u.s. department of labor wage and hour division application of davis-bacon labor standards to arra...

U.S. Department of LaborWage and Hour Division

Application of Davis-Bacon Labor Standards to ARRA

Bond-Financed Construction

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U.S. Department of Labor Wage and Hour Division (WHD) The Wage and Hour Division (WHD) is responsible for enforcing

important federal labor laws on various topics, including: FLSA minimum wage & overtime pay, recordkeeping, youth

employment and special employment standards, prevailing wages on government contracts, family and medical leave, worker protections for migrant workers, worker protections in certain temporary worker programs, and restrictions on employer use of lie detector tests.


Internet Sites Wage and Hour Division – http://www.dol.gov/whd. WHD ARRA website –

http://www.dol.gov/whd/recovery/. Wage Determinations On-Line –

http://www.wdol.gov – includes library with useful links. Office of 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.


American Recovery & Reinvestment Act of 2009

(ARRA)

Pub. L. No. 111-5, 123 Stat. 115

(February 17, 2009)


ARRA & Davis-Bacon Labor Standards

ARRA signed into law - February 17, 2009. ARRA includes Davis-Bacon labor standards provisions. Davis-Bacon labor standards require contractors and

subcontractors to pay locally prevailing wages to laborers and mechanics employed on covered projects.

These requirements apply to construction, alteration, and repair (including painting and decorating) on the “site of the work” of covered projects.


ARRA DivisionsDivision A: Appropriations

Section 1606: Davis-Bacon provision that applies to most construction funded by Division A appropriations.

Division B: Tax and Other ProvisionsSection 1601: Davis-Bacon provision that

applies to projects financed with certain tax-favored bonds.


DOL ARRA Guidance All Agency Memoranda (AAMs)

AAM No. 207 - May 29, 2009:DOL guidance on applying Davis-Bacon labor

standards to federal and federally assisted construction projects funded in whole or in part by ARRA Division A appropriations.

AAM No. 208 - May 5, 2010: DOL guidance on applying Davis-Bacon labor

standards to construction projects funded in whole or in part with tax-favored bonds specified in ARRA Division B, section 1601.


Five Types of Bonds specified in

ARRA Division B, §1601


ARRA Division B, §1601 Requires application of Davis-Bacon prevailing wage standards:

“Subchapter IV of chapter 31 of the title 40, United States Code, shall apply to projects financed with the proceeds of ”—

New Clean Renewable Energy Bonds [New CREBs]Qualified Energy Conservation Bonds [QECBs]Qualified Zone Academy Bonds [QZABs]Qualified School Construction Bonds [QSCBs]Recovery Zone Economic Development Bonds [RZEDBs]

as defined in relevant Internal Revenue Code provisions,

if issued after ARRA enactment (Feb. 17, 2009).


Relevant Internal Revenue Code (IRC) and ARRA provisions

Project IRC definitions ARRA page

New CREBs 26 U.S.C. 54C 123 Stat. 322

QECBs 26 U.S.C. 54D 123 Stat. 322

QZABs 26 U.S.C. 54E 123 Stat. 358

QSCBs 26 U.S.C. 54F 123 Stat. 355

RZEDBs 26 U.S.C. 1400U-2 123 Stat. 348


IRS Notices & Volume Cap Allocations

Project IRS Notices AVC** 2008

AVC** 2009 AVC** 2010

New CREBs No. 2009-33 $800M $1.6B

QECBs No. 2009-29* $800M $2.4B

QZABs No. 2009-30* $400M $1.4B $1.4B

QSCBs No. 2009-35* & 2010-17* $11.0B $11.0B

Tribal QSCBs Interior Dept./ BIA allocation $200M $200M

RZEDBs No. 2009-26* & 50* $10.0B

**Allocation volume caps

*IRS volume cap distribution information included

See IRS notices at http://www.irs.gov/irb


Basic Steps

IRS allocates volume cap to States, local governments and other entities. (Department of Interior allocates amounts for schools

funded by the Bureau of Indian Affairs.)

State and local governments identify projects. Bonds are developed and issued for sale. Proceeds of bonds are distributed. Construction contracts are awarded for covered

projects.


Overview of Bonds Covered by Davis-Bacon Labor Standards

Descriptive information here is provided as general information to give stakeholders unfamiliar with the bonds a general overview of the range of projects being financed with the bonds for which Davis-Bacon labor standards are required and to provide references where they may find the legal criteria that govern the issuance and use of these bonds.

For authoritative information concerning these bonds, consult the IRS and other reliable legal sources.


New CREBs Fund clean renewable energy - development & production

IRS allocates bond authority to: governmental agencies, public power providers, and cooperative electric companies.

For capital expenditures for qualified renewable energy facilities facilities that generate electricity from: wind, biomass, geothermal, solar, irrigation, landfill gas, trash

combustion, refined coal, hydropower and Indian coal production.

Davis-Bacon labor standards do not apply to “New CREBs” issued before enactment of ARRA 2/17/09, and do not apply to “CREBs.”

(see next slide for background)


CREBs & “New CREBS” Energy Tax Incentives Act of 2005, Pub. L. No. 109-58, (119 Stat. 594)

provided for “CREBs” Added § 54 to the IRC - national volume cap originally $800 million

Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120 Stat. 2922 Section 202 amended § 54 Increased total national bond volume cap for CREBs $1.2 billion Extended expiration date for issuance of CREBs to 12/31/08

Food, Conservation, and Energy Act of 2008, Pub. L. No.110-246, 122 Stat. 1651: Section 15316 added new § 54A to the IRC. Volume cap of $800 million for “New CREBs” under § 54A. Added other requirements for obligations issued after 10/3/08.

ARRA Division B, section 1111: Increased New CREBs limitation by $1.6 billion.


QECBs – Energy Conservation QECBs:

Created by Emergency Economic Stabilization Act of 2008. Davis-Bacon labor standards apply to QECBs issued after 2/17/09.

Issued by state and local governments. Used for one or more “qualified conservation purposes”:

1. Capital expenditures for reducing energy consumption in specific types of facilities and programs;

2. Expenditures for research facilities and research grants to support energyconservation;

3. Mass commuting facilities;

4. Certain demonstration projects designed to promote energy conservation;and

5. Public education campaigns to promote energy efficiency.


Qualified Zone Academies QZABs

QZABs Created by Emergency Economic Stabilization Act

of 2008.Davis-Bacon labor standards apply to the

QZABs issued after ARRA enactment (2/17/09).

Issued by a state or local government – Used for a qualified purpose with respect to a

qualified zone academy (established by and operated by an eligible local education agency).


Qualified School Construction QSCBs

IRS volume cap allocations to:States, territories, & certain large local educational agencies;

Department of Interior allocates separate volume caps for schools funded by Bureau of Indian Affairs - $200 million each year (2009 & 2010).

Issued by state or local government in same jurisdiction as the school.

Used for construction, rehabilitation or repair of a public school facility, or for land acquisition on which the facility is to be constructed

with part of the bond proceeds.


Recovery Zone Economic Development RZEDBs

RZEDBs are one type of Build America Bond. Targeted to areas particularly affected by employment

declines (2007-2008).

Issued by the states, counties, & large municipalities.

Used for one or more qualified economic development purposes.

A recovery zone is an area designated by the RZEDB issuer as meeting certain criteria prior to January 1, 2011.


Davis-Bacon Act & Davis-Bacon “related Acts”

(DBA & DBRA)


DBA

Enacted in 1931

Amended in 1935 and 1964

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


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).


Coverage of the DBA

DBA applies to:

contracts in excess of $2,000 for

construction, alteration, and/or repair,

including painting and decorating,

of public buildings and public works.


Davis-Bacon Act (DBA)

Requires contracting agencies to

include:

Davis-Bacon wage determination(s) Davis-Bacon contract clauses

In bid solicitations & covered contracts


DBA & DBRA - Applicability

Davis-Bacon Act itself applies to:Federal contracts &D.C. government contracts.

Davis-Bacon “related Acts” are: Other federal laws that provide federal assistance

for construction and Require the application of Davis-Bacon labor

standards to the federally assisted construction.


Davis-Bacon Labor Standards

The term “labor standards” includes requirements of:

The Davis-Bacon Act;

Copeland “Anti-Kickback” Act (40 U.S.C. 3145);

The prevailing wage provisions of the Davis-Bacon

“related Acts;” and

DOL regulations at 29 CFR Part 1, 3, and 5.


DOL Responsibilities

DOL determines local “prevailing wages.”

Issues regulations to be observed by contracting agencies, contractors, and subcontractors.

Has oversight to assure coordination of administration and consistent enforcement of labor standards provisions of the Davis-Bacon and related Acts.

Has independent authority to conduct investigations.


Davis-Bacon Labor Standards

&

ARRA Division B


ARRA Division B - §1601 SEC. 1601. APPLICATION OF CERTAIN LABOR STANDARDS TO

PROJECTS FINANCED WITH CERTAIN TAX-FAVORED BONDS.

Subchapter IV of chapter 31 of the title 40, United States Code, shall apply to projects financed with the proceeds of—

(1) any new clean renewable energy bond (as defined in section 54C of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(2) any qualified energy conservation bond (as defined in section 54D of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(3) any qualified zone academy bond (as defined in section 54E of the Internal Revenue Code of 1986) issued after the date of the enactment of this Act,

(4) any qualified school construction bond (as defined in section 54F of the Internal Revenue Code of 1986), and

(5) any recovery zone economic development bond (as defined in section 1400U–2 of the Internal Revenue Code of 1986).


ARRA Division B - §1601

DBA labor standards apply to “projects” financed by the specified bonds.

Volume cap allocations set maximum dollar volume of a tax-advantaged category of bonds a recipient of authority to issue the bonds may issue to finance assisted projects.

Most recipients of volume cap allocations are States and local government agencies.


ARRA Division B - Implementationof Tax-Advantaged Bond Allocations

IRS Notices discuss the various types of bonds.

IRS Notices provide IRS volume cap allocations.

IRS volume cap allocations for some “New CREBs” are directly to public power providers & cooperative electric companies.

Department of Interior allocates volume caps for schools funded by Bureau of Indian Affairs.


Basic Steps IRS allocates volume cap to States, local

governments, and other entities. (Department of Interior allocates for schools funded by

Bureau of Indian Affairs.)

State and local governments identify projects.

Bonds are developed and issued for sale.

Proceeds of bonds are distributed.

Construction contracts are awarded for covered projects.


Notice of ARRA AssistanceNotice of ARRA assistance usually occurs at

the earliest of: When the IRS or other government entity allocates

volume cap or authority to issue covered bonds;Date the covered bonds are issued;Date issuer declares its intent to reimburse project

costs with covered bond proceeds;Date the entity is granted approval to use covered

bond proceeds for the project; orDate the bond proceeds are received by the entity.


Implementing ARRA Division BDBA Requirements

Upon Notice of ARRA assistance for a project:The entity (most frequently a state or local government) with contracting responsibility for the project being financed with the proceeds of a bond named in ARRA Division B, section 1601, must cause or require insertion of the full Davis-Bacon contract clauses and applicable wage determination in bid solicitations and covered contracts over $2,000 for construction, alteration or repair (including painting and decorating).


Notice of ARRA Assistance

Notice of ARRA assistance means that:

the contracting entity is advised or

determines that a project will be

financed in whole or in part with

proceeds of one of the five tax-favored

bonds.


ARRA Division B – DBA Contracting Agency Responsibilities

State, local government agency, or other entity with

contracting responsibility for a covered project must:

Include in bid solicitations and covered contracts the

Davis-Bacon contract clauses and wage determination(s)

(see 29 CFR 5.5(a)); and

Ensure that contractors and subcontractors pay

laborers and mechanics employed on the project site

at least the Davis-Bacon prevailing wages.


Covered Contracts

If the prime construction contract exceeds $2,000, all construction work on the project on the “site of the work” is covered;

The $2,000 threshold coverage pertains to amount of prime contract for construction, not to a subcontract.

A Davis-Bacon contract clause requires Davis-Bacon contract clauses flow-down to all subcontractors. See 29 CFR 5.5(a)(6).


Contract Clauses & Regulatory Definitions

The standard Davis-Bacon contract clauses are

in 29 CFR 5.5(a).

See 29 CFR 5.2 for regulatory definitions of terms

applicable to administration and enforcement of the

Davis-Bacon and related Acts.

DB contract clauses and wage determinations are available at: http://www.dol.gov/whd/recovery/.


Davis-Bacon Contract Clauses29 CFR 5.5(a)

(1) Minimum wages

(2) Withholding

(3) Basic records & certified payrolls

(4) Apprentices & Trainees

(5) Copeland Act compliance

(6) Rulings and interpretations

(7) Disputes

(8) Subcontracts

(9) Contract termination and debarment

(10) Certification of eligibility


Applicable Davis-Bacon Wage Determinations

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

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

http://www.wdol.gov.

Use and effectiveness of wage determinations are addressed in 29 CFR 1.6. (Especially note 1.6(b), (c) & (g).)


Applicable Wage Determinations(cont’d)

In most cases, general wage determination(s) are applicable.

Normally, the correct wage determination is the general wage determination in effect on the date of contract award (or within 10 days of the bid solicitation, for sealed bid competitive bidding).

Rarely, a “project” wage determination may be appropriate.


Projects Financed with Proceeds of Bonds specified in ARRA Division B, §1601

DOL general guidelines define "project" for Davis-Bacon coverage purposes as including all contracts that are closely related in purpose, time, and place.

DBA requirements apply even if project is financed only in part by proceeds of a bond listed in ARRA Division B, section1601.

DBA requirements apply if bond proceeds are pooled in a general fund or otherwise, and a project is financed in whole or in part from the pooled proceeds.


WHD Internet Sites

WHD Recovery Act (ARRA) website – http://www.dol.gov/whd/recovery/.

WHD ARRA inquiries e-mail address –[email protected]

DOL Prevailing Wage Resource Book – http://www.dol.gov/whd/recovery/pwrb/toc.htm.


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.


Davis-Bacon Wage Determinations



Davis Bacon Wage Surveys Davis Bacon Wage Determinations Additional Classification (Conformance)

Process Review & Reconsideration and Appeal

Process


DBA Surveys Davis-Bacon wage determinations are

based on surveys conducted by the WHD Regional Offices

Survey - schedule and status on WHD website:

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



Selecting & Interpreting DB WDs


Wage Determinations

1. “General” WDs

2. “Project” WDs

3. Selecting Correct WDs

4. Interpreting Davis-Bacon WDs


Wage Determinations

General Wage Determinations

Project Wage Determinations


“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 DOLQuestions 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.


“Project” WDs

Application to specific project only. Issued at request of Agency if:

No “General” WD in effect, or ifA 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)

Location of construction project:State & County

Type of construction:“Projects of a similar character” 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.

AAM 131 provides guidance.



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

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.”


Selecting Applicable WDsUp-to-date

Current WD is applicable:WD in effect on date of award, except: For competitive (sealed) bids:

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.


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).


Selecting Applicable WDsOngoing Projects

Ongoing projects - general rule:

The most recent wage determination issued for the relevant type of construction and county as of the date of contract award applies retroactively to that date.

(If there was no contract award, relevant date is start of construction.)

Ongoing projects - exception:

29 CFR 1.6(g) permits DOL, on request, to apply a wage determination effective at the time of “Notice of ARRA assistance” in appropriate circumstances.



For purposes of Division B of ARRA, section 1601, “Notice of ARRA assistance" means that: the contracting entity (usually a state or local

government); is advised or determines that a project will be

financed, in whole or in part; with proceeds of one of the five tax-favored bonds

(the covered bonds).



“Notice of ARRA assistance” typically occurs the earliest of:

When the IRS or other government entity allocates volume cap or the authority to issue covered bonds for the project;

The date the covered bonds are issued for the project;

The date the issuer declares its intent to reimburse project expenditures with covered bond proceeds;

The date the entity is granted approval to use covered bond proceeds for the designated project; or

The date the bond proceeds are received by the entity.



Ongoing project already subject to Davis-Bacon

labor standards does not need a new Davis-Bacon

WD upon Notice of the ARRA assistance unless

the covered bond proceeds are for work not

contemplated under the existing contract for

construction.


Selecting Applicable WDs29 CFR 1.6(f)

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).


WDs Due to be Revised


Davis-Bacon Wage Determination

Conformances


Conformance Criteria29 CFR 5.5(a)(1)(ii)

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 Process

Conformance requests are not needed

for bona fide:

ApprenticesTraineesWelders


Conformance ProcessContracting Agency & Contractors

Pre-Bid/Pre-Award:

Review WD;Compare WD with project work;Anticipate needed classifications; andConsider criteria for approval.


Conformance Process – Contractor Contractor – After Award:

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

Consider criteria for approval of conformancesComplete contractor section of SF-Form 1444

See 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

Documentation of views if in dispute

Indicate if the request is for an ARRA project

Indicate type of tax-favored bonds covered(New CREBs, QECBs, QSCBs, QASBs, RZEDBs)


Conformance Process – Contractor Contractor – After Award – Send SF-1444:

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

If a cooperative electric company or public power provider received a “New CREBs” allocation directly from IRS, it may submit conformance requests directly to DOL.The SF-1444 is available at: http://www.wdol.gov/docs/sf1444.pdf.


Conformance Process - Agency

Contracting Agency Role – After Award: Identify needed classes not on WD

Pre-construction conference

Certified payrolls

On-site inspection & interviews

Contractor/employee/union/competitor

inquiries/complaintsSF-1444 to contractors


Conformance Process - Agency Contracting agency conformance review:

Document parties’ views –

Contractor, subcontractor, employees. Document agreement of parties and/or

any dispute. Consider criteria for approval. Document agency recommendation.



Contracting agency conformance request:Contracting Officer Signature.Submit request to DOL for response.

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

Letter to agency approves or denies each

proposed additional classification & rate.

Interested parties may request review &

reconsideration.



Communicates DOL determination to contractor and other interested parties.

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


WHD Internet Sites WHD Recovery Act (ARRA) website –

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

WHD ARRA inquiries e-mail address –[email protected].

Wage Determinations On-Line – http://www.wdol.gov.

Conformance requests may be faxed to – 202-693-1432.


Disclaimer




Davis-Bacon

Compliance Principles


DBA Requirements – Overview

DB wages apply to “laborers” & “mechanics” employed by contractors and subcontractors;

Performing work on the “site of the work;

Must be paid not less often than weekly;


DBA Requirements – Overview (cont’d)

Wage determination(s) and Davis-Bacon poster must be posted on job site. Poster is available at: http://www.dol.gov/whd/regs/compliance/posters/fedprojc.pdf.

Contractors and subcontractors must file weekly certified payroll reports with contracting entity or recipient of volume cap allocation; and

Prime contractors are responsible for DBA compliance of their subcontractors.


DBA/DBRACompliance Principles

Laborers & mechanics

Site of the work

Truck drivers

Apprentices Trainees & Helpers

Fringe Benefits

Records & Payrolls

Payroll Deductions


Laborers and Mechanics

Laborers and mechanics are: Workers whose duties are manual or physical

Includes workers who use tools or are performing work of a trade

Apprentices, trainees, and helpers “Working foremen” usually included

Compared with having mental/managerial duties


Laborers and MechanicsDoes not include:

Timekeepers, inspectors, architects, engineers.Bona fide executive, administrative, and

professional employees as defined under FLSA.

Working foremen are generally non-exempt.Must be paid the Davis Bacon (DB) rate for the

classification of work performed if not 541 exempt.


“Site of the Work”

Davis-Bacon applies only to laborers and mechanics employed “directly on the site of the work.”

A three-part definition applies to determine the scope of the term “site of the work.”


Site of the Work Definition ¶1

DBA applies only to workers on the “site of the work”

The physical place or places where the construction called for in the contract will remain after work has been completed; and,

Any other site where a significant portion of the building or work is constructed, provided that such site is established specifically for the contract.


Site of the Work Definition ¶2 “Site of the work” also includes job headquarters, tool

yards, batch plants, borrow pits, etc., provided they are:

Located adjacent or virtually adjacent to the

“site of the work” described in paragraph 1, and

Dedicated exclusively or nearly so to the performance of the contract or project,

Except if they are excluded – see next slide.


Site of the Work Definition ¶3

“Site of the work” does not include a contractor’s or subcontractor’s permanent home office, branch locations,

fabrication plants, tool yards, etc.,whose location and continuance in operation are

determined without regard to a particular covered project.


Definition ¶3 (Cont’d.) Also not included in the “site of the work” are:

Fabrication plants, batch plants, job headquarters, tool yards, etc., of a commercial supplier established by a supplier of materials

- Before the opening of bids for a project, and

- Not located on the actual site of the work.Such permanent, previously established facilities are not

part of the “site of the work,” even where the operations for a period of time may be dedicated exclusively, or nearly so, to the performance of a contract.


Truck Drivers Truck drivers of the contractor or subcontractor are

covered by Davis-Bacon for time:

Spent driving on the “site of the work,” and

Spent loading or unloading materials and supplies on the “site of the work,” if such time is more than de minimis.


Truck Drivers Truck drivers are also covered when:

Transporting materials and supplies between a facility that is part of the “site of the work” and the actual construction site; or

Transporting portions of a building or work between a site where a significant portion of the project is being constructed and the physical place where the building or work will remain.


Truck Drivers Truck drivers are not covered in the following instances:

Material delivery truck drivers while off the “site of the work.”

Truck drivers of a contractor or subcontractor traveling between a commercial facility and theDavis-Bacon job when they are off the “site of the work.”

Truck drivers whose time spent on the “site of the work” is de minimis for pick-up or drop off.


Truck DriversOwner-Operators

DOL has an enforcement position with respect to bona fide owner-operators of trucks who are independent contractors (an owner-operator is a person who owns and drives a truck). Certified payrolls including the names of such owner-operators do not need to show the hours worked or the rates paid, only the notation “owner-operator.”

This position does not apply to owner-operators of other equipment such as bulldozers, cranes, etc.


Apprentices Persons individually registered in a bona fide

apprenticeship program registered with DOL or a DOL approved State apprenticeship agency.

Include individuals in their first 90 days of probationary employment as an apprentice.

DOL regulations: 29 CFR 5.2(n)(1) and 5.5(a)(4)(i).


Trainees

Persons registered and receiving on-the-job training in a construction occupation under a program that has been approved in advance by DOL’s Employment Training Administration (ETA)

DOL regulations: 29 CFR 5.2(n)(2) and 5.5(a)(4)(ii)


Apprentices and Trainees

Are laborers and mechanics, but are not listed on the WD

Permitted to be used on covered projects and paid less than the journeyman rate when:

Individually registered in an approved apprenticeship or training program

Paid the percentage of hourly rate required by the apprenticeship or training program


Apprentices and Trainees

Paid the fringe benefits specified in the approved program, or if the program is silent:the full amount of FB’s listed in the WD for journey

level workers in the classification; orin accordance with the terms of an applicable

collective bargaining agreement; and, Do not exceed the allowable ratio specified in the

approved program for the number of apprentices or trainees to journeymen in classification


Helpers May be employed if:

Duties are clearly defined and distinct from other classifications on the WD, and

An established prevailing practice in the area, andNot employed in an informal training program;

May be added to WD if all above conditions are met, and no classification in the WD performs the work.


Wages & Fringe Benefits

DBA: the term “wages” or “prevailing wages” includes:The basic hourly rate (BHR);

Contractor contributions irrevocably made to a trustee or third party pursuant to a bona fide fringe benefit (FB) fund, plan, or program; and

The rate of costs the contractor reasonably anticipates in providing bona fide FB’s where certain conditions are met.

See 40 U.S.C. 3141(2)(b), and 29 CFR 5.2(p).


Fringe Benefits

Under DBA, FB’s are component of “prevailing wage”

The WD obligation may be satisfied by:

Paying the BHR and FB in cash,

Contributing payments to a bona fide plan, or

Any combination of the two.

FB’s must be paid for all hours worked.

U.S. Department of LaborEmployment Standards Administration

Fringe Benefit - Example 1

Item Amount

Basic Hourly Rate $10.00

Fringe Benefit $1.00

Total Prevailing Wage $11.00

The contractor may comply by paying:

$11.00 in cash wages

$10.00 in cash wages plus $1.00 for FB

$ 9.00 in cash wages plus $2.00 for FB


Fringe Benefit - Example 2 (Discharging DB Prevailing Wage Obligation)

If WD requires a prevailing wage of $14.50 ($12.00 BHR plus $2.50 in FB’s), the contractor can comply by paying:$14.50 in cash wages; or$12.00 plus $2.50 in bona fide FB; or$11.00 plus $3.50 in bona fide FBs.


Examples of Fringe Benefits

Life Insurance

Health Insurance

Pension

Vacation

Holiday

Sick Leave


Records & Payrolls

Contract clause - 29 CFR 5.5(a)(3) &

Copeland “Anti-kickback” Act


Records to be Maintained Payrolls & related basic records to be maintained by

the contractor during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at site of the work.

The records must contain: name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits), daily and weekly hours worked, deductions made and actual wages paid.


Records to be Maintained(cont’d)

Records related to creditable fringe benefits, including records that show the costs anticipated or the actual cost incurred in providing such benefits.

Written evidence of registration of apprenticeship programs and certification of trainee programs, registration of the apprentices and trainees, and ratios and wage rates prescribed in applicable programs.


Copeland “Anti-Kickback” Act

Prohibits the “kickback” of wages to the employer of wages and back wages.

Requires contractors on DBA/DBRA covered projects to submit weekly certified payroll reports and a “statement of compliance.”

Regulates payroll deductions.


Certified Payrolls Contractors and subcontractors must submit weekly certified

payrolls to contracting entity (or volume cap allocation recipient).

Prime contractor is responsible for submission of copies of payrolls from all subcontractors to the contracting entity (or recipient of volume cap).

Prime contractor may require a subcontractor to provide addresses and social security numbers to the prime contractor for its own records, without weekly submission to the sponsoring government agency (or the applicant, sponsor, or owner).


Certified Payrolls (cont’d)

Optional payroll form WH-347 is available at: http://www.dol.gov/whd/forms/wh347instr.htm.

“Statement of Compliance” on page 2 of the WH-347.

Required to be signed by contractor or subcontractor or his or her agent who pays or supervises payment of the persons employed under the contract and certifies compliance with specific requirements.

See 29 CFR 5.5(a)(3)(ii).


Certified Payrolls – Contracting Agency role during construction

Contracting agency should ensure that Davis-Bacon wage determination(s) and poster (WH 1321) are posted;

Wages are paid for classification of work performed; May interview workers to determine if paid correctly; May contact WHD in instances of alleged Davis-

Bacon labor standards violations; and Can release copies of certified payrolls, ensuring

names and addresses of workers are redacted.


Permissible Deductions WithoutDOL Approval (29 CFR 3.5)

Social security, federal and state income tax withholding;

Bona fide prepayment of wages; Court ordered payments; Certain employee contributions for fringe benefits; Purchase of U.S. savings bonds; Repayment of loans or to purchase shares in a credit

union;


Permissible Deductions (29 CFR 3.5 - cont’d)

Deductions to pay regular union initiation fees and membership dues specified in a collective bargaining agreement (CBA);

Employee authorized contributions to charitable organizations such as the Red Cross, United Way, etc.;

Deductions for the “reasonable cost” of board, lodging or other facilities meeting the requirements of section 3(m) of the Fair Labor Standards Act (FLSA); and

Deductions for safety equipment, if not prohibited by the FLSA or required by law for the employer to furnish.


Deductions Requiring DOL Approval (29 CFR 3.6)

DOL may approve payroll deductions when:The contractor makes no direct or indirect profit;The deduction is not prohibited by law;The deduction is voluntarily consented to in writing

before work begins, or the deduction is provided for in a collective bargaining agreement; and

The deduction serves the convenience and interest of the employee.


Prevailing Wage Resource Book


WHD Internet Sites

WHD Recovery Act (ARRA) website – http://www.dol.gov/whd/recovery/.

WHD ARRA inquiries e-mail address –[email protected]

DOL Prevailing Wage Resource Book – http://www.dol.gov/whd/recovery/pwrb/toc.htm.


Disclaimer



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