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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)
mpurdy@mpurdy.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?
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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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
.
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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
.
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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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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
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Reviewing Payrolls- Issues to Note
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
Prevailing wages apply
More than 20% but less than 50% of hours
Prevailing wages apply
Less than 20% of hours
Federal Prevailing Wages Apply to:
Manual or Physical Labor Performed:
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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
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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 mpurdy@mpurdy.comE-mail(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.
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