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Department of Labor v. Titan Construction Co.

Decided: October 17, 1985.


On certification to the Superior Court, Appellate Division.

For affirmance in part, reversal in part -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Stein, J.


The New Jersey Prevailing Wage Act (Act), N.J.S.A. 34:11-56.25 to -56.46, expressly authorizes the Commissioner of Labor (Commissioner) to debar from public contracting work for a period of three years any contractor or subcontractor that has failed to pay its employees the prevailing wage for work performed under a contract with a public body. N.J.S.A. 34:11-56.37. In this case we must determine whether the Commissioner also possesses the authority to debar those individuals who serve as corporate officers of offending contracting or subcontracting entities. The Appellate Division affirmed the Commissioner's debarment of three corporate officers of Titan Construction Company (Titan), a debarred contractor. We granted certification, 99 N.J. 238 (1985), in order to resolve the conflict between that decision and the decision in Department of Labor v. Berlanti, 196 N.J. Super. 122 (App.Div.1984), in which another Appellate Division panel concluded that the Act did not authorize the Commissioner's debarment of individual corporate officers.*fn1


In October, 1982, Titan entered into a contract with the Middletown Township Board of Education (Middletown) for roofing work on the New Monmouth School.

An investigation of the Middletown project by the New Jersey Department of Labor (Department) indicated that Titan had failed to pay the prevailing wage to a number of workmen on the project. Three of the eight workmen not properly compensated were Titan's sole officers and owners. Although these men had worked as roofers on the project, they did not receive the roofers' prevailing wage of $20 per hour for their work. In addition, payroll records indicated that Titan had

failed to pay other workmen the proper overtime rates for weekend work and that still other workmen had received less than the prevailing wage rate as a result of Titan's failure to comply with the required roofer-to-helper ratio established in roofers' collective bargaining agreements.

In May, 1983, the Public Contracts Section of the Department's Office of Wage and Hour Compliance notified Titan and its principals that they had violated the Act in connection with five separate public work projects,*fn2 and that the names of Titan and its officers would be placed on the list of debarred contractors unless they filed a request for a hearing within twenty days.

Titan denied the violations and the Department treated this denial as a request for a hearing, transferring the matter to the Office of Administrative Law as a contested case. The Department filed a motion for a summary decision, based solely on the Middletown violations. Although Titan conceded that it had not paid prevailing wage rates to its principals who had indeed worked as roofers on the Middletown project, Titan nonetheless contended that the Act does not require that principals of corporations pay themselves the prevailing wage. The Department argued that the purpose of the Act is to ensure that all bidders on public contracts pay all their workmen the prevailing wage, and that small contractors whose principals perform manual labor should not be exempt from this requirement.

In an initial decision, the Administrative Law Judge (ALJ) granted the Department's request for a summary decision and debarred both Titan and its officers for failing to pay these officers the prevailing wage for the physical labor they had performed as roofers on the Middletown project. With regard to the other alleged violations on the Middletown job, the ALJ found the proofs insufficient to permit summary decision and resolution of those issues was deferred for a plenary hearing.

Titan filed exceptions to the initial decision as well as a request to reopen the record. In December, 1983, the ALJ's recommended decision became final,*fn3 and the Department notified Titan and its principals that they were being placed on the list of debarred contractors. The Department refused Titan's request for a stay of debarment pending appeal.

In February, 1984, the Appellate Division denied Titan's motion for a stay of debarment pending appeal. This Court reversed the Appellate Division, granted the stay, and directed the Appellate Division to accelerate its consideration of the appeal. In November, 1984, the Appellate Division summarily affirmed the ALJ's decision in a per curiam opinion, noting, however, that another appellate panel had reached a different conclusion in Department of Labor v. Berlanti, supra, 196 N.J. Super. 122.


The New Jersey Prevailing Wage Act was adopted in 1963. L. 1963, c. 150. It was intended to protect both employers and employees from unfair competition caused by low wages:

It is declared to be the public policy of this State to establish a prevailing wage level for workmen engaged in public works in order to safeguard their efficiency and general well being and to protect them as well as their employers from the effects of serious and unfair competition resulting from wage levels detrimental to efficiency and well-being. [ N.J.S.A. 34:11-56.25.]

The Act requires that every public-work contract in excess of $2000, to which any public body is a party, must provide that workmen employed to perform the contract be paid at least the prevailing wage rate. N.J.S.A. 34:11-56.27. The Act defines "public body" to include the State of New Jersey, its agencies, authorities, or political subdivisions. N.J.S.A. 34:11-56.26(4). The Act defines "prevailing wage" as "the wage rate paid by virtue of collective bargaining agreements by employers employing a majority of workmen of that craft or trade subject to

said collective bargaining agreements, in the locality in which the public work is done." N.J.S.A. 34:11-56.26(9).

The Commissioner is empowered to establish the prevailing wage rate on the basis of the collective bargaining agreements covering the majority of workers for a particular craft or trade in that locality. N.J.S.A. 34:11-56.30. The constitutionality of the Act and its delegation of power to the Commissioner to determine the prevailing wage were upheld in Male v. Ernest Renda, 122 N.J. Super. 526, 533 (App.Div.1973), aff'd, 64 N.J. 199, cert. denied, 419 U.S. 839, 95 S. Ct. 69, 42 L. Ed. 2d 66 (1974).

The Act provides criminal sanctions for failure to pay the prevailing wage, failure to keep required records, or otherwise interfering with the Commissioner in enforcing the statute. N.J.S.A. 34:11-56.35. It also authorizes civil actions by workmen, or by the Commissioner on their behalf, to recover the difference between the prevailing wage and the wage actually paid. N.J.S.A. 34:11-56.40.

The debarment provisions at issue here are set forth in successive sections of the statute:

In the event that the commissioner shall determine, after investigation, that any contractor or subcontractor has failed to pay the prevailing wage he shall thereupon list and keep on record the name of such contractor or subcontractor and forthwith give notice by mail of such list to any public body who shall request the commissioner so to do. Where the person responsible denies that a failure to pay the prevailing wage has occurred, he shall have the right to apply to the commissioner for a hearing which must be afforded and a decision rendered within 48 hours of the request for a hearing. If the commissioner rules against the petitioning party he shall have the right to apply for injunctive relief in the Superior Court against the listing by the commissioner. [ N.J.S.A. 34:11-56.37.]

The public body awarding any contract for public work or otherwise undertaking any public work shall first ascertain from the commissioner the list of names of contractors or subcontractors who have failed to pay prevailing wages as determined in section 14 of this act, and no contract shall be awarded to such contractor or subcontractor, or to any firm, corporation or partnership in which such contractor or subcontractor has an interest until 3 years have elapsed

from the date of listing as determined in section 14 of this act. [ N.J.S.A. ...

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