Building & Construction Trades Department v. Reich

40 F.3d 1275, 309 U.S. App. D.C. 244, 2 Wage & Hour Cas.2d (BNA) 737, 1994 U.S. App. LEXIS 34341, 1994 WL 684293
CourtCourt of Appeals for the D.C. Circuit
DecidedDecember 9, 1994
DocketNos. 93-5129, 93-5195
StatusPublished
Cited by16 cases

This text of 40 F.3d 1275 (Building & Construction Trades Department v. Reich) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Building & Construction Trades Department v. Reich, 40 F.3d 1275, 309 U.S. App. D.C. 244, 2 Wage & Hour Cas.2d (BNA) 737, 1994 U.S. App. LEXIS 34341, 1994 WL 684293 (D.C. Cir. 1994).

Opinions

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting opinion filed by Chief Judge EDWARDS.

SENTELLE, Circuit Judge:

The Building and Construction Trades Department, AFL-CIO, and certain local labor organizations and contractor associations (collectively, “the unions”) appeal the district court’s grant of summary judgment in favor of Robert B. Reich, the Secretary of Labor (hereinafter “the Secretary” or “Labor”), in an action to review a decision by Labor’s Wage Appeals Board that the unions’ job targeting programs (“JTPs”) violate the Davis-Baeon Act and Labor’s regulations. See Building and Constr. Trades Dep’t v. Reich, 815 F.Supp. 484, 486 (D.D.C.), reconsideration denied, 820 F.Supp. 11, 14 (D.D.C.1993). Associated Builders and Contractors, Inc. (“ABC”) appeals the district court’s denial of its motion to intervene and seeks to intervene on appeal. For the reasons set forth below, the decision of the district court is affirmed and the motion to intervene on appeal is denied.

I. BACKGROUND

In 1988, ABC, a national trade association of construction employers, requested that the Administrator of Labor’s Wage and Hour Division rule on the legality of deductions taken from the wages of workers to fund JTPs, which are union-initiated programs designed to maintain or improve the unions’ share of certain construction markets by subsidizing the wage costs of union employers who bid on certain projects. Under a JTP, an employer takes out of its employees’ wages payroll deductions authorized by the membership of the union, which are then paid into a union-managed fund. The union unilaterally decides what jobs to target and uses this fund to provide a wage subsidy either to the contractor or directly to the employees on the targeted job. Deductions from employees’ pay to fund JTPs and the provision of JTP subsidies to union contractors occur on both public and private construction projects.

The Copeland Act, 18 U.S.C. § 874 (1988), provides criminal penalties for anyone who forces a construction worker employed on a public project to give up any part of the compensation to which he is entitled under his employment contract. The Davis-Baeon Act, 40 U.S.C. § 276a(a) (1988), provides that all construction contractors on public construction projects are required to pay laborers and mechanics employed directly on the site .of the work the “prevailing” wage and that wage has to be paid “without subsequent deduction or rebate on any account,” “regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics....” Labor has issued anti-kickback regulations under the Copeland Act, which are also designed to aid in the enforcement of the prevailing wage provisions of the Davis-Baeon Act. See 29 C.F.R. § 3.1 (1994). Section 3.5 provides that certain enumerated deductions may be made without application to and approval of Labor. Subsection 3.5(i) specifically permits deductions to pay regular union initiation fees and membership dues, not including fines or special assessments. 29 C.F.R. § 3.5. Section 3.6 states that some payroll deductions • are permissible with Labor’s approval and any contractor or subcontractor may apply to Labor for pennission to make any deduction not permitted under section 3.5. 29 C.F.R. [1278]*1278§ 3.6. Labor may grant such permission whenever it finds that the “contractor, subcontractor, or any affiliated person does not make a profit or benefit directly or indirectly from the deduction either in the form of a commission, dividend, or otherwise....” 29 C.F.R. § 3.6(a).

The Administrator determined that while the JTP funds collected by the unions are not wage kickbacks prohibited by the Copeland Act, JTP deductions violate prevailing wage rate requirements of the Davis-Baeon Act and are not permissible under either section 3.6 or section 3.6 because such deductions benefit employers. The unions petitioned the Wage Appeals Board to review and overturn the Administrator’s decision, and Labor and ABC opposed the petition.

In Building and Construction Trades Unions Job Targeting Programs, Wage App. Bd. Case No. 90-02 (June 13, 1991), the Wage Appeals Board upheld the determination that JTPs violate the Davis-Bacon Act prevailing wage rate requirements and the relevant regulations. The Board reasoned that the Davis-Bacon Act requires the payment of prevailing area wages and that Labor’s regulations, which generally prohibit payroll deductions unless specifically enumerated or approved by Labor, are intended to effectuate that end. While the unions claimed that the JTP deductions are authorized under section 3.5(i) as membership dues, the Board concluded that JTP deductions are not union membership dues as that term is ordinarily understood. The Board considered the effect of Communications Workers of America v. Beck, 487 U.S. 735, 745, 108 S.Ct. 2641, 2648, 101 L.Ed.2d 634 (1988), which held that periodic dues under section 8(a)(3) of the National Labor Relations Act (“NLRA”), 29 U.S.C. § 158(a)(3) (1988), were limited to funds expended for the core functions of collective bargaining, contract administration, and grievance adjustment. One Board member relied on Beck in finding that JTP deductions from non-union employees’ wages violate the Davis-Baeon Act because they go beyond the funds needed for the core functions. The other two Board members, however, found the discussion of Beck unnecessary to their decision.

The unions sought review of the adverse decision of the Wage Appeals Board in the district court, and ABC requested intervention as of right or, in the alternative, permissive intervention. The district court, adopting the report and recommendation of Magistrate Judge Kay, denied ABC intervention, reasoning that the Davis-Bacon Act was enacted to protect employees rather than employers. See United States v. Binghamton Constr. Co., 347 U.S. 171, 176-77, 74 S.Ct. 438, 441-42, 98 L.Ed. 594 (1954). Considering cross-motions for summary judgment, the district court granted Labor’s motion on the basis that Labor’s interpretation of its own regulations are reasonable and consistent with the purposes of the Davis-Bacon Act.

The district court first held that the Wage Appeal Board’s conclusion that wages withheld under JTPs are not membership dues is not plainly erroneous or inconsistent with section 3.5(i) and that the Board’s interpretation was consistent with the relevant regulations as a whole. Specifically, the court found it consistent to disallow contractors from making JTP payroll deductions without Labor’s approval under section 3.5(i) when Labor could not approve such deductions under section 3.6 because the contractor would benefit, directly or indirectly, from the deduction.

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40 F.3d 1275, 309 U.S. App. D.C. 244, 2 Wage & Hour Cas.2d (BNA) 737, 1994 U.S. App. LEXIS 34341, 1994 WL 684293, Counsel Stack Legal Research, https://law.counselstack.com/opinion/building-construction-trades-department-v-reich-cadc-1994.