Read the entire DIR Civil Wage Assessment against Azurelite Inc. 4/21/15 here.
Subcontractor, Azurelite, Inc. (Azurelite) performed glacier work on the Cunningham Science and Math Replacement Building project (Project) for the San Joaquin Community College District (District) in Stockton, California.
The issues for decision are:
The Director finds that Azurelite and Taisei have failed to carry their burden of proving that the basis of the Assessment was incorrect. However, having discovered calculation errors in DLSE’s audit worksheet from which the assessed unpaid wage and penalty amount are derived, this Decision reduces the assessed unpaid wages and penalties in accord with the evidence. Therefore, the Director issues this Decision affirming the Assessment as modified.
SUMMARY OF FACTS
The facts are set forth verbatim:
The Assessment seeks a grand total $76,123.27 in wages and penalties. Since a deposit of the full amount of the Assessment ($76,123.27) was made on or about August 8, 2013, liquidated damages are not at issue.
FACTUAL SUMMARY
“Prior to their work on the Project, Azurelite’s Los Angeles County based workers specifically requested an alternative workweek, i.e. to work four days a week at up to ten hours a day.
With respect to Travel and Subsistence payments to Azurelite’s Los Angeles based workers, Azurelite utilized the Travel and Subsistence Provisions that it found on the Department of Industrial Relations (the ‘DIR’) website that cover Los Angeles County, where Azurelite is located (see Exhibit ‘D’ attached hereto). There is no dispute that Azurelite paid its workers the travel and subsistence payments called for in Travel and Subsistence Provisions that cover Los Angeles County as opposed to those called for in the DIR’s Travel and Subsistence Provisions for San Joaquin County, where the Project is located. Attached hereto as Exhibit ‘E’ is the Travel and Subsistence Provisions [sic] for San Joaquin County.
CONCLUSION
“The main dispute between the parties with respect to the alleged wages owed is that the DLSE contends that Azurelite should have utilized the Travel and Subsistence Provisions found on the Department of Industrial Relations website for San Joaquin County instead of those for Los Angeles County. There is also a smaller dispute as to the exact amount of hours the workers worked per day. Finally, the parties have reached no agreement as to penalties.”
The Assessment found that 15 Azurelite workers, eleven journeyman and four apprentice glaziers, had been underpaid required travel and subsistence and overtime pay totaling $60,810 .92 for their work on the Project. DLSE assessed penalties under section 1775, subdivision (a) in the amount of $7,840.00 at a mitigated penalty rate of $10.00 per violation based on its determination that Azurelite had no prior violations and that the current violations appeared to be the result of a good faith mistake. In addition, DLSE assessed penalties under section 1813 for failure to pay the required prevailing overtime rate in the amount of $6,725.00 at the statutory rate of $25.00 per violation.
Section A. Travel Time
2. Regular employees of the Employers located in Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Lassen, Modoc, Nevada, Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, portions of Solano, Stanislaus, Sutter, Tehama, Trinity, Tuolumne, Yolo and Yuba Counties in California who are required to jobsite report more than forty (40) miles from the point of dispatch (employee’s home or individual Employer’s shop) as determined by the individual Employer, shall receive Wages and Benefits for all time spent traveling beyond forty (40) miles from the point of dispatch to the jobsite and return. Employees reporting in their private vehicles to a jobsite more than forty (40) miles from the point of dispatch, shall also receive mileage at the current IRS rate per mile for all miles traveled outside of the forty (40) miles. (Mileage and drive time is to be based on the latest version of Microsoft Map Point). Mileage will be paid on a per vehicle basis. This system· is based on employees reporting to their jobsite at their regular start time and working on the job until their regular quitting time. Travel from jobsite to jobsite in a private vehicle shall be considered as hours worked and mileage will be reimbursed at the current IRS rate per mile.
All travel commencing after reporting to the Employers shop to and from the jobsite will be considered as hours worked and use of the employee’s vehicle will be reimbursed at the current IRS rate per mile. At no time shall the employee be allowed to transport the Employer’s material or equipment in his own vehicle.
Section B. Subsistence
1. When employees are required to live away from their personal place of residence, in order to report for work when and where directed by the Employer, each employee shall receive lodging, or an amount equal to reasonable lodging, in advance, plus ‘Subsistence’ in the amount of seventy-five dollars ($75.00) per day, in-advance, on a separate-check.
DISCUSSION
Azurelite Is Required To Pay Travel And Subsistence For The Project In Accord With The Travel And Subsistence Provisions For San Joaquin County.
Section 1771 requires all workers employed on public works to be paid “not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed.” It is undisputed that the glazier classification contained in SJ0-2009-2, the General Prevailing Wage Determination for San Joaquin County, establishes the applicable prevailing wage rate for the work performed by Azurelite employees on the Project. The travel and subsistence provisions contained in the Northern California Glaziers Master Agreement, effective June 22, 2008, were adopted by the Director and incorporated by reference as part of the glazier prevailing wage rate for San Joaquin County. DLSE contends that Azurelite is required to pay its workers travel and subsistence in accord with these provisions for their travel related to work on the Project which was performed in San Joaquin County and included unpaid travel and subsistence as part of the Assessment. Azurelite and Taisei dispute this position and argue that Azurelite’s workers are only entitled to receive the lower travel and subsistence payments required by the travel and subsistence provisions for glaziers which are applicable to Los Angeles County where Azurelite and its workers are based. It is undisputed that Azurelite’s payments to its workers satisfied the Los Angeles County travel and subsistence requirements.
In a nutshell, Azurelite bases its argument that the Los Angeles County travel and subsistence rates should apply to its workers rather than the San Joaquin County rates on language in the San Joaquin County travel and subsistence provision stating that it applies to “Regular Employees of the Employers located in … San Joaquin … Count[y].” Azurelite argues that its business is not “located” in San Joaquin County and thus this provision cannot apply to its workers. While a very literal reading of the language could lead to this interpretation, this language must be considered in context. Unlike the text of a PWD which sets the prevailing wage rates, and which is carefully drafted for adoption by the Director, the scopes of work and travel and subsistence provisions which a PWD incorporates by reference are typically drawn from the collective bargaining agreements or memorandums of understanding applicable to the trades in the locality to which the PWD applies. As such, these provisions are normally drafted with the only consideration being their application to the local unions and contractors who are signatory to the agreement. When interpreted in the context of prevailing wage enforcement, however, these provisions must be read more broadly in light of the purposes of the prevailing wage law to guarantee equal pay for all workers in a given trade on the same public works project and to level the playing field for contractors and subcontractors bidding for work on that project, whether signatory to the agreement that the provisions are drawn from or not.
Azurelite is therefore requested to pay its workers travel and subsistence for the Project according to the terms of the San Joaquin County travel and subsistence provisions incorporated by reference as part of the glazier prevailing wage rate established by PWD SJ0-2009-2. DLSE’s assessment of unpaid travel and subsistence payments to the affected workers is affirmed as modified.
DLSE Did Not Abuse Its Discretion By Assessing Penalties Under Section 1775 At The Mitigated Rate Of $10.00 Per Violation.
The record shows that DLSE mitigated the section 1775 penalty rate used in the Assessment to $10.00 per violation based on its determination that Azurelite had no prior violations and that the current violations appeared to be the result of a good faith mistake.
Neither Azurelite nor Taisei has offered any evidence or argument to show that DLSE abused its discretion in assessing penalties at this greatly mitigated rate or that Taisei is not jointly and severally liable with’ Azurelite for those penalties.
The record does not establish that DLSE abused its discretion and, accordingly, the assessment of penalties under section 1775, subdivision (a) is affirmed jointly and severally against Azurelite and Taisei in the modified amount of $2,570.00.
Azurelite Underpaid Its Workers For Overtime Hours Worked On The Project and is Therefore Liable For Unpaid Overtime And Overtime:
Penalties Under Section 1813.
The stipulated record establishes that Azurelite’ss workers worked an alternative workweek of four days per week and up to ten hours per day on the Project and were paid-at the prevailing straight time rate for those hours under the mistaken belief that Azurelite workers could elect an alternative workweek for the Project. Such arrangements are prohibited on public works projects under sections 1811, which restricts the work day for public works projects to eight hours per day, and 1815, which allows work in excess of eight hours per day only upon payment on one and one-half times the basic rate of pay. As a result, Azurelite workers working on the Project under this alternative workweek schedule were required to be paid at the applicable prevailing overtime rate for any hours worked in excess of eight in one day whether or not they worked in excess of 40 hours per week.
There are three components to the prevailing wage: the-basic hourly rate, fringe benefit payments and a contribution to the California Apprenticeship Council or an approved apprenticeship training fund. The first two components (also known as the total prevailing wage) must be paid to the worker or on the worker’s behalf and for his benefit. An employer cannot pay a worker less than the basic hourly rate; the balance must be paid to the worker as wages or offset by credit for “employer payments” authorized by section 1773.1. Under the glazier rate applicable to this project, the basic hourly rate for journeymen is $33.53 per hour and the balance of the total prevailing wage is $17.09, comprised of fringe benefits totaling $16.71 and other payments in the amount of$0.38. When combined, this results in a total straight time prevailing wage rate of $50.62 per hour.
When time and one-half is required for overtime work, only the basic hourly rate is multiplied while the fringe benefit and other payments component of the wage rate remains constant. Thus, the required time and one-half rate for daily overtime is $67.385, comprised of the base rate of $33.53 multiplied by one and one-half, totaling $50.29, combined with fringe benefits totaling $16.71 and other payments in the amount of $0.38.
It is undisputed that Azurelite paid its journeyman on the Project the straight time prevailing wage rate of $50.62 per hour for all hours worked up to 40 in one week, regardless of whether a worker worked in excess of eight hours per day. Azurelite and Taisei mistakenly argue that $50.62 per hour is in excess of the required overtime rate by multiplying the base rate alone to arrive at a purported overtime rate of $50.295. This calculation fails to add the required unmultiplied amount of $17.09, for fringe benefits and other payments, however, which results in the actual required prevailing overtime rate of $67.385. Consequently, I find that Azurelite has underpaid its journeyman glaziers by $16.765 per hour for each hour of daily overtime worked on the Project and affirm the assessment of unpaid overtime wages as modified.
Section 1815
“Notwithstanding the provisions of Sections 1810 to 1814, inclusive, of this code, and notwithstanding any stipulation inserted in any contract pursuant to the requirements of said sections, work performed by employees of contractors in excess’ of 8 hours per day, and 40 hours during any one week, shall be permitted upon public work upon compensation for all hours worked in excess of 8 hours per day and not less than 1 1/2-times the basic rate of pay.”
The stipulated record establishes that Azurelite violated section 1815 by paying less than the required prevailing overtime wage rate to its workers on 218 occasions. Unlike section 1775 above section 1813 does not give DLSE any discretion to reduce the amount of the penalty, nor does it give the Director any authority to limit or waive the penalty. Accordingly, the assessment of penalties for under section 1813 is affirmed, as modified, in the aggregate amount of $5,450.00 for 218 violations. Azurelite and Taisei are jointly and severally liable for these penalties.
FINDING
Azurelite was required to pay its workers travel and subsistence for the Project at the rates specified in the Travel and Subsistence provisions for San Joaquin County adopted by the Director and incorporated by reference as part of prevailing wage determination SJ0-2009
Azurelite underpaid its workers for daily overtime worked on the Project by paying the applicable prevailing straight time rate for hours worked on the Project in excess of eight hours per day, up to 40 hours per week, under an alternative workweek schedule of four days per week and up to ten hours per day.
As a result of findings 3 and 4, above, Azurelite underpaid required travel and subsistence and daily overtime pay to the affected workers in the aggregate amount of $51,418.43, as modified.
DLSE did not abuse its discretion by setting the penalty for these violations under section 1775, subdivision (a) at the mitigated rate of $10.00 per violation for 257 violations on the Project, totaling $2,570.00 in penalties, as modified. Taisei is jointly and severally liable for these penalties.
Penalties under section 1813 at the rate of $25. 00 per violation are due for 218 violations on the Project by Azurelite, totaling $5,450.00 in penalties, as modified. Taisei is jointly and severally liable for these penalties.
8. The amounts found remaining due in the Assessment, as modified, against Azurelite and Taisei are affirmed by this Decision are as follows:
Wages Due: $51,418.43
Penalties under section 1775, subdivision (a): $2,570.00
Penalties under section 1813: $5,450.00
TOTAL: $59,438.43
In addition, interest is due and shall continue to accrue on all unpaid wages as provided in section 1741, subdivision (b).
ORDER
The Civil Wage and Penalty Assessment is modified and affirmed as set forth in the above Findings. The Hearing Officer shall issue a notice of Findings that shall be served with this Decision on the parties.
