Davis-Bacon Act Training

1

Course Overview

• Davis-Bacon Act and Related Acts coverage and exemptions • Application of Contract Work Hours and Safety Standards Act, Miller Act, Copeland Anti-Kickback Act • DBA wage determinations • Wages and fringe benefits under DBA • Compliance issues, recordkeeping • DBA impact on contract pricing • Potential changes in legislation, regulations, and procedures 2

References

• Title 29, Code of Federal Regulations – Part 1, Procedures for Predetermining Wage Rates Under DBA – Part 3, Payment and Reporting Wages on Federal Construction Contracts – Part 4, Labor Standards for Federal Service Contracts – Part 5, Labor Standards Provisions Applicable to Federal Construction Contracts – Rules of Practice for Administrative Proceedings – Rules for Appeals [DBA & SCA] Before the Administrative Review Board (ARB) 3

Other References

• DOL’s “Field Operations Handbook,” Chap. 15 – Find these documents at WDOL.gov (Library) • Federal Acquisition Regulation and Agency Supplements • Agency contracting officer • Agency labor advisor – See listing on www.WDOL.gov) 4

DBA Coverage

• Contracts in excess of $2,000 • For construction, alteration, and/or repair of public buildings or public works – Including painting and decorating • Where the United States or District of Columbia is a direct party • May also apply to construction performed under a supply or service contract where such construction work is substantial and segregable 5

Other Contract Labor Standards

• Service Contract Act – Applies to contracts the principal purpose of which is to provide services – DBA will apply to substantial and segregable construction work within the same contract • Walsh-Healey Public Contracts Act – Applies to supply or manufacturing contracts – DBA will apply to substantial and segregable construction work within the same contract • Contract should identify where each law may apply 6

DBA [and Related Acts]

• Other statutes provide federal assistance to construction projects without a direct contract using – Grants, loans, loan guarantees, insurance • Statutes may include a requirement to comply with the provisions of DBA – Routinely referred to as DBRA (“Davis-Bacon & Related Acts”) • Examples: HUD housing projects, Federal Highway Administration projects for roads or bridges, EPA’s water treatment plants 7

Geographical Coverage

• DBA applies to work performed in the 50 states and the District of Columbia • However, “Related Acts” may apply DBA provisions to work performed under the Related Act in such places as Guam or Virgin Islands • The contract (or other federal assistance provisions) should note when DBA applies • Ask the contracting officer if it is not clear 8

DBA-Covered Work

• DBA applies to work performed from the beginning through the end of the project, whether or not within the same contract – Land clearing preparatory for construction – Demolition of old structures – Laying of carpet, if part of the complete project – Final cleaning of building or work site • DBA does not apply to work not connected to a planned construction project – Exploratory drilling – Demolition not expected to be followed by construction 9

DBA-Covered Work (Cont’d)

• DBA applies to prime and subcontractor – NOT applicable to suppliers unless suppliers are performing construction activities in the course of delivering materials (e.g., concrete pouring) • “Site of work” includes actual construction site and dedicated sites adjacent to construction site (e.g., lay-down yards) • NOT applicable to the fabrication of materials off the site of work – unless that work is considered to be a secondary construction site 10

DBA Requirements

• DBA requires the payment of “locally prevailing wages and benefits” [determined by DOL] to laborers and mechanics performing on the site of work • DBA does not require overtime premiums (see FLSA and CWHSSA) • “Laborers and mechanics” do NOT include watchmen and guards (but CWHSSA does specifically cover these) 11

Apprentices

• Apprentices may be employed under DBA, and paid in accordance with an approved apprenticeship program – Note that FLSA and SCA do not provide for different wage levels for apprentices – Employee/apprentice MUST be enrolled in an approved (by DOL) program – Employer cannot exceed the ratio of apprentices to journeymen – Progress through the apprenticeship program must be tracked and wages paid accordingly – Records, records, records!

12

DBA Wage Determinations (WDs)

• Where does an employer get WDs?

– In the contract – You can find current and archived General DBA WDs on www.WDOL.gov

• for informational purposes only • Generally, WDs are incorporated into a covered contract, and good for the performance life of that contract – However, contracts with construction requirements and options or extensions require updating DBA WDs at each option/extension 13

DBA General WDs

• General DBA WDs are published under four “schedules” (industry types) – Residential (Applicable to construction of single-family homes and apartments up to 4 stories) – Building (Non-residential structures, with walk-in access – Highway (Roads, runways, sidewalks, highways) – Heavy (Catch-all, water towers, bridges, docks, underground structures, etc) 14

DBA General WDs (cont’d)

• Out-of-schedule work in the same contract requires adding the second schedule’s WD (e.g., sidewalks added to construction of single-family homes) • Second schedule’s WD is not required if work is incidental (less than 20% of the total contract value) • Contracting officer makes these decisions 15

DBA Project WDs • Project WDs

– If DOL has not published a General WD for a specific locality, or the General WD does not contain adequate classifications for a project, DOL may issue a Project WD at the agency’s request (SF308) – Project WDs are project-specific, and will expire if not incorporated into an awarded contract within 180 days from publication 16

DBA and Contract Options/Extensions

• Each time a contracting officer exercises an option to extend the terms of a contract containing construction requirements, a most current DBA WD must be added • For ID/IQ contracts with options, the most current DBA WD will be incorporated at option, and will be applicable to each task order issued during that option, for the full performance of the task order • Reference FAR 22.404-12 17

DBA and Contract Options/Extensions

• Fixed-Price contracts must include a clause providing allowance at each option for changes in contract price resulting from the DBA WD added at the option • FAR Clause 52.222-30 – • Offerors can bid or propose out-year prices • The contract may contain a separate pricing method permitting a contract price adjustment, generally keyed to an index – • Either way, there will be NO further contract price adjustment for a current WD incorporated at each option 18

DBA and Contract Options/Extensions

• FAR 52.222-31 – – The contract price may be adjusted solely on a percentage rate, determined by the contracting officer, on the contract’s labor cost • FAR 52.222-32 – – The contract price may be adjusted to reflect the contractor’s actual increase or decrease in wages and fringe benefits to the extent the changes are made to comply with a new DBA WD • Similar to the Service Contract Act Price Adjustment clause at 52.222-43 19

DBA Classifications

• Laborers, mechanics, apprentices are paid IAW the classification listed on the WD • Working foremen are paid DBA rates for the hours they perform blue-collar work, not for the hours they supervise or do administrative work • Owner/Operators of trucks and other hauling equipment: If they are independent contractors, DOL does not apply DBA to them (contractor should list them on the certified payrolls, though) – No exception for owner/operators of other equipment 20

Determining Classifications

• Most classifications are clear (e.g., plumbers, carpenters, painters (brush and roller), roofers) • In some localities, “area practice” must be used to define a worker’s classification – If the classification is union-dominant in a locality, area practice is found in the jurisdictional decisions of the unions – If the locality and classification is not union dominant, area practice is determined by survey of employers performing such work • KNOW the “area practice” of the locality where the work is performed 21

DBA Conformances

• What if the DBA WD does not list a classification necessary for performance?

• CONFORMANCE PROCESS: getting approval from DOL for an enforceable wage/benefit rate for a missing classification • Employer MUST request approval by submitting SF1444 (or equivalent) • Employer proposes, employee signs concurring or disagreeing, contracting officer signs (cannot approve) and submits it to DOL 22

DBA Conformances (cont’d)

• Employer pays worker the proposed wages and benefits until DOL responds • Do NOT attempt to split classifications down to component elements • DOL will NOT approve a request for a “Helper” classification unless area practice shows that a “Helper” is a valid classification for the journeyman work • DOL will NOT approve a “Trainee” classification 23

Collective Bargaining Agreements

• DBA has no provision that protects CBAs – Unlike Service Contract Act, Section 4(c) – HOWEVER, note “Project Labor Agreements” • DBA requirements supersede the wage, benefit, and classification provisions in a CBA for the hours worked on a DBA covered project • DBA WDs may reflect union wages, benefits, and classification definitions, if union-covered classifications prevail 24

Computing DBA Wages & Benefits

• DBA WD lists wages and benefits, for example: “Wages = $20.00 per hour “Benefits = $2.50 + 3%” • The percentage (3%) is applied to the base wage rate ($20.00) • The total due under DBA is therefore: $20.00 + $2.50 + $0.60 = $23.10 per hour 25

Computing DBA Wages & Benefits (cont’d) • Total wage and benefits due = $23.10 per hour • Employer may pay this amount –

– $23.10 in cash, or – $20.00 in cash plus $3.10 in employer contributions to pension, health or other bona fide plans, or – $18.00 in cash plus $5.10 in employer contributions to bona fide plan(s) – DOL will not permit an employer to provide ONLY fringe benefits 26

Paying DBA Wages and Benefits

• Wages may be paid by an hourly rate, piecework rate, or even a salary.

– BUT, the earnings each week must meet the minimum DBA rate for all covered hours • Benefits must be provided via a bona fide fringe benefit plan or cash equivalent, or combination • Deductions from wages, other than taxes and authorized deductions, may not be taken (possible violation of Copeland Anti Kickback Act) 27

DBA Certified Payrolls

• Employers are required to pay workers in full each week, and . . .

• To submit weekly payrolls showing – Employee name, ID number (last 4 SSN), classification, hours worked, wage rate(s), straight-time and overtime compensation, deductions, benefits, and net wages paid, and • A statement of compliance signed by a person authorized by the employer to supervise the payment of wages/benefits 28

DBA Enforcement

• Contracting agencies have primary responsibility for routine enforcement “to ensure contract performed in compliance” • DOL has final statutory authority for enforcement and interpretations • Investigations include job site (and offsite) interviews, payroll reviews, contract data • DOL can ask the contracting officer to withhold contract monies for back wages • Contractors can be debarred for three years • DBA has criminal provisions as well 29

Effective DBA Enforcement

• PLAN AHEA D !!!

• Know what to expect from the prime and each subcontractor, and when to expect it – Conformance requests, certified payrolls • Immediately Follow through with demands for compliance – – Deal with the problems while they are current and manageable – delay means more work 30

Contract Work Hours & Safety Standards Act

• Covers laborers and mechanics (including watchmen and guards) on service and construction contracts • Provides overtime compensation and workplace safety standards • Overtime is time and one-half the regular rate of pay for all hours over 40 per week • Contains a penalty of liquidated damages ($10/per day per employee in violation) 31

Copeland Anti-Kickback Act

• Applies to federally-funded or assisted construction contracts • Prohibits inducing any person to “kick back” any portion of compensation due • Requires employers to submit weekly payrolls • AND “Statements of Compliance” years in jail, and civil or criminal willful falsifications (WH-347) • Penalties include fines up to $5,000 or 5 prosecutions under USC Titles 18 & 31 for 32

Miller Act

• Applies to contracts for construction, alteration, repair, in excess of $25,000 • Prohibits award of such contracts until awardee furnishes a surety bond for the protection of all persons supplying labor and materials for the project • Protection follows DBRA coverage, and protects workers’ wages/benefits • Applies to prime contractors and first-tier subcontractors • Not enforced by Dept of Labor – Suits must be filed timely in US District Court 33

Questions?????

34