## Facts

- Janik Paving & Construction, Inc. performed federally funded construction work on two projects in New York: a municipal sidewalk/curb/drain job and a highway paving job.
- Both contracts incorporated prevailing-wage labor standards and were subject to the Contract Work Hours and Safety Standards Act (CWHSSA) overtime requirements.
- After investigation, the Department of Labor determined Janik failed to pay required overtime and submitted payroll records that concealed the violations.
- In an evidentiary hearing, the Department presented payroll and related documentation indicating inaccurate reporting, plus worker testimony that overtime hours were not properly compensated.
- An Administrative Law Judge ordered payment of back wages and imposed a two-year debarment from federally funded contracts.
- The Wage Appeals Board affirmed; Janik sought to enjoin the debarment in federal district court, which dismissed the action, and Janik appealed.

## Issues

1. Whether the Secretary of Labor has statutory authority under the CWHSSA and related federal labor-standards statutes to debar a contractor for overtime violations on federal or federally assisted contracts.
2. Whether the agency’s findings of overtime underpayment and falsification of payroll records were supported by substantial evidence sufficient to sustain debarment.

## Decision

- The Second Circuit affirmed the district court’s dismissal and left the back-wage and debarment order in effect.
- The court held the Secretary has authority to impose debarment as an enforcement mechanism for CWHSSA overtime violations within the federal construction labor-standards scheme.
- The court held substantial evidence supported findings that Janik underpaid overtime and falsified payroll records, so the sanction was not arbitrary, capricious, or an abuse of discretion.
- The two-year debarment was within the permissible regulatory range (up to three years) and was proportionate given the willful violations and record falsification.

## Legal Principles

- An agency may adopt enforcement measures, including debarment, when reasonably related to effectuating a statutory labor-standards scheme and not prohibited by the governing statutes.
- Courts generally defer to the Secretary of Labor’s reasonable interpretation of interconnected federal labor-standards statutes and implementing regulations.
- Agency factfinding is reviewed under the “substantial evidence” standard on the record as a whole.
- Where an employer’s time and payroll records are inaccurate or incomplete, employee testimony and reasonable inferences may support findings of uncompensated work and the extent of underpayment.
- Debarment for willful violations and falsified records may be sustained when supported by substantial evidence and imposed within authorized limits.

## Conclusion

The Second Circuit upheld the Department of Labor’s two-year debarment and back-wage order, concluding that debarment is an authorized enforcement tool for CWHSSA overtime violations on federally funded projects and that the findings of underpayment and payroll falsification were supported by substantial evidence.


Janik Paving & Constr., Inc. v. Brock, 828 F.2d 84 (2d Cir. 1987)