COMMONWEALTH OF MASSACHUSETTS


DIVISION OF ADMINISTRATIVE LAW APPEALS

Steven J. LaFleur (individually) and
LaFleur Electrical Co., Inc.,

Petitioners,


v. Docket No. LB-08-686


Office of the Attorney General,
Fair Labor Division,

Respondent,

Appearance for Petitioners

Kimberly A. Rozak, Esq.

Mirick O'Connell
100 Front Street
Worcester, MA 01608-1477

Appearance for Respondent

Anita V. Maietta, Esq.

OAG, Fair Labor Division
105 William St.
New Bedford, MA 02346

Administrative Magistrate

Francis X. Nee

SUMMARY OF DECISION

The Fair Labor Division issued a subcontractor on a public works construction project a citation, including a $5,500.00 penalty, for failing to provide payroll reports to the awarding authority each week. After a hearing, I determine that when the Fair Labor Division set the penalty amount, it failed to consider four of the five statutorily-mandated factors and the citation was, thus, erroneously issued. Consequently, I vacate the citation, including the penalty.

BACKGROUND

The Fair Labor Division of the Office of the Attorney General issued a citation that included a $5,500.00 penalty to LaFleur Electrical Co., Inc. and Steven J. LaFleur, individually, for failing to provide certified copies of payroll reports each week directly to the awarding authority on a public works construction project. G. L. c. 149, § 27B. Mr. LaFleur and LaFleur Electrical Co., Inc. appealed.
On February 9, 2009, I conducted a hearing at the Division of Administrative Law Appeals, which I recorded on two cassette tapes. Steven J. LaFleur testified on behalf of himself and LaFleur Electrical Co., Inc. Celina Dias Pendexter, an inspector with the Fair Labor Division, testified for the Office of the Attorney General. During the hearing, I accepted into the record a stipulation of facts and ten exhibits. After the parties completed their presentations, I ended the hearing and closed the record.

FINDINGS

Based on all of the evidence in the record, reasonable inferences drawn from the evidence, and my assessment of the credibility of the witnesses, I make these findings.

1. In April 2008, the Fair Labor Division of the Office of the Attorney General received a complaint that LaFleur Electrical Co., Inc., a subcontractor on a public works construction project, was not providing certified copies of its payroll reports each week directly to the awarding authority (Testimony of Pendexter).

2. Celina Dias Pendexter, an inspector in the Fair Labor Division, investigated the complaint against LaFleur Electrical. She interviewed Steven J. LaFleur and visited Jeffrey Osuch at his office where she interviewed him and reviewed and copied documents (Testimony of Pendexter).

3. Mr. LaFleur is the Treasurer and Secretary of LaFleur Electrical Co., Inc., a Massachusetts corporation. As such, he is an employer liable for violations of the requirement to provide payroll records to an awarding authority (Stipulation of Facts).

4. In October 2006, LaFleur Electrical began providing electrical contracting services as a subcontractor on the Mattapoisett Well Pump Station Construction and Upgrade Project-a public works construction project (Stipulation of Facts).

5. Mr. LaFleur signed all certified payroll reports on behalf of LaFleur Electrical (Stipulation of Facts).

6. Jeffrey Osuch is the agent for the Mattapoisett River Water District, the awarding authority for the Mattapoisett Well Pump Station Construction and Upgrade Project (Exhibits 3 and 8).

7. From the start of the project, all but one of the subcontractors submitted their certified payroll reports only to the general contractor, WES Construction Corp (Stipulation of Facts).

8. WES Construction Corp. would bundle the subcontractors' certified payroll reports, and send them to the project engineer, Tata & Howard, Inc. (Stipulation of Facts).

9. Tata & Howard, Inc. would collect four or five weeks of certified payroll reports and send them to Mr. Osuch (Stipulation of Facts).

10. Mr. Osuch expressed surprise when Ms. Pendexter told him that all subcontractors must send payroll reports directly to the awarding authority each week. He said that this explained why he was receiving payroll reports each week directly from Fernandes Masonry, one of the subcontractors, as well as receiving copies of Fernandes's payroll reports periodically from the project engineer (Testimony of Pendexter).

11. In late April 2008, Ms. Pendexter informed Mr. LaFleur of the required method of providing payroll reports to the awarding authority on public construction projects. In response, LaFleur Electrical began sending its payroll reports directly to the awarding authority each week while continuing to send copies to WES Construction (Testimony of LaFleur and Pendexter).

12. On October 7, 2008, the Fair Labor Division cited Mr. LaFleur and LaFleur Electrical for violating G.L. c. 149, § 27B. The citation, which included a $5,500.00 penalty, was based on LaFleur Electrical's failure to provide certified payroll reports each week to the Mattapoisett River Water District, the awarding authority on the Mattapoisett Well Pump Station project (Exhibit 1 and Stipulation of Facts).

13. After the Fair Labor Division issued the citation, Ms. Pendexter visited Jeffrey Osuch's office for a second time. She again interviewed Mr. Osuch and reviewed and copied documents (Testimony of Pendexter).

14. Between May and September 2008, LaFleur Electrical sent several of its weekly payroll reports to the awarding authority late (Testimony of LaFleur).

15. Throughout its involvement in the project, Fernandes Masonry consistently sent its payroll reports directly to the awarding authority (Stipulation of Facts).

16. Prior to April 2008, neither Steven J. LaFleur nor LaFleur Electrical had ever been convicted of or issued a citation for violating any Massachusetts law regulating labor and industry (Testimony of LaFleur).

17. In its citation, the Fair Labor Division charged Mr. LaFleur and LaFleur Electrical with an unintentional violation (Exhibit 1).

18. The Fair Labor Division set the penalty amount based solely on the amount of LaFleur Electrical's contract with the general contractor, which was $1,600,000.00. (Testimony of Pendexter).

19. From October 2006 to October 2008, of the twenty-three subcontractors on the Mattapoisett Well Pump Station project, only LaFleur Electrical and Fernandes Masonry ever sent payroll reports directly to the awarding authority (Stipulation of Facts).

20. The Fair Labor Division did not warn, cite, or penalize any of the other twenty-one subcontractors on the project even though none sent payroll reports to the awarding authority as required (Testimony of Pendexter).

21. LaFleur Electrical is a nonunion shop (Testimony of LaFleur).

DISCUSSION

G. L. c. 149 § 27B requires all subcontractors on public works projects to provide payroll reports to awarding authorities each week. From October 2006 until April 2008, LaFleur Electrical, while working on a public works project, sent no weekly payroll reports directly to the awarding authority (Finding 7). Further, LaFleur Electrical began sending payroll reports directly to the awarding authority in May 2008; it, however, sent several reports late (Finding 14). Thus, LaFleur Electrical failed to comply with the law.

Additionally, G. L. c.149 § 27C authorizes the Fair Labor Division to issue warnings, citations and penalties to employers that violate various labor and employment laws, including G. L. c. 149 § 27B. LaFleur Electrical is unquestionably an employer, thus, the Fair Labor Division was empowered to issue it the citation and penalty.

Prior to the hearing, the parties stipulated that Mr. LaFleur met the definition of employer in G. L. c. 149 (Stipulations of Fact). Additionally, the stipulation shows that Mr. LaFleur's failure to present evidence or argument challenging his status as an employer was intentional. In the absence of any contrary evidence or argument, I accept the stipulation that Mr. LaFleur meets the definition of employer. Thus, Mr. LaFleur is personally liable both because he served as secretary and treasurer of LaFleur Electrical (Finding 3) and because he produced, signed, and forwarded the payroll reports (Finding 5 and Testimony of LaFleur). Accordingly, the Fair Labor Division was empowered to issue a citation and penalty to Mr. LaFleur.
Next, I consider and reject the two affirmative defenses raised by LaFleur Electrical and Mr. LaFleur.


AFFIRMATIVE DEFENSES

Mr. LaFleur and LaFleur Electrical contend that the Fair Labor Division was required to notify them of the obligation to provide weekly payroll reports directly to the awarding authority before issuing the citation and penalty. They contend that the citation and penalty must be vacated because they were issued without first providing LaFleur Electrical notice and an opportunity to correct its mistake.
Neither the law nor the facts, however, support this contention. Along with providing criminal penalties, the law allows the Fair Labor Division to issue either a warning or a citation, with or without a penalty, for violations of various laws protecting workers; it does not require a warning prior to a citation or penalty. G. L. c.149 § 27C.


Additionally, the facts show that the Fair Labor Division informed Mr. LaFleur and LaFleur Electrical of their obligations concerning payroll reports in April 2008 (Finding 11). Subsequently, LaFleur Electrical sent payroll reports directly to the awarding authority, but it sent some of those reports late (Finding 14). Thus, after receiving notice Mr. LaFleur and LaFleur Electrical did not always comply in full with the payroll reporting requirements. Accordingly, I reject their contention that timely notice would have brought them into compliance and eliminated any need for a citation and penalty.

LaFleur Electrical and Mr. LaFleur assert that LaFleur Electrical was treated differently because it is a nonunion shop. They offer three facts to support their contention. One, twenty-one other subcontractors on the project consistently violated the payroll reporting requirements (Finding 19). Two, none of these subcontractors received a citation or penalty (Finding 20). Three, LaFleur Electrical is a nonunion shop (Finding 21).
In their argument, Mr. LaFleur and LaFleur Electrical imply that the other subcontractors are union shops. There is, however, no evidence in the record establishing which, if any, of the non-complying subcontractors are union shops. Thus, based on the record before me all of the non-compliant subcontractors could be nonunion shops. Accordingly, I reject the contention that the citation and penalty should be vacated because LaFleur Electrical was treated differently based on its status as a nonunion shop.
Below, I review the Fair Labor Division's setting of the penalty amount in light of the five factors it was required to consider. The review brings the validity of the citation and penalty into question because it shows that the Fair Labor Division took only one of the five factors into consideration.


FAILURE TO CONSIDER STATUTORILY-MANDATED FACTORS

G. L. c.149 § 27C requires the Fair Labor Division, when it sets the amount of a penalty, to take into consideration five factors: (1) the total monetary amount of the public contract or payroll involved, (2) any previous labor law offenses by the violator, (3) whether the current violation was intentional, (4) the number of employees affected by the violation, and (5) the monetary extent of the violation. The statute does not elaborate on the meaning of "take into consideration". I, therefore, give the phrase its ordinary and common meaning: think about or take into account.

The Fair Labor Division considered the size of LaFleur Electrical's contract for work on the project (Testimony of Pendexter). The Fair Labor Division's consideration was merely a comparison of the $5,500.00 penalty to the $1,600,000.00 that LaFleur Electrical would be paid under the contract. This simple comparison constitutes consideration because it shows that the Fair Labor Division thought about and took into account the size of LaFleur Electrical's public contract.

The Fair Labor Division considered neither the absence of any previous violations, nor the unintentional nature of LaFleur Electrical's violation (Testimony of Pendexter). When the Fair Labor Division considers these two factors, it, may set a smaller penalty amount when, as here, it is addressing an unintentional first offense, or it may set a larger penalty amount when addressing an intentional or repeat offense. Here, the Fair Labor Division did neither of these things. It simply did not take these two factors into account when it set the penalty amount.
G. L. c.149 § 27C, limits penalty amounts for unintentional first offenses by capping such penalties at $7,500.00. This maximum puts the penalty at issue here in perspective. The Fair Labor Division imposed a penalty amount only $2,000.00 below the maximum. Thus, it treated LaFleur Electrical's offense as a serious transgression, but the record does not show why it did so. .
The Fair Labor Division considered neither the number of employees affected nor the monetary extent of the violation. These two factors are included in G. L. c.149 § 27C because it allows the Fair Labor Division to issue penalties for violations other than failing to provide payroll reports for work on public projects. It authorizes penalties for labor and employment law violations that harm individual workers financially, such as ignoring statutorily established hiring preferences, failing to pay prevailing wage and overtime, and retaliating against workers who assert their rights to fair wages.

When the Fair Labor Division considers these two factors, it may increase or decrease the penalty amount depending on how many workers were harmed and the amount of money wrongfully withheld from them. Here, no workers were harmed and no money was wrongfully withheld from workers, and therefore no monetary figure can be ascribed to LaFleur Electrical's failure to provide payroll reports. Under these circumstances, a penalty that is only $2,000.00 below the maximum can be justified only if the underlying offense is significant.
Ms. Pendexter's review of records and her interviews with the awarding authority's agent made her aware that only one of the subcontractors on the Mattapoisett Well Pump Project was providing payroll reports weekly to the awarding authority. Twenty-three subcontractors worked on the project. One, Fernandes Masonry, complied with the payroll reporting requirement. LaFleur Electrical substantially complied only after April 2008 when the Fair Labor Division directed it to do so. The remaining twenty-one did not comply at all. Yet, none of these twenty-one subcontractors was warned, cited, or penalized (Finding 20).
This shows that the Fair Labor Division did not regard a payroll reporting violation to be a serious transgression. The Fair Labor Division offered nothing to show why LaFleur Electrical's violation deserved a $5,500.00 or any other penalty while twenty-one identical violations on the same project did not even warrant a warning.

CONCLUSION

The Fair Labor Division failed to comply with G. L. c.149 § 27C, which requires it to consider five specific factors when setting a penalty amount. Thus, it issued the citation erroneously. Accordingly, I vacate the citation, including the $5,500.00 penalty.

DIVISION OF ADMINISTRATIVE LAW APPEALS


/S/ August 12, 2009

Francis X. Nee
Administrative Magistrate