1 CDBG Federal Labor Standards Compliance For Grant Administrators

2 Why are Labor Standards Crucial? Standards guarantee fair wages and compensation for workers Helps provide a level playing field for bidders Local grantee must ensure and document compliance Transgressions endanger future funding Required by CDBG program and other federal laws

3 Todays Labor Standards Topics Federal Labor Standards 101 UGLG Responsibilities Wage Determinations & Classification Issues Certified Payroll Requirements Compliance Principles Contractor Responsibilities When Things Go Awry…. Other Sources of Information

4 Key Federal Statutes Davis-Bacon Act Contract Work Hours and Safety Standards Act Copeland Act

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6 CDBG and Davis-Bacon Act (40 U.S.C. 276a.-5) Enacted 1931, amended 1935 & 1964 HCDA requires construction contracts over $2,000 or residential properties with 8 or more housing units comply with Davis-Bacon Act Act is site-based Includes alteration, repair, painting & decorating

7 CDBG and Davis-Bacon Act Construction work financed Soft costs do not trigger DB Property building; Applies to Total # of units in property Volunteers are exempt (more later) Force account workers are exempt

8 Use of Volunteers Volunteers may work without pay on a construction project to which Davis-Bacon and Related Acts apply. An individual may not however, be paid for some work and volunteer for other work. It is permissible to cover reasonable costs of volunteers such as travel or other incidental benefits.

9 Contract Work Hours and Safety Standards Act (CWHSSA) (40 U.S.C ) Enacted 1962 Payment for all contract work exceeding 40 hours per week at 1½ times regular rate of pay Applies to contracts exceeding $100,000 Liquidated damages for violations ($10 per/day, per/violation)

10 Copeland Act Enacted in 1934 (40 U.S.C. 276c) Prohibits kickbacks Requires contractors to submit certified payrolls with a signed statement of compliance each week

11 Copeland Act Regulates deductions from wages: FICA, federal & state taxes Bona fide prepayment of wages Court ordered payments, fringe benefit plans, etc

12 CDBG and Davis - Bacon Factors of Applicability All laborers and mechanics employed by contractors or subcontractors Requires payment of at least prevailing wages Requires weekly payment of wages Usually applied through Related Acts

13 Davis-Bacon Regulations The Department of Labor (DOL) has published rules and instructions concerning Davis-Bacon and other labor laws in the Code of Federal Regulations (CFR). They can be found in Title 29 CFR Parts 1, 3, 5, 6 and 7

14 Responsibilities of UGLG (Title 29 CFR Part 5) Designate a Labor Standards Compliance Officer Request a Wage Decision Put Wage Decision and Labor Standards clauses (Form 4010) in contract bid documents Check contractor eligibility ( Conduct a pre-construction conference (optional)

15 Responsibilities of UGLG (Title 29 CFR Part 5) Review weekly payrolls and compliance statements Conduct employee interviews See that underpaid workers receive restitution Maintain contract management system and compliance files

16 Davis-Bacon Wage Determinations Must be included in bid documents and contract Established by geographic area May be modified periodically Published for four types of construction

17 Davis-Bacon Wage Determinations Types of Construction Building - sheltered enclosures that house persons, machinery, equipment, etc. Also apartment buildings over 4 stories Residential - single family houses, townhouses, and apartment buildings up to four stories Highway - roads, highways, sidewalks, parking areas, and other paving work not incidental to other construction Heavy - projects that cant be classified as Building, Residential or Highway

18 Davis-Bacon Wage Determinations Lock-In Rules Competitive bidding: Modifications published less than 10 days before bid opening are not applicable if there is not sufficient time to notify bidders Lock-in at bid opening provided contract is awarded within 90 days Must update wage determination if contract award is more than 90 days UGLG must verify that wage rates are current

19 State Labor Law Requirements Insert any specific state requirements if applicable

20 Employer Requirements Classification Pay Overtime Posters

21 Employer Requirements All laborers and mechanics must: Be classified in accordance with the Wage Decision Be paid at rates those on Wage Decision

22 Employer Requirements Additional Classifications Employer submits request in writing UGLG must follow up (contact State) DOL has 3 criteria for approval: Work is not already on the WD Proposed classification is used by the industry in the project area Proposed wage rate & fringe benefits bear a reasonable relationship to rates on the WD

23 Employer Requirements Dual Classification When an employee performs tasks under two or more distinct classifications, the employee must be paid the prevailing wage rate for each classification Must be listed separately on the payroll

24 Employer Requirements All laborers and mechanics must: Be paid not less often than once a week Receive at least 1½ times regular rate of pay for all hours worked over 40 per week Each employer must: Submit weekly certified payrolls reflecting all hours worked

25 Employer Requirements Two Posters: Wage Determination DOL Notice to Employees ojc.pdf Posted in a conspicuous place, protected from the elements

26 UGLG Compliance/Monitoring On-site employee interviews should be used as a proactive enforcement tool Grantees are encouraged to focus interviews to projects or groups of workers where violations are suspected or alleged Each employer must: Maintain full documentation, including payrolls and related records, for at least 3 years following completion

27 UGLG Compliance/Monitoring Interviews can be used to support a specific on-going investigation Fewer on-site interviews may be conducted randomly but HUD considers focusing a far more effective means of utilizing on-site interview resources

28 Davis-Bacon Compliance Wage Classifications and Pay Site of the Work Truck Drivers Apprentices and Trainees Helpers Fringe Benefits

29 Davis Bacon Compliance Laborers and Mechanics Laborer / Mechanic: anyone performing construction work on the project Supervisors are covered if they spend 20% their time performing manual work Project Superintendents if they do work in listed trades, they must be paid the appropriate wage listed on the Wage Determination

30 Davis Bacon Compliance Site of Work 29 CFR 5.2(l)(1): the physical place where the building or work called for in the contract will remain

31 Davis Bacon Compliance Apprentices and Trainees Only apprentices & trainees registered in an approved program may be paid less than the applicable wage rate Approved program means a program registered with the DOL or a DOL- recognized State Apprenticeship Agency

32 Davis Bacon Compliance Helpers Helpers are only allowed when: Duties are distinct from all others Use of helpers is established in the area Helper not in informal training program

33 Davis Bacon Fringe Benefits Allowed: Employer contributions to Third Party plans Health / life / disability / dental insurance plans Retirement plans Costs of apprenticeship

34 Davis Bacon Fringe Benefits Excludes payments required by law: FICA Workers Compensation Unemployment Certified payrolls must reference how FBs are paid

35 Prime Contractor Responsible for all employers on project Subcontractors communicate through prime Ensures labor provisions in all subcontracts

36 Prime Contractor Submits certified payrolls for own employees Provides subs with forms and guidance Ensures access to employees on site Responsible for restitution to underpaid employees Posters

37 Subcontractor Submits certified payrolls each week Instructs lower-tier subs of responsibilities Reviews Wage Decisions, requests additional classifications Ensures access to employees on-site

38 Certified Payroll Requirements (Title 29 CFR Part 3) Optional Form WH-347 Compliance statement w/ original signature of corporate official, or letter of delegation Payrolls are due weekly Identify first and final payroll

39 Certified Payroll Basics No Work payrolls optional – but all weeks must be accounted for in records Payrolls must be complete & legible Prime contractor reviews payrolls and submits to UGLG Payroll record retention = three years

40 Certified Payroll Basics Employee Information Employee name, address, SSN Employee work classification Rate of pay Straight / OT hours worked per day, per week on this project

41 Certified Payroll Basics Wages and Deductions Gross wages earned Deductions from wages Net pay Statement of compliance: one for each weekly payroll signed by corporate official (or designee)

42 Correcting Violations Labor Standards Officer notifies company and/or prime contractor of violations Wage restitution must be documented Submit corrected certified payroll

43 Correcting Violations Funds may be withheld by UGLG if violations are not corrected promptly Deposit of funds in Escrow if matter is under appeal, or workers cannot be found Administrative sanctions: Limited Denial of Participation Debarment

44 Recordkeeping Requirements Copies of Wage Decisions Modifications Preconstruction Minutes if applicable Bid Documents and Copy of Contract Notification of Contract Award Documentation of all enforcement actions

45 Recordkeeping Requirements (continued) Weekly payrolls with statement of compliance Employee interviews Contractor clearance Securing confidentiality of records

46 Reporting Violations of underpayment must be reported to DOL if >$1,000 or willful. Semi-annual report of contracts awarded

47 HUD Labor Relations References Making Davis Bacon Work (HUD Publication) A Practical Guide for States, Indian Tribes and Local Agencies s/forms/files/4813-LR.pdf Making Davis Bacon Work A Contractors Guide to Davis-Bacon /pdfforms/4812-LR.pdf

48 HUD Labor Relations References Labor Relations Forms HUD Office of Labor Relations: HUD Regulations:

49 Other Sources Davis-Bacon Wage Determinations: GSAs On-Line Debarment List:

50 Other Sources DOL DBRA Homepage: DOL Regulations: DOL Forms: