NEW JERSEY DEPARTMENT OF LABOR v. TRI-PLEX INDUSTRIES, INC., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6112-03T26112-03T2

NEW JERSEY DEPARTMENT

OF LABOR,

Petitioner-Respondent,

v.

TRI-PLEX INDUSTRIES, INC.

and THEO HADJITHEODOSIOU,

Respondents-Appellants.

_______________________________________

 

Argued: September 26, 2005 - Decided April 12, 2006

Before Judges A. A. Rodr guez, Alley and C. S. Fisher.

On appeal from the final administrative decision of the Commissioner of the Department of Labor, OAL# LID2790-03 and LID2791-03.

Eric C. Stuart argued the cause for appellants (Ogletree, Deakins, Nash, Smoak & Steward, attorneys; Mr. Stuart, of counsel and on the brief).

Lisa N. Lackay, Deputy Attorney General, argued the cause for respondent (Peter C. Harvey, Attorney General, attorney; Michael J. Haas, Assistant Attorney General, of counsel; Andrew J. Walko and Ms. Lackay, Deputy Attorneys General and on the brief).

PER CURIAM

Tri-Plex Industries, Inc. (Tri-Plex), a roofing contractor engaged in public construction work, and its Chief Executive Officer, Theodosius Hadjitheodosiou (collectively "Appellants"), appeal from the final administrative action of the Commissioner of the Department of Labor (DOL). The Commissioner ordered payment of $5,462.04 in wages, $27,500 in administrative penalties and $1,365.51 in administrative fees, and debarred Tri-Plex and Hadjitheodosiou from performing public works and Economic Authority projects for a period of three years beginning January 15, 2004. In reaching this decision, the Commissioner adopted the findings and recommendations of Administrative Law Judge (ALJ) Anthony Bruno, who found that appellants violated several provisions of the Prevailing Wage Act, N.J.S.A. 34:11-56.25 to -56.57 (PWA). We affirm.

These are the facts found by the ALJ. Appellants contracted with the Berkeley Heights Board of Education (Board) for a partial roof replacement at Governor Livingston High School. Ashleigh Chamberlain, a DOL Senior Field Representative, conducted a routine site inspection of the Berkeley Heights project on August 10, 2001. He found one employee tending to a kettle heating tar and five other employees applying mineral paper to the roof with hot tar. Chamberlain spoke to the men and determined that their names were Nicholas Savinon, Ebedardo Kiros, Pedro Fuentes, Gumercindo Reyes, Julio Garcia, and Elias Chavez. At the Board's office, Chamberlain inspected the certified payrolls submitted by Appellants. No employees were listed as working at the site on August 10, 2001. However, Chamberlain learned that custodians were hired to stay at the high school on Saturdays in case the roofers needed access to the roof from the interior of the building. The time records showed custodians working at the high school on July 7, 14, 21 and 28, 2001. The certified payroll sheets indicated that no one from Tri-Plex was at the school on those dates. Chamberlain read all of the roofing records in the office of the School Business Administrator. No other roofing contractor was mentioned.

Marc Goldberg, a DOL Field Representative, received Chamberlain's report. He then generated the wage information that was used to prepare the audit. Goldberg concluded that Appellants paid employees $2 per hour less than the then prevailing wage.

Pedro Fuentes, a former Tri-Plex employee, testified that he worked for Tri-Plex as a roofer from mid-1999 until July 2003. Among the jobs Fuentes worked on was the Berkeley Heights project. Fuentes worked at the school for about a month-and-a-half. Fuentes worked five to six days each week, depending on the weather, for eight to twelve hours a day. He worked on Saturday every other week. Fuentes received $140 for eight hours worked.

Gumercindo Reyes, a former Tri-Plex employee, also worked on the Berkeley Heights project. He testified that when it rained, none of the workers worked. Otherwise, he and co-workers were at the job site for eleven to twelve hours each workday, including Saturdays. Reyes was paid $130 a day, never $42.62 an hour, the prevailing rate.

Several custodians at Governor Livingston High School testified that there were roofers working at that site on Saturdays. David Schelhorn testified that on Saturday, July 7, 2001, he worked from 7:00 a.m. until 12:00 p.m. and saw at least ten roofers and two or three trucks at the site. In describing the scene he stated that there were "guys all over the place." Tommaso Pugliese testified that he also worked on July 7, 2001, from 12:00 p.m. until 8:30 p.m. He remembers some people working on the roof that day, but could not recall how many people worked or exactly what they were doing. Robert Krieg testified that he worked Saturday, July 21, 2001, from 7:00 a.m. to 3:30 p.m. at Governor Livingston and saw the roofers working. They arrived at the site by van. Livo Rovarin testified that he worked at the school on July 28, 2001 from 7:00 a.m. until 4:00 p.m. His job that day was to open and close the building for roofers. He too saw several roofers arrive by van. Peter Marino worked on Saturday, July 14, 2001 from 7:00 a.m. to 4:00 p.m. His job that day was to open the building and give the roofers access to any room they sought.

The sole witness for Appellants was Hadjitheodosiou. According to Hadjitheodosiou, the work by Tri-Plex was not the only roofing being done at the school. A year earlier, another roofing contractor installed a section of the roof that developed leaks during the year. In addition to the roofing contract, the Board was giving Governor Livingston High School "a major face lift," letting contracts for electric and bathroom renovation. Therefore, there were many other laborers at the school. Hadjitheodosiou denied having any employees working Saturdays at Governor Livingston. According to Hadjitheodosiou, no one at Tri-Plex works weekends.

Hadjitheodosiou acknowledged the $2 per hour underpayment to the roofers on the Berkeley Heights project. He placed blame for this error on the architect and bookkeeper who applied the Morris County prevailing wage in Union County.

The ALJ concluded that the Governor Livingston High School custodians were credible. However, there was no evidence in the record to find that the roofers on site on the Saturdays in question were Tri-Plex employees. Therefore, the ALJ relied on Chamberlain's testimony that on August 10, 2001, six Tri-Plex employees were working at Governor Livingston High School. Further, the ALJ found as fact that Tri-Plex's certified payroll for the week of August 10, 2001, did not list those roofers. Therefore, the ALJ concluded:

that one day's wages are due and owing to Savinon, Kiros, Fuentes, Reyes, Garcia and Chavez for that date, and the certified payroll records submitted by Tri-Plex for the week ending August 15, 2001 are false.

Specifically, the six roofers at the site on August 10, 2001 are entitled to receive an additional $44.62 per hour for seven hours of work on that date, a total of $312.34 each. The ALJ also found that every employee at the Berkeley Heights project is entitled to receive $2 for each hour shown on the certified payroll because Tri-Plex used the wrong prevailing wage.

The ALJ found that Hadjitheodosiou did not "inspire credibility." Based upon the following factors, the ALJ concluded that the debarment of Tri-Plex was reasonable: Tri-Plex's history of previous violations, particularly (12/26/00 to 5/30/02), the unexplained or undocumented delay of Tri-Plex in paying wages and benefits it acknowledged as due over a seventeen-month span, and the falsified certified payroll for the week that included August 10, 2001. This penalty is a second suspension of Tri-Plex's public bidding opportunity.

I

On appeal, Tri-Plex contends that the DOL wrongly concluded that Appellants falsified the certified payroll for the week of August 15, 2001. We are not persuaded by this contention, which is a challenge to the facts found by the ALJ and adopted by the Commissioner. We have a "limited role in reviewing a decision of an administrative agency." Henry v. Rahway State Prison, 81 N.J. 571, 579 (1980). We will "reverse the decision of the administrative agency only if it is arbitrary, capricious or unreasonable or it is not supported by substantial credible evidence in the record as a whole." Id. at 579-80. "The scope of review of an administrative decision 'is the same as that [for] an appeal in any non-jury case, i.e., whether the findings made could reasonably have been reached on sufficient credible evidence present in the record considering the proofs as a whole, with due regard to the opportunity of the one who heard the witnesses to judge . . . their credibility.'" In re Taylor, 158 N.J. 644, 656 (1999) (citing Close v. Kordulak Bros., 44 N.J. 589, 599 (1965) (citations omitted)).

Appellants argue that Chamberlain's testimony, the only evidence presented to show that six roofers worked on August 10, 2001, was insufficient to support a finding that Appellants failed to pay the six employees for the work done that day. According to Appellants, Chamberlain's testimony constituted "pure hearsay and should not have been considered." He testified regarding the "interviews" he conducted with the roofers on August 10, with Fuentes acting as an interpreter. To support the proposition that the evidence should have been excluded, Appellants argue that in accordance with N.J.A.C. 1:1-15.5(b), Chamberlain's testimony was hearsay and was not presented in conjunction with "some legally competent evidence." We are not persuaded.

N.J.A.C. 1:1-15.5(a) provides in part that, "subject to the judge's discretion to exclude evidence pursuant to N.J.A.C. 1:1-15.1(c) or a valid claim of privilege, hearsay evidence shall be admissible in the trial of contested cases." However,

notwithstanding the admissibility of hearsay evidence, some legally competent evidence must exist to support each ultimate finding of fact to an extent sufficient to provide assurances of reliability and to avoid the fact or appearance of arbitrariness.

[N.J.A.C. 1:1-15(b).]

Here, Chamberlain testified regarding his own observations and his examination of Board records. His testimony was not hearsay, but based on his own perceptions. Moreover, Fuentes and Reyes testified and buttressed Chamberlain's testimony by confirming that they worked at the Berkeley Heights site on August 10, 2001. Furthermore, Appellants' certified payroll for that week did not list any roofers as working at the Berkeley Heights Project on August 10, 2001. From our review of the record, we conclude that the decision by the Commissioner is supported by sufficient credible and competent evidence on the record as a whole. R. 2:11-3(e)(1)(D).

II

Appellants also contend that the DOL failed to establish any basis to debar Tri-Plex or Hadjitheodosiou. We disagree.

The Commissioner may debar an employer after an investigation and determination that the employer has failed or refused to pay the prevailing wage rate. N.J.A.C. 12:60-7.3b. The failure or refusal to pay the prevailing wage does not automatically result in debarment. The Commissioner has discretion to debar upon the consideration of the following seven factors listed at N.J.A.C. 12:60-7.3c: (1) record of previous violations; (2) previous cases of debarment by the Commissioner; (3) frequency of violations; (4) significance or scale of the violations; (5) the existence of outstanding audit(s) or failure(s) to pay; (6) failure to respond to a request to produce records, forms, documents, or proof of payments; and (7) submission of falsified or altered records, forms, documents, or proof of payment. N.J.A.C. 12:60-7.3c. Debarment shall be for a period of three years. N.J.A.C. 12:60-7.4e. Appellants argue that considering the factors enumerated in N.J.A.C. 12:60-7.4c, the Commissioner incorrectly found that Appellants had falsified the certified payroll for the week of August 15, 2001. According to Appellants, the admitted mistake was merely a clerical error and not an intentional falsification. However, N.J.A.C. 12:60-7.4c(7) does not require that a "falsification" be intentional. Furthermore, there was adequate credible evidence that Appellants intentionally falsified the August 15, 2001 payroll in order to underpay the roofers.

Appellants also argue that the Commissioner erred in considering Appellants' five previous violations. Specifically, appellants point to a 2003 Settlement Agreement arguing that it did not admit guilt. This assertion is belied by the record. The 2003 Settlement Agreement specifically states,

[I]t is understood and accepted by the parties hereto that this Agreement, and the suspension and monetary penalties it encompasses, does constitute a "previous violation" of Respondents as that term is utilized at N.J.A.C. 12:60-8.3c(1), and may be considered as a "previous violation" in a future proceeding (if any) involving the Petitioner herein and Respondents herein only and for no other purpose.

(emphasis added).

Therefore, the Commissioner's consideration of this previous violation was not arbitrary or capricious.

Appellants disputes the Commissioner's finding that the payment of wages approximately two years after they were due was continuing evidence of bad faith. The Commissioner found that Appellants did not pay the workers until shortly before the first plenary hearing in October of 2003, more than two years after the wages were earned. The Commissioner agreed with the ALJ's finding that such conduct was continuing evidence of bad faith. The ALJ was troubled by the fact that Appellants did not offer an explanation for this delayed payment.

Appellants argue that it should have been allowed to develop a defense of disparate treatment before the ALJ. They further argue that the Commissioner did not utilize the mandatory regulatory criteria set forth in N.J.A.C. 12:60-7.3c and otherwise relied on clearly erroneous factual findings. These arguments are not persuasive. First, Appellants did not attempt to raise disparate treatment before the ALJ. Therefore, Appellants cannot now complain on appeal that the ALJ did not allow it to develop such an argument. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973). Second, the argument Appellants seek to raise cannot accurately be described as "a disparate treatment defense." Rather, Appellants seek to compare its case to a number of published cases wherein the DOL did not debar a particular contractor because the facts did not warrant debarment. However, those cases are not dispositive.

Hadjitheodosiou argues that he should not have been debarred because there was no evidence that he prepared the certified payroll for the week which includes August 10, 2001, or that he did so with the intention of cheating workers out of their earned wages. He relies on Dep't of Labor v. Titan Constr. Co., 102 N.J. 1, 17 (1985) for the proposition that corporate officers should not be debarred when they are without knowledge or culpability. Hadjitheodosiou's argument lacks merit. He signed the certified payrolls for the week which includes August 10, 2001. There was credible evidence on which the Commissioner could hold Hadjitheodosiou responsible for this PWA violation. Further, Titan Constr. Co. does not support Hadjitheodosiou's position because Hadjitheodosiou signed the certified payroll himself. Thus, Hadjitheodosiou cannot now claim lack of knowledge or culpability.

III

Finally, Appellants contend that imposition of $27,500 in administrative penalties is contrary to applicable law. Appellants argue that the relatively small amount of wages they failed to pay does not warrant such an "exorbitant administrative penalty," noting that prior adjudicated wage underpayment cases reveal that administrative penalties generally amount to a small fraction of the wages found due. Appellants further argues that the Commissioner erred in assessing Appellants twice for the same violation: $12,500 for unpaid wages/late payment and $12,500 for failure to pay prevailing wages.

N.J.S.A. 34:11-56.35(a) provides that an employer who willfully falsifies any record required under this act, "or pays or agrees to pay wages at a rate less than the rate applicable under this act or otherwise violates any provision of this act . . . shall be guilty of a disorderly persons offense . . . ." The next section of the statute, 56.35(b), provides that, "[a]s an alternative to or in addition to any other sanctions provided by law for violations of [the PWA] . . . the Commissioner is authorized to assess and collect administrative penalties, up to a maximum of $2,500 for a first violation and up to a maximum of $5,000 for each subsequent violation."

Here, the administrative fee is $1,365.51 or twenty-five percent of the unpaid wages. The Commissioner held that the ALJ properly found that the $27,500 in penalties assessed against Appellants was within applicable statutory and regulatory parameters for a subsequent offense. Contrary to Appellants' argument, N.J.A.C. 12:60-8.3(c) does not provide that a small monetary figure owed in wages equates to a small administrative penalty. Moreover, the assessment of penalties was based on violation of two separate statutes, N.J.S.A. 34:11-4.2 (providing the time and mode of payment), and N.J.S.A. 34:11-56.27 (providing that workers shall be paid not less than such prevailing wage rate). The violation of each statute calls for a separate administrative penalty.

We conclude that the administrative penalty is reasonable and within the statutory and regulatory parameters.

Affirmed.

 

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A-6112-03T2

April 12, 2006