Opinion
No. 97 Civ. 6269 (NRB)
August 15, 2000
MEMORANDUM AND ORDER
Plaintiffs filed this action on August 22, 1997 to recover unpaid wages and benefits under the Fair Labor Standards Act of 1938 as amended, 29 U.S.C. § 201, et seq. ("FLSA"), the Contract Work Hours and Safety Standards Act, 40 U.S.C. § 327, et seq. ("CWHASSA"), and under the laws of the State of New York. Now pending is a motion for summary judgment under Fed R. Civ. P. 56 by defendants Phoenix Construction Corp. ("Phoenix"), Ypsilon Construction Corp. ("Ypsilon"), John Giavris, George Gizanis, Republic Western Insurance Co. ("Republic Western") and Utica Mutual Insurance Co. ("Utica"), (collectively the "Phoenix Defendants"), as well as a motion for summary judgment by defendants Ajet Construction Corp. ("Ajet"), Spiros Gazgalis (sued herein as or s/h/a "Spiro Gazgalis") and International Fidelity Insurance Corp. ("IFIC"), (collectively, the "Ajet defendants"). On June 6, 2000, an oral argument was held on the pending motions. For the reasons set forth below, defendants' motions are denied in part and granted in part. Furthermore, plaintiffs must elect, and notify the Court within ten days, whether to proceed in this Court where they may recover only limited damages as discussed below, or to pursue the full damages they seek in their pending administrative proceedings before the New York City Housing Authority ("NYCHA").
BACKGROUND
Plaintiffs are roofers and bricklayers who allege they are owed compensation for work they performed on four separate public works construction projects. Defendants are contractors involved in those projects, their officers, and the insurance companies that served as sureties on construction payment bonds for those projects. Ypsilon acted as the subcontractor on the "Purchase Project" at the State University at Purchase, New York. Ypsilon also performed brick repair for the "Fulton Houses Project" in New York, New York for the New York City Housing Authority ("NYCHA"). Phoenix performed asbestos abatement and roofing replacement for the "Wald Houses Project" in New York, New York, also for the NYCHA. Ajet and Phoenix formed a joint venture for roofing replacement, asbestos abatement and brickwork repair on the "Queensbridge Houses Project" in Queens, New York, which was performed for the NYCHA as well. The three projects performed for the NYCHA were all paid for with federal funds.
Each plaintiff claims to have worked on at least one of the four projects, although the parties dispute specifically which plaintiff worked on each project and for precisely how long. Plaintiff Jan Grochowski claims that he worked on the "Purchase Project" and the "Fulton Houses Project." Plaintiff Janusz Wysocki claims to have worked on all four projects. Plaintiffs Andrzej Zmijewski, Henryk Supinski and Jerzy Klosek claim they worked on the "Fulton Houses Project." Plaintiffs Roman Kakol, Jan Statkiewicz and Andrzej Wiktoruk claim that they worked on the "Fulton Houses" and "Wald Houses" projects. Plaintiff Miroslaw Sidor claims to have worked on the "Fulton Houses", "Wald Houses" and "Queensbridge Houses" projects. See Plaintiff's Chart Submission at June 6, 2000 Oral Argument. Plaintiffs seek to recover unpaid prevailing wages and overtime compensation allegedly owed them for their labor on these projects.
PROCEDURAL HISTORY
On August 17, 1999, at the conclusion of an oral argument on earlier motions for summary judgment, I dismissed plaintiffs' CWHASSA claims because CWHASSA does not provide a private right of action. I also dismissed plaintiffs' state common law claims related to work performed on the three federally funded projects, because state law remedies are not available to recover prevailing wages under federally funded contracts. Moreover, the Davis-Bacon Act, the statute applicable to those federal contracts, does not afford plaintiffs a private right of action.Grochowski v. Ajet Construction Corp., 1999 WL 688450, at *1 (S.D.N.Y. Sept. 2, 1999); 40 U.S.C. § 276a et seq.
However, I denied summary judgment to defendants on plaintiffs' FLSA claims and state law claims related to the state funded projects. Additionally, I held that: (1) plaintiffs who were illegal aliens were entitled to protection under the FLSA; (2) the FLSA's three year statute of limitations for willful nonpayment of wages allowed plaintiffs to recover wages they were owed after August 22, 1994; and (3) plaintiffs could recover against the sureties under the terms of the construction bonds. Id. In an opinion and order dated September 1, 1999, I denied the Ajet defendants' motion for summary judgment on the issue of whether Ajet or Gazgalis is an "employer" under the FLSA, as well as plaintiffs' motion to amend the complaint. Id. at *3-4. Plaintiffs now seek to recover unpaid prevailing wages and overtime compensation under the remaining FLSA claims, which apply to all the projects.
According to plaintiffs, each of the nine plaintiffs has filed timely administrative claims for prevailing wages with the NYCHA pertaining to the three federally funded projects, "Fulton Houses," "Wald Houses" and "Queensbridge Houses." Administrative proceedings based on those claims are currently pending before the NYCHA. Transcript of June 6, 2000 Oral Argument (hereinafter "Tr.") at p. 6; Plaintiff's Chart Submission at June 6, 2000 Oral Argument; Affidavit of Richard J. Flanagan dated February 3, 2000 ("Flanagan Affidavit") ¶ 7-11; Id. Exs. C, D.
No administrative proceedings have been commenced with respect to the "Purchase Project" which, unlike the three other projects involved, was not a recipient of federal funds.
The Phoenix defendants now contend that: (a) plaintiffs have no remaining FLSA claims because they have failed to exhaust their state administrative remedies; (b) assuming arguendo that plaintiffs do not have to exhaust their administrative remedies, they still have no FLSA claim for underpayment on the first 40 hours they worked in any given week because defendants have paid all plaintiffs higher wages than the minimum wage mandated by the statute; and (c) plaintiffs' overtime claims would be limited to one and one half times the "regular rate" of pay actually paid by defendants and not the prevailing wage rate that plaintiffs contend should have been paid.
The Ajet defendants also seek to limit damages in a similar fashion to the Phoenix defendants, and further contend that this action should be stayed pending completion of the administrative proceedings being pursued by plaintiff because plaintiffs' Davis-Bacon prevailing wage claims with respect to the Queensbridge project are still pending before the NYCHA. Because the Ajet defendants were involved only in the Queensbridge Houses project, they address only the claims of Janusz Wysocki and Miroslav Sidor, the two plaintiffs who claim to have worked on that project.
DISCUSSION
The FLSA can be enforced by private lawsuits or by investigations and actions initiated by the Secretary of Labor. 29 U.S.C. § 216 (b); 29 U.S.C. § 216 (c). A private action may be maintained for violations of the FLSA "against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated." 29 U.S.C. § 216 (b); Hale v. Mann, 2000 WL 675209, at *5, ___ F.3d ___ (2d Cir. May 25, 2000).
The FLSA does not require exhaustion of administrative remedies. 29 U.S.C. § 201, et seq. When a statute does not specifically require exhaustion of administrative remedies, the issue of whether plaintiff should be required to exhaust them is left to the discretion of the District Court. McCarthy v. Madigan, 503 U.S. 140, 144 (1992) ("where Congress specifically mandates, exhaustion is required . . . But where Congress has not clearly required exhaustion, sound judicial discretion governs.") (internal citations omitted). Here, plaintiffs need not exhaust their administrative remedies, but should they proceed in this forum, their remedies would be circumscribed by the provisions of the FLSA and by this Court's previous decision with respect to the absence of a private right of action under the CWHASSA and the Davis-Bacon Act. See Grochowski, 1999 WL 688450.
The FLSA provides that an employer is liable to an employee for "unpaid minimum wages or unpaid overtime." 29 U.S.C. § 216 (b). Plaintiffs' recovery for back pay under the FLSA is thus limited to unpaid minimum wages and any unpaid overtime for hours worked in excess of the first forty hours per week.
A. Plaintiffs' Claims for Prevailing Wages
Section 206(a) of the FLSA obligates every employer to pay to each of its employees a guaranteed minimum wage at "not less than $4.25 in the period ending on September 30, 1996, not less than $4.75 an hour during the period beginning on October 1, 1996, and not less than $5.15 an hour beginning September 1, 1997" for the relevant time period. 29 U.S.C. § 206 (a).
The FLSA allows employees whose rights were violated to sue their employers for the recovery of unpaid minimum wages and liquidated damages in an amount equal to the unpaid minimum wages. 29 U.S.C. § 216 (b). The statute provides that "[a]ny employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount of liquidated damages." Id.
Plaintiffs' assertion that the FLSA provides a right to recover prevailing wages has no support. Our extensive research has not uncovered any authority to support the proposition that the FLSA contains a mechanism to determine the prevailing wage for the first forty hours of work per week. The statute itself does not address liability for underpayment of straight time hours at prevailing wage rates. Nor is there any case law authority, in the over sixty years since the enactment of the FLSA, where a federal court determined, under the FLSA, the amount workers on a federally funded project, otherwise governed by the Davis-Bacon act, should have been paid.
Recovery of back pay under the FLSA is thus restricted to unpaid minimum wages, and does not extend to any underpayment claims made on another basis. See Barrentine v. Arkansa-Best Frieght Sys., Inc., 450 U.S. 728, 739 (1981); Lyon v. Whisman, 45 F.3d 758, 764 (3d Cir. 1995) ("The substantive sections of the FLSA, narrowly focusing on minimum wage rates and maximum working hours, bear out its limited purpose."). Consequently, when plaintiffs who seek to recover unpaid wages were paid salaries at a rate higher than the minimum wage in effect at the time of their employment, the FLSA is not applicable. Lasater v. Gardner, 609 P.2d 932, 933-34 (Utah 1980)
In fact, payment of prevailing wages for work on federally funded projects is the purpose of the Davis-Bacon Act, which does not afford plaintiffs a private right of action but rather offers an administrative procedure to employees who believe they were not properly paid for work on such projects. Grochowski v. Ajet Construction Corp., 1999 WL 688450, at *3; 40 U.S.C. § 276a; United States v. Capeletti Bros., Inc., 621 F.2d 1309, 1315 (5th Cir. 1980) (Davis-Bacon Act provides an exclusive administrative mechanism for its enforcement); Miccoli v. Ray Communications, Inc., 2000 WL 1006937, at *3 (E.D.Pa. July 20, 2000) (administrative scheme in place for enforcing the Davis-Bacon Act's prevailing wage provision is the sole method of redress for individuals alleging a violation of the contractual provisions for prevailing wages that Davis-Bacon Act mandates be included in government contracts).
Thus, plaintiffs' attempt to use the FLSA to circumvent the procedural requirements of the Davis-Bacon Act must fail. "[P]laintiffs' claim, no matter how creative the choice of nomenclature, is in reality a private claim for back wages under the Davis-Bacon Act . . . [which does not] allow for such a claim." Miccoli, 2000 WL 1006937, at *3
To reiterate, plaintiffs cannot use the FLSA to recover any back pay for their first forty hours beyond unpaid minimum wages. In that regard, defendants maintain that plaintiffs were paid in excess of the minimum wage rate mandated by FLSA. Phoenix defendants Memorandum of Law at 5; Flanagan Affidavit, Ex. B. If defendants' assertion that there has been no violation of the minimum wage provisions of FLSA is correct, plaintiffs would have no underpayment claims for straight time.
Plaintiffs may, however, pursue their prevailing wage claims before NYCHA. The Housing Authority is authorized to deal with wage claims lodged against contractors performing work for the Housing Authority and routinely conducts investigations and holds hearings on such matters. Phoenix Defendants' Memorandum of Law at 4; Ajet Defendants' Memorandum of Law at 10 ("NYCHA has responsibility for handling such claims for the Queensbridge Project."); Tr. at pp. 14, 26. In fact, the NYCHA is currently withholding two hundred thousand dollars ($200,000) due to defendants Phoenix and Ajet for other construction projects, one hundred thousand dollars ($100,000) from Phoenix and one hundred thousand dollars ($100,000) from Ajet, against any liability that may result from resolution of the prevailing wage claims brought by plaintiffs in the administrative proceedings they commenced regarding the projects involved in the case at bar. Affirmation of John Giavris, February 3, 2000 ("Giavris Aff.") ¶¶ 2-3; Flanagan Aff. ¶ 10. Thus, plaintiffs, as they acknowledge, may pursue recovery for prevailing wages for the three federally funded projects in their pending administrative procedures before NYCHA.
At oral argument, plaintiffs expressed concern that the NYCHA may never act upon their administrative claims but shortly thereafter conceded that they may commence an Article 78 proceeding in state court to compel the NYCHA to act. Tr. at pp. 8-9.
B. Plaintiffs' Claims for Overtime Compensation
Under the FLSA, employees can also seek to recover for unpaid overtime. The statute allows employees to recover unpaid overtime compensation and an additional equal amount of liquidated damages. 29 U.S.C. § 216 (b). The FLSA recognizes separate claims for overtime even when employees have no claims for minimum wages due. Id.
Section 207 of the FLSA requires employers to pay each employee overtime compensation equal to at least "one and one-half times the regular rate at which [the employee] is employed," for all hours worked in excess of forty per week, and prohibits employers from employing affected employees for a workweek longer than forty hours unless such compensation is paid. 29 U.S.C. § 207 (a)(1).
The regular rate of pay must be at least equal to the FLSA minimum wage. 29 U.S.C. § 207 (f); 29 C.F.R. § 778.107. The "`regular rate,' while not expressly defined in the statute, . . . mean[s] the hourly rate actually paid for the normal, non-overtime workweek." 149 Madison Ave. Corp. v. Assetta, 331 U.S. 199, 204 modified on other grounds, 331 U.S. 795 (1947); Adams v. Dept. of Juvenile Justice of the City of N.Y., 143 F.3d 61, 67 (2d Cir. 1998). The regular rate of pay as defined in the statute is "deemed to include all remuneration for employment paid to, or on behalf of, the employee" excluding several statutory exceptions set forth in paragraphs (1) through (7) of section 207(e), such as gifts, discretionary bonuses, contributions to retirement or life insurance plans and overtime compensation. 29 U.S.C. § 207 (e). The regular rate thus encompasses all payments made by the employer to the employee including but not limited to salaries, meal and travel expenses paid for by the employer, and contractual bonuses, and excluding various enumerated benefits. 29 C.F.R. § 778.108; 29 C.F.R. § 778.110-121; 29 C.F.R. § 778.200-224.
For purposes of computing overtime compensation, "the `regular rate' under the Act is a rate per hour . . . The regular hourly rate of pay for an employee is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid." 29 C.F.R. § 778.109. "[T]he formula for determining the regular rate of pay, which must be the hourly rate actually paid for non-overtime work, . . . is to divide the wages actually paid by the employer for non-overtime work by the total non-overtime hours actually worked." Wirtz v. Williams, 369 F.2d 783 (5th Cir. 1966) (citing 149 Madison Ave. Corp., 331 U.S. at 204; Bay Ridge Operating Co., Inc. v. Aaron, 334 U.S. 446, 460, rehearing denied, 335 U.S. 838 (1948)). Overtime pay is then computed on that basis. Id. If plaintiffs have any overtime claims here at all, they would be "computed by multiplying all hours [each plaintiff] worked over 40 hours a week by one and one-half times the `regular rate'" of pay for each plaintiff.Masters v. Maryland Management Co., 493 F.2d 1329, 1333 (4th Cir. 1974)
Alternatively, plaintiffs could resolve their overtime claims before NYCHA along with their prevailing wage claims, thereby tying the resolution of their overtime claims to the unresolved issue of their straight time compensation. The regulations provide that:
Various Federal, State, and local laws require the payment of minimum hourly, daily or weekly wages different from the minimum set forth in the Fair Labor Standards Act . . . Where a higher minimum wage than that set in the Fair Labor Standards Act is applicable to an employee by virtue of such other legislation, the regular rate of the employee, as the term is used in the Fair Labor Standards Act, cannot be lower than such applicable minimum, for the words "regular rate at which he is employed" as used in section 7 must be construed to mean the regular rate at which he is lawfully employed.29 C.F.R. § 778.5. Thus, if plaintiffs were indeed entitled to earn pay in accord with the prevailing wage standard for federally funded contracts as set forth in the Davis-Bacon Act, the "regular rate" used in computing overtime pay must reflect that statutory requirement and must be not only equal to at least the minimum wage provided by the FLSA but also to at least the applicable statutory wage. If plaintiffs are due prevailing wages under the Davis-Bacon Act as they allege, that sum needs to be determined by the NYCHA before any overtime payment due is computed.
In sum, plaintiff's forum for determining prevailing wages is NYCHA, which can consider all aspects of plaintiffs' wages and hours and compute underpayment for overtime hours at one and one-half times the prevailing wage. Tr. at p. 27. In this Court, however, on the current record, plaintiffs' overtime would be calculated based on the wages plaintiffs were actually paid.
Should plaintiffs recover only unpaid straight time in their NYCHA proceedings, they could then compute overtime pay under the FLSA on the basis of their "regular rate" that would reflect the prevailing wage determination of the NYCHA as required by 29 C.F.R. § 778.5.
CONCLUSION
In conclusion, plaintiffs' remedies for their FLSA claims in this Court are limited to unpaid minimum wages, if any, and unpaid overtime in the total of one and one half times the wages they were actually paid, rather than one and one-half times the prevailing wage rate as plaintiffs maintain.
Defendants maintain that plaintiffs were paid in excess of the minimum wage rate mandated by FLSA. see supra, p. 10.
Alternatively, plaintiffs may pursue their administrative claims before NYCHA for the purpose of establishing the prevailing (i.e. regular) rate of pay. With that determination in hand, plaintiffs could seek recovery from the corporate defendants and their sureties of the total sum they allege they are owed, i.e. both unpaid prevailing wages and overtime pay computed on the basis of the statutory prevailing wage rates.
Accordingly, the Phoenix defendants' motion for summary judgment is denied in so far as they contend that plaintiffs have failed to exhaust their administrative remedies because the FLSA does not require exhaustion of administrative remedies. The Ajet defendants' motion to stay this action pending completion of the administrative proceedings pursued by plaintiff is denied for the same reason. The Phoenix defendants' motion for summary judgment is granted to the extent, and only to the extent, that plaintiffs were actually paid at or above the relevant minimum wage for the first forty hours of each work week. The Phoenix defendants' motion for summary judgment is granted in so far as plaintiffs' overtime claims in this Court on the current record would be limited to one and one-half times the actual rate of pay.
Plaintiffs are required to notify this Court in writing within 10 days of the manner in which they elect to proceed. IT IS SO ORDERED.
Plaintiffs' submission should also include a proposed course of action for the resolution of their claims for the state-funded Purchase Project.