Prevailing Wage Compliance Adam Strong – MDOT Prevailing Wage Compliance (517) 719-7344 Ron Metevier Michigan Fair Contracting Center (989) 370-4443

State of Michigan Prevailing Wage Law Labor Statutes Davis Bacon Act (DBA) Davis Bacon & Related Acts (DBRA) Fair Labor Standards Act (FLSA) Contract Work Hours & Safety Standards Act (CWHSSA) Copeland “Anti-Kickback” Act (CA) State of Michigan Prevailing Wage Law Public Act 166 of 1965

Base hourly rate + fringe benefit = Prevailing Wage A contractor may discharge their base hourly rate and fringe benefit obligations by: Paying both in cash; Making payments or incurring costs for “bona fide” fringe benefits; Or, a combination thereof (29 CFR Part 5.31) Base hourly rate + fringe benefit = Prevailing Wage

Examples of ‘Bona Fide’ Benefits Training and Apprentice Programs (29 CFR 5.16) Pension Plans; 401k plans (29 CFR 5.26) Vacation and Holiday (29 CFR 5.28) Health Insurance (29 CFR 5.29) Other bona fide fringe benefits (29 CFR 5.29(c)) Prevailing wage supplemental benefit (SUB) plans Might have to be approved by USDOL Apprentice / Training programs need to be registered with the US Department of Labor. Pensions / 401k plans need to be run through a third party. Vacation / Holiday need to be figure with the workers “normal” shop rate. Supplemental benefit plans need to be approved by the US Department of Labor and other agencies as needed.

NOT a ‘Bona Fide’ Benefit Company Trucks (including a gas allowance) Paid Lodging Tools Cell Phones Loan Payments  Uniforms Unemployment/Workers Comp/Social Security These are examples of a “deduction” and not a fringe benefit

Hourly Credit Example Fringe Benefit Credit Example: Benefit Paid Total Vacation 40 hrs. X $20/hr. $800/yr. Blue Cross Yearly Premium $10,800/yr. 401K Employer Contribution of $3.00/hr. $3.00/hr.   To Calculate the Fringe Credit: Benefit Calculation Total Vacation 40 hrs. X $20/hr. = $800/2,080 hrs. $ .38 Blue Cross $10,800/2,080 hrs. $5.19 401K $3.00/hr. $3.00 $8.57 Credit *Note: This example assumes the employee worked a full year and accrued 2080 hours. Seasonal workers may work less than 2080 hours. In these cases, the actual total hours accrued would be used instead of 2080 hours. Examples of figuring the hourly credit for fringe benefits. All fringe benefits need to be shown in an hourly credit to verify the prevailing wage is met.

Fringe Benefit Annualization (DBRA)

State Prevailing Wage Rate Schedule

Fringe Benefit Breakdown Must accompany first CPR where fringes are credited 9

Prevailing Wage 2012 Water Tower CDBG Contractor was paying all hours worked in a single work week at straight time pay. Contractor was paying $23-$28 p/hr not posted rate. Contractor was attempting to take deductions for items that were not considered “bona-fide” fringe benefits under USDOL guidelines (Hotels, per-deim, etc) Claim was turned over to USDOL WH Division for full audit review. Contractor was found in non-compliance of DBRA and FLSA and was required to pay restitution. If found in non-compliance again, possible disbarment from future Davis-Bacon projects along with Civil Money Penalties (CMP’s) and/or Liquidated Damages (LD’s) may be assessed (FLSA).

New Transportation Building for local Transportation Authority Prevailing Wage 2012 New Transportation Building for local Transportation Authority Contractor was from S. Carolina and brought up with it out of town Hispanic workers. First crew was arrested and deported. Second crew was not making the required wage rate + fringe benefit as required per contract. Contractor was found in non-compliance and required to pay restitution. Some monies are held at the Department of Treasury due to deportation of workers or workers returning home to Mexico. Additional contractors were misclassifying workers as Laborers, should have been carpenters. Back wages were paid to over 15 workers.

Wage Schedule(s)

Contract Responsibility Prime is responsible for all contractors prevailing wage compliance (29 CFR 5.5) Prime is responsible for submission of all payroll to the contracting agency Employer responsible for the payment of prevailing wage and worker classification Payroll and basic records must be maintained during the course of work and preserved for a period of three years thereafter

Questions? Ron Metevier Michigan Fair Contracting Center Prevailing Wage 2012 Questions? Ron Metevier Michigan Fair Contracting Center (989) 370-4443 Adam Strong– MDOT Prevailing Wage Compliance Specialist (517) 719-7344 StrongA1@michigan.gov