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CDBG Federal Labor Standards Compliance

For Grant Administrators

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Why are Labor Standards Crucial?

• Standards guarantee fair wages and compensation for workers

• Helps provide a level playing field for bidders

• Local grantee must ensure and document compliance

• Transgressions endanger future funding• Required by CDBG program and other

federal laws

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Today’s Labor Standards Topics

• Federal Labor Standards “101”

• UGLG Responsibilities

• Wage Determinations & Classification Issues

• Certified Payroll Requirements

• Compliance Principles

• Contractor Responsibilities

• When Things Go Awry….

• Other Sources of Information

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Key Federal Statutes

• Davis-Bacon Act • Contract Work Hours and Safety Standards

Act• Copeland Act

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CDBG and Davis-Bacon Act (40 U.S.C. 276a.-5)

• Enacted 1931, amended 1935 & 1964• HCDA requires construction contracts over

$2,000 or residential properties with 8 or more housing units comply with Davis-Bacon Act

• Act is “site-based”• Includes alteration, repair, painting &

decorating

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CDBG and Davis-Bacon Act

• Construction work financed

• Soft costs do not trigger DB

• Property ≠ building; Applies to Total # of units in property

• Volunteers are exempt (more later)

• Force account workers are exempt

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Use of Volunteers

• Volunteers may work without pay on a construction project to which Davis-Bacon and Related Acts apply. An individual may not however, be paid for some work and volunteer for other work. It is permissible to cover reasonable costs of volunteers such as travel or other incidental benefits .

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Contract Work Hours and Safety Standards Act (CWHSSA) (40 U.S.C. 327-333)

• Enacted 1962• Payment for all contract work exceeding 40

hours per week at 1½ times regular rate of pay

• Applies to contracts exceeding $100,000• Liquidated damages for violations ($10

per/day, per/violation)

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Copeland Act

• Enacted in 1934 (40 U.S.C. 276c)• Prohibits “kickbacks” • Requires contractors to submit certified

payrolls with a signed “statement of compliance” each week

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Copeland Act

• Regulates deductions from wages:−FICA, federal & state taxes−Bona fide prepayment of wages−Court ordered payments, fringe benefit plans, etc

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CDBG and Davis - Bacon Factors of Applicability

• All laborers and mechanics employed by contractors or subcontractors

• Requires payment of at least prevailing wages

• Requires weekly payment of wages• Usually applied through “Related Acts”

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Davis-Bacon Regulations

• The Department of Labor (DOL) has published rules and instructions concerning Davis-Bacon and other labor laws in the Code of Federal Regulations (CFR). They can be found in Title 29 CFR Parts 1, 3, 5, 6 and 7

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Responsibilities of UGLG (Title 29 CFR Part 5)

• Designate a Labor Standards Compliance Officer

• Request a Wage Decision • Put Wage Decision and Labor Standards clauses

(Form 4010) in contract bid documents• Check contractor eligibility

(http://epls.arnet.gov/) • Conduct a pre-construction conference

(optional)

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Responsibilities of UGLG (Title 29 CFR Part 5)

• Review weekly payrolls and compliance statements

• Conduct employee interviews• See that underpaid workers receive

restitution• Maintain contract management system and

compliance files

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Davis-Bacon Wage Determinations

• Must be included in bid documents and contract

• Established by geographic area • May be modified periodically• Published for four types of construction• www.wdol.gov

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Davis-Bacon Wage Determinations Types of Construction

• Building - sheltered enclosures that house persons, machinery, equipment, etc. Also apartment buildings over 4 stories

• Residential - single family houses, townhouses, and apartment buildings up to four stories

• Highway - roads, highways, sidewalks, parking areas, and other paving work not incidental to other construction

• Heavy - projects that can’t be classified as Building, Residential or Highway

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Davis-Bacon Wage Determinations “Lock-In” Rules

• Competitive bidding: −Modifications published less than 10 days before

bid opening are not applicable if there is not sufficient time to notify bidders

−Lock-in at bid opening provided contract is awarded within 90 days

−Must update wage determination if contract award is more than 90 days

−UGLG must verify that wage rates are current

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State Labor Law Requirements

Insert any specific state requirements if applicable

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Employer Requirements

• Classification• Pay• Overtime• Posters

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Employer Requirements

• All laborers and mechanics must:

−Be classified in accordance with the Wage Decision

−Be paid at rates those on Wage Decision

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Employer Requirements Additional Classifications

• Employer submits request in writing• UGLG must follow up (contact State) • DOL has 3 criteria for approval:

− Work is not already on the WD− Proposed classification is used by the

industry in the project area − Proposed wage rate & fringe benefits bear a

reasonable relationship to rates on the WD

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Employer Requirements Dual Classification

• When an employee performs tasks under two or more distinct classifications, the employee must be paid the prevailing wage rate for each classification

• Must be listed separately on the payroll

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Employer Requirements

• All laborers and mechanics must:

−Be paid not less often than once a week−Receive at least 1½ times regular rate of pay for

all hours worked over 40 per week

• Each employer must:

−Submit weekly certified payrolls reflecting all hours worked

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Employer Requirements

• Two Posters:−Wage Determination−DOL “Notice to Employees”

http://www.dol.gov/esa/regs/compliance/posters/pdf/fedprojc.pdf

−Posted in a conspicuous place, protected from the elements

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UGLG Compliance/Monitoring

• On-site employee interviews should be used as a proactive enforcement tool

• Grantees are encouraged to focus interviews to projects or groups of workers where violations are suspected or alleged

• Each employer must: Maintain full documentation, including payrolls

and related records, for at least 3 years following completion

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UGLG Compliance/Monitoring

• Interviews can be used to support a specific on-going investigation

• Fewer on-site interviews may be conducted randomly but HUD considers focusing a far more effective means of utilizing on-site interview resources

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Davis-Bacon Compliance

• Wage Classifications and Pay• Site of the Work• Truck Drivers• Apprentices and Trainees• Helpers• Fringe Benefits

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Davis Bacon ComplianceLaborers and Mechanics

• Laborer / Mechanic: anyone performing construction work on the project

• Supervisors are covered if they spend 20% their time performing manual work

• Project Superintendents if they do work in listed trades, they must be paid the appropriate wage listed on the Wage Determination

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Davis Bacon ComplianceSite of Work

• 29 CFR 5.2(l)(1): −the physical place where the building or work

called for in the contract will remain

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Davis Bacon ComplianceApprentices and Trainees

• Only apprentices & trainees registered in an approved program may be paid less than the applicable wage rate

• “Approved program” means a program registered with the DOL or a DOL- recognized State Apprenticeship Agency

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Davis Bacon ComplianceHelpers

• Helpers are only allowed when:

−Duties are distinct from all others−Use of helpers is established in the area−Helper not in informal training program

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Davis BaconFringe Benefits

• Allowed:

−Employer contributions to Third Party plans

−Health / life / disability / dental insurance plans

−Retirement plans

• Costs of apprenticeship

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Davis BaconFringe Benefits

• Excludes payments required by law:

−FICA −Workers’ Compensation−Unemployment

• Certified payrolls must reference how FBs are paid

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Prime Contractor

• Responsible for all employers on project• Subcontractors communicate through

prime• Ensures labor provisions in all subcontracts

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Prime Contractor

• Submits certified payrolls for own employees

• Provides subs with forms and guidance• Ensures access to employees on site• Responsible for restitution to underpaid

employees• Posters

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Subcontractor

• Submits certified payrolls each week• Instructs lower-tier subs of responsibilities• Reviews Wage Decisions, requests

additional classifications• Ensures access to employees on-site

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Certified Payroll Requirements(Title 29 CFR Part 3)

• Optional Form WH-347• Compliance statement w/ original signature

of corporate official, or letter of delegation• Payrolls are due weekly• Identify first and final payroll

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Certified Payroll Basics

• “No Work” payrolls optional – but all weeks must be accounted for in records

• Payrolls must be complete & legible• Prime contractor reviews payrolls and

submits to UGLG• Payroll record retention = three years

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Certified Payroll Basics Employee Information

• Employee name, address, SSN• Employee work classification• Rate of pay• Straight / OT hours worked per day, per

week on this project

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Certified Payroll Basics Wages and Deductions

• Gross wages earned• Deductions from wages• Net pay• Statement of compliance:

−one for each weekly payroll−signed by corporate official (or designee)

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Correcting Violations

• Labor Standards Officer notifies company and/or prime contractor of violations

• Wage restitution must be documented−Submit corrected certified payroll

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Correcting Violations

• Funds may be withheld by UGLG if violations are not corrected promptly

• Deposit of funds in Escrow if matter is under appeal, or workers cannot be found

• Administrative sanctions:−Limited Denial of Participation−Debarment

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Recordkeeping Requirements

• Copies of Wage Decisions−Modifications

• Preconstruction Minutes if applicable• Bid Documents and Copy of Contract• Notification of Contract Award• Documentation of all enforcement actions

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Recordkeeping Requirements (continued)

• Weekly payrolls with statement of compliance

• Employee interviews• Contractor clearance• Securing confidentiality of records

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Reporting

• Violations of underpayment must be reported to DOL if >$1,000 or willful.

• Semi-annual report of contracts awarded

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HUD Labor Relations References

• Making Davis Bacon Work (HUD Publication) A Practical Guide for States, Indian Tribes and Local Agencies http://www.hud.gov/offices/adm/hudclips/forms/files/4813-LR.pdf

• Making Davis Bacon WorkA Contractor’s Guide to Davis-Baconhttp://www.hudclips.org/sub_nonhud/cgi/pdfforms/4812-LR.pdf

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HUD Labor Relations References

• Labor Relations Formswww.hud.gov/offices/olr/olrform.cfm

• HUD Office of Labor Relations: www.hud.gov/offices/olr

• HUD Regulations:www.access.gpo.gov/nara/cfr/cfr-table-search.html

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Other Sources

• Davis-Bacon Wage Determinations: http://www.wdol.gov

• GSA’s On-Line Debarment List:http://epls.arnet.gov

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Other Sources

• DOL DBRA Homepage: www.dol.gov/esa/programs/dbra/index.htm

• DOL Regulations:www.dol.gov/esa/regs/cfr/whdcfr.htm

• DOL Forms:www.dol.gov/libraryforms/