2. REGION IX – San Francisco U.S. Department of HUD Office of Labor Relations (9ASL) 450 Golden Gate Avenue San Francisco, CA 94102 Phone: (415) 436-6576 Fax: (415) 436-8524

3. 2 The Honorable Alphonso Jackson Secretary of the United States Department of Housing and Urban Development

4. 3 Key Labor Relations Goals & Objectives

5. 4 1.Provide Training and Technical Assistance 2.Monitoring of Agencies 3.Issuance of Maintenance Wage Rate Determinations to Public Housing Agencies 4.Promote Economic Opportunities 5.Reporting Requirements Key Labor Relations Goals & Objectives

6. APPLICABILITY OF FEDERAL LABOR STANDARDS REQUIREMENTS

7. 6 COURSE AGENDA Increase LCA understanding of prevailing wage statutes How to determine applicability for each HUD / DOL/Local agency responsibilities Bid and Contract Documents requirements 

8. 7 COURSE AGENDA Wage decisions & classification issues Basic enforcement concepts Correcting violations Reports Contractor’s Due Process

9. 8 What You Should Learn From this Course

10. 9 COURSE OBJECTIVES Clear understanding of the labor statutes HUD enforces Identify applicability factors Correctly determine applicability Determine the appropriate wage decision for a project’s character of construction 

11. 10 COURSE OBJECTIVES Identify the “lock in” (effective) date for a wage decision Reviewing documentation, determine if deficiencies exist and identify the corrective actions Afford the Contractor due process (29 CFR5.11b)

12. 11 Useful Web Links www.hud.gov/offices/olr www.hud.gov/offices/olr/library.cfm www.access.gpo.gov/davisbacon/ epls.arnet.gov Useful Web Links

13. 12 Useful Web Links www.hud.gov/offices/olr

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15. 14 Useful Web Links www.hud.gov/offices/olr/library.cfm

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18. 17 Useful Web Links www.access.gpo.gov/davisbacon/

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22. 21 Useful Web Links //epls.arnet.gov

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27. 26 DAVIS-BACON & OTHER LAWS Federal Labor Standards 101

28. 27 Davis-Bacon Act (DBA) Copeland Act (Anti-Kickback Act) Contract Work Hour and Safety Standards Act Davis-Bacon Related Acts (DBRA) See 29 CFR Parts 1,3,5,6,7

29. 28 DAVIS-BACON ACT Enacted in 1931, amended in 1935 & 1964 Federal construction contracts over $2,000 Applies to all laborers & mechanics Includes alteration, repair, painting & decorating

30. 29 DAVIS-BACON ACT Establishes prevailing wage rates Requires that workers be paid weekly Is “site-based” Usually applied through the “Related acts”

31. 30 COPELAND ACT Enacted in 1934 Prohibits “Kick-backs” of pay Requires certified weekly payrolls Regulates payroll deductions from wages

32. 31 CONTRACT WORK HOURS & SAFETY STANDARDS ACT Enacted in 1962 Overtime for all work in excess of 40 hrs/week on a covered project Applies to contracts > $100,000 

33. 32 CONTRACT WORK HOURS & SAFETY STANDARDS ACT Requires the assessment of liquidated damages @ $10 per day per violation Intentional violations = federal criminal misdemeanor

34. 33 CONTRACT WORK HOURS & SAFETY STANDARDS ACT Does not apply to contracts < $100K However, through Federal Labor Standards Act, overtime will probably be applicable

35. 34 FAIR LABOR STANDARDS ACT (Enforced by the Dept. of Labor) Enacted in 1938 Established Federal minimum wage rates Established maximum working hours Established minimum ages for workers HUD will refer FLSA matters to the DOL

36. why doesn’t the Department of Labor enforce them instead of HUD? So, if Congress passed all these Labor laws,

37. 36 REORGANIZATION PLAN 14 Executed March 13, 1950 Provides uniform approach to enforcement DOL coordinates administration of labor stds Gives Federal Agencies primary responsibility

38. 37 Code of Federal Regulations (CFR) - Title 29 Pt 1 – Determination of wage decisions Pt 3 – Copeland Act requirements Pt 5 – Labor standards provisions for contracts Pt 6 – Administrative proceedings Pt 7 – Practice before the Admin. Review Board

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40. 39 WAGE DECISION Stipulates the wage requirements for construction trades Must be incorporated in prime contract Required for all subcontracts Incorporate, do not include by “attachment” Must be posted at the job site

41. 40 A Wage Decision identifies the prevailing hourly wage requirements for all laborers and mechanics performing work on a covered project.

42. 41 Wage Decision Basics The wage decision will identify Work classifications Basic hourly rate of pay Fringe benefits

43. 42 $22.50 Base Rate + 4.25 Fringe Benefit $14.75 $18.65 Base + 3.50 FB $26.90 Base +5.00 FB $12.45

44. 43 DETERMINATION OF DAVIS-BACON WAGE DECISIONS Established by survey of contractors Established by geographic area Establishes the “prevailing” wage rate May be modified from time to time

45. 44 CHARACTER OF CONSTRUCTION Construction projects are broadly classified: Building - housing >4 stories; commercial facilities Highway - roads, sidewalks Residential - housing 1-4 stories Heavy - “catch-all” category

46. 45 WAGE DECISION “LOCK-IN” Generally, once “locked in” a wage decision cannot be modified during the life of the contract “Lock-in” usually occurs at contract award, with a few exceptions

47. 46 WAGE DECISION “LOCK-IN” Competitively Bid Contracts Lock-in at bid opening provided contract is awarded or construction has started within 90 days Must update wage decision if contract is awarded more than 90 days after bid opening

48. 47 WAGE DECISION “LOCK-IN” Negotiated Contracts Date the negotiated bid is accepted Lock-in provided contract is awarded or construction has started within 90 days Must update wage decision if contract is awarded more than 90 days after bid opening

49. 48 WAGE DECISION COMPONENTS Wage decision number Modification date State, county information Wage decision type Trade classifications Base Wage, and Fringe Benefits

50. 49 FRINGE BENEFITS Employer Contributions to: Health insurance Retirement Life insurance Apprenticeship and training

51. <- WD Number <- Construction Type <- Counties Mod Number & Publish Date <- Description

52. CLASSIFICATION RATE FRINGES

53. 52 CALCULATE FRINGE BENEFITS Example Base Rate = $31.94 Fringe = 3% + $11.86 3% of $31.94 = $0.96 Add: $31.94 $11.86 + $ 0.96 _________ = $44.76

54. 53 WAGE DECISION SOURCES Free through the GPO: –Http://www.Access.gpo/davisbacon/ or –www.wdol.gov

55. 54 WAGE DECISIONS Something M_ssing? Wage decisions are not always complete; Some classifications may be absent from the wage decision...

56. 55 ADDITIONAL CLASSIFICATIONS Standards for Consideration Work by classification being requested is not performed by a classification in the WD Classification is used in the area by construction industry, and Proposed wage + FB’s bears reasonable relationship to wage rates in the WD

57. 56 ADDITIONAL CLASSIFICATIONS Review DOL decisions for missing classifications Discuss with contractors early Submit (HUD 4230A) request for Additional Classification form after contract award to HUD Office of Labor Relations HUD will respond in writing 

58. 57 ADDITIONAL CLASSIFICATIONS Do not “borrow” classifications / wage rates from other wage decisions Contractor’s rights re: additional classifications Post new classification & rate Restitution payments & documentation requirements

59. 58 RECENT CHANGES ELIMINATION OF: Contractors submission of Employees’ Payroll Deductions Authorization Certification of Understanding Certificate of Fringe Benefits Statement Revision of: HUD form 4230A Report of Additional Classification and Rate

60. 59 COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM

61. 60 APPLICABILITY FACTORS CDBG Section 110 of the Housing and Community Development Act of 1974 determines the extent to which Davis-Bacon wage rates apply to construction activities. It states in part: 

62. 61 APPLICABILITY FACTORS CDBG …provided, that this section shall apply to the rehabilitation of residential property only if such property is designed for residential use for eight or more families…. 

63. 62 APPLICABILITY FACTORS CDBG HUD has a Dept of Justice ruling stating that the requirement for payment of prevailing wages only when federal funds are used to pay for “construction work.”

64. 63 APPLICABILITY FACTORS CDBG Remember that Construction financing may not only be limited to the act of paying for the construction work directly. -using CDBG assistance to pay the interest charged or - using CDBG funds to provide permanent financing (take-out loan)

65. 64 APPLICABILITY FACTORS CDBG However, because of the DOJ ruling, the following CDBG activities or “soft costs” do not trigger Davis-bacon requirements: - Real property acquisition, - Purchase of equipment, (13% ruling regarding installation expenses) - Architectural and engineering fees - Other services (legal, accounting, construction management), and

66. 65 APPLICABILITY FACTORS CDBG -Other non-construction items (furniture, business licenses, real estate taxes, and/or tenant allowances for such items).

67. 66 APPLICABILITY FACTORS CDBG Examples of “non residential” properties that may have less than 8 units, but trigger DBRA include: Conversion of a single family residence for transient use Conversion of a 2 unit townhouse for commercial use as a doctor’s offices

68. 67 APPLICABILITY FACTORS CDBG REVIEW …Construction work financed “in whole or in part…” Construction work over $2,000 Unit thresholds may also apply (8+ units) Soft costs generally do not trigger DB Volunteers: excluded (defined later)

69. 68 HOME PROGRAM

70. 69 APPLICABILITY FACTORS HOME The standard for coverage is “assisted” not financed... “Any contract for the construction of affordable housing with 12 or more units assisted with [HOME] funds...”

71. 70 APPLICABILITY FACTORS HOME Once triggered, DB requirements apply to the entire project, and (Refer to HUD Labor Relations Letter No. LR-96-02) Sweat equity participation is exempt

72. 71 VOLUNTEERS National Affordable Housing Act ‘90 Performs services voluntarily Do not receive compensation for services May be paid expenses, reasonable benefits, nominal fee for services Not otherwise employed at any time on the construction work [Section (b)’s]

73. 72 YOUTHBUILD PROGRAM Youthbuild trainees performing work under CDBG-funded construction activity – Minimum wages If working on Public housing units – requires HUD determined wages

74. 73 Public Housing Hope IV – Sec 12(a) Davis-Bacon rates apply to PH construction Preemption

75. 74 PUBLIC HOUSING APPLICABILITY FACTORS

76. 75 PUBLIC HOUSING Overview Construction, rehabilitation and maintenance work are covered by some type of prevailing wage requirement.... For properties subject to an Annual Contributions Contract,

77. 76 DEVELOPMENT U.S. Housing Act of 1937, Sec. 12(a) mandates the payment of Davis-Bacon prevailing wage rates to all laborers and mechanics engaged in the development of public housing

78. 77 DEVELOPMENT WORK IS Reconstruction; A substantial improvement in the quality or kind of original equipment and materials; Or remodeling that alters the nature or type of housing units falls within the purview of "development" (24 CFR 968.203).

79. 78 New construction

80. 79 A substantial improvement in the quality or kind of original equipment and materials

81. 80 MAINTENANCE U.S. Housing Act of 1937, Sec. 12(a) Payment of not less than prevailing wages, as determined or adopted by HUD, to all maintenance laborers and mechanics engaged in the operation of low-income housing/affordable housing projects

82. 81 MAINTENANCE work that involves the regular upkeep and preservation of buildings, grounds, and facilities.

83. 82 NON-ROUTINE MAINTENANCE work items that ordinarily would be performed on a regular basis in the course of upkeep of a property but have become substantial in scope because they have been put off

84. 83 NON-ROUTINE MAINTENANCE and that involve expenditures that would otherwise materially distort the level trend of maintenance expenses. replacement of equipment and materials rendered unsatisfactory because of normal wear and tear by items of substantially the same kind

85. 84 PUBLIC HOUSING SUMMARY Davis-Bacon Development & rehabilitation work HUD-Determined Non-Routine Maintenance Non-routine work, as defined in Labor Relations Letter LR 93-01 HUD-Determined Maintenance Routine, day-to-day maintenance of units

86. 85 PUBLIC HOUSING Applicability & Source of Funds The source of funding has no bearing on the applicability of prevailing wage requirements $Insurance proceeds $Grant or foundation funds $City or State funding $And more...

87. 86 PUBLIC HOUSING Exclusions from HUD-Determined requirements Periodic inspections or testing of equipment Testing for lead-based paint Installation, service or maintenance of leased equipment, fixtures or appliances Inspections, maintenance or service on equipment or fixtures owned by a utility

88. 87 L OCAL AGENCY RESPONSIBILITIES Follow along in your pamphlet - “A Practical Guide for States, Indian Tribes and Local Agencies

89. 88 LOCAL AGENCY RESPONSIBILITIES Designate appropriate enforcement staff Ensure that bid docs, contracts, & subcontracts comply with labor requirements Ensure contractor eligibility  Maintain full document of program compliance Ensure contractor’s rights to Due process

90. 89 LOCAL AGENCY RESPONSIBILITIES Review certified payrolls records (Streamlined Measures) Conduct employee interviews Take actions to correct labor standards concerns Obtain verification of apprenticeship registration Refer complex investigations to HUD, and Submit required reports

91. 90 Labor Relations File Documents Copy of executed contract Documentation of bid opening / contract award Documentation of Contractor eligibility (http://epls.arnet.gov) Documentation of construction start date Certified weekly payrolls Apprentice / trainee registrations Employee interviews Related correspondence / memoranda

92. 91 CONTRACTOR RESPONSIBILITIES

93. 92 PRINCIPAL CONTRACTOR Responsible for compliance of all subcontractors (including lower-tier subcontractors) Include labor provisions in all subcontracts, and Provide subcontractors with forms, guidance

94. 93 SUB-CONTRACTOR Prepare & submit certified weekly payrolls Instruct any sub-tier sub-contractors of responsibilities Review wage decision, request additional classifications, and Maintaining documentation

95. 94 CONTRACT REQUIREMENTS

96. 95 LABOR PROVISIONS Each contract subject to DBRA must contain labor standards (LS) clauses & the applicable wage decision LS clauses describe contractor responsibilities LS clauses provide remedies for noncompliance HUD uses standard forms for these clauses –CDBG and HOME programs, use form HUD-4010 and Public Housing Authorities, use form HUD 5370

97. 96 CONTRACT REQUIREMENTS

98. 97 PROCUREMENT Plan Project activities Consult with LCA Labor Officer upfront, especially regarding applicability questions Keep L/O informed of upcoming projects and changes in scope or funding  Document 10-day lock in check Ensure contract contains a copy of DOL decision and Labor Standards Provisions

99. 98 PROCUREMENT Inform L/O in advance of advertisements, bid opening, contract awards, etc. Keep L/O “in the loop” re: construction progress, and requests for payment Copy L/O on all key documents Obtain L/O’s concurrence for final payment

100. 99 ESSENTIAL CONCEPTS OF ENFORCEMENT: Classification Pay Overtime Laborers vs Mechanics

101. 100 Pay workers once per week A work week consists of 7 consecutive days Once begun, do not change the weekly cycle (Sun-Mon, Wed-Tue, etc.)

102. 101 Pay wage rates at or above those on wage decision for class of work performed For projects subject to CWHSSA (or FLSA) pay at least 1½ times regular rate of pay for all hours worked over 40 hours per week Post the wage decision

103. 102 DAVIS-BACON DEFINITIONS Laborer or Mechanic? Laborers & Mechanics mean anyone who is performing construction work on the project Supervisors are covered if they spend 20% or more of their time performing manual work Every person who performs work is considered “employed” regardless of any contractual relationship

104. 103 Who is “Employed?” Every person who performs work is considered “employed” regardless of any contractual relationship

105. 104 SPLIT CLASSIFICATIONS An employee performing work in more than one classification may be paid the wage rate specified for each classification only if accurate time records are kept. Otherwise, pay the employee the highest wage rate of the applicable classifications

106. 105 APPRENTICES & TRAINEES Only apprentices & trainees registered in an approved program may be paid less than the wage rate specified for their work classification “Approved program” means a program registered with the State Apprenticeship Agency 

107. 106 APPRENTICES & TRAINEES Ratio requirements apply, re: the maximum number of apprentices that may be on the job site Pre-apprentices not registered in a program must be paid the full journeyman rate for the classification of work they perform

108. 107 PIECE WORK Convert to hourly wage rate Total weekly wages  hours worked = effective hourly wage rate It is important that contractors keep good records of hours worked

109. 108 FRINGE BENEFITS Can include employer contributions to health insurance premiums, retirement contributions, life insurance, vacation, etc. Bona fide funded plans: common to the industry, paid directly in cash or into a fund, plan, or program on the employee’s behalf 

110. 109 FRINGE BENEFITS Does not include employer payments required by Federal, state or local law Unfunded plans - i.e. Kaiser dental, 401 K plans, etc. Discuss hour conversion rates Contractor must identify on certified payroll whether fringe benefits are, or are not paid

111. 110 OVERTIME Hours worked over 40 per week Applies to hours worked on the covered project Paid at 1½ times the regular rate of basic pay plus the straight-time rate of fringe benefits

112. 111 DEDUCTIONS Those deemed permissible by 29 CFR Part 3 Contractor’s Documentation

113. CERTIFIED WEEKLY PAYROLLS Streamlining Davis-Bacon

114. 113 For many contractors, the weekly certified payroll is the only Davis- Bacon paperwork they will need to submit!

115. 114 PAYROLL BASICS Optional WH347 form Compliance statement (certification) Payrolls are due weekly Identify first and final payroll “No Work” payrolls optional – but all weeks must be accounted 

116. 115 PAYROLL BASICS Payrolls must be complete & legible Prime contractor must review of payrolls for completeness Payroll retention – three years 

117. 116 PAYROLL BASICS Project & Contractor Information Contractor/sub-contractor name Business address Project name & number Week ending date Day & date for each day in the workweek Numbering payrolls (optional – but strongly recommended) 

118. 117 PAYROLL BASICS Employee Information Employee name, address, SSN Employee work classification Rate of pay Straight/Overtime hours worked per day, per week on THIS project 

119. 118 PAYROLL BASICS Wages & Deductions Gross wages earned Deductions from wages Net pay Statement of compliance – one for each weekly payroll

120. 119 WORKING SUBCONTRACTORS Payroll Reporting Requirement They are covered! May not certify to payment of own wages (may not sign own payrolls) Exception: Owners of business working with their crew

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127. 126 ENFORCEMENT Employee Interviews Payroll & Document Review

128. 127 ENFORCEMENT Investigations conducted by: DOL LCA or Referred to HUD/Labor Relations What to expect Notification to HUD Investigation of Records

129. 128 ENFORCEMENT Employee Interviews (Form HUD-11) Provides a check against payroll data Contractors must allow access Interviews are confidential 

130. 129 ENFORCEMENT Employee Interviews (Form HUD-11) Focus on projects / workers where violations are suspected or alleged Complaints / investigations may be developed based on interviews

131. 130 ENFORCEMENT Payroll Reviews Spot check payrolls Review for major trades Compare HUD-11s with payrolls Focus on falsification

132. 131 ENFORCEMENT Falsification Indicators Ratio of laborers to mechanics Too few or irregular hours Discrepancies in wage computations Extraordinary deductions 

133. 132 ENFORCEMENT Communicate routine review results by phone; document with “memo to file” Take necessary corrective action before problem grows 

134. 133 ENFORCEMENT Use resources for investigations Send questionnaires Target employee interviews Develop complaints 

135. 134 ENFORCEMENT The payrolls should be complete!! Resubmit for missing info such as employee addresses / Social Security No.’s Identify classifications not on wage decision; obtain additional classification as needed Certification statements – look for original signatures, deductions, and payment of fringe benefits 

136. 135 ENFORCEMENT Check for wage underpayments Check for undocumented apprentices & trainees Check for overtime worked at straight time rates Check for extraordinary payroll deductions 

137. 136 ENFORCEMENT CORRECTING VIOLATIONS Notify prime contractor In writing, insert contractor’s appeal rights Require appropriate documentation Withhold funds from the contractor, if necessary Document wage restitution of > $10 

138. 137 Wage restitution documentation –Submit corrected certified payroll –Obtain employee’s signature on payroll Submit 5.7 report to OLR if > $1000 per contractor ENFORCEMENT CORRECTING VIOLATIONS

139. 138 ENFORCEMENT Consequences Withhold funding Deposit contractor’s funds if matter is under appeal or workers cannot be found Referral to DOL for investigation Administrative sanctions - Debarment

140. 139 LABOR STANDARDS ENFORCEMENT REPORTS

141. 140 ENFORCEMENT REPORTS - I Case By Case (§5.7(a)) Employer underpays by  $1,000 Violations appear aggravated or willful Recommendations on debarment; CWHSSA liquidated damages

142. 141 ENFORCEMENT REPORTS - II Semi-Annual (§5.7(b)) Submit this report twice each year – Oct 1  Mar 31 – Apr 1  Sep 30 Contracts awarded within reporting period Enforcement activity – regardless of award

143. Contract Name / # Contract Amount Wage Decision No. - include Mod# Wage Decision Effective Date Contract Activity

144. 4. Complaints 5. Referrals 6. Wage Restitution Enforcement Activity

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146. 145 STANDARD OPERATING PROCEDURE (SOP) REVIEW 1.Obtain DB wage decisions online 2.Pre-construction conferences optional 3.Project Wage Decision Sheets 4.Eliminate unnecessary or duplicative processes 

147. 146 SOP REVIEW 5.Maintain enforcement file system 6.Target on-site interviews 7.Streamline payroll reviews 

148. 147 SOP REVIEW 8.Communicate routine reviews informally 9.Focus enforcement on willful violators. 10.Submit labor standards enforcement reports

149. 148 FOR MORE INFORMATION... Specific Davis-Bacon Related Act (statute) for the program involved DOL Regulations: 29 CFR; Parts 1, 3, 5, 6 & 7 Labor Relations Letters Labor Relations Desk Guides Labor Relations On the Mark! Series

150. 149 INFORMATION ONLINE HUD Office of Labor Relations www.hud.gov/offices/olr Davis-Bacon Wage Decisions www.access.gpo.gov/davisbacon HUDClips (Forms) www.hudclips.org

151. 150 INFORMATION ONLINE DOL Homepage www.dol.gov GSA On-Line Debarred List http://epls.arnet.gov

152. THANK YOU!

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