defend." To "keep" means "to maintain in good order or condition." (Webster's New World Dict. (3d college ed. 1988).)

The application of two new coats of shellac is clearly intended to preserve the gymnasium floor, to protect it from damage, and to maintain the floor in a condition that it may be used for its intended purpose, whether that be as a site for a sporting event, assembly, or school luncheon. As Campbell testified, the work of removing the top finish coat from the floor and replacing it with new base and finish coats is done on a recurring basis, annually, and is done "to save the floor." Thus, the gymnasium refinishing work here clearly entails "maintenance work."

In support of its position that the work is janitorial in nature, Crossroads cites City of Santa Clarita Street Sweeping (2005) PW Case No. 2005-007. Public works coverage determinations are not precedential decisions under Government Code section 11425.60.

Crossroads has Failed to Show that the Refinishing Work Does Not Fall Within the Scope of Work for Carpenter

Prevailing rates and related scope of work provisions for the affected craft, classification or type of worker are regularly posted on the DIR's Web site by its Division of Labor Statistics and Research (DLSR). (Italics added.)

Crossroads presents no alternative published prevailing wage rate that might apply. Given that Crossroads has the burden on proving that the wage rate used as a basis for the Assessment is incorrect, its failure to prove an alternative, lower rate is fatal.

As Crossroads has failed to meet its burden of proving the basis for the Assessment to be incorrect, the assessment of $18,131.55 in unpaid wages is affirmed.

The Penalty Assessment Under Section 1775 Is Appropriate

Bergin testified that she determined Crossroads has no history of prevailing wage violations and that she presented her case to her supervisor, Lola Beavers, for determination of the penalty. Beavers testified that she considered the statutory factors specified above and determined the penalty to be $30.00 per violation. She concluded that Crossroads failure to pay the correct prevailing wage was not a good faith mistake on the grounds that it was aware the job was a prevailing wage job but failed to check the DLSR website for a published PWD of the Director. She did not feel Crossroads should be excused for not knowing the law. Beavers noted that the error still had not been corrected as the correct prevailing wages still have not been paid. She mitigated the penalty from $50.00 because Crossroads had no prior violations.

Though there is evidence in the record showing that Crossroads attempted to contact District to determine a proper prevailing wage, the determination by DLSE that the failure to pay the correct per diem wage was not a "good faith mistake" is supported by evidence and is neither arbitrary no capricious. Crossroads has failed to meet its burden of showing that DLSE abused its discretion in determining the amount of the penalty.

DLSE Properly Assessed Penalties Under Labor Code Section 1813 Section 1813 states as follows:

The contractor or any subcontractor shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit twenty-five dollars ($25.00) for each worker employed in the execution of the contract by the ... contractor ... for each calendar day during which the worker is required or permitted to work more than 8 hours in anyone calendar day and 40 hours in anyone calendar week in violation of the provisions of this article. In awarding any contract for public work, the awarding body shall cause to be inserted in the contract a stipulation to this effect....

Crossroads Is Not Liable For Liquidated Damages

There is no dispute that Crossroads timely deposited with DIR the full amount of the Assessment, including penalties, within 60 days following service of the Assessment. Accordingly, pursuant to section 1742.1, it is not liable for liquidated damages.

FINDINGS

1. Affected contractor Crossroads Facilities Services, Inc. (Crossroads) filed a timely request for review of a Civil Wage and Penalty Assessment (Assessment).

2. Crossroads was the low bidder on a public works project, 2010 Gym Floor Refinishing, for the Napa Valley Unified School District (District).

3. The work consists of refinishing ten gymnasium floors. In a pre-bid conference and again after it was chosen to perform the work, Crossroads was advised by District that the project required the payment of prevailing wages. District did not advise Crossroads what the prevailing wage was for the project or the classification of work that applied.

4. The refinishing work is "maintenance work" under section 1771; it does not fall within the exception for janitorial or custodial work. As such, it is subject to the California prevailing wage laws (CPWL).

5. Crossroads did not meet its burden of showing that DLSE incorrectly determined that the refinishing work falls within the scope of work for carpenter and that the prevailing wage is the rate established by the Director for that work in prevailing wage determination NC-23-31-1-20 10-1.

6. Crossroads has failed to meet its burden of showing that the work was not subject to the CPWL or that the basis for the wage assessment is incorrect.

7. Crossroads has not met its burden of showing that DLSE abused its discretion in assessing penalties under section 1775, subdivision (a) at the rate of $30.00 per violation, and the resulting total penalty of $900.00 for 30 violations is confirmed.

8. DLSE properly assessed penalties against Crossroads under section 1813 for its failure to pay the proper overtime wage rates.

9. The amount found due on the Assessment as affirmed by this Decision is as follows:

Wages due: $18,131.55

Penalties assessed under section 1775: $900.00

Penalties assessed under section 1813: $625.00

TOTAL: $19,656.55

In addition, interest shall accrue on all unpaid wages as provided in section 1741, subdivision (b).


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