In re Corrections Corporation of America and United Government Security Officers of America, Local 315 (agency decision, April 18, 2019)

Plain-English summary

UGSOA Local 315 sought to replace collectively bargained wages for detention officers working under a federal immigration-detention contract because it said the rates were substantially below prevailing local wages. The Board held that the Service Contract Act's substantial-variance procedure can raise or lower a collectively bargained rate. The union nevertheless failed to provide the comprehensive mix of wage evidence needed to show the prevailing rate for similar work in the relevant locality. Among other gaps, its county-jail comparison lacked descriptions proving the work was similar, and non-arm's-length bargaining evidence did not belong in this variance proceeding. The Board affirmed denial and dismissed the case.

Decision snapshot

• Cited authorities: 41 U.S.C. § 6707(c); 29 C.F.R. §§ 4.10(a), 4.54(a), and 8.1
• Outcome: Denial of the union's substantial-variance petition affirmed; case dismissed.
• Key point: A substantial-variance petition can seek a higher wage, but it must clearly establish prevailing pay for services of similar character in the locality.

Full text (DOL official public release)

U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

  IN THE MATTER OF:

  Applicability of Wage Rates                      ARB CASE NOS. 2016-074
  Collectively Bargained by Corrections                          2016-075
  Corporation of America and United
  Government Security Officers of                  ALJ CASE NO. 2015-CBV-00001
  America, Local 315, Under Contract
  ODT-5-C-0010 for Detention Guard                 DATE: April 18, 2019
  Services, Elizabeth Detention Center,
  Elizabeth, New Jersey


  Appearances:
  For Corrections Corporation of America:
       Robert G. Lian, Jr., Esq., Esther G. Lander, Esq., and Frederick L.
       Conrad III, Esq.; Akin Gump Strauss Hauer & Feld LLP; Washington,
       District of Columbia

  For United Government Security Officers of America, Local 315:
       Robert B. Kapitan, Esq.; United Government Security Officers of
       America, International Union, Westminster, Colorado

  For the Administrator, Wage and Hour Division:
        M. Patricia Smith, Esq., Jennifer S. Brand, Esq., William C. Lesser,
        Esq., Jonathan T. Rees, Esq., and Quinn Philbin, Esq.; United States
        Department of Labor, Washington, District of Columbia


  Before: William T. Barto, Chief Administrative Appeals Judge; James A.
  Haynes and Daniel T. Gresh, Administrative Appeals Judges


                          FINAL DECISION AND ORDER
        PER CURIAM. This case arises under the McNamara-O’Hara Service Contract
  Act (SCA), 41 U.S.C. § 6701, et seq., (2011) and it’s implementing regulations, 29
  C.F.R. Parts 4 and 6 (2015). The United Government Security Officers of America



  (UGSOA) sought a variance from the collectively-bargained wages for detention
  officers in a contract between the Corrections Corporation of America (CCA) 1 and
  the U.S. Department of Homeland Security’s Immigration and Customs
  Enforcement (ICE). On June 16, 2016, a Department of Labor (Department)
  Administrative Law Judge (ALJ) issued a Decision and Order (D. & O.) denying
  UGSOA’s request. For the following reasons, we affirm the ALJ.

                                       BACKGROUND

        The ALJ’s findings of fact are supported by a preponderance of the record
  evidence. To summarize, in 2005 CCA entered into Service Contract ODT-5-C-0010
  with ICE to provide detention guard services at the Elizabeth Detention Center
  (EDC) in Elizabeth, New Jersey. In 2009 CCA entered into a collective bargaining
  agreement (CBA) with the Security, Police, Fire Professionals of America, Local 448
  (SPFPA). The 2011 CBA between CCA and SPFPA provided a wage rate of $20.00
  per hour for detention officers.

        In February 2012, EDC employees elected the UGSOA, Local 315, to replace
  the SPFPA as their collective bargaining representative. CCA and UGSOA
  negotiated a new CBA with an effective term of March 25, 2013 to September 24,
  2016. This CBA provided for detention officer hourly wage rates of $20.40 in 2013,
  $20.71 in 2014 and $21.02 in 2015.

        On September 16, 2014, UGSOA filed a request with the Wage and Hour
  Administrator of the United States Department of Labor (Administrator) for a
  substantial variance hearing with respect to the wage rates for detention officers
  and transportation detention officers working at EDC. UGSOA asserted that the
  CBA wage rate was substantially below the prevailing wage for detention officers in
  EDC’s locality. After reviewing the request, the Administrator filed an Order of
  Reference with the Office of Administrative Law Judges authorizing a hearing. An
  ALJ conducted the hearing on April 28, 2016.

         At the hearing, UGSOA presented wage determinations, Bureau of Labor
  Statistics (BLS) data, its own CBA wage rates, and wages paid at the Essex County
  Jail as evidence to establish the existence of a substantial variance. After receiving
  post-hearing briefs, the ALJ issued a Decision and Order Denying Petition for

  1      CCA has since changed its name to CoreCivic, Inc.



  Substantial Variance. The ALJ concluded that, although UGSOA could utilize the
  substantial variance process to obtain a higher rate, the union failed to submit
  evidence providing the required comprehensive mix of hourly wage rates necessary
  to establish the prevailing wage for workers providing similar services in the same
  locality as the EDC and, therefore, a substantial variance. 2

         UGSOA filed a petition for review of the ALJ’s conclusion that it failed to
  provide sufficient wage information to prove its claim that there was a substantial
  variance. CCA filed a separate petition for review of the ALJ’s conclusion that the
  Department of Labor can use the substantial variance regulations to replace a
  collectively bargained wage rate with a higher rate.

                         JURISDICTION AND STANDARD OF REVIEW

         The Secretary of Labor has delegated to the ARB authority to issue final
  agency decisions under SCA. Secretary’s Order No. 01-2019 (Delegation of
  Authority and Assignment of Responsibility to the Administrative Review Board),
  84 Fed. Reg. 13072 (Apr. 3, 2019); 29 C.F.R. § 8.1(b) (2018). In this role, “the Board
  shall act as the authorized representative of the Secretary of Labor and shall act as
  fully and finally as might the Secretary of Labor concerning such matters.” 29
  C.F.R. § 8.1(c). The ARB’s review of the ALJ’s decision under the SCA is an
  appellate proceeding. 29 C.F.R. § 8.1(d). The ARB’s “authority to modify or set
  aside an ALJ’s findings of fact is limited to those instances where the ALJ’s findings
  are not supported by a preponderance of the evidence.” Administrator, Wage &
  Hour Division v. Tri-County Contractors, Inc., ARB No. 11-014, ALJ No. 2008-SCA-
  017, slip op. at 3 (ARB June 29, 2012); 29 C.F.R. § 8.1(d). See Dantran, Inc. v. U.S.
  Dep’t of Labor, 171 F.3d 58, 71 (1st Cir. 1999). The ALJ’s conclusions of law are
  reviewed de novo. Tri-County, ARB No. 11-014, slip op. at 3.


                                      DISCUSSION

  1. Governing Law

        The SCA requires that whenever the United States enters into a contract in
  excess of $2,500, the principal purpose of which is to provide services through the


  2      See D. & O. at 4, 27, 29.



  use of employees in the United States, the contract must contain a provision that
  specifies the minimum hourly wage rates that are payable to the various
  classifications of service employees working under the contract. 41 U.S.C. § 6702.
  The SCA provides that a service contract and bid specification shall contain a
  provision specifying the minimum wage and fringe benefits to be paid to each class
  of service employee engaged in the performance of the contract or any subcontract,
  as determined by the Department of Labor in accordance with prevailing rates
  and/or benefits in the locality, or, where a collective-bargaining agreement covers
  the service employees, in accordance with the rates and/or benefits provided for in
  the agreement, including prospective wage and/or benefit increases provided for in
  the agreement as a result of arm’s length negotiations. 41 U.S.C. § 6703(1)-(2).

         The Wage and Hour Division (WHD) Administrator predetermines the wage
  and fringe-benefit rates. See 41 U.S.C. § 6703; 29 C.F.R. § 1.1 (2018). Under the
  process set out in the Act, the WHD Administrator identifies the following for
  service contracts: (1) a general wage determination based on the rates that the
  WHD determines prevail in the particular locality for the various classifications of
  service employees to be employed on the contract, and (2) wages based on a
  collective bargaining agreement between the service employees and the employer
  working on a federal service contract. 41 U.S.C. § 6703 (1). The latter applies here.

          SCA Section 4(c), as amended, “imposes on successor contracts an obligatory
  floor for wages and fringe benefits in the event that the predecessor contract has
  specified collectively bargained rates.” In re United HealthServ Inc., 1989-CBV-001,
  et al., slip op. at 6 (Dep. Sec’y Feb. 4, 1991); see 41 U.S.C. § 6707(c). However,
  Section 4(c) “contemplates circumstances in which the obligation may be
  suspended.” In re United HealthServ, 1989-CBV-001, slip op. at 4. That provision
  reads as follows:

                  (c)  Preservation of wages and benefits due under
                  predecessor contracts. –

                    (1) In general. – Under a contract which succeeds a
                        contract subject to this chapter, and under which
                        substantially the same services are furnished, a
                        contractor or subcontractor may not pay a service
                        employee less than the wages and fringe benefits the
                        service employee would have received under the




                     predecessor contract, including accrued wages and
                     fringe benefits and any prospective increases in
                     wages and fringe benefits provided for in a
                     collective-bargaining agreement as a result of arm’s
                     length negotiations.

                  (2) Exception. – This subsection does not apply if the
                      Secretary finds after a hearing in accordance with
                      regulations adopted by the Secretary that wages and
                      fringe benefits under the predecessor contract are
                      substantially at variance with wages and fringe
                      benefits prevailing in the same locality for services
                      of a similar character.

  41 U.S.C. § 6707(c); 29 C.F.R. § 4.10(a). The moving party carries the burden of
  demonstrating that a substantial variance exists with a “clear showing” of
  evidence.” In re Big Boy Facilities, 1988-CBV-007, slip op. at 4 (Dep. Sec’y Jan. 3,
  1989). That clear showing requires “persuasion by a substantial margin.” Id.
  Substantial variance decisions are “highly factual, [and] turn on an evaluation of all
  evidence presented.” In re United HealthServ, 1989-CBV-001, slip op. at 6.

         The SCA does not define “substantial variance,” but the Department of Labor
  has made clear that “the plain meaning of the term requires that a considerable
  disparity in rates must exist before the successorship obligation may be avoided.”
  All Agency Memorandum No. 166 (Acting Administrator, Wage and Hour Division)
  (Oct. 8, 1992) (AAM No. 166) at 2 (internal quotations omitted). The Department
  has determined that “no discrete comparison rate is conclusive,” and has “rejected
  the argument that area wage determinations should serve as the only benchmark
  for section 4(c) findings.” Id. (Department states that “collectively bargained rates
  often can be expected to exceed service industry prevailing rates in these
  circumstances.”). For a movant to succeed, there must be a clear showing of a
  substantial disparity with “prevailing wages for services of similar character in the
  locality.” 41 U.S.C. § 6707(c)(2); 29 C.F.R. § 4.10(a). The term “services of a
  character similar in the locality,” means “job duties and skill characteristics of a
  related nature,” not “an identity of services.” Neeb-Kearney v. Dep’t of Labor, Civ.
  A. No. 91–2916, 1992 WL 395510 at 4, 1 Wage & Hour Cas. 2d (BNA) 331 (E.D. La.
  1992); citing In Re Big Boy Facilities, 1988-CBV-007, slip op. at 15.





          AAM No. 166 directs parties seeking a wage variance to include information
  and analysis concerning the differences between the collectively-bargained rates
  issued and the rates contained in the following sources: (1) federal wage board rates
  and surveys; (2) relevant BLS surveys and comparable SCA wage determinations;
  (3) other relevant wage data such as what other employers pay for similar services;
  and (4) other collectively-bargained wages and benefits in the locality. AAM No.
  166. at 2-3.



  2. Substantial Variance Procedures May Be Utilized to Raise Rates

         CCA argues that Section 4(c) of the SCA “does not permit the Department of
  Labor to replace the collectively-bargained wage with higher ‘prevailing’ wages.”
  CCA’s Brief in Support of Its Petition for Review at 7. We disagree. The statute
  does not provide that a substantial variance ruling is only available when
  collectively bargained rates are greater than those that prevail in the locality.
  Instead, it states that the process is available whenever the “variance” between
  wages is “substantial[].” 41 U.S.C. § 6707(c)(2). Accordingly, we hold that the
  variance can include rates that are both higher and lower than the previously-
  negotiated rate.



  3. UGSOA Did Not Meet Its Burden To Establish A Substantial Variance

       The record supports the ALJ’s conclusion that the evidence UGSOA
  submitted was insufficient to establish the existence of a substantial variance. 3 On

  3       See D. & O. at 21-29 discussing the relevance of: (1) the 2013-2016 CBA between
  UGSOA and CCA showing hourly wage rates between $20.40 and $21.02 for detention
  officers (UGSOA Exhibit (CX) 1); (2) Wage Determination No. 2005-2353 (June 19, 2013)
  showing hourly wage rates of $30.97 (CX 2); (3) the 2009-2012 CBA negotiated by SPFPA
  showing hourly wage rates between $18.00 and $29.93 (CX 3); (4) an amendment to the
  2009-2012 CBA showing hourly wage rates between $20.00 and $24.00 (CX 7); (5) Wage
  Determination No. 2015-2353 (March 3, 2016) showing hourly wage rates of $30.97 (CX 20);
  (6) 2012 New Jersey and Pennsylvania information from BLS showing an hourly mean
  wage between $32.91 and $35.76 for “Correctional Officers and Jailers” (CX 9); (7) 2010
  [New York/New Jersey/Connecticut/Pennsylvania] BLS National Compensation Survey
  data showing an hourly wage rate for “Correctional Officers and Jailers” at $32.35 (CX 11);
  and (8) 2013 CBA data related to corrections officer at the Essex County Jail.




  appeal, UGSOA raised five issues for review. First, UGSOA argues that the ALJ
  erred by not relying upon evidence related to correctional officers at the Essex
  County Jail. UGSOA Petition for Review at 2-3. But the ALJ found that the
  evidence the union submitted failed to include “a description of the Essex County
  Jail employee’s job duties for the base salary or any of the steps” or “other evidence
  that would establish the character of the duties performed.” 4 Thus, the ALJ’
  properly concluded that UGSOA failed to establish that the services that the
  correctional officers at the Essex County Jail performed were similar to the services
  that the EDC detention officers provided. 5

         Second, UGSOA argues that the ALJ erred by identifying the hourly wage
  rates paid at Delaney Hall, another detention facility in New Jersey, as probative
  evidence of a prevailing rate. UGSOA Petition for Review at 3. While the ALJ
  identified Delaney Hall as a facility with employees who performed services similar
  to the EDC detention officers, he ultimately concluded that “the amount of weight to
  afford to the Delaney Hall wages is largely irrelevant. UGSOA has not provided
  enough rates for this tribunal to determine a prevailing rate regardless of whether
  the Delaney Hall wages are included.” 6

        Third, UGSOA asserts that the ALJ “discounted the evidence of non-arm’s
  length negotiation which supported the finding that the wages substantially vary
  from prevailing rates.” UGSOA Petition for Review at 3-4. But the ALJ correctly
  concluded that “evidence of non-arm’s length bargaining is not relevant to this
  proceeding as ‘the absence of arm’s length negotiation is not a consideration in
  substantial variance proceedings unless so designated by the Administrator.’” 7

         UGSOA’s fourth contention is that the ALJ’s “legal conclusion that the
  ‘relevant locality’ is limited to the Newark-Union, [New Jersey-Pennsylvania] area
  is incorrect.” UGSOA Petition for Review at 4. But the union has presented no law


  4      D. & O. at 27.

  5      Id.
  6      Id. at 28, n 32.

  7      Id. at 27, citing In re United HealthServ Inc., 1989-CBV-001,slip op. at 6 ; see 29
  C.F.R. §§ 4.10(c), 4.11(c)(1).




  or evidence indicating that the ALJ’s conclusion was incorrect. Instead, UGSOA
  cites the SCA regulation at 29 C.F.R. § 4.54(a) indicating that, in this context,
  “locality” is an “elastic” term. 8 But this regulation also indicates that “[l]ocality is
  ordinarily limited geographically to a particular county or cluster of counties,”
  which is what the ALJ concluded in this case.

         Finally, UGSOA challenges the ALJ’s application of AAM No. 166, arguing
  that while the various categories of data listed to be submitted in order to establish
  a substantial variance “are probative,” AAM No. 166 “does not state that they are
  required.” UGSOA Petition for Review at 5. But this assertion does nothing to
  establish why the information the union did submit was sufficient to establish a
  substantial variance between EDC’s hourly wage rates and those prevailing for
  services of a similar character in EDC's locality.

         In sum, the evidentiary record supports the ALJ’s determination that UGSOA
  failed to submit sufficient evidence to establish that the collectively-bargained wages
  for detention officers at EDC are substantially at variance with wages prevailing in
  the same locality for services of a similar character.

                                         CONCLUSION

        The ALJ’s Decision Denying Petition for Substantial Variance is AFFIRMED
  and this case is DISMISSED.

         SO ORDERED.




  8       See 29 C.F.R. § 4.54(a) (“Although the term locality has reference to a geographic
  area, it has an elastic and variable meaning and contemplates consideration of the existing
  wage structures which are pertinent to the employment of particular classes of service
  employees on the varied kinds of service contracts. Because wage structures are extremely
  varied, there can be no precise single formula which would define the geographic limits of a
  “locality” that would be relevant or appropriate for the determination of prevailing wage
  rates and prevailing fringe benefits in all situations under the Act. The locality within
  which a wage or fringe benefit determination is applicable is, therefore, defined in each
  such determination upon the basis of all the facts and circumstances pertaining to that
  determination. Locality is ordinarily limited geographically to a particular county or cluster
  of counties comprising a metropolitan area.”).