Labor Standards – Davis Bacon for Contractors Before, During, and After Development

Purpose The information and materials in this training are provided to educate the general contractors and subcontractors selected to complete work on IHCDA HOME, CDBG, and CDBG-D program funded developments.

Agenda What is Davis Bacon? What occurs before your contract is executed? What needs to be in place and occur during the construction phase? What is required for “back end” compliance?

Key Acronyms DB = Davis Bacon WD = Wage Decision DOL = Department of Labor CPR = Certified Payroll Reports GC = General Contractor CDBG = Community Development Block Grant HOME = Home Investment Partnerships Program

What is Davis Bacon? A federal regulation that applies to any and all construction work to be paid using HOME or CDBG funds (including CDBG-Disaster Recovery) Requires the payment of prevailing wage rates to all laborers and mechanics on IHCDA- funded construction projects in excess of $

What is Davis Bacon? Construction work not covered by HUD but bound through labor provisions contained in Davis-Bacon and Related Acts or DBRA. For HOME and CDBG funded projects, Davis- Bacon applies if your project contains: For HOME – 12 or more assisted units For CDBG – 8 or more units in the entire project – # of assisted units is not applicable

Benefits of Davis-Bacon The prevailing wages paid assists the economy by providing a level playing field with other contractors. Minimizes being underbid

Prior to Contract Execution Developer/Applicant will allow an opportunity for qualified firms to respond to a bid proposal. Bid should contain all specifications of work to be completed for job. Bid should also contain a full copy of the most recent wage determination to assess costs and drive bid response

Contract Execution Once the bid opening is done, the wage determination for this job is considered “locked in”. Ensure that the most recent update (if applicable) is being used moving forward. Once contract is signed and General Contractor (GC) is in place, IHCDA must ensure that the GC is aware of the requirements prior to the start of construction

Contract Execution Construction Contract should also reference a few other labor laws applicable to Davis- Bacon: – Contract Work Hours and Safety Standards Act (CWHSSA) – Copeland Act (Anti-Kickback Act) – Fair Labor Standards Act (FLSA)

Contract Execution Your contract, subject to DB labor standards requirements must contain clauses that describe the responsibilities of the contractor concerning DB wages and obligates the contractor to comply with the requirements. HUD has forms containing these clauses – HUD 2554 (FHA multifamily and other programs) – HUD-4010 (HOME and CDBG projects)

Contract Execution Job Site – Post WH-1321 – Notice to all Employees – Post copy of wage decision – Posted where workers can see it – Must be in accessible location – Must be covered/protected (laminated)

During Construction Phase Prime/General Contractor is responsible for full compliance regarding Davis Bacon. – Related to contractor, subcontractors, and lower- tier subcontractors Contract Administrator is responsible for: – Administration and enforcement of the Federal labor standards provisions – Person(s) who provide advice and support to contractors and others such as owner, sponsor, architect.

During Construction Phase General Contractor must ensure that posters/notices and wage is compliant at all times while work is being performed on job site. Assess needs for the job and seek to get additional job classifications if necessary. – Unfortunately, these cannot be requested until the wage rate is “locked in”.

During Construction Phase Work/job classification you need is not on the wage decision, you must request it along with a wage rate. This is approved by the Department of Labor. – Be prepared and move quickly. The wage decision, at the very latest, is reviewable with the bid package. – Must be in writing through contract administrator. – Subcontractors must go through GC

During Construction Phase – How to get approval? Make sure the requested classification is used by other contractors in the area (usually the county) Work is not being performed by another classification on the WD. Wage rate requests fits with other wage rates already on WD. Any other classifications cannot be set any lower than the highest wage paid to a laborer

During Construction Phase – How to get approval con’t The workers or the workers’ representative must agree with the proposed rate IHCDA Labor Standards Officer will review the requested classification and determine if it meets the DOL rules. If needed, contract administrator will contacted for additional information. If good, Labor Standards Officer will give preliminary approval and forward to DOL for final approval. You will receive a copy of the letter/referral that is sent to DOL

During Construction Phase – If Labor Standards Officer does not agree with request and an agreement cannot be reached, it will not be approved. – Request will be sent to DOL along with recommendation letter. You will receive a copy of the letter. – DOL has authority to make final decision and will respond in writing about the request

During Construction Phase – Labor Standards Officer will notify you of DOL decision in writing. – If approved, GC must post approval notice on job site with WH-1321 and WD. – If not approved, DOL will propose classification and wage rate to use for work in question. – You will also receive instruction about how to appeal/request reconsideration for your initial recommendation.

During Construction Phase Certified Payroll Reports (CPR) – You will need to submit WEEKLY certified payroll reports beginning with the first week that your company works on a project and every week afterward until your firm has completed its work. – Good idea to number these by week for sufficient tracking – Payrolls managed/handled by contract administrator

During Construction Phase Certified Payroll Forms for reporting – DOL’s WH-347 recommended but not required – You may use other forms such as electronic formats as long as all required information is present. – Weekly payrolls must be certified, meaning each payroll is signed and contains language certifying that information is true and correct

During Construction Phase – Payroll certification language is on the back of the form. If you use another format, you may attach the certification from the back of the WH-347, or Use the WH-348, Statement of Compliance Any other format that contains the certification language WH-348

During Construction Phase If work is not continuous, you can submit “No Work” payrolls. – For example, if there is a periodic break in work for whatever reason, you can submit a WH-347 that specifies the week and that no work was completed. – Good method to ensure accurate tracking per week and clean paper trail.

During Construction Phase GC should review their own and each subcontractors payroll reports for compliance prior to submitting them to the contract administrator. GC is responsible for compliance so be sure that yours as well as any subcontractors payrolls are accurate and correct. GC is responsible for full compliance and will be held accountable for any violations. ALL payrolls must be submitted by contract administrator through the GC

During Construction Phase Payroll Retention and Inspection – Every contractor/subcontractor must keep a complete set of their own payrolls and other records such as time cards, tax records, evidence of fringe benefit payments, for at least 3 years after the project is completed. GC must keep all information (including subcontractors info) for at least 3 years. – This information must be made available for review to any authorized representative from HUD or DOL.

During Construction Phase Davis Bacon Wages must be paid to any laborer or mechanic: – Defined as anyone who is performing construction work on the project, such as carpenters, plumbers, sheet metal workers, apprentices, and trainees. – Foremen that spend more than 20% of their time performing construction work and not excluded (next slide), are covered under DB rules. (only for time spent on construction work)

During Construction Phase – Exclusions to DB wages include administrative, executive, or clerical workers. Examples are superintendents, timekeepers, messengers, etc. – Apprentices and Trainees are the only workers who can be paid less than the prevailing wage rate for their classification. – They must be part of a registered program approved by DOL or a DOL recognized State Apprenticeship Agency (SAC) and are paid in accordance with wage schedule set by approved program.

During Construction Phase Piece Work – Employees may be paid based on a unique factor such as square footage or actual units completed as long as the computed hourly earnings are sufficient to satisfy the wage rate requirement based on actual hours. Fringe Benefits – Health Insurance premiums, retirement, life insurance, vacation, and other paid leave.

During Construction Phase – Fringe benefits do not include employer payments or contributions required by other Federal, State, or local laws, such as employer’s contribution to Social Security or some disability insurance payments. Overtime Deductions Employers are prohibited from requiring employees to “kick back” any of their earnings.

During Construction Phase Site of Work – Where DB wage rates apply. – Boundaries of the project – Can include adjacent property used by a contractor or subcontractor in the construction of a project. Example is a fabrication site that is dedicated exclusively to the project, or nearly so.

During Construction Phase Now let’s go over how to complete a Payroll Report!!!!!

Back End Compliance Once the construction is complete, all payrolls should have been submitted. Remember, all records must be kept for at least three years GC is responsible for keeping records of his own employees as well as any/all subcontractors for at least 3 years.

Resources/Links DOL Office of Labor Relations – DOL Regulations – fr.htm Labor Standards Forms –

Resources/Links Payroll Forms in fillable PDF format – m m Davis Bacon Wage Decisions (current) can be found online at THANK YOU!