Braden Black CEO
“Skilled Trades is a skilled personnel provider to the industrial, commercial, and energy construction\maintenance industry. If you would like to learn more about how we can help your business maximize productivity and minimize employment risk, please click on your state below for a Market Manager in your area.”
Friday, March 26, 2010
Complying With Prevailing Wage Laws
As the economy languishes, public works projects – which in good times, many contractors wouldn’t touch with a 10-foot length of red tape – are starting to look better and better. If you’re among the contractors who find themselves holding their noses and bidding on government-funded jobs, be aware of the prevailing wage hoops through which you’ll be required to jump. In fact, even if you’re a public works construction veteran, it couldn’t hurt to review the appropriate measures for complying with prevailing wage procedures and requirements.
The Davis-Bacon Act sets forth pay and benefit rules that contractors must follow on projects which are funded by federal money. State prevailing wage regulations do the same for state-funded jobs and vary slightly depending upon the jurisdiction. And, because building projects that use both federal and state money usually are subject to more stringent requirements, the first step when bidding and completing infrastructure projects is to get your hands on the appropriate rules.
Still, most projects will be governed by similar prevailing wage laws. Here is a primer to keep you in compliance:
• Fully one-half of your workforce must be designated as journeymen and be paid at least the full prevailing rates as denoted on the project’s wage. Workers designated as laborers may be subject to lower wage rates. The other half of the workforce can be apprentices and receive a percentage of the full rate, depending upon their level of training. Only those enrolled in a qualified apprenticeship program can be designated as apprentices. “Helpers” have no place in federal projects. Check your state’s law to see if it allows the use of helpers at lower wage rates. Apprentices assigned to a job before or in favor of a journeyman must be paid at the journeyman rate. For instance, if you employ eight electricians on a site four must be journeymen and the other four can be apprentices. But if you assign two journeymen and six apprentices, the four “unpaired” apprentices must get the full journeyman rate.
• All workers on public works projects must be paid weekly. Certified payroll records must be turned in to the designated state or federal agency.
• The wage decision also will tell you the value of the fringe benefits you must provide workers on a prevailing wage project. ALL workers – apprentices, as well as journeymen – get the whole enchilada when it comes to these benefits.
If you don’t offer enough qualified benefits, or if an employee chooses not to participate in some benefit programs, you must pay the difference in cash to each employee. Your benefit program probably is qualified if it’s managed by a third party, but check with a consultant or your human resources professional to be sure. If you offer paid holidays and vacations, you can deduct the fair value of those benefits from the fringe package. Note that worker’s compensation is not considered a fringe benefit, and it cannot be deducted from the package.
• You’ll probably also have to pay into a qualified training program for every hour worked on the job. Some of these programs, notably those run by the Associated Builders and Contractors, apply the contributions to an employer’s account. The employer can draw on this account to pay for training for his apprentices. Others, such as those run by many states, pool the contributions from all contractors on public works projects and divide them among apprenticeship training programs in the state based on the number of apprentices they graduate.
• Projects in rural areas or located far from your base of operations may require you to pay workers extra to account for excess travel time to the jobsite or, in rare instances, to pay for temporary housing if commuting would be impractical.
The addition of Davis-Bacon and state prevailing wage regulation adds a few layers of complexity to the plunge into public works construction. But with a systematic approach to compliance, these hurdles can be easily overcome with minimal headaches. If you’re new to the public works arena, I suggest you consult a labor attorney and accountant to help set up your compliance assurance or contract with an established monitoring and compliance consultant or provider. Your local chapter of the Associated Builders and Contractors can offer tips and recommend sources of assistance.
Whether you keep your compliance team in house or use a consultant, make sure your team reviews your project’s payroll often and communicates any concerns to you. These reviews, including interviews with workers on site and coordination between the general and subcontractors, should begin even before construction commences. Insist your team has a plan in place to catch errors early and correct them with full disclosure to the state or federal agency overseeing prevailing wage compliance on the project. Make sure the team keeps impeccable records of its findings, reviews and payroll and compliance reports.
The Davis-Bacon Act sets forth pay and benefit rules that contractors must follow on projects which are funded by federal money. State prevailing wage regulations do the same for state-funded jobs and vary slightly depending upon the jurisdiction. And, because building projects that use both federal and state money usually are subject to more stringent requirements, the first step when bidding and completing infrastructure projects is to get your hands on the appropriate rules.
Still, most projects will be governed by similar prevailing wage laws. Here is a primer to keep you in compliance:
• Fully one-half of your workforce must be designated as journeymen and be paid at least the full prevailing rates as denoted on the project’s wage. Workers designated as laborers may be subject to lower wage rates. The other half of the workforce can be apprentices and receive a percentage of the full rate, depending upon their level of training. Only those enrolled in a qualified apprenticeship program can be designated as apprentices. “Helpers” have no place in federal projects. Check your state’s law to see if it allows the use of helpers at lower wage rates. Apprentices assigned to a job before or in favor of a journeyman must be paid at the journeyman rate. For instance, if you employ eight electricians on a site four must be journeymen and the other four can be apprentices. But if you assign two journeymen and six apprentices, the four “unpaired” apprentices must get the full journeyman rate.
• All workers on public works projects must be paid weekly. Certified payroll records must be turned in to the designated state or federal agency.
• The wage decision also will tell you the value of the fringe benefits you must provide workers on a prevailing wage project. ALL workers – apprentices, as well as journeymen – get the whole enchilada when it comes to these benefits.
If you don’t offer enough qualified benefits, or if an employee chooses not to participate in some benefit programs, you must pay the difference in cash to each employee. Your benefit program probably is qualified if it’s managed by a third party, but check with a consultant or your human resources professional to be sure. If you offer paid holidays and vacations, you can deduct the fair value of those benefits from the fringe package. Note that worker’s compensation is not considered a fringe benefit, and it cannot be deducted from the package.
• You’ll probably also have to pay into a qualified training program for every hour worked on the job. Some of these programs, notably those run by the Associated Builders and Contractors, apply the contributions to an employer’s account. The employer can draw on this account to pay for training for his apprentices. Others, such as those run by many states, pool the contributions from all contractors on public works projects and divide them among apprenticeship training programs in the state based on the number of apprentices they graduate.
• Projects in rural areas or located far from your base of operations may require you to pay workers extra to account for excess travel time to the jobsite or, in rare instances, to pay for temporary housing if commuting would be impractical.
The addition of Davis-Bacon and state prevailing wage regulation adds a few layers of complexity to the plunge into public works construction. But with a systematic approach to compliance, these hurdles can be easily overcome with minimal headaches. If you’re new to the public works arena, I suggest you consult a labor attorney and accountant to help set up your compliance assurance or contract with an established monitoring and compliance consultant or provider. Your local chapter of the Associated Builders and Contractors can offer tips and recommend sources of assistance.
Whether you keep your compliance team in house or use a consultant, make sure your team reviews your project’s payroll often and communicates any concerns to you. These reviews, including interviews with workers on site and coordination between the general and subcontractors, should begin even before construction commences. Insist your team has a plan in place to catch errors early and correct them with full disclosure to the state or federal agency overseeing prevailing wage compliance on the project. Make sure the team keeps impeccable records of its findings, reviews and payroll and compliance reports.
Labels: Commercial, Construction Industry, Industrial
Post a Comment