u.s. department of labor wage and hour division 2011 davis-bacon act webinar for contracting...

U.S. Department of LaborWage and Hour Division

2011 Davis-Bacon Act Webinar for Contracting Officials



Presenters

Jade Banks, National Labor Advisor

U.S Housing and Urban Development

Rex Elliott, Contractor Industrial Relations Officer

National Aeronautics and Space Administration

Tim Helm, Chief, Government Contracts Enforcement

U.S. Department of Labor


Internet Sites

Wage Determinations – http://www.wdol.gov

Wage and Hour Division - http://www.dol.gov/whd

Office of the Administrative Law Judges Law Library - http://www.oalj.dol.gov

Administrative Review Board - http://www.dol.gov/arb

Debarred Bidders List - http://www.epls.gov

HUD – http://www.HUD.gov/offices/olr


Code of Federal Regulations29 CFR Part

1 - Procedures for Predetermination of Wage Rates under the Davis-Bacon Act

3 - Payment & Reporting of Wages on Federal Construction Contracts

4 - Federal Service Contracts

5 - Labor Standards Provisions Applicable to Federal Construction Contracts

6 - Rules of Practice for Administrative Proceedings


Code of Federal Regulations29 CFR Part

7 & 8 - Rules for DBA/SCA appeals before the ARB

525 - FLSA (Workers with Disabilities)

531 - FLSA (Credit for tips, meals, & lodging)

541 - FLSA (Exempt - Salaried employees)

778 - FLSA (Overtime)

785 - FLSA (Hours Worked)


Labor Standards Statutes

The Davis-Bacon Act (DBA)

Davis-Bacon and Related Acts (DBRA)

Contract Work Hours and Safety Standards Act (CWHSSA)

Copeland “Anti-Kickback” Act (CA)

Walsh-Healey Public Contracts Act (PCA)

McNamara-O’Hara Service Contract Act (SCA)


The Davis-Bacon Act

(DBA)


DBA

Enacted in 1931

Amended in 1935 and 1964

Protects communities and workers from non-local contractors underbidding local wage levels


DBA Requirements

Payment of locally “prevailing wages” and “fringe benefits” to laborers and mechanics, as determined by the U.S. Department of Labor (DOL)

Applies to direct Federal and District of Columbia contracts


DBA Requirements

Applies to “laborers” and “mechanics” of contractors and subcontractors

Performing work on the “site of the work”

Must be paid not less often than weekly

Wage scale must be posted at the job site


Coverage of the DBA

Applies to contracts in excess of $2,000 to which the Federal Government or the District of Columbia is a party for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works.


Criteria For Considering DBA Coverage

Is the contract an agreement to which the U.S. or District of Columbia is a party?

Is the agreement a “contract for construction”?

Is the “contract for construction” a contract for construction of a public building or public work of the U.S. or the District of Columbia?


The Davis-Bacon Related Acts

(DBRA)


DBRA

Davis-Bacon (DB) requirements extend to numerous “related Acts” that provide federal assistance by:GrantsLoansLoan guaranteesInsurance


DBRA Examples

HUD financed construction of low-income housing projects

Federal Highway Administration provides grants to states for reconstruction of roads and bridges on Federal-aid highways


Distinguishing DBA and DBRA

Examples of DBA ProjectsVA hospitalFederal office building (GSA)Military base housing (DOD)National Park road (Dept. of Interior)


Distinguishing DBA and DBRA (cont’d.)

Examples of DBRA ProjectsHUD - assisted housing construction projectEPA - assisted water treatment plant construction

project


Lease Construction Contracts Factors to determine DBA coverage

Length of the lease Extent of government involvement in construction

project Extent construction will be used for private rather than

public purposes Extent construction costs will be paid for by lease

payments,

and Whether it is written as lease to evade DBA


Fair Labor Standards Act

(FLSA)


Terms Used in FLSA

Workweek - a period of 168 hours during seven consecutive 24-hour period

Hours worked - employees must be paid for all hours worked in a workweek

Hourly rate - regular rate of an employee paid by the hour


FLSA Requirements

Payment of minimum wage (29 CFR Part 531)

Overtime pay for time worked over 40 hours in a workweek (29 CFR Part 778)

Recordkeeping (29 CFR Part 516)

Exceptions and Exemptions (29 CFR Parts 525 & 541)


FLSA Minimum Wage

Effective July 24, 2007 = $5.85




Exemptions

Provides for non-payment of minimum wage (MW) and/or overtime (OT)

Based on activities performed, not titles

Applies on a workweek basis


Exemptions - Examples Exempt salaried employees (MW & OT)

Interstate truck drivers (OT)

Computer professionals paid at least $27.63 per hour (OT)


Recordkeeping

Protects employer Does not have to be kept in any particular

form Must accurately reflect work time the

employee works Must be maintained for three years Posting of FLSA poster


Independent Contractors(Factors to Determine Relationship)

Extent to which services rendered are an integral part of principal’s business

Permanency of relationship

Amount of alleged contractor’s investment in facilities and equipment

Nature and degree of control by principal


Independent Contractors(Factors to Determine Relationship)

Alleged contractor’s opportunities for profit and loss

Amount of initiative, judgment, or foresight in open market competition required for the success of claimed independent contractor, and

Degree of independent business organization/operation


Contract Work Hours and Safety Standards Act

(CWHSSA)


Purpose of CWHSSA(40 U.S.C. 3701 et seq.)

Enacted in 1962 - consolidated a number of “eight hour” laws that provided for overtime pay on federally financed contracts employing “laborers” and “mechanics”

In 1986, the federal daily overtime requirement was repealed to require overtime pay only after 40 hours a week

Both CWHSSA and FLSA require overtime pay for work over 40 hours in a workweek


Requirements of CWHSSA

Requires overtime pay for laborers, mechanics, guards, and watchmen at a rate of one and a half times the basic rate of pay for hours worked in excess of 40 in a workweek on covered contracts

Liquidated damages can be assessed at a rate of $10 per day for each laborer or mechanic not paid proper overtime


Coverage of CWHSSA

Covers contracts over $100,000 that require or involve the employment of “laborers” and “mechanics” on: DBA covered construction contractsDBRA covered construction contractsSCA covered service contracts

Is self-executing (even if not stated in contract) Has no “site of the work” limitation


Copeland“Anti-Kickback” Act

(CA)


Purpose and Requirements of CA

Prohibits “kickback” of wages and back wages

Requires contractors on DBA/DBRA covered projects to submit weekly a “statement of compliance”

Regulates payroll deductions


Permissible Deductions Without DOL Approval (29 CFR 3.5)

Social security or federal or state income tax withholding

Bona fide prepayment of wages Court ordered payments Fringe benefit plans with certain provisions

Purchase of U.S. savings bonds Repayment of loans or purchase shares in a credit

union


Permissible Deductions (29 CFR 3.5)

Deduction to pay regular union initiation fees and membership dues provided by a collective bargaining agreement (CBA)

Authorized contribution to charitable organizations such as the Red Cross, United Way, etc.

Deduction for “reasonable cost” of board, lodging, or other facilities meeting the requirements of section 3(m) of FLSA

Deduction for safety equipment - if not prohibited by FLSA, or required by law for employer to furnish


Deductions Requiring DOL Approval (29 CFR 3.6)

DOL may approve payroll deductions when:Contractor makes no direct or indirect profitDeduction is not prohibited by lawDeduction is voluntarily consented to in writing

before work begins, or deduction is provided for under CBA terms

Deduction serves the convenience and interest of employee


Walsh-HealeyPublic Contracts Act

(PCA)


Purpose of PCA

Provides labor standards for employees

working on Federal contracts over

$15,000 for the manufacturing or

furnishing of goods, supplies, articles, or

equipment


PCA Requirements

Establishes minimum wage, overtime, safety and health standards, and posting requirements

Prohibits employment of youth under 16, and convict labor


McNamara-O’Hara Service Contract Act

(SCA)


SCA

Took effect in January 1966

Amended in 1972 and 1976

Most recent of government contract labor standards laws administered by the Wage and Hour Division (WHD)


Legislative History and Purpose of SCA

To “close the gap” in labor standards protection between supply and manufacturing contracts subject to PCA and construction contracts subject to DBA

To remove wages as a bidding factor in the competition for federal service contracts


Requirements of SCA(29 C.F.R. § 4.6)

Contracts in excess of $2,500 must contain labor standards clauses with:

Minimum monetary wages and fringe benefits determined by Department of Labor (DOL)

Recordkeeping and posting requirements Safety and health provisions Statement of rates paid to federal employees


Elements of SCA Coverage (29 C.F.R. §§ 4.107, 4.108 & 4.110)

Contracts entered into by Federal Government and District of Columbia

Contracts principally for services

Contracts performed in the U.S.

Contracts performed through the use of service employees


Federal Contracting Agencies(29 C.F.R. §§ 4.107 & 4.108)

Agencies or instrumentality

• Department of Defense (DOD) Wholly owned corporations of the Government

• U.S. Postal Service Non-appropriated fund activities

• Military post exchanges (PX’s) Contracts entered into by

• District of Columbia


Contracts to Furnish Services (29 C.F.R. §§ 4.111 & 4.130)

Examples of service contracts:

Security and guard services

Janitorial services

Cafeteria and food services

Support services at Federal installations


Contracts “in the US” (29 C.F.R. § 4.112)

50 States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf, American Samoa, Guam, Wake Island, Johnston Island, and the Northern Marianas (Canton Island, Eniwetok Atoll, and Kwajalein Atoll are no longer a part of the United States)

Any portion of a contract principally for services performed in the United States is covered


Contracts Not SCA Covered(29 C.F.R. § 4.134)

Contracts primarily for something other than services, e.g., construction

Contracts for leasing of space Contracts for professional services Federally-assisted contracts for services entered into

by state governments, e.g., Medicaid and Medicare programs

Contracts excluded by statutory exemptions Contracts excluded by regulatory exemptions


Davis-Bacon and related Acts

Contracting Agency Responsibilities


Federal or Funding Agency Responsibilities

Ensure proper wage determination (WD) is applied

Advise contractors which schedule of rates applies to various construction items

Advise contractors regarding the duties performed by various crafts in the WD


Reorganization Plan No. 14 of 1950

DOL Functions/ResponsibilitiesDetermining “prevailing wages”

Issuing regulations and standards to be observed by contracting agencies

Perform oversight function and has independent authority to conduct investigations


Reorganization Plan No. 14of 1950

Contracting agencies have day to day enforcement responsibility for:Contract Stipulations Wage Determinations WH-1321 PosterReviewing certified payrollsEmployee interviews and investigationsForwarding refusal-to-pay and/or debarment consideration

cases to WHD for appropriate action Enforcement reports


Davis-Bacon Labor Standards/Contract Stipulations

The term “labor standards” means the requirements of:

The Davis-Bacon ActThe Contract Work Hours and Safety Standards Act

The Copeland Act

Prevailing wage provisions of the Davis-Bacon and “related

Acts”

Regulations, 29 CFR 1, 3, and 5


Davis-Bacon Wage Determinations



1. Contracting Agency Responsibilities

2. Surveys

3. Selecting DBA Wage Determinations

4. Interpreting Wage Determinations


DBA Survey


DBA Surveys

Davis-Bacon prevailing wage surveys conducted by WHD Regional Offices

Survey - schedule and status on WHD website:

http://www.dol.gov/whd/programs/dbra/schedule.htm


DBA

Requires Secretary of Labor to determine locally prevailing wages, including fringe benefits, for inclusion in bid solicitations and covered contracts.

Based on wages paid to laborers and mechanics employed on similar construction projects in a local area (county-by-county).


Impact of Survey Participation

Accuracy and Completeness of WDs

depends on:Survey participation

Level of construction activities

Encourage contractors to participateContact WHD Regional Offices to be notified of survey(s)

see http://www.dol.gov/whd/programs/dbra/regions.htm


Cross Walk – FAR – DOL



Selecting DB WDs


Federal/Funding Agency Responsibilities 29 CFR 1.6(b) & FAR - 48 CFR 22.404-2

Ensure proper wage determinations are applied

Advise contractors which schedule of rates applies to various construction items (see 29 CFR 1.6(b) & FAR - 48 CFR 22.404-2)

Advise contractors regarding the duties performed by various crafts in the WD


Application to Covered Contracts29 CFR 1.6 & FAR 48 CFR 22.4

Rules in 29 CFR Part 1 govern procedures for pre-determination of wage rates.

Use and effectiveness of wage determinations are addressed in 29 CFR 1.6 and FAR 48 CFR 22.404.

General wage determinations are published on the Wage Determinations On-Line (WDOL) website:

http://www.wdol.gov.


Wage Determinations

General Wage DeterminationsIn most cases, general wage determination(s)

are applicable

Project Wage DeterminationsRarely, a “project” wage determination may be

appropriate.


“General” WDs Official site for General WDs –

http://www.wdol.gov Issued for:

Each major type of constructionMost counties – nationwide

May be used by agency without notifying DOL Questions regarding application of wage rate schedules shall

be referred to the WHD Administrator, who shall give foremost consideration to area practice in resolving the question.

29 CFR 1.5; 29 CFR 1.6(b); FAR 48 CFR 22.404-2(a), b, and (c)(5).


“Project” WDs

Application to specific project only.

Issued at request of Agency if:No “General” WD in effect, or if A classification not listed on general WD will

perform virtually all work (100%) on contract.

Standard Form (SF) 308.

Effective for 180 days.


Selecting Applicable WDs (29 CFR 1.1 & 1.6; FAR 48 CFR 22.404)

Location of construction project:State & County

Type of construction:“Projects of a similar character” (DBA) Four general types of construction

Current WD


Selecting Applicable WDsType of Construction – AAM 130

BUILDING construction is generally the construction, rehabilitation and repair of sheltered enclosures with walk-in access for the purpose of housing persons, machinery, equipment or supplies (includes installation of utilities and equipment, both above and below grade).

RESIDENTIAL construction projects, for Davis-Bacon purposes, include construction, alteration, or repair of single family houses, townhouses, and apartment buildings of no more than four (4) stories in height.

HIGHWAY projects include construction, alteration or repair of roads, streets, highways, runways, taxiways, alleys, trails, paths, parking areas, and similar projects not incidental to building or heavy construction.

HEAVY is not a homogeneous classification. Because of this catch-all nature, projects within the heavy classification may sometimes be distinguished on the basis of their particular project characteristics and separate schedules issued. Example: sewer & water line projects.



Some construction items in a project may

fall into a different type of construction –

Incidental to the principal type of construction,

or

Requiring a separate wage schedule.



Multiple wage schedules apply to different

types of construction on a project:

If construction items of a separate type of

construction are:20% or more of total project cost; or

Will cost $1,000,000 or more.


AAMs Nos. 130 & 131

AAM No. 130 addresses “Application Of The Standard Of Comparison ‘Projects Of A Character Similar’ Under The Davis-Bacon And Related Acts.”

AAM No. 131 provides “Clarification of All Agency Memorandum No. 130.”

AAM Nos. 130 & 131 are available at:http://www.dol.gov/whd/programs/dbra/docs/memo-131.pdf.


Selecting Applicable WDs – Up-to-date 29 CFR 1.6(c)(3); FAR 48 CFR 22.4

Current WD is applicable:WD in effect on date of award, except: For competitive (sealed) bids (not RFP):

WDs issued less than 10 days before bid opening apply unless reasonable time is not available before bid opening to notify bidders & a report of this finding is inserted into contract file.


WDs Due to be Revised


Selecting Applicable WDsUp-to-date

Extension - General WD:For contract not awarded within 90 days

of bid opening,

WD modification in effect on date of contract award applies unless extension of 90-day period is granted.

See 29 CFR 1.6(c)(3)(iv) & FAR 48 CFR 22.404-6(b)(6).


Selecting Applicable WDs29 CFR 1.6(f) & FAR 48 CFR 22.404-9

DOL may apply a WD after contract award

or start of construction due to:Failure to incorporate a WD into contract;WD used clearly did not apply –

by its terms or regulatory provisions; orWrong WD used due to inaccurate project

description in request for WD.


Correction of Inadvertent Clerical Errors on WD

At request of agency or on own initiative

WHD Administrator may issue:“Letter of inadvertence” to correct the error.

Corrections apply to bid solicitations and

contracts retroactively to start of construction. 29 CFR 1.6(d) & FAR 48 CFR 22.404-7.



Interpreting DBA WDs


Interpreting “General” WDs

Cover Sheet

Body of WD (Classifications, Rates & Fringe Benefits)

Conformance Requirement

Appeals Process


Interpreting “General” WDsCover Sheet



Decision Number (Supersedeas)StateCounty or City CoveredType of ConstructionDescription of Construction Record of Modifications



Decision Number (Supersedeas)

Annual publication - General WDs

Replace prior wage decisions

WD numbers reflect new year



State County Type of Construction Description of Construction

Include and Exclude Language



Examples of inclusion/exclusion language: HIGHWAY CONSTRUCTION PROJECTS (Does not

include building structures in rest area projects)HEAVY CONSTRUCTION PROJECTS (includes flood

control, water & sewer lines, and water wells; excludes elevated storage tanks, industrial construction-chemical processing, power plants, and refineries)

BUILDING CONSTRUCTION PROJECTS (Does not include Treatment Plants or single family homes & apartments up to and including 4 stories)



Record of Modifications:

Lists all modifications of the WD

Update union rates

Results of new survey


Interpreting “General” WDsBody of WD

List of classifications and rates

Basis for rates – “Identifiers”

Union Identifiers

SU Identifiers



Union Identifier – example:

“ELEV0101A 10/15/2006” indicates:

ELEV: International Union – Elevator Constructors

101: Local union number

A: Internal processing number

10/15/2006: Date collectively bargained rate was bargained to take effect



Craft - BOSSIER, CADDO, & WEBSTER PARISHES

Rate Fringes

ELECTRICIAN (including low voltage wiring and installation of fire alarms and security systems)

$22.35 $8.56

ELEC0194-002 09/06/2007

CBA rates are updated when CBA rates are changed



SU (Non-Union) Identifier – Example:

“SULA2004-012 06/15/2004”

SU: SUrvey – Basis of Rate(s)

LA: Louisiana

2004: Date of Survey

012: Internal numbering

6/15/2004:Date submitted for publication

Note: SU non-union rates - remain unchanged until new survey



Craft Rates Fringes

CARPENTER (including drywall hanging, metal stud installation, and Form building and form setting)

$11.78 $0.00

Laborer, common $8.01 $0.00

SULA2004-012 06/15/2004


Interpreting “General” WDsConformance Requirement

Unlisted classifications needed for work

not included within the scope of the

classifications listed may be added after

award only as provided in the labor standards

contract clauses (29 CFR 5.5(a)(1)(ii)).

Note: referenced clause reiterated at FAR 48 CFR 52.222-6(c).


Interpreting “General” WDsAppeal Process

WAGE DETERMINATION APPEALS PROCESS

1.) Has there been an initial decision in the matter? This can be:

* an existing published wage determination

* a survey underlying a wage determination

* a Wage and Hour Division letter setting

forth a position on a wage determination

matter ……………………


Davis-Bacon Wage Determination

Conformances


Conformance Criteria29 CFR 5.5(a)(1)(ii) & FAR 48 CFR 52.222-6(c)(1)

Work not performed by classification in WD;

Rate must bear a reasonable relationship to WD rates; and

Classification is utilized in the area by the construction industry.


Conformance ProcessContracting Agency & Contractors

Pre-Bid/Pre-Award:

Review WD;

Compare WD with project work;

Anticipate needed classifications; and

Consider criteria for approval.


Conformance Process Note: conformance requests are not

needed for bona fide:

Apprentices – see contract clausesTrainees – see contract clausesWelders – see wage determination


ConformancesSF-1444


Conformance Process - Agency Contracting Agency Role – After Award:

Pre-construction conferenceSF-1444 to contractors – available at: http://www.wdol.gov/docs/sf1444.pdf.

Identify needed classes not on WDCertified payrollsOn-site inspection & interviewsContractor/employee/union/competitor inquiries/complaints


Conformance Process – Contractor Contractor – After Award:

Identify needed classes not on WDPre-construction conferenceSubcontractor inquiriesCertified payrollsOn-site observation

Consider criteria for approval of conformances

Complete contractor section of SF-Form 1444See next slide for details


Conformance Process – Contractor Contractor – After Award:

Complete contractor section of SF-Form 1444

Include description of work, as appropriate

Signature by subcontractor

Signature by prime or general contractor

Employee, if known (or representative)

Documentation of views if in dispute

Indicate if the request is for an ARRA project


Conformance Process – Contractor

Contractor – After Award:

Forward completed SF-1444 to contracting agency for review, signature, and submission to DOL.


Conformance Process – Agency Contracting Agency Conformance Review:

Document parties’ views –

Contractor, subcontractor, employeesDocument agreement of parties and/or any

dispute

Consider criteria for approval of conformances

Document agency recommendation

Contracting Officer signature


Conformance Process - Agency Contracting agency conformance request:

Contracting Officer Signature.Submit request to DOL for response.

Conformance requests may be faxed or e-mailed to – (202) [email protected]

Communicate with DOL to:Respond to DOL requests for additional

information needed to process request.Obtain status if no response in 30 days.


Conformance Process - DOL WHD Branch of Construction Wage

Determinations review - based on information submitted and criteria.

Letter to agency approves or denies each proposed additional classification & rate.

Interested parties may seek review & reconsideration (see later slides).


Conformance Process - DOL DOL review:

Is requested classification listed on WD or cana classification on WD perform the work?

If not, does proposed rate bear a reasonable relationship to the rates already in the

contract WD for the given county and typeof construction.

Verify classification is utilized area by the construction industry.


Conformance Process - Agency

Upon receipt of WHD response, agency communicates DOL determination to contractor and other interested parties.

Advises contractor and other interested parties of reconsideration and appeal procedures.



Review & Reconsideration& Appeals to ARB


Review - Initial Contact Survey, WD or Conformance Action

Initial contact on survey related matters should be directed to WHD Regional Office.

Initial contact on WD and conformance actions should be directed to the WHD National Office, Branch of Construction Wage Determinations.


Review & Reconsideration by WHD Administrator

Request to the Administrator, WHD:In writingInclude supporting data

Final ruling will be issued by the WHD

Administrator May be appealed to the Administrative

Review Board (ARB) – See 29 CFR Part 7


Wage Determinations On-Line (WDOL)

http://www.wdol.gov

(An E-Government Initiative)


WDOL.GOV

Created by an inter-agency task force that

included DOL, DOD, OMB, GSA, DOE, and

the National Technical Information Systems

Links to SCA & DBA Wage Determinations• Current, Archived, and to be Revised

Library


WDOL Home Page


WDOL.GOV

FAQ’s – about WDOL User Guide Service Contract Act

Selecting SCA WDse98Archived WDsWDs due to be revisedPACT (Price Adjustment

Calculation Tool”

Davis-Bacon ActSelecting DBA WDsArchived WDsWDs due to be revised

Related InformationAgency Labor AdvisorsLibrary ‘DO”L Wage and Hour

Website


Agency Labor Advisors


Selecting DBA WDs


WDs Due to be Revised


Archived DBA WDs


WDOL Library of Links and Related Information

Links on this site include links to:Sites for Contracting Agency Pre-Award ActivitiesListing of Debarred, Ineligible and Suspended Contractors

(Excluded Parties List System)SCA Directory of OccupationsConformances – SF-1444All Agency Memos issued by DOLDOL Prevailing Wage Resource BookDOL and State Apprenticeship OfficesAcronyms & Glossary Regulations and a Cross-Walk from Title 29 CFR

(DOL Regs) to Title 48 CFR (FAR)


WHD Internet Sites

DOL Prevailing Wage Resource Book –

http:www.dol.gov/whd/recovery/pwrb/toc.htm.

WHD Recovery Act (ARRA) website –

http://www.dol.gov/whd/recovery/.

WHD ARRA inquiries e-mail address –

[email protected]


Internet Sites

Wage Determinations – http://www.wdol.gov

Wage and Hour Division – http://www.dol.gov/whd

Office of the Administrative Law Judges Law Library – http://www.oalj.dol.gov

Administrative Review Board – http://www.dol.gov/arb

Debarred Bidders List – http://www.epls.gov

HUD – http://www.HUD.gov/offices/olr


Disclaimer

This presentation is intended as general information only and does not carry the force of legal opinion.

The Department of Labor is providing this information as a public service. This information and related materials are presented to give the public access to information on Department of Labor programs. You should be aware that, while we try to keep the information timely and accurate, there will often be a delay between official publications of the materials and the modification of these pages. Therefore, we make no express or implied guarantees. The Federal Register and the Code of Federal Regulations remain the official source for regulatory information published by the Department of Labor. We will make every effort to keep this information current and to correct errors brought to our attention.


Q & A

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