Comstock Construction wins a round in prevailing-wage war with MnDOT

The owner of Comstock Construction has been embroiled in a prolonged dispute with state officials over Minnesota’s prevailing-wage law, which requires contractors on state-funded projects to pay their workers a certain minimum wage that’s comparable to similar work in the community.

Minnesota Department of Transportation officials say Comstock Construction — an 85-year-old family-owned company with offices in North Dakota and Minnesota — violated the law in the early 2000s when it built an expansion of MnDOT’s regional headquarters in Detroit Lakes.

The company adamantly denies the allegations and has been fighting ever since — even as it has spent well in excess of $200,000 in legal fees. Bob Comstock accuses the department of deliberately dragging out the case to wear him down.

“Their tactics are to delay, cause expense,” he said in a phone interview.

Attorneys for Comstock say MnDOT wrongfully withheld a $27,000 final payment to the contractor for work performed on the headquarters project. MnDOT withheld payment because it believed Comstock violated prevailing-wage laws and owed more than $98,000 in back wages on the job.

On Sept. 29, Comstock won a round in the fight when Administrative Law Judge Eric Lipman of the state’s Office of Administrative Hearings (OAH) recommended that MnDOT dismiss its prevailing-wage claims against Comstock and pay the company $27,074.86.

“The best result is for the [MnDOT] commissioner to do what lower-level officials did not: Wipe this slate clean,” Lipman noted in a 52-page OAH document, which was based in part on an “evidentiary hearing” held in June.

“The commissioner should abandon MnDOT-OCIC’s (Office of Construction and Innovating Contracting) claim for back wages and release the contract amounts that the department has retained.”

Lipman’s recommendation is a victory for Comstock, but it’s probably not the final word on the case.

MnDOT could accept all or parts of the judge’s recommendation. The department previously rejected a similar recommendation from the administrative law judge. If the department rejects the recommendation, Comstock could appeal.

“It certainly is a big victory for our client, but I don’t know if the battle is going to continue or not,” said Thomas Revnew, a shareholder with Seaton Beck & Peters, which represents Comstock.

MnDOT communications director Kevin Gutknecht said it’s not appropriate for MnDOT to comment on the case because it’s still in litigation.

Brendan Cummins, a local attorney who represents union members, believes the commissioner should reject Lipman’s recommendation.

“ALJ Lipman and Comstock find the existing prevailing-wage rules impossible to comply with. Others, however, seem to manage it,” Cummins, lead partner in the labor law practice of Minneapolis law firm Miller O’Brien Cummins, noted in an e-mail to Finance and Commerce.

“The contractors my union clients work with and the members they represent find MnDOT’s current approach to enforcement to be practical and workable. The old saying is, if it ain’t broke, don’t fix it. We see no need to cast aside decades of department practice.”

If Lipman’s recommendations were adopted, “every task on a construction project would have to be subject to formal rule-making,” which would lead to “an enormous amount of needless, costly and cumbersome regulations,” Cummins added.

Confusing job classifications

Under the state’s prevailing-wage law, contractors working on state-funded construction projects “must be paid wage rates comparable to wages paid for similar work in the area where the project is located,” according to the Minnesota Department of Labor and Industry.

Comstock said he submitted weekly payroll records to prove compliance with the law. But four years after the project was completed MnDOT asked him to pay more than $100,000 to settle alleged prevailing-wage violations.

Over a four-year period, MnDOT came up with six different figures for what Comstock allegedly owed in back wages. The dollar amounts range from $98,772.38 to $114,065.47l, according to the OAH document.

Job classification is a key part of the prevailing-wage system because different trades require different wages. Critics say Minnesota’s prevailing-wage system lacks specific job descriptions and is open to broad interpretation.

One of the alleged violations in Comstock’s case, for example, had to do with installation of roof caps: Comstock used a carpenter for the job, but the state classified the employee as an ironworker, which would require higher pay.

In another example, three senior investigators from the state gave three different versions of how a particular worker should be classified, according to Bob Comstock.

Phil Raines, director of legislative affairs for the Minnesota Associated Builders and Contractors, says Comstock case puts a spotlight on how important it is to define job roles in as they relate to prevailing wage.

ABC is on record as opposing the entire prevailing-wage system, “but we support Comstock and their rights,” Raines said. “They should be paid. If you truly support the prevailing-wage system, you have to be fair.

“The way this could be resolved for everyone is simply for MnDOT to admit they were wrong, pay the man the $27,000 he was owed from seven years ago, and proceed to work with people to develop these rules.”

Rule-making authority

The Minnesota Department of Labor and Industry (DLI) is the rule-making authority for the state’s prevailing-wage law. MnDOT and other agencies are responsible for enforcing the law on their projects.

The Minnesota Court of Appeals and the Office of the Legislative Auditor, among others, have urged the DLI to come up with more precise job classifications for prevailing wage, the OAH document noted.

In a July 2008 interview with Finance and Commerce, Minnesota DLI labor standards director Roslyn Wade said the department was looking at definitions in Wisconsin and other states in an effort to better define job classifications.

That work is still in progress.

DLI published a “request for comments” on prevailing-wage job classifications in the Aug. 18, 2008, State Register.

“DLI also invited a group of representatives from the construction industry to meet and discuss job classifications in prevailing wage,” DLI communications manager James Honerman noted in an email. “At those meetings and after those meetings, DLI received input from all sides of the construction industry. We are currently working on putting together a draft of rules.”

Cummins noted, “From my clients’ standpoint, as participants in the construction industry, MnDOT’s current standards of enforcement are working. The contractors who bid on the work and the department have a specialized and thorough understanding of the work belonging to different classifications of labor.”

“The department’s expertise, developed over many years, should be given deference.”

The OAH document offered a different perspective.

For example, Comstock officials in December 2003 asked the Department of Labor and Industry to define the duties of “common laborers,” “skilled laborers,” “laborers,” “skilled tradesmen,” “carpenters” and “ironworkers.”

According to the document, Erik Oelker, senior labor investigator for the Department of Labor and Industry, replied that “Minnesota Rules and Statutes do not provide for specific position descriptions for workers performing on state-funded projects.”

“The class of labor indicated in the Major Job Classifications is based on common usage in the industry, scope of work in union contracts, apprenticeship standards, and the U.S. Department of Labor Dictionary of Occupational Titles. … The classification of labor and prevailing wages are enforced by the contract agency that owns the project on a case-by-case basis …”

Another example: If an employee used the word “rebar” under the “type of work” heading on a prevailing-wage report, the MnDOT office “reasoned that because the rebar is made of steel, and ironworkers work with steel, the work listed for that day was property characterized as ‘iron work,’” the OAH document noted.

MnDOT said in September 2001 that Comstock was in compliance with prevailing-wage requirements, but changed its mind in February 2002, according to the OAH document. Lipman noted in the document that the department “never adequately explained” its “about-face.”

Bob Comstock believes state officials have it in for his company because it fought back against what he believes are frivolous charges.

“We are spending hundreds of thousands of dollars to ensure that we are doing it right,” Comstock said. “But you can’t protect yourself against vindictiveness. When people in public positions are vindictive, business owners can’t protect themselves.

“These people — their tactic is to drag it out and create expense, so you can’t protect yourself. It’s got to be changed.”

Comstock says he’s fighting on for the sake of his family’s business, so future generations don’t have to go through the same experience.

“We are doing this for self-preservation,” he added. “I am not rolling over.”