1. 1 Prevailing Wage Compliance 2012 (revised) Prevailing Wage Components Contract Documents Wage Decisions Certified Payrolls Adam Strong – MDOT Prevailing Wage Compliance (517) 719-7344 Dan Argentati Michigan Fair Contracting Center (248) 836-3411

2. STATE DBRA 2

3. 3 Worker Classifications The worker’s classification is based on the “type of work” being performed, which often is different than the title his/her employer may assign to them on private work. It is the duty of the employer to classify the worker based on the descriptions in the wage determination. An inspector or auditor may also classify the worker, and it is necessary that there is an agreement on classification.

4. 4 Prevailing Wage Components “Prevailing Wage” is made up of two interchangeable components Base Hourly Rate (BHR) Fringe Benefit Value (FB) The total dollar value of the two components comprise –the “prevailing wage” requirement. (29 CFR 5.23) The goal is to ensure compliance with the Federal Davis-Bacon Act.

5. 5 Prevailing Wage The total including the value of the fringe benefits may be paid entirely as wages. Or as a combination of wages and “bona fide” fringe benefits used together to meet the total required prevailing wage. –Base Hourly Rate + Fringe Benefit value = Total Prevailing Wage

6. 6 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) Prevailing wage supplemental benefit plans –Might have to be approved by USDOL

7. 7 Prevailing Wage NOT a “bona fide” benefit Company trucks (including a gas allowance) Paid lodging Tools Cell phones Loan payments Uniforms

8. 8 Prevailing Wage Example Base Hourly Rate +Fringe = Total Package $22.00 $8.00 $30.00 The contractor can comply by paying: (29 CFR 5.31) 1. $30.00 in wages 2. $22.00 plus, $5.00 in health insurance benefits, and $3.00 contributions in a 401k account 3. $19.00 plus $11 in 401k contributions or any other “bona fide” fringe benefit that would have a value of $11

9. 9 Fringe Benefit Credit Example: Benefit PaidTotal Vacation40 hours X $20/hr$800/yr Blue Crossyearly premium$10,800/yr 401K Employer Contribution of $3.00/hr $3.00/hr To calculate the Fringe Credit: Benefit CalculationTotal Vacation40 hours X $20/hr= $800/2080hrs$.38 Blue Cross$10,800/2080hrs$5.19 401K$3.00 per hour$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. Hourly Credit Example

10. 10 Examples: Assume Health Insurance costs $10,800 for a 12 month premium. The insurance is provided to the employee year-round even though the employee worked 1,200 hours in a year. In this case the Davis- Bacon credit would be $10,800/$1,200hours = $9.00. Assume Health Insurance premium is paid on a monthly basis and only provided during the work season. Assume the premium is $900 per month. Under Davis-Bacon the employer can break down the costs based on the hours worked during the month. Assume the worker accrued 175 hours during the month. The Davis-Bacon credit would be $900/175hours = $5.14. Davis-Bacon also allows the calculations to be based on the previous month’s hours. THE CONTRACTOR CANNOT TAKE MORE OF A CREDIT THAN THE ACTUAL COST OF THE BENEFIT: Once the yearly premium is paid, the credit cannot be used for health insurance, it must be converted to another “bona fide” credit or paid as base hourly rate (wage). Hourly Credit Example

11. 11 Minimum Prevailing Wage Apprentice Workers classified as “apprentices” must be enrolled in a program registered with the U.S. DOL Office of Apprenticeship & Training. –This is not to be confused with State registered skilled trades apprenticeships. Apprentice wages are figured according to the Apprentice Agreement registered with USDOL. (29 CFR 5.2 and 5.5) The published base and fringe wages are to be used when figuring the minimum prevailing wage due for the apprentice percentage.

12. 12 Minimum Prevailing Wage Apprentice / OJT Base Hourly Rate +Fringe = Total Package $22.00 $8.00 $30.00 M inimum Prevailing Wage due an Apprentice at 50% Base Hourly Rate +Fringe = Total Package (50% x $22.00) $8.00 $19.00 $11.00 NOT Prevailing: 50% x $30.00(total package) = $15.00

13. 13 Overtime and Fringe Benefits When computing overtime wages, the total wages paid must meet or exceed the “total package” listed in the wage decision (29 CFR 5.32) : 1.5 x Base Hourly Rate + Fringe = Total Package (1.5 x $22.00) + $8.00 = $41.00 Once the total package is determined it may be paid in any combination as long as it equals the total package.

14. 14 Overtime Examples (Davis-Bacon) The published hourly rate is $22 and the fringe is $8, and employee worked 44 hours. The employer does not offer any benefits. The $8.00 in fringes is paid as hourly wages. The worker would be due on his check (and shown on certified payroll): 44 hours x $30 = $1,320 (straight time pay) 4 hours x 1/2 ($22) =$ 44 (overtime premium) ____________________________________ $1,364

15. 15 The published hourly rate is $22 and the fringe is $8, and employee worked 44 hours. The employer contributes $8.00 per hour into the workers 401k plan to meet the fringe benefits requirement. The worker would be due on his check (and shown on certified payroll): 44 hours x $22 = $ 968 (straight time pay) 4 hours x ½ ($22) = $ 44 (overtime premium) _____________________________________ $1,012 *note – in addition, the worker would be due $352 (44 x $8) in his 401k account. Note the total is the same in all examples ($1,012 + $352 = $1,364 )

16. 16 The published hourly rate is $22 and the fringe is $8, and employee worked 44 hours. The employer contributes $4.00 per hour into a 401k plan and pays $26.00 per hour to the worker. The worker would be due on his check (and shown on certified payroll): 44 hours x $26 = $1,144 (straight time pay) 4 hours x ½ ($22) = $ 44 (overtime premium) ___________________________________ $1,188 *note – in addition, the worker would be due $176 (44 x $4) in his 401k account. Note the total is the same in all examples ($1,188 + $176 = $1,364 )

17. 17 The published hourly rate is $22 and the fringe is $8, and employee worked 44 hours The employer pays the worker $19 per hour and contributes $11 per hour into the workers 401k plan. The worker would be due on his check (and shown on certified payroll). 44 hours x $19 = $836 (straight time pay) 4 hours x ½ ($22) = $ 44 (overtime premium) ________________________________ $880 *note – in addition, the worker would be due $484 (44 x $11) in his 401k account. Note the total is the same in all example ($880 + $484 = $1,364 )

18. 18 Rates of pay for a worker working in different classifications during a week with overtime. Weighted average is allowed in calculating overtime: $15/hr for 40 hours as a laborer = $600 $25/hr for 10 hours as an operator = $250 Average Rate = (Total Dollars) / (Total Hours) $850/50 hours = $17 Premium Rate = $17 X 1/2 = $8.50 Premium Pay = $8.50 X 10 hours = $85.00 Total for the 50 hours worked: $600.00 + $250.00 + $85.00= $935.00

19. 19 State Prevailing Wage Rate Schedule

20. 20 State Prevailing Wage Rate Schedule

21. 21 State Prevailing Wage Rate Schedule Overtime Provisions

22. 22 Example HHHHHHHDN

23. 23 Example: XXXHHHHDY

24. 24 Prevailing Wage Compliance 2012 Prevailing Wage Components Contract Documents Wage Decisions Certified Payrolls Adam Strong– MDOT Prevailing Wage Compliance (517) 719-7344

25. 25 What and Where to Look for Prevailing Wage Compliance Bureau of Highway Instructional Memorandum –Prevailing Wage Oversight Procedures (BOHIM2009-07) The BOHIM2009-07 provides the oversight for the following: FHWA – 1273 Notice to Bidders Wage Determinations

26. 26 Notice to Bidders Report Forms (03NB00) –The bi-weekly estimate may be withheld. Certified Payrolls (03NB10) –Requires the information from the WH-347 to be provided. …Under 75 Days…(03NB12) –Adjust the grace period for first payroll due. –The notice goes from 30 days to 15 days. Multiple Wage Decisions(03NB13) –Clarifies the proper use of wage decisions (Highway vs. Heavy). Labor Compliance (03NB14) –States a non-compliance issue should be resolved in 60 days. –Prime Contractor to advise all subs of “Wage Rate Interviews” –Prime Contractor is responsible for paying ALL prevailing wages

27. 27 Prevailing Wage Compliance 2012 Prevailing Wage Components Contract Documents Wage Decisions Certified Payrolls Adam Strong– MDOT Prevailing Wage Compliance (517) 719-7344

28. 28 Wage Decisions Davis-Bacon According to the USDOL, wage decisions for construction projects are generally classified as either: –Highway (MI1) formerly MI7 –Heavy –Building –Residential

29. 29 Wage Determinations The wage determination contain a workers: –Classification Identifier (example CARP004-004) –Corresponding wage rate –Related to a corresponding county or counties (area)

30. 30 Wage Decisions Davis-Bacon

31. 31 Highway (MI1) Heavy

32. 32 Typical Roadway Section

33. 33 Prevailing Wage Compliance 2012 Prevailing Wage Components Contract Documents Wage Decisions Certified Payrolls Adam Strong – MDOT Prevailing Wage Compliance (517) 719-7344

34. 34 Certified Payrolls Certified weekly payrolls shall be submitted to the delivery/project engineer on all federally funded contracts of more than $2,000.00 Certified weekly payrolls shall be submitted to the delivery/project engineer on all state funded projects –THIS IS A MDOT REQUIREMENT Optional certified payroll forms: –Computer generated form that contains all required information. –WH-347 (Wage & Hour form from the USDOL) –CP-347 (created to meet all MDOT requirements)

35. 35 Prevailing Wages when there is no signed Subcontract Persons performing the duties of laborers and mechanics (operators) must be paid the prevailing wage rate regardless of any written contractual arrangement. Certified payrolls are required anytime employees are paid prevailing wages. –THIS IS A MDOT REQUIREMENT (for State Wages) It is the responsibility of the prime contractor to assure that certified payrolls are submitted by any company with which they have a “contractual arrangement”

36. 36

37. 37 Certified Payrolls

38. 38 CP-347 Instructions

39. 39

40. 40 Certified Payrolls If fringe benefits are paid into approved programs and plans, a detailed hourly breakdown of the type of benefits and hourly dollar value must accompany the first payroll. The plan administrator’s contact information must also be included.

41. 41 MI-TA web site Union Wage Breakdown www.mi- ita.com/labor_wages.asp This is acceptable for a detailed fringe benefit breakdown for a union employee Operating Engineers Wage Rates

42. 42 Weighted Average Overtime Calculation: (($540+$444.60)/(36+18))/2

43. 43 Certified Payroll with Weighted Average Overtime

44. 44 Adam Strong– MDOT Prevailing Wage Compliance Specialist (517) 719-7344 StrongA1@michigan.gov Questions? Dan Argentati Michigan Fair Contracting Center (248) 836-3411