CDBG Federal Labor
Standards Compliance
For Grant Administrators
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Why are Labor Standards Crucial?
• Standards guarantee fair wages and
compensation for workers
• Helps provide a level playing field for
bidders
• Local grantee must ensure and document
compliance
• Transgressions endanger future funding
• Required by CDBG program and other
federal laws
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Today’s Labor Standards Topics
• Federal Labor
Standards “101”
• UGLG Responsibilities
• Wage Determinations
& Classification Issues
• Certified Payroll
Requirements
• Compliance
Principles
• Contractor
Responsibilities
• When Things Go
Awry….
• Other Sources of
Information
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Key Federal Statutes
• Davis-Bacon Act
• Contract Work Hours and Safety Standards
Act
• Copeland Act
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CDBG and Davis-Bacon Act
(40 U.S.C. 276a.-5)
• Enacted 1931, amended 1935 & 1964
• HCDA requires construction contracts over
$2,000 or residential properties with 8 or
more housing units comply with Davis-Bacon
Act
• Act is “site-based”
• Includes alteration, repair, painting &
decorating
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CDBG and Davis-Bacon Act
• Construction work financed
• Soft costs do not trigger DB
• Property ≠ building; Applies to Total # of
units in property
• Volunteers are exempt (more later)
• Force account workers are exempt
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Use of Volunteers
• Volunteers may work without pay on a
construction project to which Davis-Bacon
and Related Acts apply. An individual may
not however, be paid for some work and
volunteer for other work. It is permissible to
cover reasonable costs of volunteers such as
travel or other incidental benefits .
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Contract Work Hours and Safety
Standards Act (CWHSSA) (40 U.S.C. 327-333)
• Enacted 1962
• Payment for all contract work exceeding 40
hours per week at 1½ times regular rate of
pay
• Applies to contracts exceeding $100,000
• Liquidated damages for violations ($10
per/day, per/violation)
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Copeland Act
• Enacted in 1934 (40 U.S.C. 276c)
• Prohibits “kickbacks”
• Requires contractors to submit certified
payrolls with a signed “statement of
compliance” each week
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Copeland Act
• Regulates deductions from wages:
− FICA, federal & state taxes
− Bona fide prepayment of wages
− Court ordered payments, fringe benefit plans, etc
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CDBG and Davis - Bacon
Factors of Applicability
• All laborers and mechanics employed by
contractors or subcontractors
• Requires payment of at least prevailing
wages
• Requires weekly payment of wages
• Usually applied through “Related Acts”
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Davis-Bacon Regulations
• The Department of Labor (DOL) has
published rules and instructions concerning
Davis-Bacon and other labor laws in the Code
of Federal Regulations (CFR). They can be
found in Title 29 CFR Parts 1, 3, 5, 6 and 7
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Responsibilities of UGLG
(Title 29 CFR Part 5)
• Designate a Labor Standards Compliance
Officer
• Request a Wage Decision
• Put Wage Decision and Labor Standards
clauses (Form 4010) in contract bid
documents
• Check contractor eligibility
(http://epls.arnet.gov/)
• Conduct a pre-construction conference
(optional)
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Responsibilities of UGLG
(Title 29 CFR Part 5)
• Review weekly payrolls and compliance
statements
• Conduct employee interviews
• See that underpaid workers receive
restitution
• Maintain contract management system and
compliance files
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Davis-Bacon Wage Determinations
• Must be included in bid documents and
contract
• Established by geographic area
• May be modified periodically
• Published for four types of construction
• www.wdol.gov
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Davis-Bacon Wage Determinations
Types of Construction
• Building - sheltered enclosures that house
persons, machinery, equipment, etc. Also
apartment buildings over 4 stories
• Residential - single family houses,
townhouses, and apartment buildings up to
four stories
• Highway - roads, highways, sidewalks,
parking areas, and other paving work not
incidental to other construction
• Heavy - projects that can’t be classified as
Building, Residential or Highway
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Davis-Bacon Wage Determinations
“Lock-In” Rules
• Competitive bidding:
− Modifications published less than 10 days before
bid opening are not applicable if there is not
sufficient time to notify bidders
− Lock-in at bid opening provided contract is
awarded within 90 days
− Must update wage determination if contract
award is more than 90 days
− UGLG must verify that wage rates are current
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State Labor Law Requirements
Insert any specific state requirements if
applicable
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Employer Requirements
•
•
•
•
Classification
Pay
Overtime
Posters
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Employer Requirements
• All laborers and mechanics must:
− Be classified in accordance with the Wage
Decision
− Be paid at rates  those on Wage Decision
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Employer Requirements
Additional Classifications
• Employer submits request in writing
• UGLG must follow up (contact State)
• DOL has 3 criteria for approval:
− Work is not already on the WD
− Proposed classification is used by the
industry in the project area
− Proposed wage rate & fringe benefits bear a
reasonable relationship to rates on the WD
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Employer Requirements
Dual Classification
• When an employee performs tasks under
two or more distinct classifications, the
employee must be paid the prevailing wage
rate for each classification
• Must be listed separately on the payroll
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Employer Requirements
• All laborers and mechanics must:
− Be paid not less often than once a week
− Receive at least 1½ times regular rate of pay for
all hours worked over 40 per week
• Each employer must:
− Submit weekly certified payrolls reflecting all
hours worked
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Employer Requirements
• Two Posters:
− Wage Determination
− DOL “Notice to Employees”
http://www.dol.gov/esa/regs/compliance/posters/pdf/fedpr
ojc.pdf
− Posted in a conspicuous place, protected from
the elements
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UGLG Compliance/Monitoring
• On-site employee interviews should be used
as a proactive enforcement tool
• Grantees are encouraged to focus interviews
to projects or groups of workers where
violations are suspected or alleged
• Each employer must:
 Maintain full documentation, including payrolls
and related records, for at least 3 years following
completion
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UGLG Compliance/Monitoring
• Interviews can be used to support a specific
on-going investigation
• Fewer on-site interviews may be conducted
randomly but HUD considers focusing a far
more effective means of utilizing on-site
interview resources
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Davis-Bacon Compliance
•
•
•
•
•
•
Wage Classifications and Pay
Site of the Work
Truck Drivers
Apprentices and Trainees
Helpers
Fringe Benefits
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Davis Bacon Compliance
Laborers and Mechanics
• Laborer / Mechanic: anyone performing
construction work on the project
• Supervisors are covered if they spend  20%
their time performing manual work
• Project Superintendents if they do work in
listed trades, they must be paid the
appropriate wage listed on the Wage
Determination
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Davis Bacon Compliance
Site of Work
• 29 CFR 5.2(l)(1):
− the physical place where the building or work
called for in the contract will remain
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Davis Bacon Compliance
Apprentices and Trainees
• Only apprentices & trainees registered in an
approved program may be paid less than the
applicable wage rate
• “Approved program” means a program
registered with the DOL or a DOLrecognized State Apprenticeship Agency
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Davis Bacon Compliance
Helpers
• Helpers are only allowed when:
− Duties are distinct from all others
− Use of helpers is established in the area
− Helper not in informal training program
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Davis Bacon
Fringe Benefits
• Allowed:
− Employer contributions to Third Party plans
− Health / life / disability / dental insurance plans
− Retirement plans
• Costs of apprenticeship
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Davis Bacon
Fringe Benefits
• Excludes payments required by law:
− FICA
− Workers’ Compensation
− Unemployment
• Certified payrolls must reference how FBs
are paid
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Prime Contractor
• Responsible for all employers on project
• Subcontractors communicate through
prime
• Ensures labor provisions in all subcontracts
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Prime Contractor
• Submits certified payrolls for own
employees
• Provides subs with forms and guidance
• Ensures access to employees on site
• Responsible for restitution to underpaid
employees
• Posters
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Subcontractor
• Submits certified payrolls each week
• Instructs lower-tier subs of responsibilities
• Reviews Wage Decisions, requests
additional classifications
• Ensures access to employees on-site
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Certified Payroll Requirements
(Title 29 CFR Part 3)
• Optional Form WH-347
• Compliance statement w/ original signature
of corporate official, or letter of delegation
• Payrolls are due weekly
• Identify first and final payroll
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Certified Payroll Basics
• “No Work” payrolls optional – but all weeks
must be accounted for in records
• Payrolls must be complete & legible
• Prime contractor reviews payrolls and
submits to UGLG
• Payroll record retention = three years
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Certified Payroll Basics
Employee Information
•
•
•
•
Employee name, address, SSN
Employee work classification
Rate of pay
Straight / OT hours worked per day, per
week on this project
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Certified Payroll Basics
Wages and Deductions
•
•
•
•
Gross wages earned
Deductions from wages
Net pay
Statement of compliance:
− one for each weekly payroll
− signed by corporate official (or designee)
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Correcting Violations
• Labor Standards Officer notifies company
and/or prime contractor of violations
• Wage restitution must be documented
− Submit corrected certified payroll
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Correcting Violations
• Funds may be withheld by UGLG if violations
are not corrected promptly
• Deposit of funds in Escrow if matter is under
appeal, or workers cannot be found
• Administrative sanctions:
− Limited Denial of Participation
− Debarment
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Recordkeeping Requirements
• Copies of Wage Decisions
− Modifications
•
•
•
•
Preconstruction Minutes if applicable
Bid Documents and Copy of Contract
Notification of Contract Award
Documentation of all enforcement actions
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Recordkeeping Requirements
(continued)
• Weekly payrolls with statement of
compliance
• Employee interviews
• Contractor clearance
• Securing confidentiality of records
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Reporting
• Violations of underpayment must be
reported to DOL if >$1,000 or willful.
• Semi-annual report of contracts awarded
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HUD Labor Relations
References
• Making Davis Bacon Work (HUD
Publication)
A Practical Guide for States, Indian
Tribes and Local Agencies
http://www.hud.gov/offices/adm/hudclip
s/forms/files/4813-LR.pdf
• Making Davis Bacon Work
A Contractor’s Guide to Davis-Bacon
http://www.hudclips.org/sub_nonhud/cgi
/pdfforms/4812-LR.pdf
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HUD Labor Relations
References
• Labor Relations Forms
www.hud.gov/offices/olr/olrform.cfm
• HUD Office of Labor Relations:
www.hud.gov/offices/olr
• HUD Regulations:
www.access.gpo.gov/nara/cfr/cfr-table-search.html
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Other Sources
• Davis-Bacon Wage Determinations:
http://www.wdol.gov
• GSA’s On-Line Debarment List:
http://epls.arnet.gov
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Other Sources
• DOL DBRA Homepage:
www.dol.gov/esa/programs/dbra/index.htm
• DOL Regulations:
www.dol.gov/esa/regs/cfr/whdcfr.htm
• DOL Forms:
www.dol.gov/libraryforms/
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