what is the davis-bacon act? complying with federal prevailing … · 2018-04-04 · 30 typical...

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What is the Davis-Bacon Act?Complying with Federal

Prevailing Wage RequirementsMike Purdy

Michael E. Purdy Associates, LLC

(206) 762-2699 (office)(206) 295-1464 (cell)

[email protected]

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Free e-mail Subscription to my Blog:http://PublicContracting.blogspot.com

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Agenda

1. What is the Davis-Bacon Act?2. Check Your Federal Grant Requirements3. When Do Federal Prevailing Wages Apply?4. Federal vs. State Prevailing Wages5. Effective Date for Prevailing Wages6. Types of Prevailing Wage Rates7. Fringe Benefits8. Apprentices 9. Public Agency Responsibilities10. Reviewing Payrolls11. Typical Compliance Problems

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What is the Davis-Bacon Act?

Senator James J. Davis (R – PA) Rep. Robert L. Bacon (R – NY)

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Approved by Republican Congress and President in 1931

Herbert Hoover

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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

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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

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When Do Federal Prevailing Wages Apply?

With any federal funding, regardless of dollar amount

Federal vs. Local Funding

Local Funds

Federal Funds

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Check Your Federal Grant Requirements

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

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Federal Prevailing Wages in Bid Documents

Include Federal Wage Determination in bidding documents and contract

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Federal vs. State Prevailing Wages

Both must be reviewed

Higher of two wages applies

More stringent requirement applies

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Federal vs. State Prevailing Wages

Workers must be paid weeklyFrequency of worker payment not addressed

Payrolls requiredPayrolls not required

On-site work only (including dedicated sites adjacent to site or for prefabrication if considered as a secondary construction site)

On-site work and specialty work prefabricated off-site

Overtime for work over 40 hours a week

Overtime for work over 8 hours a day

Separate Wages & Fringe BenefitsCombined Wages & Fringe Benefits

FederalState

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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

Applicable Regulation:– 29 CRF 1.6 (c)(3)(i)

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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 296-127-011 (3)(b)]

Duration: Wages effective for entire project

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Types of Prevailing Wage Rates

ResidentialResidential

Building

Highway Commercial

Heavy

StateFederal

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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

Fringe Benefit contributions must:– Comply with regulations (ERISA, IRS, State, etc.)

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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:

http://www.lni.wa.gov/TradesLicensing/PrevWage/files/Policies/BenefitsCalculationPolicy.pdf

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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 journey-level wages

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Apprentices

Ratio: Employer may not exceed approved ratio of apprentices to journey-level workers

Website:http://www.lni.wa.gov/TradesLicensing/Apprenticeship/Programs/Standards/default.asp

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School District Responsibilities

1. Payrolls: Weekly certified payrolls from Contractor and all subcontractors– Collect weekly– Review weekly– Enforce non-compliance

2. Interviews: Conduct on-site wage interviews with workers– Compare information with payrolls submitted

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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

.

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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

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Reviewing Payrolls- Issues to Note

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

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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

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Superintendent exemption from prevailing wages

All hours on project

Only hours spent performing manual or physical labor

No prevailing wages apply

State Prevailing Wages Apply to:

Prevailing wages apply

More than 50% of hours


More than 20% but less than 50% of hours


Less than 20% of hours

Federal Prevailing Wages Apply to:

Manual or Physical Labor Performed:

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Authorized deductions– Must be in writing

Signed Statement of Compliance– By individual authorized by owner of firm

No work performed statements

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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

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Michael E. Purdy Associates, LLC- Contact Information

Mike PurdyPrincipal

https://www.facebook.com/pages/Michael-E-Purdy-Associates-LLC/92090808667

http://www.linkedin.com/in/mpurdy

http://twitter.com/#!/MikePurdy

PO Box 46181, Seattle, WA 98146

http://PublicContracting.blogspot.comBlogwww.mpurdy.comWeb [email protected](206) 295-1464Cell(206) 762-2699Office

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Michael E. Purdy Associates, LLC- Brief Bio of Mike Purdy

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

(http://PublicContracting.blogspot.com)

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)

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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.