Labor Compliance Certification Program Audit Process I Presented by Elvis Tran & Cynthia Hernandez
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1 Labor Compliance Certification Program Audit Process I Presented by Elvis Tran & Cynthia Hernandez
2 Follow Up of On-Site Visits Review forms and pictures for discrepancies Classification Check Apprentice Information Cross Check Documents Two (2) Weeks After Initiate a Case Log Findings & Follow-ups 41
3 Observation Form LC Interview Form Sign in Sheet Contractor Worker s Name Picture Certified Payroll Report Site Information 42
4 Misclassification of Workers Each worker must be paid the applicable Prevailing Wage Rate within the specified scope of work for the craft performed. To confirm you are properly paying the applicable craft rate within the scope of work, go to the Department of Industrial Relations website. 43
5 Misclassification of Workers cont. For example: The craft of Electrician has many sub-trades, which consists of Communication & System Installer, Communication & System Technician, Sound Electrician, Inside Wireman, etc. If a worker is performing work that involves voice, data, and video communications work and the installation of less than ten (10) feet of conduit or raceway within the computer closet, the minimum rate of pay for this worker would be that of the Communication and System Installer. If a worker is performing work that involves the installation of conduit or raceway in excess of ten (10) feet, the minimum rate of pay would be that of an Inside Wireman. 44
6 Holidays, Scope of Work, Travel & Subsistence Holidays, Scope of Work, Travel & Subsistence Statewide Journeyman Rates 45
7 Holidays, Scope of Work, Travel & Subsistence - Subtrades Los Angeles County Scope of Work 46
8 Using the Correct Wage Determination Statistics & Research Statistics & Research 47
9 Using the Correct Wage Determination Prevailing Wage Determinations 48
10 Using the Correct Wage Determination Journeyman Determination Important Notices Superseded Determinations Important Notice 49
11 Using the Correct Wage Determination Journeyman Determinations Statewide Southern California County Determinations (subtrades) County Determination (subtrades) Shift Differential Important Notices 50
12 Using the Correct Wage Determination Step Four Los Angeles Journeyman Determination 51
13 Using the Correct Wage Determination Basic Hourly Rate Issue Date & Expiration Date Employer Payments Straight Time Total Hourly Rate Contract Provisions Predetermined Increase Los Angeles County Prevailing 52
14 Prevailing Wage Determination Selecting the Correct Prevailing Wage Determination Using the Bid Advertisement date to determine the correct Prevailing Wage Determination Prevailing Wage Determination naming convention yyyy-1 and yyyy-2 Issued Biannually February 22 and August 22 Effective date of each Prevailing Wage Determination 10 days after issue date 53
15 Using the Correct Wage Determination The correct prevailing wage determination for a project is determined by the advertisement date of the invitation to bid DIR issues determination 2 times a year February 22 (yyyy-1) & August 22 (yyyy-2) NOTE: According to the Department of Industrial Relations, each Prevailing Wage Determination is effective 10 days after its issued date. EXAMPLES: Bid Advertisement Dates February 22, 2008 August 23, 2008 April 23, 2008 September 9, 2008 Correct Wage Determination
16 Using the Correct Wage Determination SUPERSEDED AS OF 3/4/2009 CRAFT (JOURNEY LEVEL) ISSUE DATE EXPIRATION DATE # BRICKLAYER, STONEMASON, MARBLE MASON, CEMENT BLOCKLAYER, POINTER, CAULKER, CLEANER If the issue date of the general prevailing wage determination for a Bricklayer, Marble Mason is August 22, 2008 (LOS ), what is the effective date? A 09/01/2006 B 09/01/2007 C 09/01/2008 D None of the above GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF INDUSTRIAL RELATIONS PURSUANT TO CALIFORNIA LABOR CODE PART 7, CHAPTER 1, ARTICLE 2, SECTIONS 1770, 1773 AND FOR COMMERCIAL BUILDING, HIGHWAY, HEAVY CONSTRUCTION AND DREDGING PROJECTS LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS EMPLOYER PAYMENTS STRAIGHT-TIME BASIC HOURLY RATE HEALTH AND WELFARE PENSION VACATION/ HOLIDAY Answer C 09/01/2008 (10 days after issue date of 08/22/2008) TRAINING OTHER PAYMENTS HOURS TOTAL HOURLY RATE 8/22/ /30/2009** A B C
17 The bid advertisement date of LA New High School #1 is 02/24/09 & 02/27/09. SUPERSEDED AS OF 3/4/2009 CRAFT (JOURNEY LEVEL) ISSUE DATE EXPIRATION DATE # BRICKLAYER, STONEMASON, MARBLE MASON, CEMENT BLOCKLAYER, POINTER, CAULKER, CLEANER GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF INDUSTRIAL RELATIONS PURSUANT TO CALIFORNIA LABOR CODE PART 7, CHAPTER 1, ARTICLE 2, SECTIONS 1770, 1773 AND FOR COMMERCIAL BUILDING, HIGHWAY, HEAVY CONSTRUCTION AND DREDGING PROJECTS LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS EMPLOYER PAYMENTS STRAIGHT-TIME BASIC HOURLY RATE HEALTH AND WELFARE PENSION VACATION/ HOLIDAY TRAINING OTHER PAYMENTS What is the appropriate general prevailing wage determination for a Bricklayer, Marble Mason based on the above bid advertisement date? Issue Date Effective date A LOS (02/22/08 03/03/08) B LOS (08/22/08 09/01/08) C LOS (02/22/09 03/04/09) HOURS TOTAL HOURLY RATE 8/22/ /30/2009** A B C D All of the above Answer B LOS
18 The bid advertisement date of LA New High School #9 is 08/24/08 & 08/27/08. SUPERSEDED AS OF 9/1/2008 GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF INDUSTRIAL RELATIONS PURSUANT TO CALIFORNIA LABOR CODE PART 7, CHAPTER 1, ARTICLE 2, SECTIONS 1770, 1773 AND FOR COMMERCIAL BUILDING, HIGHWAY, HEAVY CONSTRUCTION AND DREDGING PROJECTS LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS EMPLOYER PAYMENTS STRAIGHT- TIME CRAFT (JOURNEY LEVEL) ISSUE DATE EXPIATI ON DATE BASIC HOURL Y RATE HEAL TH AND WELF ARE PENSI ON VACAT ION/ HOLID AY TRAINI NG OTHE R PAYM ENTS HOU RS TOTA L HOU RLY RATE # BRICKLAYER, STONEMASON, MARBLE MASON, CEMENT BLOCKLAYER, POINTER, CAULKER, CLEANER 8/22/ /30/200 8** A B C Today is 09/05/08, what is the appropriate general prevailing wage determination for a Bricklayer, Marble Mason based on the above bid advertisement date? Issue Date A LOS (08/22/07 09/01/07) B LOS (02/22/08 03/03/08) Effective date C LOS (08/22/08 09/01/08) D B & C Answer B LOS (Effective date is 03/03/08) 57
19 Using the Single (*) or Double Asterisk (**) Rule The expiration date of each Prevailing Wage Determination will be followed by a single (*) or double (**) asterisk. A single (*) asterisk indicates that the rate for that specific classification will be in effect for the duration of the project. A double (**) asterisk indicates that the rate for that specific classification is subject to change according to Predetermined Increases. 58
20 Using the Single Asterisk (*) Rule Prevailing Wage Determination 59
21 Using the Double Asterisk (**) Rule Prevailing Wage Determination Double Asterisk** 60
22 Applying Predetermined Increases As mentioned before, Prevailing Wage Determinations followed by double asterisks are subject to Predetermined Increases. Amount of Increase indicates how much the Prevailing Wage Rate will increase. Allocation for these increases can be adjacent to the specified subtrades determination. Date of Next Change refers to the date in which the increase is scheduled to change. There may be more than one Predetermined Increase scheduled. 61
23 Applying Predetermined Increases Southern California Journeyman Rate Increase No Increase * 62
24 Applying Predetermined Increases Amount of Predetermined Increase & Effective Date 63
25 Applying Predetermined Increases Predetermined Increases (subtrades) Date of Next Change Amount of Increase Footnotes Predetermined Increase Tab 64
26 Utilizing the Footnotes in the Wage Determination Footnotes are associated with the employer payments and/or fringe benefit packages that constitute a prevailing wage determination. Applicable footnotes are usually identified by an alphabetical character(s). Each Footnote will have its own distinct meaning. It is important to understand what each footnote means and apply it to the proper Prevailing Wage Rate. Let s take a look at an actual prevailing wage determination 65
27 Utilizing the Footnotes in the Wage Determination Los Angeles County Prevailing Wage Determination (Footnotes) Footnotes Footnotes 66
28 Utilizing the Footnotes in the Wage Determination Column A Los Angeles County Prevailing Wage Determination (Footnotes) Footnotes Footnote Meaning Predetermined Increases Footnotes 67
29 Important Notices & Advice Letters Important Notices issued by the DIR contain important information regarding modifications or changes to the Prevailing Wage Determination The DIR also issues Advice Letters (previously known as Precedential Public Works Decisions) These letters provide an ongoing advisory service only. Let s take a look at the DIR website so that I may show you how to find these notices 68
30 Important Notices Journeyman Determination Important Notices 69
31 Important Notices Important Notice 70
32 Advice Letters Advice Letters DIR Website 71
33 DIR Response Letters to LAUSD DIR Decisions & Opinions 72
34 Calculating the Correct Wage Determination Boilermaker-Blacksmith Prevailing Wage Determination Issue Date Expiration Date Employer Payments Basic Hourly Rate Total Hours Total Hourly Rate 73
35 Calculating the Correct Wage Determination Boilermaker-Blacksmith Prevailing Wage Determination LOS
36 Calculating the Correct Wage Determination Boilermaker-Blacksmith Prevailing Wage Determination LOS Basic Hourly Rate: $37.99 Employer Payments: H&W $8.27 Pension $7.50 Vac/Hol $1.60 Training $0.50 Other $0.24 Total Employer Payments: $18.11 Straight-Time Hourly Rate: $
37 Calculating the Correct Wage Determination Boilermaker-Blacksmith Prevailing Wage Determination LOS Boilermaker-Blacksmith ST OT (1 1/2 X) DT (2X) Basic Hourly Rate $ $ $ Employer Payments H&W $ 8.27 $ $ Pension b $ 7.50 $ $ Vacation/Holiday b $ 1.60 $ $ Training $ 0.50 $ $ Other Payments $ 0.24 $ $ Total Employer Payments $ $ $ Total Hourly Rate $ $ $ b Contribution is factored at the applicable overtime multiplier for each overtime hour worked. Daily & Saturday Overtime Rate: $ Sunday Double Time Rate: $
38 Calculating the Correct Wage Determination GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF INDUSTRIAL RELATIONS SUPERSEDED AS OF 9/1/2008 PURSUANT TO CALIFORNIA LABOR CODE PART 7, CHAPTER 1, ARTICLE 2, SECTIONS 1770, 1773 AND FOR COMMERCIAL BUILDING, HIGHWAY, HEAVY CONSTRUCTION AND DREDGING PROJECTS LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS EMPLOYER PAYMENTS STRAIGHT-TIME OVERTIME HOURLY RATE CRAFT (JOURNEY LEVEL) ISSUE DAE EXPIRATION DATE BASIC HOURLY RATE HEALTH AND WELFARE PENSION VACATION/ HOLIDAY TRAINING OTHER PAYMENTS HOURS TOTAL HOURLY RATE DAILY SATURDAY SUNDAY AND HOLIDAY # TILE FINISHER 8/22/ /31/2008** V W X Y V INCLUDES AMOUNT WITHHELD FOR ADMINISTRATIVE DUES. Predetermined Increases LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS INCREASE 1 INCREASE 2 INCREASE 3 INCREASE 4 CRAFT (JOURNEY LEVEL) ISSUE DATE EXPIRATION DATE DATE OF NEXT CHANGE AMOUNT OF INCREASE DATE OF NEXT CHANGE AMOUNT OF INCREASE DATE OF NEXT CHANGE AMOUNT OF INCREASE DATE OF NEXT CHANGE AMOUNT OF INCREASE TILE FINISHER 8/22/ /31/2008** 6/1/2008 $1.70 W 6/1/2009 $1.75 X W $1.25 TO BASIC HOURLY RATE, $0.25 TO HEALTH AND WELFARE, $0.10 TO PENSION, $0.02 TO TRAINING, AND $0.08 TO OTHER. X $1.30 TO BASIC HOURLY RATE, $0.25 TO HEALTH AND WELFARE, $0.15 TO PENSION, $0.02 TO TRAINING, AND $0.03 TO OTHER.
39 Calculating the Correct Wage Determination LOS Predetermined Increases Tile Finisher Expired Date Date of Next Change Total Date of Next Change Total 05/31/2008** 6/1/2008 Increased 6/1/2009 Increased Basic Hourly Rate $ $ 1.25 $ $ 1.30 $ Health and Welfare $ 5.95 $ 0.25 $ 6.20 $ 0.25 $ 6.45 Pension $ 1.35 $ 0.10 $ 1.45 $ 0.15 $ 1.60 Vacation/Holiday $ - $ - $ - $ - $ - Training $ 0.21 $ 0.02 $ 0.23 $ 0.02 $ 0.25 Other Payments $ 0.24 $ 0.08 $ 0.32 $ 0.03 $ 0.35 ST Total Hourly Rate $ $ 1.70 $ $ 1.75 $ /1/2008 $1.70 W = $1.25 TO BASIC HOURLY RATE, $0.25 TO HEALTH AND WELFARE, $0.10 TO PENSION, $0.02 TO TRAINING, AND $0.08 TO OTHER. 6/1/2009 $1.75X = $1.30 TO BASIC HOURLY RATE, $0.25 TO HEALTH AND WELFARE, $0.15 TO PENSION, $0.02 TO TRAINING, AND $0.03 TO OTHER. 78
40 What are the three (3) components to the prevailing wage? 3 Components of Prevailing Wage Basic Hourly Rate Fringe Benefit Payments (H&W, Pension, Vacation/Holiday, Other Payments) Training Fund Paid directly to the Worker Paid directly to the Worker or appropriate Trust Fund For Apprenticeable Craft, paid to the California Apprenticeship Council or an approved Apprenticeship Program 79
41 General Prevailing Wage Determination & Footnotes SUPERSEDED AS OF 3/4/2009 CRAFT (JOURNEY LEVEL) ISSUE DATE EXPIRATION DATE GENERAL PREVAILING WAGE DETERMINATION MADE BY THE DIRECTOR OF INDUSTRIAL RELATIONS PURSUANT TO CALIFORNIA LABOR CODE PART 7, CHAPTER 1, ARTICLE 2, SECTIONS 1770, 1773 AND FOR COMMERCIAL BUILDING, HIGHWAY, HEAVY CONSTRUCTION AND DREDGING PROJECTS LOCALITY: LOS ANGELES COUNTY DETERMINATION: LOS EMPLOYER PAYMENTS STRAIGHT-TIME BASIC HOURLY RATE HEALTH AND WELFARE PENSION VACATION/ HOLIDAY TRAINING OTHER PAYMENTS HOURS TOTAL HOURLY RATE DAILY OVERTIME HOURLY RATE SATURDAY SUNDAY AND HOLIDAY # BRICKLAYER, STONEMASON, MARBLE MASON, CEMENT BLOCKLAYER, POINTER, CAULKER, CLEANER # DRYWALL FINISHER 8/22/ /30/2009** A B C D D G DRYWALL FINISHER 2/22/ /30/2008** H I * EFFECTIVE UNTIL SUPERSEDED BY NEW DETERMINATION ISSUED BY THE DIRECTOR OF INDUSTRIAL RELATIONS. CONTACT DIVISION OF LABOR STATISTICS AND RESEARCH (415) FOR NEW RATES ** THE RATE TO BE PAID FOR WORK PERFORMED AFTER THIS DATE HAS BEEN DETERMINED. IF WORK WILL EXTEND PAST THIS DATE, THE NEW RATE MUST BE PAID AND SHOULD BE INCORPORATED IN CON # INDICATES AN APPRENTICEABLE CRAFT. EFFECTIVE AS OF JULY 1, 2008, THE ISSUANCE AND PUBLICATION OF THE PREVAILING WAGE APPRENTICE SCHEDULES/APPRENTICE WAGE RATES HAVE BEEN RE & THE BASIC HOURLY RATE AND EMPLOYER PAYMENTS ARE NOT TAKEN FROM A COLLECTIVE BARGAINING AGREEMENT FOR THIS CRAFT OR CLASSIFICATION. A INCLUDES AMOUNT WITHHELD FOR DUES CHECK OFF. B INCLUDED IN STRAIGHT-TIME HOURLY RATE. C SATURDAYS IN THE SAME WORK WEEK MAY BE WORKED AT STRAIGHT-TIME IF JOB IS SHUT DOWN DURING THE NORMAL WORKWEEK DUE TO INCLEMENT WEATHER, OR REASONS BEYOND THE CONTROL D RATE APPLIES TO THE FIRST 2 DAILY OVERTIME HOURS AND THE FIRST 8 HOURS ON SATURDAY ONLY; ALL OTHER TIME IS PAID AT THE SUNDAY AND HOLIDAY OVERTIME HOURLY RATE. G RATE ONLY APPLIES TO WORK PERFORMED IN ANTELOPE VALLEY. H INCLUDES AMOUNT WITHHELD FOR WORKING DUES. I RATE APPLIES TO FIRST 8 HOURS ONLY. DOUBLE TIME THEREAFTER. SATURDAYS IN THE SAME WORK WEEK MAY BE WORKED AT STRAIGHT-TIME IF JOB IS SHUT DOWN DURING THE NORMAL WORK WEE 80
42 What is the training fund amount $0.30 $ a contractor must pay to the California Apprenticeship Council or an approved apprenticeship program funds based on LOS General Prevailing Wage Determination for the classification of a Bricklayer, Marble Mason? Answer: $
43 What is the straight-time Total Hourly Rate $ $46.46 for a Bricklayer, Marble Mason based on LOS General Prevailing Wage Determination? Answer - $46.46 Basic $35.46 Fringe Benefits $10.70 Training Fund $ 0.30 ST Total Hourly Rate: $
44 Can overpayment on the basic hourly rate apply toward fringe benefit payments? Why? Answer Yes, the balance can either be paid to the worker as wages or offset by credit for fringe benefits. (CCR 16200(a)(3)(I)) Can overpayment on the basic hourly rate apply toward the training fund? Why? Answer No, the training fund must be paid to the California Apprenticeship Council or an approved apprenticeship program for an apprenticeable craft. 83
45 Can overpayment on the training fund apply toward fringe benefit payments? Why? Answer No, because the payment required by section is distinct from the per diem wages due to workers under section , and must be distinguished from apprenticeship or training programs offered as an employee fringe benefit under section , subdivision (a)(6). It is not a direct employee fringe benefit since it is never paid to the worker and may be paid to programs that do not necessarily have a direct connection to the workers employed on the project. 84
46 Assume for this question that the fringe benefits are not paid directly to the worker. Can overpayment on fringe benefits apply toward the basic hourly rate? Why? Answer (CCR 16200(a)(3)(I)) No, an employer cannot pay a worker less than the basic hourly rate. 85
47 Bricklayer is an apprenticeable craft. A contractor directly paid its employees the training fund contribution instead of paying to the applicable apprenticeship training program. Is this contractor still required to pay into a training fund? Answer Yes
48 DETERMINATION: NAP Painter Brush and Spray Basic Fringe Benefits Training Funds Straight-Time $29.61 $13.54 $.25 $43.40 Assume that fringe benefits are paid to a trust fund. Based on the above general prevailing wage rate for the classification of a Painter (Brush and Spray), which answer is in compliance with the prevailing wage requirement? Basic Fringe Benefits Training Fund Straight-Time A $ $ $ 0.25 $ B $ $ $ 0.25 $ C $ $ $ 1.00 $ D All of the above 87
49 Answer B (CCR 16200(a)(3)(I)) & DBS Painting, Inc. case (page 5, 6,& 7) Why? A Underpayment of basic wage rate. Overpayment of fringe benefits cannot apply toward basic wage rate because an employer cannot pay a worker less than the basic hourly rate. B C Overpayment of basic rate can apply toward fringe benefits because balance can either be paid to the painter as wages or offset by credit for fringe benefits. (CCR 16200(a)(3)(I)) Overpayment of training fund cannot apply toward underpayment of fringe benefits because it does not directly benefit the painter. 88
50 CPRs & Fringe Benefits Hours Reconciliation Month/Year January 2005 Name Craft/Trade 01/09/05 01/16/05 01/23/05 01/30/05 01/31/05 Total CPR Hours Total FB Hours Paid Difference Worker 1 Asbestos Worker 2 Inside Wireman (10) Worker 3 Laborer Worker 4 Asbestos (2) Worker 5 Inside Wireman
51 Hourly Rate Sheet 90
52 Individual Worker Audit Worksheet 91
53 Fact Sheet 92
54 Fact Sheet 93
55 Audit Summary 94
56 Questions & Answers 95
57 Audit Process II Presented by: Ronald Valles Labor Compliance Officer 96
58 Audit Process Notification to Contractor of Audit When an audit has been initiated, the Contractor and (if any) Subcontractor shall be notified, via certified mail, that an audit has been initiated. Contractor s Obligation to Submit Documentation The affected Contractor(s) will be notified, via certified mail, of the basic records, such as check stubs, cancelled checks, time cards, proof of fringe benefit contributions, etc., that they are required to submit for the audit. 97
59 Audit Process cont. Pre-Withhold Meeting with Contractor The purpose of the pre-withhold meeting is to: Review and discuss the initial audit results with the Contractor(s). Inform the Contractor(s) of his/her right to administratively appeal an assessment. Schedule a due date (10 days) for any mitigating evidence to be submitted by the Contractor(s). 98
60 Audit Process Cont. Contractor Accepts / Rejects Final Audit Findings After a review and consideration of any mitigating evidence submitted by the Contractor, the audit findings will be finalized. A letter is sent to the Contractor with directions on how to make the payments along with the finalized audit. In the event that a resolution cannot be reached between Los Angeles Unified School District and the contractor(s), the case is then forwarded to the State Labor Commissioner for approval of the Request for Approval of Forfeitures and Penalties. 99
61 Submitting a Case to the State Request for Formal Withhold The LCD must submit, in writing, a Request for Approval of Forfeitures and Penalties to the State Labor Commissioner. Notice of Withholding of Contract Payments Upon receipt of approval, the LCD will place a Notice of Withholding of Contract Payments against the affected contract(s). Contractor s Right to Settlement Meeting The affected Contractor(s) is given thirty (30) days, from being served with the Notice of Withholding of Contract Payments, to request a Settlement Meeting with the LCD. Contractor s Request for a Formal Hearing The affected Contractor(s) has sixty (60) days from being served with the Notice of Withholding of Contract Payments, to request a hearing. 100
62 Notice of Withholding of Contract Payments 101
63 Notice of Withholding of Contract Payments cont. 102
64 Submitting a Case to the State cont. Request for Approval of Forfeitures and Penalties 6 0 d a y s Issued a Notice of Withholding of Contract Payments 30 days Contractor s Rights to Settlement Meeting Request for Formal Hearing 103
65 Submitting a Case to the State cont. Contractor s Right to Review Evidence The affected Contractor(s) has the right to review the evidence compiled by the LCD that can be used at the hearing. Liquidated Damages After sixty (60) days following the service of the Notice of Withholding of Contract Payments, the affected Contractor(s) and the bonding company shall be liable for liquidated damages equal to the amount of back wages owed and training fund. Announcement of the State s Decision The State s decision will be announced within forty-five (45) days of the conclusion of the hearing. Contractor s Right to Appeal Affected Contractors may appeal the decision of the Director by filing a petition for a writ of mandate to the appropriate Superior Court within forty-five (45) days after the decision. 104
66 Common Violations & How to Avoid Them A. Using the Incorrect Wage Determination B. Not understanding the Double Asterisk (**) Rule C. Not applying Predetermined Increases D. Ignoring the footnotes in the Wage Determination E. Not utilizing the Important Notices issued by the Department of Industrial Relations (DIR) and Advice Letters F. Failure to submit Certified Payroll Reports G. Misclassification of Workers H. Not following Apprenticeship Requirements 105
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