July 15, 2013
Re: Super Storm Sandy HUD Financed Projects-Prevailing Wage Requirements under Davis-Bacon Act
Many municipalities will be receiving monies from the United States Department of Housing and Urban Development (HUD) for Hurricane Sandy related repairs in the upcoming months. It is important to keep in mind that any monies accepted by municipalities for federally funded or assisted construction projects due to damage from Hurricane Sandy must comply with the federal labor standards requirements outlined in the Davis Bacon Act (DBA). This act applies to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. DBA mandates the payment of prevailing wage rates, determined by the United States Department of Labor (DOL), to all construction workers on eligible projects. In addition to receiving prevailing wage rates, employees must also receive at least time and one-half of the hourly rate in addition to standard fringe benefits, if any, for all overtime hours worked.
In order to comply with DBA and avoid liability for potentially significant wage restitution or liquidated damages assessed for overtime violations, the following should be taken into consideration:
First, each contract subject to DBA must contain labor standard clauses and a Davis-Bacon wage decision, usually included as part of the contract specifications. The labor standards clauses define the responsibilities of the contractor, obligate the contractor to comply with the labor requirements found in DBA, enable HUD to enforce the applicable federal labor standards, and provide for remedies in the event of violations, including withholding from payments due to the contractor to ensure the payment of wages. The wage decision lists each type of construction classification needed to complete a contract, such as plumber or laborer, and the minimum hourly rates and fringe benefits assigned to each class. The HUD representative supplies both documents for incorporation into the contract. A copy of the wage decision, or of the project wage rate sheet prepared by the HUD representative, and a copy of the Department of Labor form WH-1321 entitled “Notice to All Employees” must be posted at the job site in a location easily accessible to all construction employees and protected from destruction by inclement weather or wind. It is the responsibility of the municipality, as the prime contractor, to ensure posting of these notices.
Second, as prime contractor, a municipality must also ensure full compliance by all employers including all subcontractors with the prevailing wage requirements. The wage decision must include all needed work classifications since no modifications can occur once a contract is awarded. If a need for additional classifications arises, the prime contractor may file a request in writing, including the proposed classification and a recommended wage rate, to the DOL, through the HUD representative.
Third, all contractors, including all subcontractors and third tier contractors, must submit a weekly certified payroll report starting the first week the contractor works on the project and for every week until the contractor finishes. The DOL provides form WH-347 entitled “Payroll” for convenience, but any other payroll form may be used provided it contains the information required by WH-347, including a signature and a certification that the information is true and correct. If there is a temporary break in work on the project by a contractor, a “no work” payroll report must be submitted, unless the HUD representative receives written notice of the break or each payroll report is numbered consecutively. Every contractor must keep a complete set of its own payroll records, time cards, tax records, and evidence of fringe benefit payments for at least three years after the project’s completion. The prime contractor must keep a complete set of all payrolls for every contractor for at least three years after the completion of the project. Furthermore every contractor must have available a copy of its own payroll records for review or copying by HUD or the DOL.
Each payroll report must include the employee’s name, address, social security number, work classification, number of hours worked during the week, rate of pay, gross amount earned, amount of any deductions (including specifying each deduction and verifying the employee’s authorization for each deduction), net amount paid, and signature of compliance by a principal or one authorized by a principal to sign. If the wage decision specifies payment of fringe benefits, payroll reports must either indicate the method of payment of fringe benefits or the basic hourly rate paid must be at least as much as the hourly wage rate plus the fringe benefit rate.
Additionally, any contractor hiring an apprentice or a trainee must obtain certification of the employee’s enrollment. The employer must submit a copy of the apprentice’s or trainee’s registration and/or the approved program’s ratio and wage schedule. Furthermore, the number of apprentices and trainees must not be higher than that of journeymen. If an apprentice or a trainee is not registered, he or she must be paid the journeyman wage rate for the classification of work he or she performs.
Prime contractors must review each subcontractor’s payroll reports for compliance and then submit them to the HUD representative. The municipality, as prime contractor, is responsible for full compliance by all subcontractors and liable for any wage restitution that may be found due to any underpayment of a laborer or mechanic and for any liquidated damages that may be assessed for overtime violations.
The HUD representative monitors labor standards compliance by conducting interviews with construction workers at the job site and reviewing payroll reports. They also over see any enforcement actions required. Every employer must allow all employees to be available for interview on the job site. The DOL may also monitor the project by conducting independent investigations including reviewing payroll information and construction worker interviews.
The League will be hosting a seminar dealing with DBA and other Federal and State requirements attached to Super Storm Sandy rebuilding funds on September 19, 2013 at the PNC Bank Arts Center in Holmdel.
Questions regarding DBA compliance can be directed to Joseph M. Hannon, Esq. at Genova Burns Giantomasi Webster LLC, at 973-533-0777 or firstname.lastname@example.org.
Questions regarding the League’s upcoming seminar on compliance with Super Storm Sandy rebuilding funds regulations can be directed to the League’s staff attorney, Ed Purcell Esq., at (609) 695-3481 x. 137 or email@example.com
Very truly yours,
William G. Dressel, Jr.