RFP_#122051_Appendix_E_Public_Facilities.pdf

September 2011 Previous versions obsolete

U.S. Department of Housing and Urban Development

Labor Relations Desk Guide

LR01.DG

A Practical Guide for States, Indian Tribes and Local Agencies

DAVIS-BACON

WORK

MAKING

A Practical Guide for States, Indian Tribes and Local Agencies

HUD LABOR STANDARDS

ADMINISTRATION

ENFORCEMENT

A Practical Guide for States, Indian Tribes and Local

Agencies

Revised September 2011

LCA Guide Page 1

Section Page Number

HUD Labor Standards Administration and Enforcement 3

The Basics 4

Key Labor Standards Objectives 4

LCA Responsibilities for Davis-Bacon Labor Standards 5

What LCAs Need to Carry Out These Responsibilities 7

Labor Relations Reference and Guidance Materials 7

The Basic Elements – Labor Standards Administration and Enforcement

Labor Standards Administration 9

Labor Standards Enforcement 12

LCA Flexibility for Labor Standards Responsibilities 16

Appendices 20

Labor Law Synopses 21

Davis-Bacon Act (DBA) 21

Copeland Act (CA) 21

Contract Work Hours and Safety Standards Act (CWHSSA) 21

HUD Davis-Bacon Related Acts and Factors of Applicability 23

Housing and Community Development Act of 1974, as amended (HCDA) 23

National Affordable Housing Act of 1990, as amended (NAHA) 26

U.S. Housing Act of 1937, as amended (USHA) 28

Native American Housing Assistance ad Self-Determination Act of 1996, as amended (NAHASDA)

NAHASDA – Hawaiian Homelands 33

Davis-Bacon Wage Determinations 35

Character of work 35

General wage decisions 35

Selecting the correct wage decision 36

Wage decision “effective” dates 36

Conformances (additional classifications) 36

LCA Guide Page 2

Compliance Principles 38

Responsibilities of employers 38

Responsibilities of the principal (prime) contractor 38

Site of work 38

Laborers and mechanics 38

Employee 39

Proper classification of work 39

Split classification 39

Apprentice 39

Trainee 39

Use of apprentices and trainees 39

Wages 40

Fringe benefits 40

Discharging prevailing wage obligations 40

Deductions 41

CWHSSA overtime 41

Payrolls and other reporting requirements 42

Certified payroll reports 43

Willful Violations/Falsification Indicators 44

Falsification appearing on CPRs 44

Willful violations that do not appear on CPRs 45

Willful violation payment schemes 45

Davis-Bacon Wage Restitution 47

Computing wage restitution for laborers an mechanics 47

Correction CPRs 47

Review of correction CPRs 47

Withholding from payments due the contractor 48

Unfound/unpaid workers 48

Acronyms/Symbols/Websites 49

Acronyms/symbols 49

Websites 51

LCA Guide Page 3

HUD Labor Standards Administration and

Enforcement

This Guide has been developed as part of HUD’s communications strategy with you and its approximately 5,000 client agencies. It has been designed to help you develop organizational and administrative approaches which best work for you while still enabling you to meet your labor standards contractual responsibilities in the administration of HUD-assisted programs as efficiently as possible. It will also be useful to you as a training tool and ready reference for compliance staff. While this Guide is intended to address numerous situations, it was not written to cover every possible labor standards issue. If there is a labor standards issue not addressed in this Guide, please contact your local HUD

Labor Relations Field Staff. Throughout this Guide, the acronym “LCA” or

“LCAs” shall mean state, tribal and local agencies.

Whom to contact...

The HUD Labor Relations Field staff is your support team and is available to provide training and technical assistance in the administration of HUD programs subject to Federal labor standards provisions. Please call upon the HUD Labor

Relations Field staff for your jurisdiction at any time. Also, please visit the Office of Labor Relations at: http://www.hud.gov/offices/olr/.

At this site you will have ready access to publications, forms, the latest policy letters, and related links which will help you administer labor standards. Most of the publications and forms referenced in this Guide are available in the Labor

Relations Library at our website (above).

You can also obtain additional copies of this Guide and other publications by telephone from HUD’s Customer Service Center at (800)767-7468.

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The Basics

The Office of Labor Relations (OLR) has identified five Key Labor

Standards Objectives - the basics of what must be accomplished in order to protect workers’ rights. We also identified all of the policies, procedures and paperwork at our disposal - what we do ourselves and what we impose on contractors. HUD eliminated superfluous requirements and will not institute policies, procedures or paperwork that are not required by statute or regulation, or that do not contribute to one or more of the Key Objectives.

Key Labor Standards Objectives

1. Apply Davis-Bacon requirements properly. Make certain that labor standards, including Davis-Bacon prevailing wage rates, are applied where required. Ensure any exemptions or exceptions are identified.

2. Through education and advice, support contractor compliance with labor standards. Provide basic training and technical support to contractors to ensure they understand their obligations under prevailing wage and reporting requirements.

3. Monitor contractor performance. Perform reviews of certified payroll submissions and other information to help ensure contractor compliance with labor standards provisions and the payment of prevailing wages to workers.

4. Investigate probable violations and complaints of underpayment.

Thoroughly explore any evidence of violations, especially allegations of underpayment.

5. Pursue debarment and other available sanctions against repeat labor standards violators. Carry out a no-tolerance policy toward contractors who violate prevailing wage laws.

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LCA Responsibilities for Davis-Bacon Labor Standards

State, tribal and local contracting agencies (LCAs) that administer HUD programs agree to administer and enforce Davis-Bacon requirements as a condition for receiving HUD program assistance. LCAs have the following responsibilities:

1. Designate appropriate staff (e.g. a Contract Administrator) before the start of construction to ensure compliance with all applicable labor standards requirements and to act for and in liaison with HUD. Provide the name(s) of the staff to the appropriate HUD Field Office of Labor Relations.

2. Establish a construction contract management system which meets the standards of Part 85 (24 CFR - HUD regulations), Administrative

Requirements for Grants and Cooperative Agreements to State, Local and

Federally Recognized Indian Tribal Governments.

3. Ensure all bid documents, contracts and subcontracts contain the applicable Davis-Bacon wage decision and Federal labor standards provisions.

4. Ensure no contract is awarded to a contractor that is ineligible (e.g., debarred) for Federally-assisted work.

5. Conduct on-site inspections including interviews with laborers and mechanics employed on the construction project. Ensure that the applicable Davis-Bacon wage decision and DOL’s Davis-Bacon poster

(Form WH-1321) are displayed at the job site.

6. Review certified payroll reports and related documentation. Identify any discrepancies and/or violations. Ensure any needed corrections are made promptly, including the payment of wage restitution, as needed, and the assessment and collection of liquidated damages, as appropriate.

7. Maintain full documentation of Federal labor standards administration and enforcement activities.

8. Refer potential criminal or complex enforcement actions to HUD, in addition to Contract Work Hours and Safety Standards Act (CWHSSA)

LCA Guide Page 6 liquidated damages assessments for overtime violations and debarment recommendations.

9. Comply with all HUD requirements concerning statutory, program and/or other requirements.

10. Prepare Federal labor standards enforcement reports as required in

U.S. Department of Labor (DOL) regulations (29 CFR Part 5, Section 5.7).

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What LCAs Need to Carry Out These

Responsibilities

In addition to basic knowledge about labor standards administration and enforcement, LCAs need basic reference and guidance materials. Many of these materials are available on-line. A complete list of website addresses referenced in this Guide is provided in the Appendix (page 51). Also, the HUD Labor

Relations Field Staff can assist you in obtaining hard copies of any materials offered in the Labor Relations Library on the HUD Homepage.

Labor Relations Reference and Guidance Materials

1. Specific Davis-Bacon Related Act (statute) for the program involved. The clauses containing the Davis-Bacon labor standards provisions for each HUD program are key to making proper decisions concerning applicability.

Determining whether Davis-Bacon wage rates are applicable in specific cases may be the most difficult task LCAs face on a day-to-day basis. Excerpts from the HUD Related Acts - the labor standards provisions – are offered in the Appendix (page 23) to this Guide. In addition, we’ve provided treatments explaining the factors of applicability (how the language of the labor standards clauses is interpreted and applied in real situations) for CDBG, HOME, Public Housing, Indian Housing, and Hawaiian Homelands Programs.

2. HUD regulations: 24 CFR, relevant Parts for the program involved. Many times the regulations will contain further information about Davis-Bacon aspects of the program. HUD regulations are available on-line at:

http://www.access.gpo.gov/nara/cfr/cfr-table-search.html

3. DOL regulations: 29 CFR, Parts 1, 3, 5, 6 & 7. These regulations contain policy guidance and instructions for all agencies, including local contracting agencies, in the administration and enforcement of Davis-Bacon wage and reporting requirements. These DOL regulations are available on-line at the DOL homepage at: http://www.access.gpo.gov/nara/cfr/cfr-table-search.html

4. Labor Relations Letters. This special directives series is designed to provide current and thorough guidance on Davis-Bacon issues in HUD programs. Popular topics include Davis-Bacon applicability under HOME, and prevailing wage requirements concerning self-employed laborers and mechanics. Labor Relations Letters are available on-line at the Labor Relations Library.

http://www.access.gpo.gov/nara/cfr/cfr-table-search.html http://www.access.gpo.gov/nara/cfr/cfr-table-search.html

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5. Labor Relations Desk Guides. These Guides compliment the guidance and instructions provided in HUD Handbook 1344.1, Federal Labor Standards in HUD Programs. This Guide is for LCAs. Another is HUD’s Contractor’s Guide to Prevailing Wage Requirements for Federally-assisted Construction Projects - an easy to use resource that explains Davis-Bacon requirements and what contractors must do to comply. These Guides are also available at the Labor Relations Library.

6. On the Mark!. This series is also available at the Labor Relations Library.

The series contains simple, one-page suggestions containing time-saving tips to improve efficiency and effectiveness including new technologies and services available through the internet.

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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.

1. Determine Davis-Bacon applicability. 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 Applicability (see Appendix, page 23) should be helpful. Most HUD-assisted construction work is covered by Davis-Bacon but there are some exceptions. The best and safest approach is to 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's any reason for non-coverage.

Assuming a determination has been made that Davis-Bacon wage and reporting requirements are applicable:

2. Prepare the bid documents/contract. The contract for construction is the vehicle to ensure contractor compliance and Davis-Bacon wage enforcement.

Therefore, the bid specifications 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. These should be bound into the contract specifications or incorporated by specific reference in the bid/contract documents (see Labor Relations Letter 96-03).

a. Davis-Bacon wage decisions. The Davis-Bacon wage decision is a listing of various construction work job classifications (such as Carpenter, Electrician, Plumber, Laborer, etc.) and the minimum wage rates (and fringe benefits, where prevailing) people performing work in those classifications must be paid. (See the Appendix, page 35, for more information regarding wage determinations and for information on how to add trade classifications not already on a wage decision.)

Wage Determinations On-Line (http://www.wdol.gov) is the only official source to obtain wage determinations issued by DOL for construction contracts subject to the Davis-Bacon Act (DBA) and Related Acts (DBRA).

After logging on to wdol.gov (user names and passwords are not required), click “Selecting DBA WDs” in the “Davis-Bacon Act” column.

http://www.wdol.gov/

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“Selecting DBA WDs” connects users to a searchable database of current

Davis-Bacon general wage determinations.

The “WDs due to be revised” link connects users to information identifying specific wage determinations that will be revised/modified in the near future.

This information alerts contracting agencies of upcoming revisions to wage determinations that they may need to incorporate into bid solicitations and/or contracts.

The “Sign up for alert service” provides email alerts concerning updates for wage determinations that may be needed for upcoming procurement actions.

The alert service is specific to a wage decision(s) and can be found on the first page of any current wage decision(s) that is retrieved at wdol.gov (see bottom left for the link).

b. Labor standards clauses. The labor standards clauses (aka, labor standards provisions, stipulations) obligate the contractor to comply with Davis-Bacon wage and reporting requirements and with the overtime provisions of the Contract Work Hours & Safety Standards Act (applicable only when the prime contract is valued at over $100,000).

The labor standards clauses also provide remedies and sanctions should violations occur. HUD has standard forms containing the labor standards clauses appropriate for different programs: the HUD-4010 for CDBG and HOME; and the HUD-5370 and HUD-5370-EZ for Public and Indian housing. These forms are available on-line at:

http://portal.hud.gov/hudportal/HUD?src=/program_offices/administratio n/hudclips/forms

3. Verify contractor eligibility. Once you have selected the contractor to whom you want to award the contract, you must verify that the contractor is not ineligible (e.g., debarred) from participation in Federal programs. You only need to verify the eligibility of the prime contractor. The U.S. General Services Administration maintains a list of ineligible contractors which can be accessed on-line at: https://www.epls.gov (See On the Mark! OTM #6 (6/97) for more information about on-line verification.)

4. Provide contractor training. Make certain the contractor understands its responsibilities for Davis-Bacon compliance: The principal contractor (also referred to as the prime or general contractor) is responsible for the full compliance of all employers (the contractor, subcontractors and any lower-tier subcontractors) with the labor standards provisions applicable to the project.

HUD has published a Contractor’s Guide to Prevailing Wage http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms

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Requirements for Federally-Assisted Construction Projects for this purpose. This Guide provides basic information and instructions to contractors concerning Davis-Bacon wage and reporting requirements. Hard copies of the Guide are available from the HUD Labor Relations Field Staff.

In addition, the Guide is available in a download-able pdf file at the HUD Labor Relations Library.

You may also wish to provide formal training separate from the contracting process for contractors who are interested in performing work on your HUD-assisted contracts and want to learn more about what is involved.

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Labor Standards Enforcement

Labor Standards Enforcement involves the activities that take place during construction to ensure contractor compliance. Enforcement of federal labor standards involves certain compliance principles (see Appendix, page 38) applicable to almost every Davis-Bacon – covered project. Adhering to these principles will promote effective LCA contract compliance.

1. Posting the wage decision and Davis-Bacon poster. The contractor is required to display on the job site a copy of the applicable Davis-Bacon wage decision and Department of Labor Form WH-1321, Davis-Bacon Poster. 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.

a. Project Wage Rate Sheet (HUD-4720). Many wage decisions are multi-paged and cover several counties and/or more than one type of construction. To make this vital information easier to read and understand, contract administrators can offer a Project Wage Rate Sheet (HUD-4720) -a one-page listing of only the wage rates applicable to the specific project involved - for posting on the job site. This form is available in an on-screen fillable format which can be accessed via the HUD Forms or Office of Labor Relations websites.

b. Davis-Bacon Poster. The Davis-Bacon Poster is available in English and Spanish via the DOL website. The poster in English is at http://www.dol.gov/whd/programs/dbra/wh1321.htm. The link to the poster in Spanish is http://www.dol.gov/whd/regs/compliance/posters/davispan.pdf Both versions can be accessed via the Labor Relations website.

2. Conduct on-site interviews with laborers and mechanics. The contract administrator or a designee (such as an agency construction inspector) must periodically conduct interviews with the construction workers on the job site.

The purpose of the interviews is to capture observations of the work being performed and to get the workers’ views on the number of hours they work, the type of work they perform and the wages they receive. Information gathered during the interviews is recorded on Form HUD-11, Record of Employee Interview. Completed HUD-11s must be compared to the corresponding contractor and subcontractor certified payrolls to test and verify the accuracy of the payroll information. HUD-11 forms are available on-line in English and in Spanish in a fillable format via the HUD Forms website and at http://www.dol.gov/whd/programs/dbra/wh1321.htm http://www.dol.gov/whd/regs/compliance/posters/davispan.pdf

LCA Guide Page 13 the OLR website.

3. Review contractor and subcontractor certified payroll reports. In addition to comparing HUD-11s to the certified payroll reports, the contract administrator reviews the payroll reports generally to ensure all laborers and mechanics are being paid no less than the wage rates contained on the applicable Davis-Bacon wage decision for the classification of work they perform. Contract administrators should be particularly alert for indications of payroll falsification - misinformation on payrolls to conceal underpayments.

Falsification on payrolls indicates a contractor or subcontractor is aware of its obligations, is knowingly underpaying its employees and is attempting to avoid detection of the violations.

a. Discrepancies and/or underpayments on the payrolls. Some underpayments and other errors can appear on the face of the payroll records (i.e., do not involve falsification). In these cases, the contract administrator contacts the employer and/or prime contractor and provides instructions as to what steps should be taken to correct the payroll records and to pay any back wages that may be due to the affected workers.

b. Indications of falsification on payrolls. The greatest threat to construction workers entitled to statutorily-mandated prevailing wage for their craft is from employers who know what is required, choose not to pay the required prevailing wage rates and falsify certified payroll reports to conceal the underpayments. Such willful violators see the workers’ underpayment as their own gain and engage in deception to increase this gain. In addition, willful violators that successfully escape detection and are not required to pay prevailing wages will continue to bid on Davis- Bacon contracts until their violations are disclosed and administrative sanctions such as debarment are imposed.

c. Falsification indicators. HUD has prepared a list and explanation of four common falsification indicators that are detectable during payroll “spot-checks.” Information reported on payrolls that indicate falsification suggests willful, much more serious violations in terms of the amount of back wages that may be due and the number of employees affected. Such cases most often warrant investigation which can include on-site interviews, mailing questionnaires to employees, taking written statements or complaints, and other methods to gather and assess the facts of the case. See the Appendix (page 44) to this Guide for an explanation of willful violations and falsification indicators.

4. Require the correction of all discrepancies, the payment of wage

LCA Guide Page 14 restitution found due, and the assessment and collection of CWHSSA liquidated damages, as appropriate. Contract administrators must ensure the full correction of all discrepancies disclosed during compliance monitoring conducted by the LCA, HUD or DOL. This includes the collection of documentation to demonstrate that corrective measures have been successfully completed.

5. Examine and resolve probable violations and complaints of underpayment. Contract administrators must explore probable violations – particularly those involving falsification of payrolls and complaints alleging underpayments. In addition to the HUD-11, Record of Employee Interview, HUD has developed a questionnaire form (HUD-4730) and a complaint intake form (HUD-4731) for HUD and LCA use. The forms are available in on-screen fillable formats at the HUD forms website and via the Labor Relations website.

6. Refer complex issues and/or falsification cases to HUD or DOL. Some issues may be more complex than you are able to address. HUD encourages LCA to consult with the Labor Relations Specialist for their area to secure appropriate guidance and support. HUD has decided, in consultation with DOL, that it will refer to DOL cases involving falsification of payrolls or related documents for DOL investigation. HUD strongly suggests that LCAs employ this strategy for cases involving falsification. Contact the HUD Labor Relations Specialist for your area for more information and guidance on such referrals.

7. Take steps to ensure the full resolution of any monetary liability that has or may be imposed for labor standards reasons. Contract administrators must take prompt action to ensure that funds will be available to satisfy any labor standards liability that may be imposed. Actions include withholding from contract payments due to the contractor and requiring funding for an escrow account to guarantee the satisfaction of any restitution and/or liquidated damages assessment that may be pending at contract close-out.

8. Recommend debarment against repeat violators. HUD has implemented a no-tolerance policy against contractors who are repeat violators of Davis- Bacon labor standards. The first time an employer is found in violation, the employer is required to pay full restitution to all affected workers and to pay any CWHSSA liquidated damages (for overtime violations) which may be assessed. In addition, the employer must provide written assurance of future compliance. If the employer promptly completes these corrective actions, HUD will not object if the LCA does not recommend debarment against the employer unless there are extenuating circumstances which warrant debarment. If the employer is found in violation again, the LCA must require

LCA Guide Page 15 full correction of any underpayments and payment of CWHSSA liquidated damages assessed. A debarment recommendation made by the LCA against the employer is expected.

9. Prepare and submit enforcement reports. In accordance with DOL regulations (29 CFR Part 5, Section 5.7), the contract administrator must prepare and submit to HUD an enforcement report in any case where an employer (contractor or subcontractor) has underpaid its employees by $1,000 or more, or where there is reason to believe the violations are aggravated or willful; and prepare and submit to HUD semi-annual enforcement reports concerning all Davis-Bacon labor standards administration and enforcement activities involving all HUD-assisted programs.

a. Employer-specific enforcement reports. These enforcement reports are used for three general purposes. First, to report to the Secretary of Labor on Davis-Bacon enforcement actions successfully completed in the field by all federal, state and local agencies. Secondly, we use an enforcement report to refer to the Wage and Hour Administrator investigative findings which are in dispute (e.g., where the employer contests findings of underpayment made against it and requests a hearing to appeal the findings). Thirdly, we use an enforcement report to make recommendations for debarment and other sanctions and for recommendations concerning liquidated damages computed for CWHSSA overtime violations. (See Labor Relations Letter LR-92-02 for additional guidance concerning employer-based enforcement reports.)

10. Semi-annual Enforcement Reports. In April and October of each year, all federal agencies must report to DOL on all covered contracts awarded, and on all enforcement actions taken during the relevant 6-month period. HUD collects the reports from its client agencies and compiles a comprehensive report to DOL covering all HUD-assisted Davis-Bacon construction activity. A copy of the Semi-Annual Report form (HUD-4710) and instructions (HUD- 4710i) for LCAs and are available at HUDClips and at the Labor Relations Library at www.hud.gov/offices/olr. The report may be completed on-screen, saved and attached to an email message for submission purposes. NOTE:

States may report directly to DOL, as the state chooses. Public Housing Authorities, Indian Housing Authorities and Tribally-designated Housing Agencies should send data for Davis-Bacon - projects only; do not include data relating to HUD-determined maintenance wage rate projects, or projects subject to Tribally-determined wage rates (for construction or maintenance work).

http://www.hud.gov/offices/olr

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LCA Flexibility for Labor Standards

Responsibilities

While some aspects of labor standards administration are inflexible, such as which wage decision is applicable to a specific project, the following aspects are not. For these, HUD leaves the preference of how to achieve end results with the LCA.

1. LCAs may obtain wage decisions directly from wdol.gov. HUD expects that LCAs have the capacity to select the correct Davis-Bacon wage decisions from the www.wdol.gov web site for most projects they will undertake and to determine whether the wage decision is current for the appropriate lock-in date. LCAs that wish to continue obtaining wage decisions from HUD can make the request by telephone, fax, mail or email. HUD can send the applicable wage decision back to the LCA by any of these means also. LCAs can obtain wage decisions immediately from the wdol.gov website and, in most cases depending on the form of delivery requested by the LCA (e.g., email), LCAs should be able to obtain wage decisions from HUD within 24 hours or less.

2. Preconstruction Conferences for labor standards purposes are optional.

HUD acknowledges there are many good reasons to hold a preconstruction conference (PCC) such as discussing construction inspections, progress and contractor payment requirements, Section 3 employment and training and other issues particular to the project. However, HUD has determined that the time and resources used to conduct and document PCCs for labor standards purposes do not yield measurably better results.

Many contractors have prior Davis-Bacon contract experience and have demonstrated successful performance. These contractors don’t require the repetitive basic training such as provided at most PCCs. Basic training for contractors new to Davis-Bacon projects can be provided more efficiently through printed material such as HUD’s Contractor’s Guide to Prevailing Wage Requirements for Federally-Assisted Construction Projects.

Contractors who intend to comply can become familiarized with the fundamentals through the Guide and can contact the contract administrator concerning any questions specific to the project. Contractors who understand the requirements and who choose not to comply, will in all likelihood not be persuaded to fully comply just because they attended a PCC.

3. Project Wage Rate Sheets may be offered for Davis-Bacon projects.

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Davis-Bacon wage decisions are incorporated into the construction contract to obligate the full compliance of the prime contractor and any subcontractors.

There are three important uses for the applicable Davis-Bacon wage decision.

One is for the contractor’s and subcontractors’ understanding about the specific wage rates that must be paid. The second is for posting at the job site so that the laborers and mechanics know what they are supposed to be paid. The third is for contract administrator’s use in reviewing certified payroll reports. A Project Wage Rate Sheet (HUD-4720) is a one-page, easy to read listing of the work classifications and wage rates that are applicable to the project. This one-page listing is much more user-friendly than the full-text wage decision for these three uses:

a. A Project Wage Rate Sheet spells out more clearly the work classifications and wage rates contained in the wage decision for the contractor and subcontractors.

b. A Project Wage Rate Sheet is much easier for laborers and mechanics to understand so that they can determine whether they are paid properly.

c. A Project Wage Rate Sheet - a one-page listing - is more helpful as a ready reference for contract administrators reviewing payroll reports.

LCAs can prepare a Project Wage Rate Sheet for contracts using the on-screen fillable versions in either the HUD Forms or Office of Labor Relations websites. The Project Wage Rate Sheet should be prepared only after the wage decision has been “locked-in” by contract award or start of construction, as applicable. HUD Labor Relations staff is available to provide assistance to

LCAs in preparing Project Wage Rate Sheets. HUD strongly recommends incorporation of the full wage decision text into bid solicitations and contracts, either in hard-copy or by specific reference. (See also Labor Relations Letter

LR-96-03.)

4. LCAs may develop their own labor standards file system. HUD believes that LCAs can best determine how to maintain their files provided that certain minimum requirements are met. The minimum requirements include compliance with DOL regulations that certified payrolls and basic records relating to the payrolls are preserved not less than three years after completion of the project and the resolution of any enforcement actions which may carry over after completion. In addition, the files must be maintained in such a way that the LCA can utilize them to demonstrate its own compliance with its labor standards administration and enforcement responsibilities. For example, the LCA must, at HUDs request, demonstrate how it has

LCA Guide Page 18 documented that the eligibility of the prime contractor was verified for each contract.

5. LCAs may target on-site interviews with laborers and mechanics. HUD is interested in using on-site interviews as a proactive enforcement tool rather than as a means to meet a “representative sampling” quota. Instead of conducting interviews randomly for the sake of assembling a sample, LCAs are encouraged to target interviews to projects or groups of workers where violations are suspected or alleged. In this way, on-site interviews can be used to support a specific on-going enforcement action(s). HUD realizes that this approach may mean that less on-site interviews may be conducted randomly; and HUD considers targeting a far more efficient and effective means of utilizing on-site interview resources.

6. Payroll reviews may be limited to spot-checks and HUD-11 comparison;

the Goal: to detect falsification. HUD believes that serious violations involving underpaid workers and significant wage restitution may be overlooked because the contract administrator is over-tasked with HUD-mandated payroll review minutiae. HUD recognizes that it is not possible to conduct 100% payroll reviews; therefore, it is not possible to identify and correct every discrepancy and underpayment. It is also the case that the violations disclosed behind falsified payrolls are much more egregious (both in terms of affected workers and the amount of underpayment) than violations that appear on the face of the payroll records. Accordingly, HUD has prioritized payroll reviews so that the objective is to detect falsification and so that our enforcement activities will yield the greatest impact. HUD has developed guidance on how to detect falsification through spot-checks and HUD-11 interview comparison. (See Willful violations/Falsification Indicators in the Appendix, page 44.)

7. Routine payroll review results may be communicated to the prime contractor by telephone and documented with a record to the file. Many times, the types of deficiencies which come to the attention of the contract administrator can be handled more efficiently and just as effectively with good informal communication (e.g., a telephone call, email, etc.) with the employer/prime contractor rather than with formal letters. Examples of the types of issues that could easily be addressed informally - assuming the cooperation of both sides - include a missing payroll report or missing apprenticeship certificates, requests for employee authorizations for deductions, small underpayments that appear on the face of the payroll, and similar matters. With the prime contractor’s cooperation, these matters can be disposed of quickly with a telephone call and a brief note to the contract file documenting the call. If the employer/prime contractor does not respond

LCA Guide Page 19 appropriately to this type of communication, it may be necessary to resort to more formal means.

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Appendices

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Labor Law Synopses

Davis-Bacon Act (DBA). The Davis-Bacon Act is applicable to contracts in excess of $2,000 for construction, alteration or repair, including painting and decorating, of public buildings and public works to which the federal government or District of Columbia is a party. The DBA requires (in part):

1. Payment of no less than wages (including fringe benefits) prevailing in the locality on projects of a similar character as determined by the DOL.

2. Payment of wages not less often than once per week.

3. Posting of the applicable wage decision at the job site.

4. Other statutes (Davis-Bacon Related Acts, aka DBRA) contain provisions that impose Davis-Bacon wage requirements on projects/contracts that are funded or assisted (rather than contracted for directly) by federal agencies or the District of Columbia. HUD program legislation frequently contains such provisions and are, therefore, Davis-Bacon Related Acts.

Copeland (anti-kickback) Act (CA). The Copeland Act is applicable to contracts/projects subject to Davis-Bacon wage requirements. The CA (in part):

1. Regulates deductions that may be taken from employee earnings.

2. Requires the certification, submission and retention of weekly payroll reports.

3. Prohibits “kickbacks” from employee earnings.

4. The anti-kickback prohibition is not applicable where the nature of federal assistance is only insurance or a loan guarantee. All programs implemented by LCAs are subject to the anti-kickback provision of the CA.

Contract Work Hours and Safety Standards Act (CWHSSA). The Contract

Work Hours and Safety Standards Act is applicable to prime contracts valued in excess of $100,000. Any contracts subordinate to a covered prime contract are likewise covered. CWHSSA (in part):

1. Mandates premium pay (time and one half on base wages, plus any fringe benefits) for all hours worked on the site of the covered work in excess of 40 hours per week.

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2. Requires premium overtime pay only when all hours considered under CWHSSA overtime requirements – 40 hours plus additional (O/T) hours – are performed on CWHSSA-covered site(s) of work.

3. Includes watchmen and guards in the classes of workers entitled to premium overtime pay requirements.

4. Imposes liquidated damages at the rate of $10 per day/violation - any instance where an employee works in excess of 40 hours per week on a daily basis, In addition to full wage compensation.

5. Is not applicable to projects/contracts where the nature of federal assistance is only insurance or a loan guarantee. All programs implemented by LCAs are subject to the overtime provisions of CWHSSA.

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HUD Program Davis-Bacon Related Acts

(DBRAs) and Factors of Applicability

Programs administered by LCAs

The five programs described in this section are those which have been funded annually since their inception. Other funding that has Davis-Bacon implications is provided via existing or new HUD programs from time-to-time to respond to special situations such as natural disasters. Please contact the Office of Labor Relations staff for your jurisdiction for information regarding the requirements for HUD programs not listed in this section.

Housing and Community Development Act of 1974, as amended (HCDA);

Section 110* (CDBG, NSP, Section 108, EDI/BEDI)

HCDA (Title I) statutory language:

(a) All laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with assistance received under this title shall be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended.... Provided, that this section shall apply to the rehabilitation of residential property only if such property contains not less than 8 units

(b) Subsection (a) shall not apply to any individual that

(1) performs services for which the individual volunteered;

(2) (A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee for such services; and

(3) is not otherwise employed at any time in the construction work.

* Section 107(e) (2) of the HCDA permits the Secretary of HUD to waive the provisions of Section 110 in connection with grants to Indian tribes.

This waiver action was taken and can be found in HUD regulations at 24

CFR 1003.603.

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HCDA Factors of Applicability:

1. ...construction work financed... HCDA funds (e.g., CDBG) can finance activities other than construction work which do not trigger Davis-Bacon requirements; e.g., real property acquisition, purchase of equipment, architectural and engineering fees, other services (legal, accounting, construction management), other non-construction items (furniture, business licenses, real estate taxes, tenant allowances for such items).

Also, financing is not limited to the act of paying for the construction work directly. Financing can mean, for example, using CDBG assistance to pay the interest charged or to reduce the interest rate on a construction loan (including certain collateral accounts). Generally, “financing” also means using HCDA funds to provide permanent financing (take-out loan) following construction.

2. ...in whole or in part... If HCDA funds finance only a portion of a construction work, labor standards are applicable to the entire construction work.

3. All laborers and mechanics employed by contractors or subcontractors... Labor standards provisions do not apply to employees of the grantee (force account workers) that may be engaged on an otherwise covered project. Note: The construction work is covered but these force account workers are excluded.

4. ...shall apply to the rehabilitation of residential property only if such property contains not less than 8 units. Typically, single-family homeowner properties are excluded under this exemption. For example, a contract to rehabilitate any number of single family properties for homeownership is not covered by Davis-Bacon. However, property is not limited to a specific building. Property is defined as one or more buildings on an undivided lot or on contiguous lots or parcels, which are commonly-owned and operated as one rental, cooperative or condominium project. Examples of 8+ unit properties include:

a. 5 townhouses side-by-side which consist of 2 units each.

b. 3 apartment buildings each consisting of 5 units and located on one tract of land.

c. 8 single-family (not homeowner) houses located on contiguous lots and operated as a single rental property.

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Further, HUD has concluded that the term “rehabilitation” as used within the statutory language is not meant to preclude new construction from this exemption. The Conference Report on the HCD Act of 1974 indicated that at the time that the statute was written, residential construction was not an eligible activity. However, subsequent changes to the statute now permit the use of CDBG (and other Title I funds) for residential new construction.

Accordingly, residential new construction is treated in the same manner as residential rehabilitation for Davis-Bacon purposes.

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National Affordable Housing Act of 1990 (NAHA); Section 286 (HOME):

NAHA statutory language:

(a) IN GENERAL. Any contract for the construction of affordable housing with 12 or more units assisted with funds made available under this subtitle shall contain a provision requiring that not less than the wages prevailing in the locality, as predetermined by the

Secretary of Labor pursuant to the Davis-Bacon Act..., shall be paid to all laborers and mechanics employed in the development of affordable housing involved,

(b) WAIVER. Subsection (a) shall not apply if the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered and such persons are not otherwise employed at any time in the construction work.

NAHA (HOME) Factors of Applicability:

1. ...affordable housing with 12 or more units assisted with funds made available under this subtitle... Unlike CDBG, the standard for coverage is assisted not financed - which provides for much broader application. This means that Davis-Bacon requirements are operable without regard to whether the HOME funds are used for construction or non-construction activities. Non-construction activities include real property acquisition, architectural and engineering fees, and other professional services. In some cases, Davis-Bacon requirements may be triggered when HOME funds are used to provide down payment assistance to individual homebuyers. [LCAs should refer to HUD’s HOME regulations (24 CFR 92.354(a)(2)) or consult with HUD Labor Relations Staff if their project involves down payment assistance to homebuyers.]

This also recognizes that HOME projects can contain units that are not assisted by HOME. The threshold applies only to the number of units assisted by HOME. For unit threshold purposes, we use the number of units identified as “HOME” units under the program definition whether determined on a pro-rata basis, specific designation or other means allowable by HUD’s Office of Community Planning and Development

(CPD).

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Note also that once Davis-Bacon requirements are triggered, the labor standards are applicable to the construction of the entire project -including the portions of the project other than the assisted units.

2. Any contract for the construction of affordable housing with 12 or more units assisted with funds... Davis-Bacon requirements are applicable to contracts for construction covering 12 or more HOME-assisted units. Davis-Bacon does not follow “construction work” or “projects”. This factor has implications in two ways:

a. First, a HOME project with 12 or more assisted units that is constructed under multiple contracts each containing less than 12 HOME units is not covered. (Note: HOME regulations prohibit breaking a single project into multiple contracts for the purpose of avoiding Davis-Bacon.)

b. Second, if multiple HOME projects each containing less than 12 assisted units are grouped into a contract(s) for construction that covers a total of 12 or more assisted units, the contract is covered.

3. Sweat Equity. HOME provides for a sweat equity program (see NAHA Sec. 255) which permits members of an eligible family to provide labor in exchange for acquisition of property for homeownership or to provide labor in lieu of, or as a supplement to, rent payments. Such sweat equity participants are exempt from Davis-Bacon prevailing wage requirements.

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U.S. Housing Act of 1937, as amended (USHA); Section 12* (Public

Housing/Section 8):

(a) Any contract for loans, contributions, sale, or lease pursuant to this Act ....shall also contain a provision that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act..., shall be paid to all laborers and mechanics employed in the development of the project involved

(including a project with nine or more units assisted under section 8 of this Act, where the public housing agency or the Secretary and the builder or sponsor enter into an agreement for such use before construction or rehabilitation is commenced), and the Secretary shall require certification as to compliance with the provisions of this section prior to making any payment under such contract.

(b) Subsection (a) and the provisions relating to wages (pursuant to subsection (a)) in any contract for loans, annual contributions, sale, or lease pursuant to this Act, shall not apply to any individual that

(1) performs services for which the individual volunteered;

(2)(A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee for such services; and

(3) is not otherwise employed at any time in the construction work.

* Section 12(a) of the USHA also mandates the payment of HUD-determined prevailing wage rates to all maintenance laborers and mechanics engaged in the operation of PHA low-income housing projects.

USHA (PHA/Sec 8) Factors of Applicability

1. Any contract for loans, contributions, sale, or lease pursuant to this Act… Prevailing wage requirements apply through provisions required in any contract for loans, contributions, sale or lease…. Generally, the “contract” referenced means the Annual Contributions Contract (ACC) between HUD and the respective PHA. (Be aware that “contract” has other relevance, some not germane to LCAs and this Guide.) Prevailing wage applicability is not tied to a funding source nor to a specific use of funds. This means that federal

LCA Guide Page 29 funding for development work is not a prerequisite to Davis-Bacon requirements applicability.

2. ... (HUD-determined wage rates) shall be paid to all architects, technical engineers, draftsmen, and technicians employed in the development, and all maintenance laborers and mechanics employed in the operation…, …(Davis-Bacon wage rates) shall be paid to all laborers and mechanics employed in the development….

Notice that, unlike other HUD labor standards provisions, the USHA makes no distinction between laborers and mechanics employed by the agency and those employed by contractors and subcontractors. This means the “force account” labor – workers employed directly by the agency, whether on a full-time, part-time, permanent or temporary basis – must receive the prevailing wages applicable to the work they perform. (See Labor Relations Letter 2004- 02.)

3. ... (Davis-Bacon wage rates) shall be paid...in the development of the project involved (including a project with nine or more units assisted under Section 8 of this Act, where the public housing agency or the Secretary and the builder or the sponsor enter into an agreement for such use...before construction or rehabilitation is commenced)...

Notice, also, that the only applicability thresholds pertain to Section 8 projects:

there must be 9 or more Section 8-assisted units and there must be an agreement for the Section 8 assistance before construction begins. These agreements are referred to as AHAPs and/or APRACs. The 9 unit threshold refers to the number of units in the project that are Section 8-assisted, not to the total number of units in the project. The USHA contains no unit threshold for public housing.

While the USHA does not contain a dollar threshold, HUD observes the statutory Davis-Bacon Act $2,000 threshold for development work and has implemented a $2,000 threshold for maintenance contracts.

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Native American Housing Assistance and…