Complying with Federal

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1 What is the Davis-Bacon Act? Complying with Federal Prevailing Wage Requirements Mike Purdy Michael E. Purdy Associates, LLC (206) (office) (206) (cell) 1

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3 Agenda 3 1. What is the Davis-Bacon Act? 2. Check Your Federal Grant Requirements 3. When Do Federal Prevailing Wages Apply? 4. Federal vs. State Prevailing Wages 5. Effective Date for Prevailing Wages 6. Types of Prevailing Wage Rates 7. Fringe Benefits 8. Apprentices 9. Public Agency Responsibilities 10. Reviewing Payrolls 11. Typical Compliance Problems

4 What is the Davis-Bacon Act? 4 Senator James J. Davis (R PA) Rep. Robert L. Bacon (R NY)

5 What is the Davis-Bacon Act? Approved by Republican Congress and President in 1931 Herbert Hoover 5

6 What is the Davis-Bacon Act? Designed to protect communities and workers from non-local contractors underbidding local wage levels Originally a local bid preference law Currently supported strongly by organized labor 6

7 When Do Federal Prevailing Wages Apply? Type: Applies to public buildings or public works: Construction Alteration Repair Amount: For any construction contract in excess of $2,000 7

8 When Do Federal Prevailing Wages Apply? With any federal funding, regardless of dollar amount Federal vs. Local Funding Local Funds Federal Funds 8

9 Check Your Federal Grant Requirements 9 Davis-Bacon & Related Acts (DBRA) Many federal laws include a requirement to comply with the Davis-Bacon Act Contract Work Hours and Safety Standards Act (CWHSSA) Overtime requirements Copeland Anti-Kickback Act Prohibits contractors from inducing an employee to give up any of their wages

10 Federal Prevailing Wages in Bid Documents Include Federal Wage Determination in bidding documents and contract 10

11 Federal vs. State Prevailing Wages Both must be reviewed Higher of two wages applies More stringent requirement applies 11

12 Federal vs. State Prevailing Wages State Combined Wages & Fringe Benefits Overtime for work over 8 hours a day On-site work and specialty work prefabricated off-site Payrolls not required Frequency of worker payment not addressed Federal Separate Wages & Fringe Benefits Overtime for work over 40 hours a week On-site work only (including dedicated sites adjacent to site or for prefabrication if considered as a secondary construction site) Payrolls required Workers must be paid weekly 12

13 Effective Date for Prevailing Wages - Federal Modifications to Federal Prevailing Wages from time to time Effective Date: Bid opening date Unless a modification is published less than 10 days before bid opening date, and there is insufficient time to issue an addendum Must document inability to issue addendum 13 Applicable Regulation: 29 CRF 1.6 (c)(3)(i)

14 Effective Date for Prevailing Wages -State Modifications to State Prevailing Wages Twice a year Published beginning of February and August Effective Date: Bid submittal deadline Exception: Contract not awarded within 6 months of bid submittal deadline. Contract award date becomes effective date [WAC (3)(b)] Duration: Wages effective for entire project 14

15 Types of Prevailing Wage Rates Federal State Heavy Highway Commercial Building Residential Residential 15

16 Fringe Benefits Fringe Benefits include: Medical, dental, vision, life insurance Pensions or retirement accounts Vacation (direct to worker or to vacation fund) Apprentice training fund Paid holidays Fringe Benefits do not include: Contributions required by law Employee contributions to benefit 16 Fringe Benefit contributions must: Comply with regulations (ERISA, IRS, State, etc.)

17 Fringe Benefits Methods of payment: To an established benefit plan To worker as part of their hourly pay Calculating hourly benefit contributions: Based on the actual hours worked over a one year period State L&I February 28, 2013 Policy: ge/files/policies/benefitscalculationpolicy.pdf 17

18 Apprentices Registration: Must be registered as an apprentice in an apprenticeship program approved by the U.S. Department of Labor or Washington State Apprenticeship and Training Council (Labor and Industries) Wages: May be paid less than journeylevel wages 18

19 Apprentices Ratio: Employer may not exceed approved ratio of apprentices to journey-level workers 19 Website: TradesLicensing/Appr enticeship/programs/ Standards/default.asp

20 School District Responsibilities 1. Payrolls: Weekly certified payrolls from Contractor and all subcontractors Collect weekly Review weekly Enforce non-compliance Interviews: Conduct on-site wage interviews with workers Compare information with payrolls submitted

21 School District Responsibilities 3. Federal Postings: Ensure contractors and subcontractors post: Employee Rights poster (WH 1321) on site Applicable wage determination 4. State Postings:. Copy of approved Statement of Intent to Pay Prevailing Wages Contact information of L&I where complaint may be filed Applies to subcontractors also Applicable for all contracts over $10,000 21

22 School District Responsibilities 4. Tracking Subcontractors: Public agency must have internal mechanism to monitor and track what subcontractors are on site For payroll monitoring and State prevailing wage forms List. of all subcontractors with each pay application Use construction inspector records 22

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24 Reviewing Payrolls - Issues to Note 24 Classifications Number of hours worked Overtime pay Base wage rate used to calculate Apprentices Journey-level to apprentice Ratio Registered apprentice Rate consistent with progression period Fringe benefits Paid as part of hourly rate Paid into approved plan, fund, or program Combination of hourly rate and approved plan

25 Reviewing Payrolls - Issues to Note Workers paid at piecework rate Earnings each week must reflect hourly prevailing wages for all hours worked Hard to monitor Owner/operator exemption from prevailing wages Owners of trucks and other hauling equipment exempt Must be listed on payrolls 25

26 Reviewing Payrolls - Issues to Note Superintendent exemption from prevailing wages Manual or Physical Labor Performed: State Prevailing Wages Apply to: Federal Prevailing Wages Apply to: Less than 20% of hours No prevailing wages apply Prevailing wages apply More than 20% but less than 50% of hours Only hours spent performing manual or physical labor Prevailing wages apply 26 More than 50% of hours All hours on project Prevailing wages apply

27 Reviewing Payrolls - Issues to Note Authorized deductions Must be in writing Signed Statement of Compliance By individual authorized by owner of firm No work performed statements 27

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30 Typical Compliance Problems Not paying workers weekly Misclassification of workers Failure to pay full prevailing wage, including fringe benefits for all hours worked (including overtime hours) Not recording hours worker by an individual in two or more classifications Not reporting all hours worked Failure to maintain apprenticeship documentation Failure to submit weekly payrolls in a timely manner Failure to post Employee Rights poster and applicable wage determination 30

31 Michael E. Purdy Associates, LLC - Contact Information 31 Office Cell Web Blog (206) (206) mpurdy@mpurdy.com hael-e-purdy-associates- LLC/ PO Box 46181, Seattle, WA Mike Purdy Principal

32 Michael E. Purdy Associates, LLC - Brief Bio of Mike Purdy 32 Public Contracting Manager: Retired in February 2010 after more than 30 years City of Seattle, Contracting Manager Seattle Housing Authority, Contracting and Procurement Manager University of Washington, Contracts Manager Procurement and Contracting Consultant: Consultant and frequent speaker/trainer since 2005 Helps public agencies, contractors, and consultants in understanding complexities of public contracting issues Author of the popular Mike Purdy s Public Contracting Blog ( Education: Bachelor s degree in business and public administration and MBA from University of Puget Sound (Tacoma, WA) Master of divinity degree from Fuller Theological Seminary (Pasadena, CA)

33 Michael E. Purdy Associates, LLC - The Fine Print 1. Copyright: This document is copyrighted by Michael E. Purdy Associates, LLC. All rights reserved. No part of this document may be reproduced, modified, or transmitted in any form or by any means, electronic, mechanical or otherwise without prior written permission. 2. Not Legal Advice: The opinions, information, and interpretations provided in this document are the personal opinions of Mike Purdy, are for educational and informational purposes only, and do not represent legal advice. Mike Purdy is not an attorney. When appropriate, readers of this document are encouraged to consult with an attorney to obtain legal advice. 33