Wage and Hour Division San Diego, California

Davis-Bacon Act Training Your Trainers Bill Isokait, Associated General Contractors, Counsel for Labor and Employment Law Steve Schultz, Merrill, Schultz & Wolds Tim Helm, Wage and Hour Division, Government Contract Team Leader Richard Cheung, Wage and Hour Division, Regional Wage Specialist Gerri Rimple, Wage & Hour Division Investigator Larry Benjamin, Wage & Hour Division Investigator

DAVIS-BACON AND RELATED ACTS

Davis-Bacon Act (DBA) n n Enacted in 1931 n n Protects communities and workers from competition caused by non-local contractors n n Requires payment of locally PREVAILING WAGES and FRINGE BENEFITS n n Requires pay to all LABORERS and MECHANICS employed on work site at least once a week

DBA Coverage n n Contract in excess of $2,000 n n Construction, Alteration, and/or Repair including painting and decorating n n Public Buildings or Public Works of U.S. or D.C. n n Within geographic limits of U.S.

Davis-Bacon And Related Acts (DBRA) Congress extended DB to over 60 related acts that provide federal assistance for construction: n n Grants n n Loans n n Loan Guarantees n n Insurance n n see Regs. Part 5 section 5.1(a)

DBRA EXAMPLES n n HUD financed low income residences on housing authority projects n n EPA furnishes grant for construction of sewage plant n n Federal Highway Admin (FHA) provides grants to states for reconstruction of roads and bridges on interstate highway system

DB vs DBRA Direct DB projects: Federal gov ’ t agency signs contract DBRA projects: Agency other than federal gov ’ t signs contract

Davis-Bacon Wage Determinations

DB Wage Determinations Types n n General Wage Determinations n n Project Wage Determinations

DB Wage Determinations Selecting The Proper Wage Determinations n n Location: State and County n n Type of Construction: Building; Heavy; Highway; Residential n n Current WD: question or disputes concerning appropriate classification of project should be submitted to Wage and Hour Division for resolution

Project Wage Determinations n n Issued on case-by-case basis where no general WD is in effect or where all work on a contract will be performed by a classification that is not listed in general WD SF-308, “ Request for Determination and Response To Request ” submitted by agency to request Project WD

DB/DBRA Project Wage Determination SF-308 n n Submitted by agency n n Requesting agency should attach info indicating cost breakdown for each type of construction n n Obtain form from Mr. George Blyther at (202)

DB/DBRA Project Wage Determination SF-308 n n Anticipate 30 days processing time n n Mail to: US Dept. of Labor ESA, Wage and Hour Division Branch of Construction Wage Determinations Washington, DC 20210

DB/DBRA Project Wage Determination n n Effective for 180 days only n n Applicable only to particular project n n Request new Project WD if present one appears to be expiring between bid opening and contract award date n n Extension possible under limited conditions by Wage and Hour Administrator

DB/DBRA Special Project Wage Determination n n Issued for retroactive application for DB contracts let without WD or correct WD

DB/DBRA Wage Determination Modifications Both General and Project WDs may be modified: n n To apply results of new survey n n To update union rates due to CBAs General Wage Decisions contain “ Supersedes wage decisions ” that replace prior general WDs. These begin with Mod. No. 0

DB/DBRA Current Wage Determinations n n Contracting agency must assure that up to date WD is included in bid/RFP documents, and mods are included up to the time of award n n On negotiated contracts (RFPs), contracting agency must use most up to date WD issued at time of contract award date

DB/DBRA Current Wage Determination n n Mods to DB WDs and supersedes WD issued after award do not apply to contract n n During pre-bid conferences, Contractors should be encouraged to review WDs and raise any objections or questions during advertising period. Later complaints may be deemed untimely and not be acted upon

DB/DBRA Current Wage Determinations n n On competitive bidding contracts, WDs issued within 10 days of opening bid date shall be used unless there is not enough time to notify all bidders n n Where General WD applies, if contract not awarded within 90 days new mods must be incorporated or extension applied for and granted. Same for Project WD that expires before award

MISCLASSIFICATION NO CLASSIFICATION

MISCLASSIFICATION n n Plumber vs Pipelayer (Laborer) n n Pipelaying - Inside - Plumber n n Outside - Laborer

Misclassification n n Roofer vs Sheet Metal Worker (Materials) n n Roofer - Asphalt & Concrete Tiles n n Mop & Hot Tar n n Sheet Metal Worker - Flashing/Sheet Metal n n Carpentry - Wood Shingles

Misclassification n n Sheet Metal Workers vs Iron Workers n n Gauge of Metal n n Lower the number-thicker the metal n n (Ironworker)

Misclassification n n Fence Erector n n Chain link - Ironworkers n n Wood - Carpentry n n Poles - Laborers

Misclassification n n Laborer vs Final Cleanup Laborer n n Laborer - All Phases of Construction n n Final Cleanup - After Construction

Procedure n n Complaint n n Investigation n n Prevailing Practice n n Compliance n n Conformance

n n Classification Missing? n n Can project work be performed without this class? n n New Wage Decision

n n Simple Classification Missing? n n Prepare bid with regular rate & conformance criteria in mind. n n Request additional classification and wage rate after award.

CONFORMANCE CRITERIA n n Classification requested is not performed by class in wage decision. n n Class is used by construction industry in the area. n n Requested rate is similar to the rates contained in the decision.

Davis-Bacon Survey Process

DB Survey Process Annual Plan n n Survey activities planned using Regional Survey Planning Report (RSPR) and Uniform Survey Planning Procedure (USPP) n n Information about procurement agency construction is obtained n n Geographic area identified and included on an annual survey plan n n Survey plan distributed to interested parties

DB Survey Process Initiating And Conducting n n Interested parties and identified contractors are contacted by letter requesting their participation n n Contractors identified by F.W. Dodge Reports n n Wage data: verified as to area, time, time frame, construction type, timeliness n n Data compiled and analyzed (4 to 8 months)

DB Survey Process Importance of Participation n n Accuracy and comprehensiveness dependent upon interested party participation n n Participation by federal agencies is sometimes required to issue new schedule

DB Survey Process Key Classes Adequate data to establish rates for at least 1/2 of the key classes for a given type of construction: n n Building n n Heavy n n Highway n n Residential

DB Survey Process Building n n Heat/Frost Insulators n n Bricklayers n n Boilermakers n n Carpenters n n Cement Masons n n Electricians n n Iron Workers n n Laborers - common

DB Survey Process Building n n Painters n n Pipefitters n n Plumbers n n Power Equip Operators (Operating Eng.) n n Roofers n n Sheet Metal Workers n n Tile Setters n n Truck Drivers

DB Survey Process Heavy And Highway n n Carpenters n n Cement Masons n n Electricians n n Iron Workers n n Laborers - common n n Painters n n Power Equip Operators n n Truck Drivers

DB Survey Process Residential n n Bricklayers n n Carpenters n n Cement Masons n n Electricians n n Iron Workers

DB Survey Process Residential n n Painters n n Plumbers n n Power Equip Operators n n Roofers n n Sheet Metal Workers n n Truck Drivers

DB Survey Process Impact of Participation n n Accuracy dependent upon interested party participation n n Complete WD dependent upon participation and construction activities n n Prevailing wages mirror data submitted n n Participation by federal agencies sometimes required

DB Survey Process Planning n n Regional Survey Planning Report (RSPR) and Uniform Survey Planning Procedure (USPP) used to plan survey activity n n RSPR shows construction activity in current year and basis for prevailing rates n n USPP directs selection of survey areas by date of last survey, number of projects, cost of projects, agency plans, survey requests n n Info on agency procurement most important n n Pre-survey meetings with interested parties

DB Survey Process Conduct Nat ’ l and local interested parties notified n n Letters sent to contractors n n Follow-up for non-response n n Contractors called to obtain missing data n n Wage data submissions are verified n n Data analyzed and area practice issues resolved

DB Survey Process Conduct n n Wage data tabulated by computer/prevailing wage and fringe benefits calculated n n Wage rates tested for accuracy n n Wage determinations developed and issued n n Surveys take 4 to 8 months n n Accuracy dependent on participation n n Completeness dependent on participation and construction activities

DB/DBRA Compliance Principles Area Practice Survey n Used to determine proper classification for work performed on DB project n Limited Area Practice Survey when all parties agree on accuracy of preliminary data n Full Area Practice Survey when preliminary data is disputed - involves similar projects in area for prior year

DB/DBRA Compliance Principles Limited Area Practice Survey - Union Rates n Contact Unions that have jurisdiction over the work in question to determine if unions worked on similar projects in same county during prior year n Survey each union about how workers were classified n Info from unions should be confirmed by collective bargaining reps of contractors

DB/DBRA Compliance Principles Limited Area Practice Survey - Open Shop Rates n Contact open shop contractors to determine if they worked on similar projects in same county during prior year n If so, ask how workers were classified n If all or a majority of contractors agree, the area practice is established

DB/DBRA Compliance Principles Limited Area Practice Survey - Mixed Rates n Contact Unions, union shop and open shop contractors to determine if they worked on similar projects in same county during prior year n If all parties, or a majority agree, area practice is established

DB/DBRA Compliance Principles Full Area Practice Survey n Identify similar projects in same county as project which were in progress during one year prior to start of project under investigation n Determine what firms performed work in question and contact those that are either open shop or union depending on the basis for the wage rates issued in applicable WD

DB/DBRA Compliance Principles Full Area Practice Survey n Determine for each contractor the week in which the greatest number of employees performed the work in question and determine how they were classified n Compile info received and total the number of employees in each classification which performed work in question n Classification which has clear majority (60%) of employees is proper classification

DB/DBRA Compliance Principles Laborers and Mechanics n n Does not include: u u Timekeepers, inspectors, architects, and engineers u u Bona Fide executive, administrative, or professional employees as defined by FLSA are not laborers or mechanics

DB/DBRA Compliance Principles Laborers and Mechanics n n Working Foreman are generally non- exempt and must be paid the DB rate for the classification of work performed n n Owners of subcontract firms performing work of laborers and mechanics are entitled to the prevailing wage rate for the classification of work performed

DB/DBRA Compliance Principles Laborers and Mechanics n n Subcontractor working as laborer or mechanic u u If subcontract price covers applicable prevailing wage rate for number of hours worked, DOL would consider the owner/subcontractor to have been paid in compliance

Fair Labor Standards Act (FLSA) Information Applicable to: n n Service Contract Act (SCA) n n Davis-Bacon Act (DB / DBRA) n n Public Contracts Act (PCA) n n Contract Work Hours and Safety Standards Act (CWHSSA)

HOURS WORKED

Hours Worked Suffer or Permit: n n Work not requested but suffered or permitted is work time n n The reason the employee works extra time - requested or not - is immaterial

Hours Worked Lunch Period: n n hours worked do not generally include lunch period - provided: u u period is of 30 minutes or more u u employee is completely relieved of duty

Hours Worked Breaks: u u Breaks of 5 to 20 minutes promote efficiency of the employee u u considered hours worked

Hours Worked Meetings, Lecturers, and Training Programs n n Time spent in these activities is considered work time, unless all 4 conditions are met: u u Attendance is outside regular working hours u u Attendance is voluntary u u The course, lecture, or meeting is not job related u u Employee does not perform any productive work during attendance

Hours Worked Waiting Time: n n Engaged to wait u u Idle time where employee is at the appointed place of duty at the appointed time and for whatever reason there is no active work for the employee to do. n n Waiting to be engaged u u Idle time where employee shows up on own volition in hopes of being put to work

Hours Worked u u On call time:   Work Time - employee is required to be on the employer ’ s premises or so close thereto that employee cannot use time for employee ’ s own purposes   Non-work Time - employee is merely required to carry a “ beeper ” or leave word at home or with employer where employee can be reached

Child Labor n n 14 and 15 year olds -- cannot work on construction site u u hours limits n n 16 and 17 year olds -- hazardous orders u u Driving u u Power-driven hoisting apparatus u u Power-driven saws u u Demolition u u Roofing u u Excavation

DB/DBRA Compliance Principles Site Of The Work DB/DBRA applies only to workers on “ site of the work ” u u Limited to the physical place or places where the construction remains after work has been completed   Adjacent or nearby property used by contractor that would be reasonable to include in the “ site ”

DB/DBRA Compliance Principles Site Of The Work n n Includes u u Property dedicated exclusively to and located in proximity to actual construction location F F Fabrication plants, mobile factories, batch plants, borrow pits, headquarters, tool yards, etc. n n Not included u u Permanent offices, plants, pits, yards, etc. of contractor u u Commercial supplier or materialman

DB/DBRA Compliance Principles Site Of The Work Truck Drivers Are Covered by DB/DBRA when: Driving is done on the “ site of the work ”

Travel Time n n Travel between work sites is hours worked n n Travel between meeting place and work site

DB/DBRA Compliance Principles Prevailing Wage Basic hourly wage and fringe benefit obligation may be satisfied by: n n Paying both by cash n n Paying cash and crediting costs of bona fide fringe benefits in any combination

DB/DBRA Responsibilities n n Contracting agency has day-to-day enforcement responsibility. This includes among others: u u Insuring DB requirements and applicable WD are included in covered contracts u u Reviewing certified payrolls in a timely manner u u Conducting employee interviews u u Cannot contract out enforcement of DB requirements u u Insuring that grant recipients enforce DBRA

DB/DBRA Responsibilities n n DOL Responsibilities u u Determines prevailing wages u u Issues regulations and standards to be observed by contracting agencies u u Performs oversight function and has independent authority to conduct investigations

Contract Work Hours And Safety Standards Act CWHSSA

n n Enacted in 1962 n n Requires OT pay n n At T1/2 basic rate of pay n n To laborers and mechanics n n Also covers guards and watchmen n n After 40 hours in a work week for work on covered contracts (same as FLSA)

CWHSSA n n Self-executing - F F Failure to include CWHSSA stipulations in contract does not preclude its application n n No Site of Work Limitation - F F CWHSSA applies if an employee performs part of construction work at job site and part of work at a shop n n Does not apply to federal assistance in form of loan guarantees or insurance (i.e., HUD assistance under National Housing Act)

CWHSSA Covered Contracts n n Most federal contracts - contracts of U.S., any agency thereof, D.C., Territory of U.S. n n Federal Construction contracts over $100,000 n n Any covered service contract $100,000 or over n n Federally assisted construction contracts for over $100,000 (DBRA)

CWHSSA Does Not Apply n n Work under Walsh-Healy Public Contracts Act (PCA) n n Construction contracts of less than $100,000 n n Purchase and other contracts under $100,000 n n Agreements under Commodity Credit Corporation for storage of commodities

CWHSSA Enforcement n n Funds can be withheld to ensure payment of back wages n n Liquidated damages can be assessed by agency for violations - $10 per day per laborer/mechanic/service employee n n Debarment may be initiated

CWHSSA Exemptions Contracts for: n n Transportation by air, land, water n n Transmission of intelligence n n Purchase of supplies/materials on open market n n Work performed in foreign country n n TVA sale of surplus power

DB/DBRA/CWHSSA Investigations Issues: n n DB Stipulations and WD included in contract n n Determine correctness of classifications n n Proper wage and fringe benefits for the classification of work performed were paid n n Laborer/apprentice ratio correct n n Appropriate contributions to bona fide FR plan n n T1/2 after 40 hours in a work week was paid

DB/DBRA/CWHSSA Conducting Investigations Not necessarily in this order: n n Obtain copy of labor standards clauses in contract, WD, and copies of certified payrolls n n Contact Employer (includes contractor and sub-contractor), hold initial conference and obtain information n n Examine certified payrolls n n Examine basic payroll records

DB/DBRA/CWHSSA Conducting Investigations n n Check for apprenticeship compliance n n Determine if conformance is necessary n n Interview employees n n Determine Compliance with DB MW and FR requirements n n Determine compliance with CWHSSA n n Compute Back Wages and Liquidated Damages n n Final Conference n n Withhold

Copeland “ Anti-Kickback ” Act CA

Copeland Act Purpose Prohibits “ kickbacks ” of wages and back wages Requires contractors on DB/DBRA projects to submit weekly a “ statement of compliance ” - Certified Payroll n n Regulates payroll deductions from wages

Copeland Act Deductions Allowed n n SS, federal, state withholding income tax n n Deductions for bona fide prepayment of wages n n Deductions for court ordered payments n n Deductions for fringe benefit contributions - voluntary in writing or CBA required, convenience of employee, no profit to employer

Copeland Act Deductions Allowed n n Deduction for U.S. Savings Bonds n n Voluntary charitable deductions n n Deductions for union dues & fees per CBA n n Deductions for reasonable cost of board, lodging or facilities under FLSA n n Deduction for safety equipment - if not prohibited by FLSA or required by law for employer to furnish - based on actual cost

Copeland Act Statement of Compliance Referred to as “ Certified Payroll ” n n Contractors and sub-contractors must submit weekly n n Falsification is criminal violation and can result in $5,000 fine, 5 years in prison, or both

Copeland Act Anti-Kickback Provisions n n Prohibits kickback of wages or back wages n n Kickback is criminal violation punishable by fine of $5,000 or 5 years in prison, or both

DB/DBRA Compliance Principles Prevailing Wage Fringe Benefits: n n Must be paid for all hours worked n n Cash wages in excess of basic hourly rate may be used to offset, credit or satisfy fringe benefit obligation (Note: this is different from SCA)

Example WD REQUIRES: Basic Hourly Rate$10.00 Fringe Benefit $1.00 Total Rate$11.00 The contractor can comply by paying: $11.00 in cash wages $10.00 plus $1.00 in “ bona fide ” fringe benefits OR $9.00 plus $2.00 in “ bona fide ” fringe benefits

Overtime must be paid at the rate required by the wage determination. In this example, the basic hourly rate for OT purposes is $10.00 per hour. Under DBRA, fringe benefits must be paid for all hours worked, including the overtime hours. However, the fringe benefit amounts may be excluded from the half-time premium due as overtime compensation.

CONTRACTORS PACKAGE n n Completed SF n n Description of duties if other than basic trade. Documentation showing interested parties ’ agreement. Employees ’ signature (or representative) Employer ’ s signature

DB/DBRA/CWHSSA Debarment n n Contractor or sub-contractor is declared ineligible for up to 3 years from receiving DB/DBRA contracts   Violations were in disregard of the contractor ’ s obligations to employees and subcontractors (DB) u u Aggravated or willful violation of labor standards (DBRA)

DB/DBRA/CWHSSA Debarment Criteria n n Debarment is considered when contractor has: u u Submitted falsified certified payrolls u u Required kickbacks of wages or back wages u u Committed subsequent violations of an identical nature

DB/DBRA/CWHSSA The Hearing Process n n Refusal to pay cases: F F If factual issues are in dispute WH notifies contractors in writing of findings and offers opportunity to request hearing before Administrative Law Judge n n If only issues of law are in dispute:   WH offers contractors opportunity for a hearing before Department ’ s Administrative Review Board n n Where debarment criteria is met, contractor offered opportunity to request ALJ hearing

DB/DBRA/CWHSSA Administrative Review Board n n Hears all appeals of ALJ decisions n n Consists of three members appointed by Secretary of Labor n n Appeals may be in the form of oral hearings in Washington, DC or by review of record in closed session n n Board also acts on petitions to review rulings of WH Administrator on coverage, interpretations, and WD matters

Wage and Hour Division San Diego, California