HUD's_Davis-Bacon_and_Labor_Standards_Contractor_Guide_Addendum.pdf

DAVIS-BACON AND LABOR STANDARDS

CONTRACTOR GUIDE ADDENDUM

2 Contractor Guide Addendum

Table of Contents

INTRODUCTION � � � � � � � � � � � � � � � � � � � � � � � 3

BASIC DBA DEFINITIONS � � � � � � � � � � � � � � � � � � � 3

LAWS AND REGULATIONS � � � � � � � � � � � � � � � � � � � 4

CONTRACTOR RESPONSIBILITIES � � � � � � � � � � � � � � � 7

CONTRACT ADMINISTRATOR RESPONSIBILITIES � � � � � � � � 7

WAGE BASICS � � � � � � � � � � � � � � � � � � � � � � � � � 8

REVIEWING PAYROLLS � � � � � � � � � � � � � � � � � � � � 9

REPORTING PAYROLLS � � � � � � � � � � � � � � � � � � � 11

ADDITIONAL WORK CLASSIFICATION AND WAGE RATES � � � � 14

SANCTIONS AND RESTITUTION � � � � � � � � � � � � � � � 17

3 Contractor Guide Addendum

INTRODUCTION

This Guide has been prepared for you as a contractor performing work on construction projects that are assisted by the Department of Hous-ing and Urban Development and subject to Davis-Bacon prevailing wage requirements. This Guide does not address contractor requirements involved in direct Federal contracting where HUD or another Federal agency enters into a procurement contract. In this latter case, the Fed-eral Acquisition Regulations (FAR) are applicable. While the guidance contained in this Guide is generally applicable to any Davis-Bacon cov-ered project, specific questions pertaining to direct Federal contracts should be addressed to the Contracting Officer who signed the contract for the Federal agency.

Our objective here is to provide you with a guide that is simple and non-bureaucratic yet comprehensive, and will help you better under-stand and comply with Davis-Bacon labor standards. HUD’s Office of

Davis Bacon and Labor Standards worked closely with the Department of Labor’s Wage and Hour Division to make sure that the labor stan-dards provisions in your contract and the specifics of complying with them represent the latest information. It is the Department of Labor that has general administrative oversight of all Federal contracting agen-cies, such as HUD, which administer the day-to-day responsibilities of enforcing Davis-Bacon provisions in construction contracts that they either fund or assist in funding.

This Guide contains six main chapters. The first chapter includes the laws and regulations associated with Federal labor standards adminis-tration and enforcement. The second chapter lists the responsibilities of contractors and of state, tribal, and local contracting agencies that administer HUD programs. The third chapter lists wage basics, includ-ing wage decisions, wage classifications, and wage rates, to provide background for the rest of the Guide. The fourth chapter discusses re-viewing and reporting payrolls. The fifth chapter delves into additional work classifications and wage rates. The sixth and final chapter dis-cusses sanctions and restitution. For further background, the DBLS

Agency Guide may be used as a reference.

Finally, not all HUD construction projects are covered by Davis-Bacon wage rates. For the purpose of this Guide, we are assuming that a deter-mination has already been made that Davis-Bacon wage rates are appli-cable. Should you wish assistance in determining whether Davis-Bacon wage rates apply to a particular project or if you need other related tech-nical assistance, please consult with the HUD Labor Standards Field staff for your area.

RESOURCE

Visit the Office of Davis Bacon and Labor Standards online:

www.hud.gov/program_offices/davis_bacon_and_labor_stan-dards

BASIC DBA DEFINITIONS

See Section 3 in the Agency Guide.

http://www.hud.gov/program_offices/davis_bacon_and_labor_standards/laborrelstf http://www.hud.gov/program_offices/davis_bacon_and_labor_standards/laborrelstf

4 Contractor Guide Addendum

LAWS AND REGULATIONS

The Davis-Bacon Act (DBA)

The Davis-Bacon Act (DBA) requires the payment of prevailing wage rates (determined by the U.S. Department of Labor) to all laborers and mechanics on Federal government and District of Columbia construc-tion projects in excess of $2,000. Construction includes alteration and/ or repair, including painting and decorating, of public buildings or public works. Most HUD construction work is not covered by the DBA itself since HUD seldom contracts directly for construction services. Most often, if DB applies to a HUD project is it because of a labor provision contained in one of HUD’s “Related Acts” (see 5.9 in the Agency Guide).

The Related Acts are often referred to as the Davis-Bacon and Related

Acts or DBRA.

The Contract Work Hours and Safety Standards Act (CWHSSA)

CWHSSA requires time and one-half pay for overtime (OT) hours (over

40 in any workweek) worked on a covered project. The CWHSSA ap-plies to both direct federal contracts and to federally-assisted contracts where those contracts require or involve the employment of laborers and mechanics and where federal wage standards (e.g., Davis-Bacon or HUD-determined prevailing wage rates) are applicable. CWHSSA provisions apply to all laborers and mechanics, including watchmen and guards, employed by any contractor or subcontractor. CWHSSA also applies to maintenance laborers and mechanics employed by con-tractors or subcontractors engaged in the operation of Public Housing

Agencies (PHA), Tribally Designated Housing Entities (TDHE), and Indi-an Housing Agencies (IHA) developments.

Exemptions:

CWHSSA O/T provisions do not apply where the federal assistance is only in the nature of a loan guarantee or insurance.

CWHSSA O/T provisions do not apply to prime contracts of $100,000 or less.

The Copeland Act (Anti-Kickback Act)

The Copeland Act makes it a Federal crime for anyone to require any laborer or mechanic (employed on a Federal or Federally-assisted proj-ect) to kickback, (i.e., give up or pay back) any part of their wages. The

Copeland Act requires every employer to submit weekly certified payroll reports, and regulates permissible payroll deductions.

The Fair Labor Standards Act (FLSA)

The FLSA governs matters such as federal minimum wage rates and

O/T. These standards are generally applicable to any labor performed and may be pre-empted by other (often more stringent) federal stan-dards such as the DBRA prevailing wage requirements and CWHSSA

O/T provisions. The authority to administer and enforce FLSA provi-sions resides solely with DOL.

Davis-Bacon Regulations

DOL has published rules and instructions concerning Davis-Bacon and other labor laws in the Code of Federal Regulations (CFR). These reg-ulations can be found in Title 29 CFR Parts 1, 3, 5, 6, and 7. Part 1 ex-plains how DOL establishes and publishes DBA wage determinations

(also referred to as wage decisions) and provides instructions on how to use the determinations. Part 3 describes Copeland Act requirements for payroll deductions and the submission of weekly CPRs. Part 5 cov-ers the labor standards provisions that are in contracts relating to Da-vis-Bacon Act wage rates and the responsibilities of contractors and contracting agencies to administer and enforce the provisions. Part 6 provides for administrative proceedings enforcing Federal labor stan-dards on construction and service contracts. Finally, Part 7 sets param-eters for practice before the Administrative Review Board. These regu-lations are used as the basis for administering and enforcing the laws.

DOL Regulations are available online: www.ecfr.gov/current/title-29 http://www.ecfr.gov/current/title-29

5 Contractor Guide Addendum

Construction Contract Provisions and Labor Standards Administration

Labor standards administration involves the activities that take place primarily before construction begins. Administration sets the stage for the compliance activities that occur during the construction phase. The first and sometimes most difficult step is determining whether and to what extent Davis-Bacon wage standards apply to a particular contract or project. The Factors of Labor Standards Applicability (see Appendix

II-6) should be helpful. Most HUD-assisted construction work is cov-ered by Davis-Bacon, but there are some exceptions. The best and saf-est approach is to first assume that Davis-Bacon requirements will be applicable whenever the contract/project involves construction work valued in excess of $2,000, then look more closely to see if there is any reason for non-coverage. Each contract subject to Davis-Bacon labor standards requirements must contain labor standards clauses and a

Davis-Bacon wage decision. These documents are normally wound into the contract specifications.

The labor standards clauses The contract for construction is the vehicle to ensure contractor com-pliance and Davis-Bacon wage enforcement. Therefore, the bid speci-fications and/or the contract for each project subject to Davis-Bacon wage rates must contain both a Davis-Bacon wage decision and labor standards clauses. The labor standards clauses describe the responsi-bilities of the contractor concerning Davis-Bacon wages and obligate the contractor to comply with the Davis-Bacon wage and reporting requirements and with the O/T provisions of the CWHSSA (applicable only when the prime contract is valued at over $100,000). The labor standards clauses also provide for remedies in the event of violations, including the withholding of payments due to the contractor to ensure the payment of wages or liquidated damages that may be found due, and sanctions should violations occur. These contract clauses enable the contract administrator to enforce the Federal labor standards ap-plicable to the project. HUD has standard forms that contain contract clauses. For example, the HUD-92554M, Supplementary Conditions Of

The Contract for Construction, which is issued primarily for FHA (Fed-eral Housing Administration) multifamily housing and other construc-tion projects administered by HUD; the HUD-4010, Federal Labor Stan-dards Provisions, which is used for CDBG (Community Development and Block Grant) and HOME (HOME Investment Partnerships Program) projects; and the HUD-5370, General Conditions for Construction Con-tracts (construction contracts >$150,000) or the HUD-5370-EZ, Gener-al Contract Conditions for Small Construction/Development Contracts

(construction contracts >$2,000 but ≤$150,000) which are used for

Public and Indian Housing projects. These should be wound into the contract specifications or incorporated by specific reference in the bid/ contract documents (see Labor Relations Letter 96-03).

6 Contractor Guide Addendum

Davis-Bacon Wage Decisions

The term “wage decision” includes the original decision and any subse-quent decisions that modify, supersede, correct, or otherwise change the provisions of the original decision. The term “wage decision” is used within this Guide to mean the Davis-Bacon wage decision. The terms

“wage decision” and “wage determination” are used interchangeably.

A wage decision is a schedule of construction work classifications, wage rates, and fringe benefits that represent the minimum rates that must be paid to workers employed in those classifications. Wage deci-sions are established for defined geographic areas, usually by county or group of counties, and four general characters of construction work.

RESOURCE

The Department of Housing and Urban Development (HUD) one stop forms resource page.

www.hud.gov/program_offices/administration/hudclips/forms

RESOURCE

All current Davis Bacon wage decisions can be accessed online at no cost at www.sam.gov http://www.hud.gov/program_offices/administration/hudclips/forms http://www.sam.gov

7 Contractor Guide Addendum

CONTRACTOR RESPONSIBILITIES

The principal contractor is responsible for the full compliance of all em-ployers (the contractor, subcontractors, and any lower-tier subcontrac-tors) with the labor standards provisions applicable to the project. Be-cause of the contractual relationship between a prime contractor and their subcontractors, subcontractors generally should communicate with the contract administrator only through the prime contractor. (See

Contract Administrator Responsibilities, below.)

CONTRACT ADMINISTRATOR

RESPONSIBILITIES

The contract administrator is responsible for the proper administration and enforcement of the Federal labor standards provisions on con-tracts covered by Davis-Bacon requirements. This term is used to rep-resent the person (or persons) who will provide labor standards advice and support to contractors and other project principals (e.g., owner, sponsor, architect), including providing the proper Davis-Bacon wage decision (see 6.1, The Wage Decision) and ensuring that the wage de-cision and contract clauses are incorporated into the contract for con-struction. The contract administrator also monitors labor standards compliance (see Section 12, Payroll Compliance Reviews and Correc-tions, in the Agency Guide) by conducting interviews with construction workers at the job site and reviewing payroll reports, and oversees any enforcement actions that may be required.

The contract administrator could be an employee or agent of HUD, or of a city or county or public housing agency. For HUD projects admin-istered directly by HUD staff, usually FHA-insured multifamily projects, the contract administrator will be the HUD Labor Standards field staff.

But many HUD-assisted projects are administered by local contracting agencies such as PHAs, TDHEs, and States, cities and counties under

HUD’s CDBG and HOME programs.

In these cases, the contract administrator will likely be local agency staff. In either case, the guidance for contractors remains essentially the same.

DOL also has a role in monitoring Davis-Bacon administration and en-forcement. In addition, DOL has independent authority to conduct in-vestigations. A DOL investigator or other DOL representative may visit

Davis-Bacon construction sites to interview construction workers or review payroll information.

RESOURCE

Program technical guidance

For interpretations of program requirements or handbooks and instructions on the use of forms:

Housing Programs - See our Contact List for help.

https://www.hud.gov/program_offices/housing/contacts

8 Contractor Guide Addendum

WAGE BASICS

The Wage Decision

Davis-Bacon labor standards stipulate the wage payment requirements for skilled workers, operators, truck drivers, and laborers—for example:

carpenters, electricians, plumbers, roofers, rollers, screeds, bulldozers, water wagons, dump trucks, and other construction work classifica-tions that may be needed for the project. The Davis-Bacon wage deci-sion that applies to the project contains a schedule of work classifica-tions and wage rates that must be followed.

Remember, the wage decision is contained in the contract specifica-tions along with the labor standards clauses. See 5.12 in the Agency

Guide.

The work classifications and wage rates

A Davis-Bacon wage decision is simply a listing of different work clas-sifications and the minimum wage rates that must be paid to anyone performing work in those classifications.

You’ll want to make sure that the work classifications you need are con-tained in the wage decision, and make certain that you know exactly what wage rate(s) you will need to pay. Some wage decisions cover sev-eral counties and/or types of construction work (e.g., residential and commercial work) and can be lengthy and difficult to read. The contract administrator (HUD Labor Standards field staff or local agency staff) is available to assist with any trouble reading the wage decision or finding the applicable work classification(s).

To make reading lengthy wage decisions easier, a contract administra-tor may prepare a Project Wage Sheet (HUD-4720). This sheet is a one-page transcript that will show only the classifications and wage rates for a project. A blank copy of a Project Wage Rate Sheet is provided in the Appendix.

RESOURCE

A fillable version of this form is available online at HUDClips www.hud.gov/program_offices/administration/hudclips/forms

Contact the contract administrator monitoring the project for assistance with a Project Wage Rate.

Posting the wage decision, Davis-Bacon poster, and Additional Classifications wages

The prime contractor is responsible for posting a copy of the wage de-cision (or the Project Wage Rate Sheet), a copy of the DOL Davis-Bacon poster titled Employee Rights Under the Davis-Bacon Act (Form WH-

1321), and Additional Classifications wages at the job site in a place that is easily accessible to all the construction workers employed on the project and where the wage decision and poster will not be destroyed by wind, rain, etc. The purpose of this posting is to provide information to the construction laborers and mechanics working on the project about their entitlement to the prevailing wage for their trade, and to advise them whom to contact (the contract administrator) if they have any questions or want to file a complaint.

RESOURCE

The Employee Rights Under the Davis Bacon Act poster replac es the Notice To All Employees. The new poster is available in

English and Spanish online at:

www.hud.gov/program_offices/davis_bacon_and_labor_stan-dards/olrmk13.

http://www.hud.gov/program_offices/davis_bacon_and_labor_standards/olrmk13.

http://www.hud.gov/program_offices/davis_bacon_and_labor_standards/olrmk13.

http://www.hud.gov/program_offices/administration/hudclips/forms

9 Contractor Guide Addendum

REVIEWING PAYROLLS

Certified Payroll Reports (CPRs)

To demonstrate compliance with labor standards requirements, each employer shall prepare, certify, and submit payroll reports for each week to the sponsor, applicant, or owner for any contract work that is performed. See 29 CFR § 5.5(a)(3)(ii) for information on CPRs.

CPR format Employers on an FHA project are required to use the HUD-authorized

Electronic Payroll System (EPS) to submit CPR reports. If an approved electronic payroll reporting system is not being used by the LCA,, the employer must ensure that all information from DOL Payroll Form WH-

347 is included and that the LSS can reasonably interpret it. Form WH-

347 is available online at www.dol.gov/whd/forms/wh347.pdf.

Submission requirements Each employer shall submit payroll reports beginning with the first week such employer performs work on the site of the work. Employers shall submit reports promptly following the close of each such pay week.

“No Work” payrolls Employers are not required to submit reports for weeks during which no work was performed at the site of work, provided that the payroll reports are numbered sequentially or that the employer has provided written notice that its work on the project has been suspended.

Weekly payroll certification Each weekly payroll submitted shall be accompanied by a “Statement of

Compliance” that bears the original signature of the owner, executive/ corporate officer, or a designee authorized by the owner or officer. The signature must be in ink; pencil is not acceptable. Signature stamps, photocopies, and facsimiles are not acceptable. The employer may uti-lize the reverse side of the DOL Payroll Form WH-347 as its Statement of Compliance or another document that contains the same language prescribed on the reverse of the WH-347.

False Submissions The falsification of any of the above certifications may subject the em-ployer to civil or criminal prosecution under § 1001 of Title 18 and § 231 of Title 31 of the United States Code (USC).

http://www.dol.gov/whd/forms/wh347.pdf

10 Contractor Guide Addendum

Payroll Review and Submission

The prime contractor should review each subcontractor’s payroll re-ports for compliance prior to submitting the reports to the contract administrator. Remember, the prime contractor is responsible for the full compliance of all subcontractors on the contract and will be held accountable for any wage restitution that may be found due to any la-borer or mechanic that is underpaid and for any liquidated damages that may be assessed for O/T violations. All the payroll reports for any project must be submitted to the contract administrator through the prime contractor.

An alert prime contractor that reviews subcontractor payroll submis-sions can detect any misunderstandings early, prevent costly under-payments, and protect itself from financial loss should underpayments occur.

Payroll Retention

Every contractor (including every subcontractor) must keep a complete set of their own payrolls and other basic records—such as employee ad-dresses and full SSNs, time cards, tax records, evidence of fringe bene-fit payments—for a Davis-Bacon project for at least three years after the project is completed. The prime contractor must keep a complete set of all the payrolls for every contractor (including subcontractors) for at least three years after completion of the project.

Payroll Inspection

In addition to submitting payrolls to the contract administrator, every contractor (including subcontractors) must make their own copy of the payrolls and other basic records available for review or copying to any authorized representative from HUD or DOL.

11 Contractor Guide Addendum

REPORTING PAYROLLS

Completing a Payroll Report

Each employer shall maintain payroll records with respect to their own workforce employed at the site of the work. The prime contractor shall maintain such records relative to all laborers and mechanics working at the site of the work during the course of the construction work for at least three years following the completion of the work. Such records shall contain:

Project and contractor/subcontractor information Each payroll must identify the contractor or subcontractor’s name and address, the project name and number, and the week ending date. Week dates must be indicated in the spaces provided. Numbering payrolls is optional but strongly recommended.

Employee information The name and an individually identifying 4-digit number for each labor-er and mechanic. Employers must always maintain each employee’s ad-dress and full Social Security number (SSN) during the construction of the project and for no less than three years following completion. This information must be made available to the prime contractor, HUD, and/ or the LCA upon request.

Employers (prime contractors and subcontractors) must maintain the current address and full SSN for each employee and must provide this information upon request to the contracting agency or other authorized representative responsible for Federal labor standards compliance monitoring. Prime contractors may require a subcontractor to provide this information for the prime contractor’s records. DOL has modified form WH-347, Payroll, to accommodate these reporting requirements.

Work classification

Each employee must be classified in accordance with the wage deci-sion based on the type of work they perform.

Apprentices or trainees The first payroll on which any apprentice or trainee appears must be accompanied by a copy of that apprentice’s or trainee’s registration in a registered or approved program. A copy of the portions of the regis-tered or approved program pertaining to the wage rates and ratios shall also accompany the first payroll on which the first apprentice or trainee appears.

Split classifications

For an employee that worked in a split classification, make a separate entry for each classification of work performed, distributing the hours of work to each classification accordingly, and reflecting the rate of pay and gross earnings for each classification. Deductions and net pay may be based upon the total gross amount earned for all classifications.

Hours worked The payroll should show only the regular and O/T hours worked on one particular project. The employer must show both the daily and to-tal weekly hours for each employee. If an employee performs work at job sites other than the project for which the payroll is prepared, those

“other job” hours should not be reported on the payroll. In these cases, employers should list the employee’s name, classification, hours for this project only, the rate of pay and gross earnings for this project, and the gross earned for all projects. Deductions and net pay may be based upon the employee’s total earnings (for all projects) for the week.

Rate of pay Employers must show the basic hourly rate of pay for each employee for one particular project. If the wage decision includes a fringe benefit and the employer does not participate in approved fringe benefit programs, the employer must add the fringe benefit rate to the basic hourly rate of pay, and must list the O/T rate if O/T hours were worked.

12 Contractor Guide Addendum

Piece-work For any piece-work employees, the employer must compute an ef-fective hourly rate for each employee each week based upon the em-ployee’s piece-work earnings for that week. To compute the effective hourly rate, divide the piece-work earnings by the total number of hours worked, including consideration for any O/T hours.

The effective hourly rate must be reflected on the certified payroll. This hourly rate may be no less than the wage rate (including fringe benefits, if any) on the wage decision for the classification of work performed.

It does not matter that the effective hourly rate changes from week to week, only that the rate is no less than the rate on the wage decision for the classification of work performed.

Remember, the O/T rate is computed at one and one-half times the ba-sic rate of pay plus any fringe benefits. For example, if the wage deci-sion requires $10/hour basic plus $5/hour fringe benefits, the O/T rate would be: ($10 x 1.5) + $5 = $20/hour.

Gross wages earned Show the gross amount of wages earned for work performed on a par-ticular project. Note: Employees with work hours and earnings on other projects may show gross wages for a particular project over gross earn-ings from all projects (e.g., $425.40/$764.85) and base deductions and net pay on the “all projects” earnings.

Deductions Show the amounts of any deductions from the gross earnings. “Other” deductions should be identified (e.g., Savings Account or Loan Repay-ment). Any voluntary deduction (i.e., not required by law or by an order of a proper authority) must be authorized in writing by the employee or provided for in a collective bargaining (union) agreement. A short note signed by the employee is all that is needed and should accompany the first payroll on which the other deduction appears. The note needs to show the type, amount, and frequency of the deduction. A new deduc-tion authorization is required when any of the aforementioned items change.

MORE INFO

Only one employee authorization is needed for recurring (e.g., weekly) “other” deductions. Written employee authorization is not required for income tax and Social Security deductions.

13 Contractor Guide Addendum

Net pay Show the net amount of wages paid.

Statement of Compliance The Statement of Compliance is the certification. It is located on the reverse side of a standard payroll form (WH-347). Employers must be sure to complete the identifying information at the top, particularly if at-taching the Statement of Compliance to an alternate payroll form such as a computer payroll. Also, the employer must check either 4(a) or 4(b) if the wage decision contains a fringe benefit. Checking 4(a) indicates that the employer is paying required fringe benefits to approved plans or programs; and 4(b) indicates that the employer is paying any required fringe benefit amounts directly to the employee by adding the fringe benefit rate to the basic hourly rate of pay. If the employer is paying a portion of the required fringe benefit to programs and the balance directly to the employee, the employer must explain those differences in box 4(c).

Signature For paper payrolls submitted, the payroll is signed with an original sig-nature in ink. The payroll must be signed by a principal of the firm (owner or officer such as the president, treasurer, or payroll administrator) or by an authorized agent (a person authorized by a principal in writing to sign the payroll reports). Signature authorization (for persons other than a principal) should be submitted with the first payroll signed by such an agent. For paper payrolls, signatures in pencil, signature stamps, Xerox copies, PDFs, and other facsimiles are not acceptable.

MORE INFO

Only one Statement of Compliance is required for each employ er’s weekly payroll no matter how many pages are needed to re port the employee data.

14 Contractor Guide Addendum

ADDITIONAL WORK

CLASSIFICATION AND WAGE RATES

After contract award, if it is determined that additional work classifica-tions are required because the wage decision lacks all the necessary classifications and wage rates, the prime contractor and, if applicable, its subcontractors employing workers in such classifications shall re-quest an additional work classification and propose a wage rate and fringe benefits for such classification on form SF-1444, Request for

Authorization of Additional Classification and Rate. The contractor or subcontractor shall make its request for a final decision through the

LSS or LCA, as appropriate, to DOL at whd-cbaconformance_incoming@dol.gov. The LSS/LCA shall assist the employer in preparing the request and, if necessary, provide guid-ance on the policies and procedures involved.

Note: Additional work classifications and wage rates may be requested only after the effective wage decision “lock-in” date. (See DOL Regula-tions at 29 CFR Part 5 § 5.5(a)(1)(ii).)

Additional Work Classification and Wage Rate Parameters

Signature Additional work classifications must be signed by DBLS for FHA-in-sured projects managed by HUD and signed by the LCA contracting officer for projects managed by LCAs, then forwarded to DOL with the applicable wage decision where:

The requested work classification is used in the area of the project by the construction industry;

The work that will be performed by the requested work classification is not performed by a work classification that is already contained within the applicable wage decision;

The proposed wage rate for the requested work classification bears a reasonable relationship to the wage rates on the wage decision; and

The workers that will be employed in the requested work classification

(if it is known who the workers are or will be) or the workers’ representa-tives agree with the proposed wage rate.

General guide The wage rate and fringe benefits proposed for any classification must be in accordance with the guidance available in All Agency Memoran-dum 213. The proposed wage rate and fringe benefits should bear a reasonable relationship to the entirety of the rates within the relevant category. There are four basic categories: skilled crafts, laborers, truck drivers, and power equipment operators. Additional classifications pro-posed for power equipment operators must specify the type(s) of pow-er equipment involved.

Making the Request

Although a request for additional work classification and wage rate may be prompted following an LSS/LCA review, the proposal must originate with the prime contractor/employer that will utilize the work classifica-tion. The prime contractor/employer must submit the request in writ-ing. A basic request must identify the contract/project involved, the work classification requested, and the wage rate, including any bona fide fringe benefits proposed. In some cases, it may be necessary for the prime contractor/employer to describe the work that the request-ed work classification would perform. The prime contractor/employer should use form SF-1444, Request for Authorization of Additional Clas-sification and Rate, to submit the request.

mailto:whd-cbaconformance_incoming@dol.gov

15 Contractor Guide Addendum

LSS/LCA Review of Request

The LSS/LCA will review the prime contractor/employer’s request to determine if it satisfies the approval criteria at 5.12.1.9.2. The LSS/LCA will contact the prime contractor/employer if clarification or additional information is needed to complete the review.

Signing the request, reporting to DOL If the LSS/LCA review finds that the requested work classifications and wage rate/fringe benefits meet the criteria at 5.12.1.9.2, the LSS/LCA submits the completed SF-1444, related documentation, and the appli-cable wage decision to the DOL National Office for final decision using

DOL’s dedicated email address:

whd-cbaconformance_incoming@dol.gov.

Disagreement with the request;

referring for DOL decision If the LSS/LCA review finds that the requested work classification and wage rate/fringe benefits fails to meet the approval criteria or if the par-ties do not agree on the proper classification or wage rate/fringe bene-fits for the work described, the LSS/LCA shall prepare an SF-1444 and a written report explaining the results of the review and any issues in dispute among the parties, and shall forward these along with a copy of the applicable wage decision to the DOL National Office for its decision using the same dedicated DOL email address.

DOL decision DOL regulations permit 30 days for DOL to respond to the SF-1444. DOL will notify the LSS/LCA in writing of its decision.

DOL approval When DOL approves the requested additional work classification and wage rate/fringe benefits, the LSS/LCA shall provide a copy of the DOL notice of approval to the prime contractor/employer with instructions that the additional work classification and wage rate/fringe benefits must be posted on the job site with the wage decision.

mailto:whd-cbaconformance_incoming%40dol.gov?subject=

16 Contractor Guide Addendum

DOL disapproval When DOL disapproves the requested work classification and wage rate/fringe benefits, DOL will notify the LSS/LCA in writing of the rea-sons why the request cannot be approved. DOL may also indicate what work classifications/wage rate/fringe benefits could be approved for the work involved if a modified request is submitted.

Notification to the prime contractor/employer The LSS/LCA will notify the prime contractor/employer in writing of the results of the LSS/LCA review and/or DOL decision and provide a copy of the DOL notice.

Requests for DOL reconsideration The LSS/LCA, the prime contractor/employer, or other interested par-ties may request reconsideration of the DOL decision on a requested additional work classification and wage rate/fringe benefits. Such re-quests must be made in writing accompanied by a full statement of the interested party’s views and any supporting wage data or other perti-nent information.

17 Contractor Guide Addendum

SANCTIONS AND RESTITUTION

Introduction

Even in the best of circumstances, things can go wrong. In a Davis-Ba-con context, “things going wrong” usually means there’s a difference of opinion or a dispute about whether and to what extent underpayments have occurred. These disputes are usually between the contract ad-ministrator and one or more employers (the prime contractor and/or a subcontractor). The dispute may involve something simple such as an additional classification request that is pending before DOL, or some-thing as significant as investigative findings following a complaint of underpayment. This chapter discusses some of the things you might expect, and what you can do to make your views known and to lessen any delays in resolving the problem or issue.

Administrative Review on Labor Standards Disputes

The labor standards clauses in the contract and DOL regulations pro-vide for administrative review of issues where there is a difference of views between the contract administrator and any employer. The most common circumstances include:

Additional classifications and wage rates

Additional classification and wage rate requests are sometimes denied by DOL. An employer that is dissatisfied with the denial can request re-consideration by the DOL Wage and Hour Administrator. The employer may continue to pay the wage rate, as requested, until a final decision is rendered on the matter. When the final decision is known, the employer will be required to pay any additional wages that may be necessary to satisfy the wage rate that is established.

Reconsideration DOL normally identifies the reasons for denial in its response to the re-quest. Any interested person (e.g., the contract administrator, employer, or representatives of the employees) may request reconsideration of the decision on the additional classification request.

The request for reconsideration must be made in writing and must thor-oughly address the denial reasons identified by DOL. Employer requests for reconsideration should be made through the contract administrator but may be made directly to DOL. (See DOL Regulations 29 CFR § 1.8.)

All requests initiated by or made through the contract administrator or

HUD must be submitted through HQLS (Headquarters Office Davis-Ba-con and Labor Standards).

Administrative Review Board Any interested party may request a review of the Administrator’s de-cision on reconsideration by DOL’s Administrative Review Board. DOL regulations 29 CFR Part 7 explain the procedures for such reviews. (See also 29 CFR § 1.9.)

Findings of underpayment Compliance reviews and other follow-up enforcement actions may re-sult in findings of underpayment. The primary goal in every case and at every step in this process is to reach agreements about who may have been underpaid and how much wage restitution may be due, and to promptly deliver restitution to any underpaid workers. The contract administrator will usually work informally with employers to reach such agreements.

Rulings and interpretations unrelated to findings of underpayment DOL is the authority for rulings and interpretations unrelated to findings of underpayments. This includes disputes concerning the prevailing wage rates as determined by DOL, DBRA applicability, character of work decisions, and interpretation and application of DOL regulations at 29

CFR Parts 1, 3, and 5. These and other such matters must be referred to the DOL Wage and Hour Administrator for their ruling and/or interpreta-tion per 29 CFR § 5.13. Any request for a ruling or an interpretation from the DOL Administrator via DBLS must be submitted through HQLS with a copy to the local LSS.

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Disputes concerning findings of underpayment Underpayments usually occur when a contractor or subcontractor does not properly pay wages according to the approved wage determination and it has been identified as part of a Davis-Bacon and DBLS enforce-ment action. There may be other situations that also create underpay-ments, and they can originate from the employer, prime contractor, or any other interested party. Any underpayment decision by DBLS will in-clude a formal decision letter with a Notice of Right to Appeal.

DOL review DOL will review the contract administrator’s report and the arguments against the findings presented in the hearing request. DOL may affirm or modify the findings based upon the materials presented. You will be notified in writing by DOL of the results of its review. If DOL concludes that violations have occurred, you will be given an opportunity to correct any underpayments or to request a hearing before a DOL ALJ. (See DOL

Regulations 29 CFR § 5.11 (b) and 29 CFR Part 6, Rules of Practice for

Administrative Proceedings.)

Administrative Review Board Contractors and/or subcontractors may request a review by the Admin-istrative Review Board of the decision(s) rendered by the DOL ALJ in the administrative hearing process. See DOL regulations 29 CFR Part 7 for more information about this proceeding.

Withholding

The contract administrator shall cause the withholding of payments due to the prime contractor to ensure the payment of wages that are believed to be due and unpaid (e.g., if wage underpayments or other violations are not corrected within 30 days after written notification to the prime contractor). DOL may also direct the withholding of contract payments for alleged wage underpayments. Withholding is serious and is not taken unless warranted. If withholding is deemed necessary, the contractor will be notified in writing. Only the amounts needed to meet the contractor’s (and/or subcontractors’) liability shall be withheld.

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Deposits and Escrows

In some situations, certain labor standards issues are not or cannot be resolved in time to meet project closeout schedules. In order to per-mit a final closing/closeout to proceed while certain labor issues are outstanding, a deposit account (HUD-administered projects, e.g. mul-tifamily housing-insured and grant programs) or an escrow account

(LCA-administered projects, e.g., CDBG, HOME, HOPE VI (Housing Op-portunities for People Everywhere)) may be established as a guarantee to ensure the payment of any wages that have been or may be found due to workers that were employed in the construction of the project.

Deposit and escrow accounts may also hold fringe benefits payments that are due to plans or programs and/or liquidated damages that are assessed for violations of CWHSSA O/T provisions. The deposit or es-crow account is controlled by the contract administrator. When a final decision is rendered, the contract administrator makes disbursements from the account in accordance with the decision. Deposit/escrow ac-counts are established for one or more of the following reasons:

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Remember, the prime contractor is responsible and will be held liable for any wage restitution that is due to any worker employed in the construction of the project, including workers employed by subcontractors and any lower-tier subcontractors.

See 3.2, Responsibilities of the Principal Contractor, and 12.4, Restitution for Underpayment of Wages, in the Agency Guide.

Where the parties have agreed to amounts of wage resti-tution that are due, but the employer hasn’t furnished ev-idence yet that all the underpaid workers have received their back wages (e.g., unfound workers) The amount of the deposit is equal to the total gross amount of resti-tution due to workers lacking payment evidence. As these workers are paid and proper documentation is provided to the contract administra-tor, amounts corresponding to the documented payments are returned to the depositor. Amounts for any workers who cannot be located are held in the deposit/escrow account for three years and disposed as de-scribed in Section 11.4.1 of this Guide;

Sometimes, wage restitution cannot be paid to an affected employee because, for example, the employee has moved and cannot be located.

After wage restitution has been paid to all the workers who could be located, the employer must submit a list of any workers who could not be found and paid (unfound workers). See 12.4.6 in the Agency Guide for more information.

Where underpayments are suspected or alleged and an investigation has not yet been completed The deposit is equal to the amount of wage restitution and any liquidat-ed damages, if applicable, that are estimated to be due. If the final de-termination of wages due is less than the amount estimated and placed in the escrow account, the escrow will be reduced to the final amount and the difference will be returned to the depositor. If the parties agree to the investigative findings, the amounts due to the workers will be paid by the employer. As these workers are paid and proper

20 Contractor Guide Addendum documentation is provided to the contract administrator, the gross amounts corresponding to the documented payments are returned to the depositor;

If the employer is unable to make the payments to the workers (e.g., lacks the funds necessary), the contract administrator may make dis-bursements directly to the workers in the net amounts calculated by the employer. The amounts withheld from the workers for tax deduction will be returned to the employer as payments to workers are made. The employer shall be responsible for reporting and transmitting withhold-ings to the appropriate agencies.

If the employer is not cooperating in the resolution, the contract admin-istrator shall make disbursements to the workers in accordance with the schedule of wages due. Amounts for unfound workers will be re-tained as described in Section 13.4.6 in the Agency Guide.

If the parties do not agree and an administrative hearing is requested, the escrow will be maintained.

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Remember, if you have any questions or need assistance con cerning labor standards requirements, help is always available.

Contact the contract administrator for the project you’re work ing on or the HUD Field Labor Standards staff in your area.

Where the parties are waiting for the outcome of an ad-ministrative hearing that has been or will be requested contesting a final determination of wages due

The deposit shall be equal to the amount of wage restitution and liqui-dated damages, if applicable, that have been determined due. Once a final decision is rendered, disbursements from the escrow account are made in accordance with the decision.

Administrative Sanctions

Contractors and/or subcontractors that violate the labor standards provisions may face administrative sanctions imposed by HUD and/or

DOL.

DOL debarment Contractors and/or subcontractors that are found by the Secretary of

Labor to be in aggravated or willful violation of the labor standards pro-visions of the DBRA will be ineligible (debarred) to participate in any

DBRA or Davis-Bacon Act contracts for up to three years. Debarment in-cludes the contractor or subcontractor and any firm, corporation, part-nership, or association in which the contractor or subcontractor has a substantial interest. Debarment proceedings can be recommended by the contract administrator or initiated by DOL. Debarment proceedings are described in DOL regulations 29 CFR § 5.12.

HUD sanctions HUD sanctions may include Limited Denials of Participation (LDPs), de-barments, and suspensions.

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Limited Denial of Participation HUD may issue to the employer an LDP, which prohibits the employer from further participation in HUD programs for a period of up to one year. The LDP is usually effective for the HUD program in which the violation occurred and for the geographic jurisdiction of the issuing

HUD Office. HUD regulations concerning LDPs are found at 24 CFR §§

24.700-24.714.

Debarment and suspensions In certain circumstances, HUD may initiate its own debarment or sus-pension proceedings against a contractor and/or subcontractor in connection with improper actions regarding Davis-Bacon obligations.

For example, HUD may initiate debarment where a contractor has been convicted for making false statements (such as false statements on certified payrolls or other prevailing wage certifications), or initiate sus-pension where a contractor has been indicted for making false state-ments. HUD regulations concerning debarment and suspension are found at 24 CFR Part 24.

Falsification of Certified Payroll Reports

Cases that involve certified payroll falsification may be referred to DOL for its investigation at the outset or referred to DOL for administrative review/hearings or other sanctions.

All referrals suggesting consideration for criminal prosecution must be submitted through the established hierarchy:

States may submit any such recommendation to DOL directly.

MORE INFO

Remember, if you have any questions or need assistance con cerning labor standards requirements, help is always available.

Contact the contract administrator for the project you’re work ing on or the HUD Field Labor Standards staff in your area.