Administrator, Wage and Hour Div., USDOL v. America's Staffing Partner Inc. (agency decision, November 12, 2024)

Plain-English summary

America's Staffing Partner and two company officials did not dispute that they underpaid required wages or fringe benefits on federal service contracts at three military facilities. They sought relief from the Service Contract Act's automatic three-year debarment by arguing that unusual circumstances excused the violations. The Board agreed with the administrative judge that culpable neglect, culpable disregard, and a history of similar violations each independently prevented that relief. It emphasized that federal contractors may not pass liquidity problems or delayed government payments on to their workers, especially after investigators have explained the payment requirements. The Board affirmed the three-year prohibition on federal contract awards and directed that the respondents' names be forwarded to the Comptroller General.

Decision snapshot

• Cited authorities: 41 U.S.C. § 6706; 29 C.F.R. § 4.188
• Outcome: The Board affirmed the three-year debarment of the company and two officials.
• Key point: Culpable wage and benefit underpayments, or a history of similar SCA violations, bars unusual-circumstances relief from mandatory debarment.

Full text (DOL official public release)

U.S. Department of Labor       Administrative Review Board
                               200 Constitution Ave. NW
                               Washington, DC 20210-0001




IN THE MATTER OF:


ADMINISTRATOR, WAGE AND                  ARB CASE NO. 2023-0019
HOUR DIVISION, UNITED STATES
DEPARTMENT OF LABOR,                     ALJ CASE NO. 2020-SCA-00010
                                         ALJ LAUREN C. BOUCHER
            PROSECUTING PARTY,
                                         DATE: November 12, 2024
      v.

AMERICA’S STAFFING PARTNER,
INC., JORGE CRUZ, an individual,
and RUDY VEGLIANTE, an
individual,

            RESPONDENTS.


Appearances:

For the Administrator, Wage and Hour Division:
      Seema Nanda, Esq.; Jennifer S. Brand, Esq.; Sarah Kay Marcus, Esq.;
      Jonathan T. Rees, Esq.; Sejal Singh, Esq.; United States Department of
      Labor, Office of the Solicitor; Washington, District of Columbia

For the Respondents:
      Eric S. Montalvo, Esq.; Federal Practice Group; Washington, District
      of Columbia

Before WARREN, THOMPSON, and ROLFE, Administrative Appeals
Judges
                                               2


                                DECISION AND ORDER

ROLFE, Administrative Appeals Judge:

       This case arises under the McNamara-O’Hara Service Contract Act of 1965,
as amended (SCA or the Act), and its implementing regulations.1 On January 26,
2023, a United States Department of Labor Administrative Law Judge held that
Respondents America’s Staffing Partner, Inc. (ASP), Mr. Jorge Cruz, and Mr. Rudy
Vegliante (collectively, Respondents) failed to establish the “unusual circumstances”
the regulations require to warrant relief from an otherwise automatic three-year
debarment for their undisputed SCA violations.2 Respondents filed a Petition for
Review challenging their debarment.

       The presence of any aggravating factors exacerbating a violation prohibits a
finding of unusual circumstances. Because a preponderance of evidence supports
the ALJ’s aggravated factor findings that Respondents’ culpable conduct caused
their violations and that Respondents had a history of similar SCA violations, we
affirm the ALJ’s decision.

                                       BACKGROUND

1. Statutory and regulatory framework

       The SCA requires government contractors to meet minimum standards in
paying prevailing wages and fringe benefits.3 Every contract must include clauses
setting forth the contract’s SCA obligations including a wage determination issued
by the Secretary of Labor through the Wage and Hour Division (WHD) establishing
the minimum prevailing wage rates and fringe benefits that contractors must pay
service employees.4




1       41 U.S.C. §§ 6701-6707 (2011), and its implementing regulations at 29 C.F.R. Parts
4, 6, and 8 (2024).
2      D. & O. at 1, 16.
3      41 U.S.C. §§ 6702-6703. Since no collective-bargaining agreement (CBA) was at
issue here, we do not discuss circumstances under which the CBA-negotiated wage rate
would supersede the prevailing wage rate.
4      41 U.S.C. § 6703(1); 29 C.F.R. §§ 4.3(a), 4.6.
                                                 3


       The SCA implementing regulations, among other things, require contractors
to pay the prevailing wage rate and provide fringe benefits to all covered workers
for “each hour worked.”5 Employers must “promptly” pay the prevailing wage rate
no “later than one pay period following the end of the pay period in which they are
earned.”6 In addition to creating liability for underpaid compensation, violations of
these requirements result in an automatic three-year debarment unless the
contractor can demonstrate that unusual circumstances warrant relief from the
otherwise mandatory sanction.7

       Under the regulations, offending contractors must satisfy each stage of a
three-step process to establish unusual circumstances.8 Step One -- the only step
the ALJ reached here -- prohibits relief if any of four aggravating factors exacerbate
a violation: (1) the conduct was willful, deliberate, or of an aggravated nature; (2)
the violations were the result of culpable conduct, including culpable neglect or
culpable disregard; (3) a contractor has a history of similar violations or repeatedly
violated the SCA; or (4) any previous violations were serious in nature.9

       ASP, a staffing corporation, received eight contracts to provide personnel
support to different government entities between 2013 and 2017.10 Jorge Cruz, the
sole owner and Chief Executive Officer, and Rudy Vegliante, the Senior Vice
President, both controlled the employment practices and policies on the contracts.11
This appeal arises from WHD investigations into Respondents’ SCA compliance on
three contracts at military bases: 1) the Carl R. Darnall Army Medical Center in
Fort Hood, Texas (Fort Hood contract); 2) the Keesler Medical Center in Keesler,

5      29 C.F.R. § 4.178.
6      Id. § 4.165.
7      41 U.S.C. § 6706; 29 C.F.R. § 4.188(a).
8      29 C.F.R. § 4.188(b)(3); Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Hearn’s
Enters., LLC, ARB No. 2020-0050, ALJ No. 2017-SCA-00006, slip op. at 14 (ARB Mar. 10,
2022); see also Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Igwe, ARB No. 2007-0120,
ALJ No. 2006-SCA-00020, slip op. at 11 (ARB Nov. 25, 2009) (citation omitted) (analysis of
Step Two and Step Three unnecessary where employer cannot satisfy Step One)).
9       29 C.F.R. § 4.188(b)(3)(i). Step Two, which the ALJ did not arrive at in this case, lists
a series of “prerequisites to relief” a contractor further must establish to obtain relief, and
Step Three, which the ALJ also did not reach, consists of a “variety of factors” for a tribunal
to consider prior to granting relief. 29 C.F.R. § 4.188(b)(3)(ii).
10     D. & O. at 3-4.
11     Id. at 1, 3.
                                            4


Mississippi (Keesler contract); and 3) the Robins Air Force Base in Warner Robins,
Georgia (Robins contract).12

2. Respondents’ undisputed violations of three SCA-covered contracts

       WHD’s investigation of Respondents’ SCA compliance began in October 2015
on the Fort Hood contract.13 During the investigation, Respondents admitted they
knowingly failed to timely provide SCA-required health and welfare benefits to
their employees but blamed their noncompliance on a lack of liquidity caused by an
unexpected tax complication.14

       Respondents had entered into an installment agreement with the IRS to pay
past due taxes owed.15 Subsequently, the IRS mistakenly offset about $183,000.00
in funds from Respondents’ contracts.16 The IRS refunded the offset payments about
six months later.17 Faced with a liquidity crunch, Respondents deliberately chose to
underpay health and welfare benefits in the first half of 2016, claiming they did so
to avoid underpaying wages -- although no record evidence indicates that
Respondents took any other measures to balance their books before underpaying
their employees.18

      WHD rejected Respondents’ tax problem as a justification for permitting
delayed payments and assessed two violations: (1) a failure to pay the prevailing
wage rate regarding holiday pay; and (2) a failure to pay the full fringe health and
welfare benefit.19 At the final conference in September 2016, Respondents
acknowledged the violations and, in October 2016, agreed to pay $204,448.09 to
remedy them.20



12    Id. at 1, 6-7, 9.
13    Id. at 6.
14    Id. at 5, 12.
15    Id. at 12.
16    Id.
17    Id.
18    Id.; Administrator’s Response Brief (Administrator Br.) at 6, 38.
19    D. & O. at 6.
20    Id.
                                             5


       Notably, a WHD Investigator explicitly advised Respondents at that time of
their ongoing SCA obligations on every contract to promptly pay the prevailing
wage, to compute holiday pay as set forth in the regulations, and to pay health and
welfare benefits “according to the wage determination incorporated into [each]
contract.”21 After the violations at Fort Hood, a different WHD investigator headed
a separate corporate-wide SCA investigation into each of Respondents’ open
contracts, including the Keesler and Robins contracts.22

       Respondents received the Keesler contract in September 2016 -- the same
month as the final conference on the Fort Hood contract.23 Despite their previous
violations at Fort Hood and WHD’s explicit warning at the final conference, WHD
found Respondents committed similar violations at Keesler.24

       In 2017 and 2018, WHD issued two new wage determinations that required
Respondents to increase and promptly pay their employees’ prevailing wages.25
Respondents admitted that they failed to pay the increased wages, but claimed they
were waiting until they received an equitable adjustment to their billing to offset
the raises.26 Respondents similarly failed to fully pay SCA-mandated health and
welfare benefits.27 WHD again rejected Respondents’ attempt to justify the
underpayments through future retroactive payments, and in April 2019,
Respondents acknowledged the violations and agreed to pay approximately
$25,000.00 in addition to past amounts to remedy their Keesler contract
violations.28

       Respondents received the Robins contract in July 2017 -- ten months after
the final conference on the Fort Hood investigation.29 Similar to the previous


21     Id.
22     Id. at 6-7.
23     Id.
24     Id. at 7.
25    D. & O. at 7, 10. Option year 1 started October 1, 2017, and Option year 2 started
October 1, 2018. Administrator’s Exhibit (CX) 11 at 3.
26     D. & O. at 10.
27     Id. at 7.
28     Id. at 6, 7, 7 n.4.
29     Id. at 15.
                                           6


violations, WHD determined that Respondents underpaid health and welfare
benefits on the Robins contract, sometimes paid them late, and sometimes did not
pay them at all.30 WHD further found that Respondents failed to make full fringe
benefits contributions for all hours paid -- similar to the violation uncovered at Fort
Hood.31 Respondents again acknowledged the ongoing violations and agreed to pay
$65,407.98 in back wages at the final conference. 32

       As a result of Respondents’ violations on Keesler and Robins contracts -- and
with the previous Fort Hood violations as a backdrop -- WHD filed a complaint with
the Department of Labor Office of Administrative Law Judges seeking to enforce
the three-year debarment under 41 U.S.C. § 6706 and 29 C.F.R. § 4.188.33
Respondents did not contest their violations but contended that unusual
circumstances warranted relief from debarment.34

3. The ALJ holds that aggravating factors prevent Respondents from
establishing unusual circumstances

       The ALJ held a two-day hearing in this matter in December 2021 solely to
determine whether Respondents could demonstrate unusual circumstances to
establish debarment relief.35 The ALJ found Respondents could not satisfy the first
step of the process because at least three aggravating factors exacerbated
Respondents’ undisputed SCA violations: its culpable neglect to determine whether
its practices violated the SCA; its culpable disregard of whether it was actually in
violation of the SCA; and its history of similar or repeated violations.36

      First, while finding that Respondents did not willfully violate the Act, the
ALJ found Respondents’ failure to pay the prevailing wage rate upon the
government’s exercise of the Keesler contract’s option years constituted culpable




30    Id. at 7, 15, 15 n.20.
31    Id. at 14.
32    Id. at 7.
33    Id. at 1, 6-7.
34    Id. at 1, 9.
35    Id.
36    Id. at 15-16.
                                              7


neglect.37 The ALJ noted that the plain language of the Keesler contract
incorporated the implementing regulations’ requirement that Respondents pay each
employee “as specified in [the] wage determination” and that nothing in the plain
terms of the wage determination authorized the retroactive payment of wages.38

       The ALJ thus rejected Respondents’ argument that they reasonably could
have believed that they could pay the higher wage rate once they had obtained an
equitable adjustment to the contract.39 The ALJ instead explained that
Respondents had the responsibility to avoid transferring their cash flow problems to
their employees.40 The ALJ reasoned that “it strains credulity” that as experienced
federal contractors Respondents “did not understand [their] obligation to pay
prevailing wages at the time they were earned.”41

       Second, the ALJ found Respondents’ similar failure to timely pay full health
and welfare benefits under the Keesler and Robins contracts constituted culpable
disregard, rejecting Respondents’ various arguments that conditions outside their
control justified their actions.42 As a threshold matter, the ALJ again stressed the
overarching SCA mandate for federal contractors to promptly pay full wages and
benefits when they are due without passing financial hardships through to their
employees.43 The ALJ then rejected Respondents’ argument that the IRS’s
erroneous temporary withholding excused Respondents’ late payments.44 In any
event, the ALJ further found the withholding “immaterial” because it occurred
during the Fort Hood contract in 2016 and could not have directly impacted the
Keesler and Robins contracts years later.45

      Likewise, the ALJ also rejected Respondents’ assertion they were not
culpable because they did not know the applicable wage determinations required


37    Id. at 10, 12.
38    29 C.F.R. § 4.6(b)(1); D. & O. at 11; see also D. & O. at 3-4, ¶¶6, 10.
39    D. & O. at 10.
40    Id. at 11-12.
41    Id. at 12.
42    Id. at 12, 15.
43    D. & O. at 12; see 29 C.F.R. §§ 4.168, 4.175.
44    D. & O. at 12.
45    Id.
                                            8


health and welfare benefits based on hours paid, or because they were waiting to
adopt corrective measures at the behest of WHD, because the WHD investigator
specifically reminded Respondents at the Fort Hood final conference of their
obligations to promptly pay wages and benefits based on hours paid.46 Therefore,
the ALJ reasoned Respondents were actually aware of their obligations at the
outset of the Keesler and Robins contracts and failed to fulfill them anyway.47 And,
the ALJ concluded, “it is never permissible for federal contractors to transfer their
financial difficulties to their employees.”48

       Finally, in addition to each of these independently dispositive aggravating
factors, the ALJ further found that the Fort Hood investigation was a separate
investigation and did not comprise one part of a single corporate-wide investigation
at Keesler and Robins.49 Regardless of whether it was separate, however, the ALJ
found Respondents actually knew of their affirmative duty to timely pay wages and
benefits under the SCA no later than the final conference at Fort Hood given the
WHD investigator’s explicit warning.50 Respondents’ failure to do so after that
instruction created a “history of similar violations” that exacerbated the Keesler
and Robins violations.51 Because at least three individually dispositive aggravating
factors were present, the ALJ found Respondents could not satisfy the first element
of the unusual circumstances test.52 Thus, she barred relief without reaching the
second or third elements of the test.53

      Respondents on appeal do not point to any specific error of law or fact in the
ALJ’s decision. Rather they repeat the same general arguments the ALJ rejected
and assert that their debarment is “disproportionate and draconian” when
compared to other debarment cases.54 The Principal Deputy Administrator

46    Id. at 13-15.
47    Id. at 14.
48    Id. at 12.
49     Id. at 15. In the D. & O., the ALJ predominately considered ASP’s argument about a
corporate-wide investigation starting with the Fort Hood contract in her examination of
culpable disregard. See also id. at 12-15.
50    Id. at 13-14.
51    Id. at 15-16.
52    Id. at 16.
53    Id.
54    Respondents’ Brief at 1.
                                             9


(Administrator) of the WHD responds that the preponderance of the evidence easily
supports the ALJ’s finding that at least three aggravating factors compounded
Respondents’ undisputed SCA violations and that the cases Respondents cite on
appeal do not change that analysis.55 The Administrator thus respectfully requests
that the Board affirm the ALJ’s decision in its entirety.56

                      JURISDICTION AND STANDARD OF REVIEW

       The ARB has jurisdiction to hear and decide appeals from ALJ decisions and
orders under the SCA.57 The Board’s review of an ALJ’s decision under the SCA is
an appellate proceeding.58 As such, the Board reviews conclusions of law de novo.59
The Board may modify or set aside an ALJ’s factual findings, however, only when a
preponderance of evidence does not support them.60 Moreover, the Board generally
defers to an ALJ’s credibility findings “unless they are inherently incredible or
patently unreasonable.”61

                                         DISCUSSION

       The SCA’s debarment provision is a “particularly unforgiving provision of a
demanding statute” forcing violating contractors “to run a narrow gauntlet” to
establish relief.62 Indeed, debarment “should be the norm, not the exception” with
only “the most compelling of justifications” relieving a “violating contractor from
[the] sanction.”63


55    Administrator Br. at 22, 31, 34.
56    Id. at 42.
57     Secretary’s Order No. 01-2020 (Delegation of Authority and Assignment of
Responsibility to the Administrative Review Board (Secretary’s discretionary review of ARB
decisions)), 85 Fed. Reg. 13,186 (Mar. 6, 2020); 29 C.F.R. §§ 6.20, 8.1(b).
58    29 C.F.R. § 8.1(d).
59    Hearn’s Enters., LLC, ARB No. 2020-0050, slip op. at 4-5 (citation omitted).
60    29 C.F.R. § 8.9(b).
61    Klinger v. BNSF Ry. Co., ARB No. 2023-0003, ALJ No. 2016-FRS-00062, slip op. at 5
(ARB July 23, 2024) (citations and inner quotations omitted).
62    Hearn’s Enters., LLC, ARB No. 2020-0050, slip op. at 14 (citation omitted).
63      Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Mesa Mail Serv., LLC, ARB No.
2017-0071, ALJ No. 2009-SCA-00011, slip op. at 8 (ARB Sept. 30, 2020) (quotations and
citations omitted).
                                             10



       This is not an exceptional case. Instead, as the ALJ recognized, Respondents
plainly failed the first step of the “unusual circumstances” test on at least three
distinct grounds. First, Respondents acted with at least culpable neglect when they
knowingly failed to raise workers’ pay to match an increase in the prevailing wage
rate in the Keesler contract.64 Second, Respondents’ failure to promptly pay health
and welfare fringe benefits in the Keesler and Robins contracts resulted from at
least their “culpable disregard” of whether withholding those funds would violate
the Act.65 Finally, Respondents created “a history of similar violations” from
“repeatedly violat[ing] the provisions of the Act.”66

      Each of these findings independently prohibits debarment relief.

1. Keesler contract: the preponderance of the evidence confirms
Respondents acted with at least culpable neglect by paying less than the
prevailing rate.

       While the unusual circumstances determination “must be made on a case-by-
case basis in accordance with the particular facts present,”67 in no instance can a
contractor receive debarment relief where its violations result from “culpable
neglect.”68 Culpable neglect goes “beyond [mere] negligence,” but falls “short of
specific intent.”69 Indeed, the debarment regulation itself explicitly provides that
when the contractor’s “obligation to comply with the Act is plain from the contract,”
an employer’s “plea of ignorance of the Act’s requirements” does not constitute
“unusual circumstances.”70 The Board therefore has held that when the SCA’s
requirements are plain from the face of a contract, a violating contractor is “at least
culpably negligent in failing to read and perform them.”71


64    D. & O. at 10-12.
65    D. & O. at 15-16; 29 C.F.R. § 4.188(b)(3)(i).
66    D. & O. at 15-16; 29 C.F.R. § 4.188(b)(3)(i).
67    29 C.F.R. § 4.188(b)(1).
68    Id. § 4.188(b)(3)(i).
69    Igwe, ARB No. 2007-0120, slip op. at 9 (citation omitted).
70    29 C.F.R. § 4.188(b)(1).
71    Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Integrated Res. Mgmt., Inc., ARB No.
1999-0119, ALJ No. 1997-SCA-00014, slip op. at 6 (ARB June 27, 2002) (emphasis added).
                                               11


      Both the SCA requirements and the Keesler contract were clear here. The
SCA regulations provide that wages “shall be paid” to employees “promptly and in
no event later than one pay period following the end of the pay period in which they
are earned.”72 Further, the parties had specifically incorporated into the Keesler
contract 29 C.F.R. § 4.6(b)(1)’s requirement that “each service employee” shall “be
paid not less than the minimum monetary wages” specified “in any wage
determination attached to this contract.”73

      It is undisputed that the Keesler contract incorporated wage determinations
in 2017 and 2018 that increased the prevailing wage rate.74 And it is also
undisputed that Respondents “did not pay its employees the increased prevailing
wage rate at the start of each option year.”75 The failure to follow the plain terms of
the Act and the contract alone establishes culpable neglect.76

       Regardless, the ALJ reasonably found Vegliante’s testimony that
Respondents believed they could legitimately withhold the wage increase and pay
their workers’ wages retroactively once they received an equitable adjustment to the
contract, not credible.77 The ALJ considered it unreasonable “for an experienced
employer and businessperson to believe that an employee’s earned wages may be
paid retroactively.”78 The ALJ also found that it “strain[ed] credulity that ASP did
not understand its obligation to pay prevailing wages at the time they were
earned.”79

      It would exceed our scope of review to disturb those credibility findings. Far
from being “inherently incredible,” they are eminently reasonable -- particularly


72    29 C.F.R. § 4.165(a)(1); see also 29 C.F.R. § 4.167 (requiring employers to “timely”
pay wages “free and clear” and prohibiting an employer from retaining wages owed to
workers).
73     D. & O. at 11;see also id. at 3-4, ¶¶6, 10.
74     CX 11 at 3-4; D. & O. at 10-12.
75     D. & O. at 11.
76     29 C.F.R. § 4.188(b)(1); Integrated Res. Mgmt., Inc., ARB No. 1999-0119, slip op at 6.
77     D. & O. at 10-11.
78     Id.
79      Id. at 12. The Board generally defers to an ALJ’s credibility findings “unless they are
inherently incredible or patently unreasonable.” Klinger, ARB No. 2023-0003, slip op. at 5
(citations and inner quotations omitted).
                                             12


where WHD reminded Respondents of their responsibility to promptly pay wages
and benefits at the conclusion of the Fort Hood investigation.80

       We therefore affirm the ALJ’s finding Respondents acted with at least
culpable neglect when they knowingly failed to raise Keesler workers’ pay to match
an increase in the prevailing wage rate over the course of two contracts. That
failure violated the plain terms of the Act that had been incorporated into the
Keesler contract. And even assuming Respondents’ ignorance-based justifications
for their violations were relevant in the first place, the ALJ permissibly found them
not credible. Respondents’ culpable neglect in failing to pay the Keesler contract’s
wage determination, standing alone, prohibits debarment relief.81

2. Keesler and Robins contracts: the preponderance of the evidence
confirms Respondents acted with at least culpable disregard in similarly
failing to pay health and welfare fringe benefits.

       Respondents’ undisputed failure to promptly pay health and welfare fringe
benefits on both the Keesler and Robins contracts erects a similar barrier. The SCA
requirement contained in 29 C.F.R. § 4.6(b)(1) to pay health and welfare benefits
was explicitly incorporated into the wage determinations of both contracts. The
straightforward text of the SCA, its regulations, and the Keesler and Robins
contracts thus again plainly obligated Respondents to promptly pay full health and
welfare benefits with the same urgency as wages.82 And Respondents’ undisputed
failure to promptly pay them again establishes Respondents’ culpability with no
need to go further: “[T]he privilege of contracting” carries “the responsibility to be
aware of and follow the applicable contractual and legal provisions” providing for
employees’ welfare.83

        Nonetheless, the ALJ once again aptly rejected Respondents’ post hoc
justifications for nonpayment. As the ALJ reasoned, nothing in the plain text of the


80     See Klinger, ARB No. 2023-0003, slip op. at 5.
81     See Igwe, ARB No. 2007-0120, slip op. at 10 (affirming the ALJ’s finding that a
federal contractor that signed multiple contracts and subsequent modifications that
“changed the applicable wage determination,” yet failed to comply with the wage
determinations, “clearly” acted with “culpable neglect.”) (citation omitted).
82     See 29 C.F.R. § 4.165.
83     Igwe, ARB No. 2007-0120, slip op. at 10 (citation omitted).
                                              13


SCA or the caselaw permits a contractor to pass on its financial hardships (such as
a liquidity problem caused by tax issues) to its employees.84 Instead, Congress
mandated debarment for SCA violations and added the unusual circumstances test
to limit the Secretary’s discretion in granting relief from it.85

       And even if that was not the case, the ALJ recognized the undisputed facts
again belied Respondents’ pleas of ignorance of the law: the WHD investigator
“explicitly told” Respondents at the conclusion of the Fort Hood investigation they
had to pay health and welfare fringe benefits “for all hours paid up to 40 in a
workweek according to the wage determination incorporated into the contract.”86
Respondents do not challenge that factual finding on appeal (nor could they
reasonably), and their failure to timely pay health and welfare fringe benefits
provides another, independent reason for prohibiting debarment relief.87

3. Respondents’ history of violations further precludes relief from
debarment.

       Debarment is mandatory “where a contractor has a history of similar
violations, where a contractor has repeatedly violated the provisions of the Act, or
where previous violations were serious in nature.”88 One prior similar violation
sufficiently warrants debarment.89

       The record here speaks for itself. Respondents repeatedly violated the Act in
similar ways causing serious repercussions for their employees over the course of
approximately three years on three different contracts.90 Moreover, Respondents
were explicitly warned following their initial violations on the Fort Hood
investigation and subsequently still knowingly violated the Act. Respondents’


84     D. & O. at 10, 12.
85     S. REP. No. 92-1131 (1972), as reprinted in 1972 U.S.C.C.A.N. 3534, 3536.
86     D. & O. at 14.
87     41 U.S.C. § 6706; 29 C.F.R. § 4.188.
88     29 C.F.R. § 4.188(b)(3)(i).
89      See A to Z Maint. Corp. v. Dole, 710 F. Supp. 853, 857 (D.D.C. 1989) (holding that
the SCA statute and regulations do not spare “second-time violators” and upholding an
ALJ’s conclusion that debarment was mandatory for a contractor that committed only one
prior violation).
90     D. & O. at 6-7.
                                             14


conduct thus easily fits under all three clauses of the regulation. And counter to
Respondents’ primary argument on appeal, nothing in the Act, regulations, or
caselaw requires that the violations be uncovered in separate investigations.

       But even if that was not the case, the ALJ found the Fort Hood investigation
was separate and distinct from the Keesler and Robins investigations.91 The ALJ
correctly determined a significant period separated the Fort Hood investigation
from the Keesler and Robins investigations, different investigators conducted them,
and though the investigations uncovered similar violations, they were not
identical.92 Respondents on appeal have shown no error in the ALJ’s factual
findings. We therefore affirm the ALJ’s finding that the Fort Hood investigation
was separate from the Keesler and Robins investigations as supported by a
preponderance of the evidence.93

      Respondents’ history of similar and serious violations, therefore,
independently prohibits debarment relief.94

4. Respondents’ arguments on appeal do not change this analysis.

      Respondents’ specious arguments on appeal that a liquidity shortfall caused
by government interference or government delay creates special exceptions to these
aggravating factors is without merit. As the Administrator points out “the statute
and the regulations do not include any exceptions [to the requirement to pay the
prevailing wage] much less an exception for an employer’s liquidity shortfall.”95
Instead, the Board has long held that an employer’s “unfortunate financial
circumstances” neither excuses its legal responsibility to pay its workers “on time
and in full under the SCA” nor allows a contractor to escape the legal consequences
of underpaying its workers.96 So too here.

91     Id. at 13.
92     Id. at 13, 13 n.16.
93    29 C.F.R. § 8.9(b) (“The Board shall modify or set aside findings of fact only when it
determines that those findings are not supported by a preponderance of the evidence.”).
94     See A to Z Maint. Corp., 710 F. Supp. at 857 (“When a contractor who has been
found to have violated the SCA in the past does so again, he or she must be debarred.”).
95     Administrator Br. at 32.
96     Hearn’s Enters., LLC, ARB No. 2020-0050, slip op. at 17 (citation omitted); see
Custodial Guidance Sys., Inc., No. SCA-1235, slip op. at 3 (Dep. Sec’y July 17, 1987) (“[T]he
defense raised in this instance, i.e. financial difficulties, is not sufficient to excuse the
                                               15



       Finally, as the Administrator further argues, “the few cases [Respondents]
cite[] in support of its novel [exceptions] are readily distinguishable” and “almost
none of them are binding[.]”97 Respondents cite to Price Gordon,98 claiming the
Board found relief from debarment “appropriate because [the] inability to pay
employees occurred due to government seizure of contractor’s payment.”99

      But Respondents misstate the Board’s holding. The Price Gordon Board held
that the respondents in that case satisfied Step One of the analysis, deferring to the
ALJ’s factual finding that the contractors did not act with culpable neglect and had
not previously violated the SCA.100 Any analysis of payment occurred at Step Three
of the analysis -- and has no relevance here where the ALJ correctly found both
culpable conduct and a history of violations at Step One.101

       Respondents also argue that Elaine’s Cleaning Service, Inc. v. United States
Department of Labor102 held “that a fringe benefit violation is not willful if the
contractor cannot pay, especially if the inability to pay is caused by the government
withholding funds.”103 But Elaine’s Cleaning does not apply to the circumstances of
this case. There, the Sixth Circuit vacated a debarment order finding the ALJ’s
decision “unintelligible” and that it failed to tie its debarment decision to facts in
the record.104 The Sixth Circuit said nothing about the legal sufficiency of the
contractor’s argument that they had underpaid benefits because of delays in




violations of the Act and avoid the otherwise mandatory sanction which Congress deemed
necessary to guarantee both compliance with and employee protection under the Act.”).
97      Administrator Br. at 34.
98     Adm’r, Wage & Hour Div., U.S. Dep’t of Lab. v. Price Gordon, LLC, ARB No. 2019-
0032, ALJ No. 2017-SCA-00008 (ARB Mar. 9, 2020).
99      Petition for Review (PFR) at 13 (citing Price Gordon, ARB No. 2019-0032, slip op. at
8-9).
100     Price Gordon, ARB No. 2019-0032, slip op. at 8.
101     D. & O. at 15-16.
102     106 F.3d 726 (6th Cir. 1997).
103     PFR at 28 n.8 (citing Elaine’s Cleaning Serv., Inc., 106 F.3d at 728).
104     Elaine’s Cleaning Serv., Inc., 106 F.3d at 729.
                                              16


receiving payments from the government.105 The ALJ’s decision here, by contrast, is
a clear-eyed accounting of Respondents’ repeated and serious violations over the
course of three separate contracts. Respondents’ case law simply does not support a
finding of “unusual circumstances.”106

                                        CONCLUSION

       We AFFIRM the ALJ’s findings that “unusual circumstances” do not exist to
relieve Respondents from debarment. As a result, we AFFIRM the ALJ’s order that
the Respondents shall not be awarded United States government contracts for three
years. In addition, the Secretary will forward the Respondents’ names to the
Comptroller General for debarment.107

       SO ORDERED.

                                            ____________________________________
                                            JONATHAN ROLFE
                                            Administrative Appeals Judge



                                            ____________________________________
                                            IVEY S. WARREN
                                            Administrative Appeals Judge



                                            ____________________________________
                                            ANGELA W. THOMPSON
                                            Administrative Appeals Judge


105    Respondents cite narrow aspects of several ALJ decisions in addition to this
authority. Even if those cases stood for the broad propositions Respondents suggest they do,
they do not bind the ARB or change the analysis here.
106    Moreover, even if Respondents met the First Step, they would fail at the two
remaining. To satisfy the Second Step, Respondents would need to demonstrate “a good
compliance history” and “sufficient assurances of future compliance.” 29 C.F.R. §
4.188(b)(3)(ii). That is not possible on this record. Step Three likewise requires a tribunal to
balance a number of factors that focus on compliance history and whether the violations
were based on a good faith interpretation of the law that -- on this record -- weigh heavily
against finding unusual circumstances.
107    41 U.S.C. § 6706(b).
                                      CERTIFICATE OF SERVICE



ARB-2023-0019 AMERICA'S STAFFING PARTNER, INC. v. AMERICA'S STAFFING PARTNER, INC.
(Case No: 2020-SCA-00010)


I certify that the parties below were served this day.




         11/12/2024
     (DATE)                                               Thomas O. Shepherd, Jr., Esq.
                                                         Clerk of the Appellate Boards


Eric Sebastian Montalvo
1750 K ST NW
Suite 900
Washington, DC 20006
        --Electronic


Sejal Singh
200 Constitution Avenue NW
Suite N-2716
Washington, DC 20210
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Hon. Stephen R. Henley
Chief Administrative Law Judge
Office of the Administrative Law Judges
800 K Street, N.W., Suite 400
Washington, DC 20001-8002


Office of the Solicitor, Division of Fair Labor
Standards
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Room N-2716
Washington, DC 20210
        --Electronic


U.S. Department of Labor, Office of Administrative
Law Judges
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Room S-4325
Washington, DC 20210
        --Electronic