Transcripts for Wage and Hour Division Prevailing Wage Conference Videos
- Compliance Principles
- DBA NON compliance
- Certified Payroll Review and Exercise
- Questions and Answers
>> Good afternoon.
And welcome to part B of the Davis-Bacon webinar for contracting officials.
Before we get started I just want to extend to all of you who have been experiencing difficulties with the streaming portion of the webinar our deepest apologies.
We're working very hard to correct them but I understand based on the comments that I have been reading on the Internet and through email that our -- the quality of our webinar this morning was not at the level that we would find acceptable.
This morning's webinar will be posted on our recovery act website by the end of the day.
So those of you who were not able to see it in a manner that was able to permit you to capture all the information we shared this morning, that feed will be up later this afternoon.
We'll give you a link before the end of the session so you can plug in and watch that session over again.
We pray that the session that you're watching now is of a better quality so we will proceed with the agenda for the second half of our presentation.
This primarily starting with compliance principles, we'll also talk about how to evaluate compliance of contractors and then finally end up with an exercise on reviewing certified payroll record.
Without further adieu let's proceed with today's part B of our Davis-Bacon session.
Davis-Bacon compliance principles, there's a number of topics and issues that we need to present to you and help you get a better understanding in order to effectively administer and enforce the Davis-Bacon contracts that are under your purview.
And we're going to discuss the following six topics you see on your screen, labors and mechanics, site of the work, apprentices, trainees and helper, fringe benefits, federal contracts, the interaction between PCA and Davis-Bacon and also how a contractor should properly compute overtime under CWSSA.
Each of these topics have their own subject material and we'll move through them bullet by bullet, mice and Rex Elliott will be doing this portion of the presentation.
Let's talk about labor mechanics, we get a few questions in the morning session asking to define labors and mechanics and here is your slide.
Labors and mechanics are workers whose duties are manual or physical in nature.
They can include in the definition apprentices, trainees and helpers.
For CWSSA purposes we talked earlier about those classification also including guards and watchmen.
What is not included in the definition?
Time keeper, architectures and engineers and administrative and professional folks who meet the qualifications for exemption under 29-CFR-541.
Those folks are not considered to be boarers an mechanics.
Jade, we had a question at the end of the first session whether working foremen are subject to the Davis-Bacon provisions.
Working foremen are generally not exempt and must be paid the Davis-Bacon wages for that period of time when doing physical or manual labor.
If you have a working foreman who is paid on an hourly basis or is not exempt from the 541 rules that individual may work 20 hours as a carpetter on a website and 20 hours in the contractor shank preparing paperwork, reviewing orders for the next week.
That individual's entitled to the prevailing wage for time spent in our example in the carpetter.
The other time is not labor mechanic duty and therefore that's not Davis-Bacon compensable time.
Let's talk sit of the work.
It has a history with the department of labor and how we define site of work.
And this is a statutory phrase, Davis-Bacon only applies to laborers and mechanics employed directly on the site of the work.
And the question is always how does the department of labor define site of the work.
Let's take a minute to look at that.
Site of the work does not include a contractor or subcontractor's home office, their branch location, fabrication yards, any lowcation that has a continuance of operation that was not directly related to the Davis-Bacon project that they're working on without particular regard to the contractor's performance on that project.
So even if the contractor's home office is very close to the site of the work, if that home office has been there years and where the contractor has traditionally been the base of operations on contracts throughout the area.
Those workers employed at those locations are not covered by Davis-Bacon.
Is that all we have for site of work statistician?
There's instances, I'll go off the slide here for a minute to explain there are instances where a location adjacent or virtually adjacent to site of work can be considered covered under Davis-Bacon.
Classic example is if we have a construction of a building here in Washington D.C. and we have a contractor who received permission from the District of Columbia to take over the one lane of traffic that's on a particular roadway and they set up a cement mixing plant, that location is not directly on site of the work T. building is built 20 feet over where the footprint of the building is.
However, we would consider that temporary facility set up specifically for the project dedicated to that project and for which it's not going to exist after the project is over as being part of the site of the work.
So the workers at that location would also be entitled to prevailing age pay let's look now at tray apprentices ab trainees.
Premises and trainees registered in a bona fide apprenticeship program with the department of labor or a state DOL agency that's been recognized by our bureau of apprentice and training as approved state apprenticeship agency.
These individuals can also be employed 90 days before they are officially enrolled in the program.
So again, you simply can't call someone an apprentice unless one, the contractor has an approved program to provide apprenticeship training, and two, is individually registered that individual in the program and is paying the individual in accordance with the weight scale and the fringe benefits provided in the apprenticeship plan.
Trainees are similar, trainees also must be enrolled and participating in an approved program by our department of labor I'm employment and training administration.
Again, these individuals have to be in a plan that's been approved by DOL and also individually registered.
Note that sometimes you'll see the name trainee on a certified payroll and sometimes that's a contractor who does not necessarily have an approved training program, they're merely indicating this individual may not have all the skills necessary to perform at the journey level work.
If there is no such approved program for that contractor, then that would be a misclassification.
The contractor cannot call that individual as a trainee.
If they're doing journey level work that individual is entitled to the prevailing wage at the classification of work he or she is performing.
Again, we mentioned earlier when we reviewed wage determination that you will not see apprentices and trainees on the wage determination.
They are typically associated with a craft, either apprentice electrician, apprentice iron worker and their wages an fringe benefits wage determination and comparison of that to their particular level of education while enrolled in the program.
Sometimes the question comes up whether an apresent disis entitled to the full fringe benefits listed in the wage determination.
The importance of receiving the apprenticeship plan is shown here because it's the plan the's going to direct how the apprentice's fringe benefits should be paid.
Some plans say that the apprentices are entitled to the full fringe benefits provided by -- to the journey level in the wage determination.
Other apprenticeship plans state that apresent diss are entitled to the same percentage of wages as they're paid at that particular level.
So if they're at 60% journey level for wage purposes, they're entitled to 60% of the fringe benefit listed in the wage determination.
Each are paid to apprentice or trainee.
There are some plans in which they are silent with respect to fringe benefits where the plan fails to mention anything regarding how fringe benefits are to be paid to an enrolled apprentice or trainee.
In those cases regulations require that the apprentice or trainee receive the full fringe benefit listed in the wage determination.
In addition to the percentages of fringe benefits, the plans also going to direct what ratio of aprep at thises to journey level can be employed on the Davis-Bacon project at a particular time.
The ratios can be three journey level to one apprentice, one to one, two to two.
And whatever is established in the plan is what we abide by.
And we'll see when we get to the compliance section in reviewing the certified payroll, you'll see the importance of knowing the ratio requirements because you can look at a certified payroll and determine if a contractor has exceeded the number of apprentices that should have been permitted to be employed on the Davis-Bacon project.
If an apprentice is employed in excess of the ratio requirement, that apprentice is view the full journey level rate for his or her work when they were out of ratio.
Helpers only maybe used on Davis-Bacon projects when they meet these specific requirements in our regulations.
In general you will not see helpers listed in a wage determination and in general you will not have a conformance approved for helper classification.
Please review these requirements and if you believe that there is an individual that meets these duties you may ask for conformance.
But again, I want to focus that a helper can't be someone who simply is enrolled in an informal training program and also the duties and work that the helper performs has to be clearly and distinct from any other classification in the wage determination.
Hence, if you had someone asking for a conformance for a carpetter -- carpenter helper and the definition for what the helper was doing is assisting in sawing wood and nailing boards to the wall, that's work performed by the carpenter.
And we would benigh that conformance request because the work is already performed by a classification in the wage determination.
Is this me?
I'm going to turn it to Rex Elliott with NASA and we'll continue our discussion with compliance principles.
>> Thank you, Tim.
As we learned this morning, the reorganization act -- effort of 1950 placed on individual agencies their requirement for compliance and enforcement of Davis-Bacon act, in my talk we'll go into numbers.
We're going to do arithmetic, get into some actual ways things work in practice for wages an benefits.
First let's start with terminology.
The term wages or prevailing wages has come points.
Let's talk about what that means.
There's the base hourly rate or direct labor rate as you sometimes hear it referred to.
Also includes contributions that the contractor makes irrevocably to a trustee or third party to a bona fide fringe benefit fund or program.
So there's some key qualifiers there.
It's has to be an irrevokable contribution to a plan, usually this will be a -- like a retirement or possibly -- it could be a retirement plan, or to a third party or trustee.
So there's some key qualifiers there.
It can also include the rate of cost that the contractor reasonably anticipates in providing the bona fide fringe benefitsch there's conditions that attach to that as well.
Now, under the Davis-Bacon act fringe benefits are a component of prevailing wages.
Wage determination obligation maybe satisfied by a number of ways.
This is one case where Davis-Bacon is a lot simpler than service contract act.
Both the base hourly rate and the fringe benefit can be satisfied by paying cash to the employee.
Or there could be contributions made to one of the bona fide plans or any combination of the two.
There's flexibility here.
Fringe benefits must be paid weekly for hours worked.
That's hours worked.
When you get into service contract act there's sometime as distinction between hours worked and hours paid.
On Davis-Bacon it's simpler, hourses worked, must be paid weekly, consistent with the certified payroll.
Cash wages paid in excess of the base hourly rate do count to offset or satisfy the fringe benefit obligation the case with the service contract act.
Okay let's get into numbers.
These are rounded for simplicity purposes.
Suppose the base hourly rate on a covered contract for a given position was $10 an hour.
The fringe benefit requirement on that was $1 an hour so you have a total prevailing wage for that labor classification of $11 an hour.
Contractor can achieve compliance by paying $11 in cash wages, $10 in cash wages plus a dollar in fringe benefits per hour or $9 in cash wages plus $2 for fringe benefits.
There's that flexibility.
These are the typical examples or fringe benefits.
Remember, these are things that cannot be otherwise required by law.
So Social Security matching, things that are required by law by another law do not count.
Fringe benefits, your employer has a life insurance program or health insurance, pension contributions, vacation holidays and sick leave, those all count and the example we talked about earlier was when Obama kicks in full, the requirement for health insurance is going to be increased for a lot of employers and I believe that means the department of labor will be making adjustments to the fringe benefit portion of wage determinations.
Somehow it will have to be allowed for.
Let's talk about funding of the fringe benefit plans.
Contractors can take credit without prior approval from DOL for the bona fide fringe benefit fund contributions made to third party trustees or insurers.
They have to be irrevocably paid and they have to be -- payments have to be made no less often than quarterly.
Take credit for it on the the weekly payroll contribution bus the actual payment to the third party happens -- has to happen at least quarterly.
And the credits got to apply to the individual works workers.
Sometimes under service contract act it applies for average in all workers in a pool.
On Davis-Bacon everything is individual workers.
What about unfunded fringe benefit plans?
Where the basically the equity of the company is pledged against the declared fringe benefits that are put on the payrolls.
Costs must be reasonably anticipated to provide for that particular bona fide fringe benefit, must be pursuant to an enforcement commitment.
The employer can't say this is this is going to happen, there has on an obligation on part of the employer.
There has to be a financially responsible plan, communicated in writing to the affected workers.
Suppose a particular wage determination required a prevailing wage of $14.50 an hour.
Composed of $12 an hour base hourly rate and $2.50 in fringe benefits.
Contractor could comply by giving 14, 15 hour in cash wages or $12 an hour direct wages plus $2.50 an hour no bona fide fringe benefits or $11 an hour plus -- in direct wages plus $3.50 an hour in bona fide fringe benefits.
Let's do -- go into the -- Tim mentioned we were going to talk over time pay calculations under CWSSA.
Contract work hours and safety standard act.
Suppose an employee works 44 hours in a week.
This is an electrician and suppose the wage determination said the base hourly rate is $12 an hour plus $2.50 an hour in fringe benefits.
We can go through the numbers here.
44 hours, we're -- work that week so there has to be at least $2.50 an hour for fringe benefits.
The 44 hours also gets straight time, that's $12 an hour requirement and the final piece is the overtime premium.
Those four hours, the hours that are in excess of 40 in a given work week have under the CWSSSA as well as fair labor standards act has to have time and a half for that overtime.
This shows you the calculation for figuring that half or the overtime premium portion.
You do the math, it totals out to a grand total of $662 for that employee for that week.
What about overtime computation where employees work on two rates?
Doing more than one classification?
During the work week an employee worked 20 hours as electrician and we have had the same base hourly rate in fringe benefits.
And worked as a painter 24 hours that week with a different hour rate and different fringe benefit requirement.
Take the 20 hours that the employee was working on as electrician and apply the straight time, $12 an hour and come up with $240 an hour as an electrician.
Then you figure out the straight time due to the employee as a painter, 24 hours at $10 an hour.
And it all totals the $480.
Then you divide $480 per week divided by 44 hours per week and you come up with $10.91 as the average wage for that week.
Here is the overtime.
Take the $10.91 and multiply that by half.
You're figuring the overtime premium times number of hours in excess of 40 or the four hours.
Here is where you come up with the calculation for overtime.
$21.82 as overtime premium for that employee.
Let a talk about sometime there's interaction between different statutes on government contracts.
This particular example the public contracts act and the Davis-Bacon act have interaction.
Wallch Heeley public contract act covers contracts where there's more than incidental amount of construction work.
The Davis-Bacon act applies to construction work that's construction, rehappen, painting -- rehab, paint, demolition as well sometimes.
Alterations and repair, painting and decorating.
That's covered by Davis-Bacon act but there might be other pieces of work that are on that same contract covered by Walsh Heeley where the prevailing wage is a national minimum wage.
The regulatory citation in the far is 22.402.
Weren't you going to be presenting these?
>> Yeah but you were doing so good I thought I would let you.
>> I jumped ahead.
I'll let Tim come back to do what he's supposed to.
>> Thank you, max.
This section we're talking about the interaction of the service contract act, the Davis-Bacon and the welsh Heeley public contract act.
At least for my team here in Washington, this is one of the topic areas we oftentimes get involved with contracting agency decisions.
And unfortunately these matters are typically ones that we are forced to address after contract award.
And I will simply say that it's my experience that when we white pages these with questions as to how they made a determination whether or not to include another labor provision, in the contract, we typically find that the agencies haven't really done a lot of thought or referred to the farR guidance before making that decision.
So for those of you that are federal contracting officials, because the service contract act only applies to federal contracts, I ask that you pay particular attention to this because this is an area that even when you're sure that you're doing the right thing, you can sometimes make some errors that unfortunately can come back to your agency as cost issues.
So let's look at the first item that Rex is introduced for us.
This is the interaction between the PCA which is the supply contract, supplier manufacturing act, and the Davis-Bacon which is for construction.
So you can imagine that there are going to be instances where agency will contract for supply for supply contract.
The security system of a bidding.
Clearly that's the biggest expense item, the purchasing of the security system.
However, you're also going to include in that contract the requirement that the supplier perform the construction work necessary to install the system.
And that would be an instance where if you see this type of activity in your requirements, the replacing of existing conduit, repairing or walls, put manage new switching systems, new switching closets, that's construction work as we define it.
If it's more than incidence tall to the overall supply contract, your agency should have included PCA for the supply work and Davis-Bacon for the actual installation work.
Another example, is for the supply installation of module furniture, looking at the scope of work and requirements for construction work measured against the overall supply contract to find out if that's more than incidental.
Both the regulations at the department of labor, 29-CFR part 5 you also have good guidance in the far, 48-CFR-22, 402B.
So I encourage you to read through those provisions because that guidance will assist you in looking at the application of Davis-Bacon and supply contracts.
Let's move on now to how the SCA enteracts with Davis-Bacon and one more slide for me, please.
Here San example.
The SCA does not apply to any contract principally for construction.
If you recall when we introduced is statutes earlier this morning we said that SCA has a principle purpose test.
Service contract principally for providing services.
So you can have a big SCA contract with some Davis-Bacon work but you can't have a big Davis-Bacon contract with a little SCA work because the overall statutory definition under the service contract requires that its principle purpose be for services.
Remember too, construction as we defined it under the Davis-Bacon act includes construction alteration or repair including painting and decorating.
So let's look at some common issues where contracting officer is oftentimes faced with a decision of whether a particular solicitation should be covered by the SCA or the Davis-Bacon.
SCA contracts are typically for maintenance, schedule, regular and reoccurring maintenance activities.
Snag's done in a continued state of continued utilization.
Routine HVAC filter changes and Klineing the systems.
Snow removal, all examples of SCA covered contracts.
Let's look at examples of when Davis-Bacon would apply to particular types of contracts.
A one time fix to something not functioning.
The restoration alteration or replacement of fixed components.
We recently replaced all air conditions units here at the department of laborn't roof, required a big crane, those chillers had to be removed, new ones put in.
That's not a service activity.
That was a Davis-Bacon activity because it required not only replacement of chillers but alteration to existing cooling system so that it was compatible with the new machinery up on the roof.
So here are some examples.
Building and structural repair, renovation, roof shingling, paving repairs are all Davis-Bacon covered activities.
Here are some important considerations when you're trying to evaluate whether something should be Davis-Bacon or SCA.
Davis-Bacon when the activity is part of construction contract, requirements before the public work or public building is accepted by the owners an these examples are landscaping, cleanup, carpet laying and drapery installation, all these activities standing alone will be service contract.
But if these are requirements that are folded in to the complete renovation of the department of labor building for example, they would be performed under the auspices of the Davis-Bacon act.
Again, we talked routine maintenance and upkeep.
Our carpets need badly replaced in our office and if that was just done a regular routine basis we would award that under service contract and not Davis-Bacon.
Janitorial mowing grass, replacing draperies that are warn are also SCA covered activities when not involved in an overall Davis-Bacon renovation project.
work, we get questions on demolition whether SCA or Davis-Bacon and the rules are fairly easy.
SCA if there's no contemplation that new construction is going to take place at that site.
So if we're demoll Iing a building here in Washington C. D.C., the GSA is doing the demolition with plans to build under that site, they were awarded under SCA.
If they demolish the building and had planned in place to award a contract for construction to building new building in that location then the Davis-Bacon act would apply to that demolition work.
We have and all agency memorandum number 90 to give you further guidance on that.
SCA contracts with Davis-Bacon statement.
Remember, we covered this a little bit about SCA and Davis-Bacon.
SCA has to be in place for it to apply and also you can have Davis-Bacon activities where work is physically and functionally separate and SEGRABLE for the other work called for in the contract and from substantial amount of the construction work.
Please note -- next slide Danny.
Define substantial as type and quantity of the construction work, SEGREBLE, is the work physically separate from the other activities required in the contract.
I want to get to the far clause for this.
One more for me, Dan?
This is an important far cost that I think provides excellent guidance to the agencies when they should include Davis-Bacon and when it's SCA so please make note of that far provision and look at hours test that's involved as well as if it's pending the amount of square feet that are required for painting activities.
Here you can see the definition of painting.
More than 200 square feet.
Davis-Bacon is going to apply to that work order or task.
If it's less than 200, minor touchup painting, then SCA is the applicable labor standards that should apply to that work.
In all cases the contracting agency has the primary and initial responsibility for determining the appropriate coverage when awarding these types of contracts.
The department of labor that has the final authority on coverage decisions or all contracts under the SCA PCA and Davis-Bacon.
Whenever we issue a final ruling agencies have the right to appeal those determinations to be administrative review board who acts as a final voice of the secretary of labor when it comes to decisions and rulings.
Jade banks is about to come up doing non-compliance monitoring.
This is a workshop that we conduct at all prevailing wage conferences, jade, the rooms are always packed when you do this.
So I'm hopeful that the folks out there are able to pick up the screen because this section is very helpful.
>> Thanks, Tim.
You have learned everything you need to know about Davis-Bacon, the related acts, CWSSA, all that stuff, you have that down, we have covered that already.
So we don't need to go into that any more.
What we're going to do now is build on that knowledge.
For purposes of this segment we are going to assume that we have the project where we have established applicability, our contract has the correct wage decision and the labor standards clauses in it, we verified the eligibility of the contractor and the payrolls are coming in so what now?
We're going to talk about non-compliance monitoring.
And I know that sounds odd and I have taken some ribbing for it but think of it this way.
When you review payroll reports, who is looking for compliance?
I'm No. cxfc when I look at payroll I'm looking for violations.
In particular I'm looking for willful violations because that's where the greatest damage is done that's where the big money is.
Before we move on I want to make it clear that we know the many, many compliant contractors.
We know that.
They do all the things they're supposed to do and we're grateful for it.
Like we don't review payrolls for compliance, we're not here to focus on compliant contractors.
We focus on contractors that aren't.
So payroll reviews.
Who needs to review payrolls?
You have heard many times about the reorganization plan number 14.
Making federal agencies responsible for their own administration an enforcement.
So HUD has to review payrolls.
We have a staff, labor relations spiel staff and they handle the payrolls for our multi-family development programs.
As we have noted, HUD has thoughtfully delegated labor standards administration an enforcement activities to roughly 5,000 state and local agencies.
So they need to review payrolls.
Consultants need to review payrolls.
Many of our agencies, especially the smaller ones, they hire consul about thes -- consultants rather than in house expertise so they need payroll reports and contractors need the look at payrolls in particular crime contractors.
Because the prime is responsible for the full compliance of itself, any sub CATtors and any lower tiers working on that project furthermore the prime is liable for every penny of wage restitution that might be found due to anyone working on that project.
So prime, they get the payroll before anybody else does.
It's in their interest to look at those payrolls themselves.
In this session we're going to talk about how to review payrolls efficiently and effectively.
What to look for, how to find it.
We review payrolls -- went too far.
We review payrolls mostly basic stuff to ensure all the labors and mechanics are paid no less than prevailing rates based on type of work they perform and number of hours they work including any considerations for overtime.
We're monitoring violations, not for compliance.
There are two types of violations, there are phase of the record violations and concealed violations.
Base of the records, those are things right on the payroll report, the wage decision says you have to pay 20.
The payroll says 15.
$5 an hour is due, everybody knows that.
Based on record violations are typically inadvertent.
If you catch them early they're not costly and usually easy to correct.
That's handled somewhere else.
We're going to look at the second set of violations, concealed violations.
The reason we're going to do that is because that's where the worst violations occur.
An employer that knows what they're supposed to be doing, know they're not doing it and falsifying payrolls to conceal violations, they're not going to go to all that trouble for small change.
So we want to find out where the greatest violations are occurring, where the greatest detriment to employees is occursing.
As payroll reviewers it's our job to detect falsification.
When it comes to unraveling a falsification case that's where DOL comes in.
Number one, DOL has resources in the community where I am in our state and local agencies, we have not really had a staff increase for maybe 16 years, give or take, so we don't have great resources.
You have heard probably already that DOL has really stepped up its enforcement activity and its enforcement capacity.
So they have resources.
Number 2, DOL trained investigators.
They have people that do investigations for a living.
We don't have that at HUD.
That is not a primary piece of our work.
It's a piece but not a primary piece so DOL has investigators know how to put these things together.
And third, DOL has a much broader scope of authority.
As we've heard earlier today, we -- at HUD I can look at an employer and I may find out that employer is underpaying on one of my projectsch then I might find that employer is on a Navy project.
I can't do much about it except call the Navy and them know.
They can cross agency lines.
They don't have to worry about that.
Even more than that, they can enforce other labor laws that we can't.
If you think an employer is underpaying the workers, falsifying payrolls, what are chances there are other things going on that probably aren't okay.
It Macks sense to turn it over to DOL because they can handle it all.
On top of that when payrolls are falsified, that means a willful violation.
And willful violations can be a standard for debarment on on of that falsified payrolls lead to criminal charges.
So if our end goal, our end zone essentially is debarment it only makes sense to give the ball to DOL from the start.
They know how to put cases togetherch that's stuff they do so that makes sense.
The gravy on this from my point of view, I have done a debarment recommendation maybe once, twice.
It's lot of work.
It is painstaking.
If we turn these cases over to DOL we don't have to do the report.
So our job -- we have something DOL doesn't have.
As payroll reviewers, all of us together collectively, we have access to every single Davis-Bacon payroll out there.
So when we get them good leads we can focus their resources where they can make the greatest difference too.
So working together, feeding these great leads to DOL we send a strong message we and the department of labor are serious about Davis-Bacon compliance.
Really simple and it's a good thing because otherwise I wouldn't understand it.
It comes down to four things.
The type of work performed, the number of hours worked, the rate of pay, for that work classification and delivery of wages to the employee.
It's pretty straight forward, not many twists and turns so it should be fairly easy for any employer to understand what it is that they're supposed to do.
So moving on.
We talked about limited resources.
We cannot do it all.
The days of 100% payroll review are over.
Years and years ago dinosaurs roamed the earth, methUSOLA was, I don't know if we had indoor plumbing and I was working at the Iowa HUD office.
There were a lot of us at HUD doing payrolls.
We were very honest and very thorough and we were very busy.
We date stamped every payroll when it came in and when we reviewed it.
We had logs we kept carefully with different color dots we will put to show what violations we had found.
Like I said, we were very busy and earnest.
Not sure how effective we were.
We don't have those luxuries any more.
We absolutely are going to miss some things, we know that.
But what we can do is focus ourselves on the big things.
So we're going to spot check payrolls, we need the prioritize and we need to focus.
So by prioritizing we focus on the major trades.
And by spot checking we look for patterns on payrolls.
Not little thing, mistakes can happen.
We're looking for patterns that Pete over time.
That indicate a systemic problem.
If everything is okay we move on.
If not, we get it fixed.
Then we look below the surface.
We want to see what else is going on there, what's on the face of the record.
What's underneath that?
Every payroll tells a story and we want to get a good one.
First things first.
We want to be efficient and effective.
The first thing we're going to do is sort the payrolls by employer and arrange them by date.
And I know that can sound like a waste of time, I assure you it's not.
We're trying to figure out a story, patterns and we won't be able to do that if things are mixed up.
I think when we were little we had flash books, a bunch of pictures on a page, as you fand through the book it would look like it was animation.
So it told a little story.
So what kind of story would you get if pages were mixed up?
You're not going to get one.
After that we check the signature.
We want to make sure the certification is valid, legitimate and binding.
So each signature must be original, it must be in ink.
And it must be that of an owner, officer of the firm or someone authorized by an owner or officer of the firm to sign payroll reports.
What it also means is we do not accept Xerox copies or PDFs.
We don't accept fax copies.
We do not accept pencil on payroll and no one other than the owner and off other firm someone authorized by either may sign payrolls so we make sure the certification are in order.
Next thing we to, make sure the information is complete and legible.
Does the payroll contain all the information that you are supposed to get?
Is it complete?
Secondly, can you understand what's there?
If you can't read what's on the payroll, you're not able to assess that employer's compliance.
We want to make sure we have information that's complete and that is legible.
Not in pencil.
Because whatever is on that payroll, whatever the employer has attested to being true an correct must be indellable.
We don't want an employer coming and saying wait a minute, somebody erase this, I didn't put that down there.
We want to make sure that cannot come back on us.
If the standards aren't met we require resubmission.
We never give payroll back.
Once submitted to us, it's ours.
We want the complete story from the beginning to the very end, so we require resubmission.
Now, we have complete legible and properly certified payrolls.
We're going to do a real quick review here.
We're going down the face of the payroll, scroll down, are the classifications on the wage decision, do we need conformance, did the employer classify correctly?
Journeyman or technician.
Do we need clarification.
Are the wage rates sufficient to meet the requirements of the wage decision?
Are the hours correct?
The employer compensate for hours including overtime hours correctly.
If there are apprentices an trainees do we have a copy of the registration?
Do the ratios lack okay?
Test them if you want to but we done want to spend a lot of time there.
We require corrections, we get them done.
If we prior rest institution that is certified to on a corrected payroll report.
We always want any -- every single penny of earnings on that job, regulation, restitution, overtime pay for labors an mechanics must be on a pay report somewhere.
So we always want restitution on a corrected payroll.
Back again with dinosaurs and the indoor plumbing thing, I was in Columbus.
HUD youred to require that the employers give us cashier or certified check made payable to the employee or HUD.
Then we got past that one and said okay, just send the regular payroll check.
Then we when to oh, well, send me a copy of the canceled check, or give me a receipt for the check.
For all that effort and our earnest approach, the best we can hope for, the best outcome is that we only managed to delay the delivery of restitution to the workers.
So it doesn't work.
Also when you think about it, when you put that together, none of that even combined carries the weight of a certified payroll as far as evidence is concerned.
So if we have an employer we're requiring them to pay restitution and they give us a certified payroll and they falsified that, that I think would be just about any DOL investigator's dream.
The other thing to remember too, you can falsify stuff.
You can falsify checks, falsify receipts.
You can falsify all kinds of things.
If an employer does that for wage restitution, what happens if we find out?
They have to pay the restitution they were supposed to pay in the first place, right?
Falsifying a cancelled check is not the same as falsified a certified payroll report.
So now a closer look.
The concealed violations.
Here are some things that you can finden on a report that involves falsification.
Reduction of hours, deficient rate of pay, an authorized deduction and kick backs.
So the question is, what do these look like on a payroll report?
What do they look like and what are they trying to tell me?
Luckily we have some payroll falsification indicators.
Just like the compliance factors simple four elements.
Payrolls are the same way.
They're very simple.
They're linear, they're not complicated.
So when trying to conceal violations on a payroll report it can get pretty frustrating.
It's kind of hard to make a payroll look right when everything is but right.
So we're looking for repeating patterns, anomalies and mistakes that are going to happen but we're not going to call out the brigade for those, we'll get them fixed.
We're looking for things that will show results on par with the investment of time that we're going to put into it and the investment we're asking DOL to put in should it go that far.
One more thing to keep in mind.
It's just as important to determine what is false as to determine what is true.
Payrolls are rarely falsified in their entirety.
There's usually something there you can rely on.
So if you look at it like a puzzle you want to take the falsified pieces out but leave the correct pieces there so you're not -- you're building in just what you need to, so figure out what is true, what you can rely on and how that helps you with your case.
First, falsification indicator, a ratio of laborers to mechanics greater than 1, to 1.
In this example we have ten laborers and two electricians.
What's going on here?
Most trades people carry their own tools, their own supplies.
So what is it that two electricians can be doing day after day, week after week, that could keep ten laborers busy eight hours day?
What could they be doing?
That tells us we have misclassification going on.
Most likely those laborers are doing electrical work.
There are some exceptions.
Some work requires more laborers.
Paving, landscape, at the beginning of a project you may have more laborers and at the end you may have them too.
But that's not the norm.
So in this instance what's false?
The work classification.
What's probably true?
Everything else T hours T rate of pay, gross earnings.
All of those are probably true.
So what can you do to find out?
Who can you talk to?
Who has the answer to that?
Well, the employees know something.
So this is where on-site interviews can be productive for us.
The next one, too few or irregular hours.
Most people work 40 hour week.
If I could get away with maintaining my lifestyle and keeping my creditors happy working part time I would be on it.
Anybody with me there?
So most people work a full time job if they can get a job at all, that's the challenge now.
It doesn't make sense.
Crews normally work together.
They don't work all over the place so when you see payrolls where the hours are just spotty all over -- someone comes in a couple of hours and someone else comes in a couple of hours, that doesn't make sense at all.
How is the job getting done?
You have got carpenters followed by electricians an plumbers followed by dry wall hangers an finishers, followed by carpet layers.
That work isn't going to keep moving if for some reason the electricians just aren't there.
They're not working on the job.
So that's not how these things move.
Last thing, most employers keep time by quarter hours, half hours, hour, that's the best HUD tries to do in an office setting.
On a job site there's typically no time clock.
So what in the heck does tens an hundreds of hours, what does that have -- what is that doing on a payroll report?
And what is 16.7 hours in real time?
So let's take a look.
What would these look like and what are they telling you?
They're telling you the employer is reducing the hours.
They're backing into the hours in order to make it appear as though they provide the prevailing wage requirements so you have the earnings divided by the wage decision rate, that equals the false hours.
So in this case what's false obviously the hours and the rate of pay.
What's true, probably everything else.
So let's take a look at an example.
Here is an easy one.
The wage decision required $20 an hour.
The employer is paying 10.
So the employee, 40 hours times $10 an hour times 40 hours for the week.
You take $400 divided by the the weight on the wage decision and you get 20 hours.
The payroll is going to show you 20 hours times $20 an hour equals $400.
That's how the employer can back in to the hours.
It isn't that simple.
So we have another example.
The wage decision requires the is going to divide $700 by $33.68.
And when they do, they eat get 20.78 and that goes on hours.
That's what's going to be showing up on the payroll.
So that's how the employers can back into hours as well.
Next we have computation discrepancies, this is where the hours times rate of pay, does not equal the gross amount earned.
So you have got round gross amount earnings coming out of uneven Davis-Bacon wage rates.
Most Davis-Bacon wages need -- thank you.
Most Davis-Bacon wage rates are in odd numbers.
Employers often pay in even numbers so when they try to put those together they end up with computation discrepancies.
I thought I had an example, I'm going to move on.
There's an example where in the end the employer is trying to make you believe they don't want to dismiss with gross wages, they're trying to make you believe 20 hours times 33.68 equals $700.
In fact it does not.
It equals 673.60.
How do you find out for sure, you ask the employee.
Extraordinary desuctions, this is where you have people that are taking their -- that are putting more sign the savings account than taking home in their wallet every week.
And that's telling you that the employer is taking a kick back from that employee.
This is when an employer sends you documents you didn't ask for.
Like laborer compliance agreements where employee says my employer paid me everything I was supposed to and they don't OWE any more money, thank you very much.
We didn't ask for them, maybe that imemployer is trying to clarify things for you.
Maybe that employer is trying to distract you with labor agreements and receipts, from looking at the payroll reports and finding out what's going wrong.
I want to touch on a couple of thing, these are underpayments that will never show up on the payroll report.
They're not going to be there, the payrolls will be pristine.
They're still massive underpayments going on.
First is where the employer pays in cash.
Tim had an example today where the employer is writing checks, he drives everybody down to the bank, they cash their checks an come out and give the employer part back.
Or the employer says everybody come to the trailer 5 o'clock Friday afternoon aeel give you your pay and the employer passes out envelopes with cash.
What is in the envelope is not what the payroll says.
He'll have the employees sign checks back over to him and give them cash, it's not enough.
The last example, ghost employee, people not on the payroll but they're on the project.
They maybe day workers, the employer has someone permanent working for them, then they hire another crew and not getting Davis-Bacon rates on-site interviews get you to those.
It is now my pleasure to introduce Latricia Pratt and Calvin cox who will go over a pay row exercise with you.
>> Good afternoon, my name is Calvin cox.
Myself and Ms. Latricia Pratt will give the session on certified payroll exercise.
This is a meant to be practical exercise how the recognize common mistakes that maybe felt when reviewing certified payrolls.
Today we will only cover a part of the full payroll exercise that is given to our regular prevailing conferences because of time constraints.
Because of time constraintsch you have access to the full panel exercise on our web link and access to the answers.
The full exercise is eight pages long and contains the instruction sheet along with a wage determination for the wage rate.
Here is Ms. Pratt to kick off our presentation and I will follow her to walk you through the actual exercise.
>> Certified payroll records may contain the following information.
Name, identification number or each worker along with his or her correct classification.
Hourly rates of wages paid.
Daily and weekly number of hours worked as well as deduction made actual and actual page paid.
Please note the following Social Security numbers in home addresses are no longer permissible on payroll records submitted to contracting agencies.
However, identification numbers for each I pleaee should be used recommended contractors -- in this case the prime contractor as well as the sub must return the full address and sole Social Security numbers for all workers as well as provide them upon request the contracting agency and DOL.
The contractor should submit weekly one single copy of certified payrolls with seven -- within 7 calendar days after the payroll period.
Additionally, a prime contractor is responsible for submission of payrolls by all subcontractors as well as -- I'm sorry, by all subcontractors once work begins.
The required weekly payroll information maybe submitted in any form desired.
Also payroll submitted shall set out accurately and completely all information required to be maintained under 29-CFR-5.5.
A company with certified payroll must be a weekly compliance.
Signed by contractor or subcontractor or the agent who pays or supervise the payments of laborers and mechanics under the contract.
Payroll and basic records related there to must be maintained by federal agency during the course of the project and preserve for a period of three years from the completion of the contract.
Agency should produce them upon request of DOL during the three years at any time.
Contract funds maybe withheld if the contractor first Schmitz copies or subcontractors payroll in a timely manner.
The contracting officer should withhold payroll at an amount the contracting officer considers necessary to protect the interest of the government and their employees of the contractor or any subcontractor.
Now I want to talk about how certified payroll should be handled under the freedom of information act.
Otherwise known as the FOIA.
Certified payroll reports are considered agency records as defined by freedom of information act.
Contractors payroll records that are in the government possession must be carefully protected from any public disclosure.
Payroll records contain information which employees have the privacy concern which the government may required to protect.
The FOIA expose obligation on the part of the agency to respond to requests for records within 20 days of receipt and explain the agency and explains that the agency should advise the requesting party whether to comply with the request.
On this slide I'm going to briefly discuss electronic signatures a certified payroll submission.
Certified payrolls maybe submitted electronically with proper use of electronic signatures.
Also electronic certified payroll can reduce processing and storage costs.
As well as assist in compliance monitoring and expedite response to FOIA requests.
Last but not least submitting certified payrolls by use of a fax machine that's not certified in electronic signature requirement.
Now I would like to turn it back over to Calvin.
>> Thank you, Latisha.
I'm going to take you through the actual exercise.
We're going to start off with a blank WH 347, this is an optional form.
A little bit of information about the WH-347.
They work on assist the contracts should have a weekly statement as to wages paid each employee during the preceding week.
The department of labor regulations requires contractors submit weekly a copy of all payments to the appropriate federal agency.
It should be accompanied by assigned compliance indicating the payrolls are correct and complete and that each -- each laborer and mechanic is paid not less than proper prevailing wages for work performed during the week.
The WH-347 is an optional form made available to the public.
The only requirement that the department of labor has regarding the WH-347 is all the fields are listed on the form or any other form that the contractor or agency chooses to use.
For this exercise we completed a statement of compliance.
Your job will be to identify mistakes and problems with WH-347 or statement of compliance.
Again we have made the full exercise and the answer sheet available to the public on our web link.
As a framework for the exercise come to this exercise as if this was the first time reviewing for payroll for this particular project.
Note this is the 20th submission for the project.
You take the view that this is is first time you are reviewing this project certified payroll.
At this point I will give you approximately three minutes to examine the first of two slides, the completed WH-347 and then I will give you a minute or two to review the statement of compliance.
Please identify as many problems or potential problems as you can.
The this is a WH-347.
Next slide shows a statement of compliance.
And this is going to be the completed WH-347.
I'm going the give you approximately 3 minutes to look at this.
The purpose is to find actual problems, particular problems on this.
My watch is ticking, please get started.
It's been approximately three minutes.
I'm going to go to the next slide on our exercise.
Which is a statement of compliance.
I may flip back one quick moment before we go forward but I'm moving mow to the next page 2 of our two page exercise.
This is a statement of compliance as with the first page please take a look and find any outstanding problems or potential problems here and we'll move along in a minute or two.
>> Okay ladies and gentlemen, we're going to move forward.
What we're looking at is on this particular exercise what you should be notingen this slide, you see highlighted in blue three carpenters, Mr. Joseph Anderson, Thomas boughtwell and Todd larSEN.
Noted here as previously mentioned we encounter situations with apprentices, Mr. Tom O'Brien and Gordon Roberts when you count a separate situation you shall go to the apprenticeship agreement to see what the proper link ratio between German and aprep at this is.
On this particular slide we're looking at British carpenters and trainee, Mr. Schneider.
When you encounter this situation what you look for in going to us was previously noted is look at apresent hisship agreement, that will give the proper ratio and give information about if the person is in an approved apprenticeship program.
If they're not in the aproved program these personnel should be paid at the journeyman rate.
This next slide is what you should be looking at is first the blue arrows.
The blue arrows are telling us that the overtime.
On the certified payroll you fine out if anybody is earning overtime.
The three carpenter, Mr. Joseph Anderson, Mr. Thomas betwell and Mr. Todd larSON are getting overtime each day.
If you look at other individuals on this 347 what you find is they have zero overtime as previously mentioned this was a little odd, especially for the apprentices.
If you have a situation apprentices are working next to the journeyman is kind of uncommon or unusual for them to not work overtime hours also.
So this is one of those situations where you probably want to talk to interview the employees, kind of get a better picture of what's going on.
In addition you have the brick layers making zero hours in regards to overtime and plus not getting eight hours during the work day.
This is a situation mentioned earlier, you want to look at you want to find out what is going on.
As previously mentioned dealing with the WH-347 or certified payroll, what you're looking for is identification number on the example given to you there weren't identifications -- identification numbers provided.
What we have done here is provide the individuals last four of the SSN which is an acceptable format to be used.
We're transitioning into the statement of work, one thing you remember from the earlier slide, the work -- one we did not have the title for Mr. Hall Hardy.
What you want to have on statement of compliance is official of company.
If Mr. Hardy was actually an intern or secretary that will not be acceptable.
So what you're looking for is an official of the company to be on the actual statement of compliance.
Many addition we have this other block here.
The contractor should have selected one of two boxes in section 4 as represented here.
The contractor is not paying the fringe benefits to approved plans finds the programs box B should be checked as indicated here.
Workers are paid their fringe benefits in cash.
That's what this box indicated here is.
What we're looking at the next slide is a signature block for all what we have done in the submission of the statement of compliance, if the signature box is not signed, then that's not acceptable and the contractor should as indicated before, sign the signature block and do a resubmission to the prime contractor and/or the contacting agency.
I will move on.
We cover ad lot of information today.
What I provide on this slide is wage determinations online, what I'm making note to you, on the right hand side you see the arrow, says library.
If you click on the library, it will take you to this page here which has a wealth of information available, so you have if future questions please go to wage determinations online and click on library an you have a lot of more information available about the workH-347 Davis-Bacon in general.
This page here has information, useful links that maybe available or useful to the public.
This last slide is a reminder that the official guidance on the Davis-Bacon act please refer to federal register code of federal regulations or the far.
At this time I'm going to turn it back over to Tim helm.
Thank you very much.
>> Thank you, Calvin and Latricia.
That full exercise is available on the live link.
You can print that down.
There are a number of other issues on those certified payrolls so you can do that exercise at your own time.
We have also included the answer sheet for you.
So that you can verify that the selection that you made were consistent with the overall plan or the exercise.
We remind folks certified payrollses there's one piece of evidence we have used to determine compliance with the Davis-Bacon act.
Winding down we have a few minutes for questions so panelists, it's stump the panel time once again.
Before we get to that, a couple of housekeeping issues.
We have been asked from contracting officers whether we will issue a certificate for this attendance at this conference and the answer is yes we can do that, so if you would like a certificate of participation, email at WHPPODC@DOL government dove.
You need a code word to show you have indeed participated in the conference.
The code word for today's session is recovery.
Make sure you reference recovery in your email and we'll get you a certificate in the next few weeks.
Also I'm very please pleased to report today's -- this morning's session was videotaped without error and so we'll be posting that on our government contracts website later today so for those who had challenges watching the life stream this morning that will be at D OL.gov/workHD/recovery.
So you can check in and participate in the morning session, hopefully that downloaded stream will be a better quality for you.
In addition I know we have had some technical difficulties but we have a survey online at the link you have used to access this webcast.
Obviously this is our first attempt at a webcast of this size and you know we have some technical difficulties but we very much appreciate getting your responses to the materials we presented if they were adequate to your needs, are there additional topics that you would like us to cover in the future.
If you have attended our in-person prevailing wage conferences, are they helpful to you, should we continue to offer them next year.
So I do invite you to go back to the live link and click on the survey and complete that for us.
Your comments are all appreciated.
Here are some questions for you.
See what we got.
And I'll answer the first one.
Does the certified payroll have to be -- does the payroll have to be weekly?
We have some contractors that pay biweekly and does that matter?
The answer to is yes, it does matter for Davis-Bacon act the laborers an mechanics must be paid on a weekly basis.
If you pay biweekly or bimonthly you can continue that method for workers who are not participating on the Davis-Bacon project.
But for Davis-Bacon workers, this does unfortunately require a change in payroll methodology so you are reporting and paying workers on a weekly basis.
If you pay -- continue to to pay workers on a biweekly basis you would in essence falsify every other certified payroll.
Indeed that is a requirement of the Davis-Bacon act and the copeland act.
There we go.
We had a question also about using the last four digits of the Social Security number as the employee identifier information on the certified payroll.
Is that the only option?
A contractor can come up with any employee identifier number if they have established payroll numbers for each worker, they can include that on the certified payroll and not just the last four digits of the Social Security number.
Keep in mind always the prime contractor should be collecting the Social Security numbers and addresses of all workers employed by all contractors and subcontractors and that list should be available at all times for transmission to the federal contracting officer or the wage and hour division when requested.
Let's see if I can get you one here for our panel.
Who is the responsible entity for maintaining the original signed certified payroll records?
The agency on site sub recipients awarded the contracts.
>> On site recipients, not sure what that means.
>> But I believe that the safest answer is that the original payroll should be maintained by the agency.
And for huskies the state and local agencies that administer our programs, that will be the agency to keep the payroll report sub recipients would not I think.
>> From the department of labor standpoint for all certified payroll records, our labor standards provision say those records are the property of the federal agency.
So even in instances where HUD may have delegated that authority for the local contracting entity to hold the certified payrolls or the federal way administration has given that authority to the the state to maintain those certified payroll, we consider those federal records.
And in the event that the federal agency receives a FOIA request for those records they must get those and respond to the FOIA.
Response those records are not under our control is contrary to the labor standards provisions that you placed in the contract.
We had a question about -- we had some examples where a contractor who had a wage determination requirement of $20 and $5 an hour in cash wage and decided to pay the employee $25 an hour.
The question is whether the contractor is required to pay the worker at the $25 an hour rate when they work overtime.
>> The short answer is no.
The -- say the -- they do have to pay at the time and a half rate for whatever the number of overtime hours is.
So you calculate based on whatever the labor rate is and that's what the overtime applies to.
>> I think using the example, Rex, helps folks out a little bit so our example of $20 and the $5 in fringe benefit the contractor pays $25 an hour in cash, the contractor in this case would pay $10 in overtime, that's the additional half time.
Fringe benefits have to be paid for all hours work.
So employee is entitled to that additional $5 fringe benefit bus not at the time and a half rate.
>> Very good.
>> The overtime premium of 50% applies to base hourly rate.
>> Let's see what else we have.
How are we on time?
I'll find one more question.
Is there a timetable when wage and hour is going to stop doing investigations of the recovery act?
What should agencies expect?
I think we do know though the recovery act is winding down there are a number of programs where we coverry act funds are being used.
Some of the Division B bond programs are -- continue to exist and be awarded and also energy has issued loan guarantees under the recovery act.
Certainly as we prepare for our next fiscal year we'll be looking at additional directed work at recovery act programs in addition to some of the project investigations that you have seen us complete over the last two years.
This next year will be the same level enforcement that you have seen in the past few years here in the wage and hour division.
Danny, anything else?
I think that's going to wrap it up.
I do want to remind you about the survey online and that we will have part A online for you later today.
So that you can watch that without interruption and B we'll see online tomorrow guys, maybe, we'll see part B which is seen online tomorrow so if you have coworkers that want to see that, both should be up an running.
foes interested in the service contract act that show is tomorrow morning same time, same place, hopefully we'll have some of the wrinkles taking care of our streaming issues and Mr. William Brooks of my office will be leading that session on the service contract act, whether you register or not, the link that you use today will work find for tomorrow.
Thank you on behalf of my co-presenters jade, Rex, Calvin, Latricia, thank you for joining us today and don't hesitate to contact us if you have questions in your important role in the administration of the Davis-Bacon act.
We appreciate it.