Although many roofing contractors perform work on federal government construction projects that require payment for prevailing wages, many roofing contractors are unaware of where the requirement originates and their rights according to the law.
The Davis-Bacon Act requires the payment of prevailing wage rates, which are determined by the U.S. Department of Labor (DOL), to all laborers and mechanics who work on federal government construction projects in excess of $2,000. The purpose of the Davis-Bacon Act is to protect local wage standards and give local laborers and contractors a fair opportunity to participate in federal projects by preventing contractors from basing their bids on wages lower than those prevailing in the area. Each contract subject to Davis-Bacon labor standards must contain labor standards clauses and a Davis-Bacon wage determination.
Following are the most common questions asked by roofing contractors performing work on federal government construction projects subject to the Davis-Bacon Act.
What is a wage determination?
A wage determination is the listing of wage rates and fringe benefit rates for each classification of laborers and mechanics. The wages are determined by the administrator of DOL's Wage and Hour Division to be prevailing in a given area for a particular type of construction.
The Wage and Hour Division issues two types of wage determinations: general determinations, also known as area determinations, and project determinations. A general wage determination reflects rates determined by the Wage and Hour Division to be prevailing in a specific geographic area for the type of construction described. A project wage determination is issued at the specific request of a contracting agency and applies only to the named project.
A wage determination lists a minimum basic hourly rate of pay for each work classification. Some wage determinations include fringe benefits that usually are listed as an hourly fringe rate. If a wage determination includes a fringe benefit rate for a classification, a contractor will need to add the fringe benefit rate to the basic hourly rate unless he provides bona fide fringe benefits to employees. Examples of bona fide fringe benefits include life insurance, health insurance, pension, vacation, holidays and sick leave.
The Davis-Bacon Act requires the secretary of labor to determine prevailing rates for inclusion in covered contracts. The prevailing wages identified are the result of an investigation conducted by the Wage and Hour Division. Wage rates are issued for each laborer and mechanic classification that likely will be employed in federally funded or assisted construction. Information about wages being paid, therefore, must be collected and tabulated on the basis of distinct job classifications and construction categories.
The collected data, requested through surveys, include a contractor's name and address; project description and location; project's value; starting and completion dates; peak number of workers employed in each classification; and wage rates, including fringe benefits, paid to each worker. The surveys collect information about wage and fringe benefit rates paid to mechanics and laborers working on similar construction projects in a predetermined geographic area and during a specified calendar period.
Each state is surveyed every three years, and all construction types are surveyed. Letters announcing a survey are sent to congressional representatives, trade associations and building trade unions to advise them about the survey and solicit their cooperation in furnishing payment data.
Roofing contractors are not required to participate in the survey, but it is important they do so. The survey results will determine wage rates to be paid on future federally financed or assisted projects subject to the Davis-Bacon Act. If roofing contractors do not provide wage data, a prevailing wage rate may be determined without universal participation.
Does being an open shop matter?
Bona fide fringe benefits in an open shop are those contributions irrevocably made to a trustee or third party pursuant to a bona fide fringe benefit plan or program. The rate of costs incurred to carry out a financially responsible plan or program also may be counted toward the fringe benefit requirement provided the plan or program was communicated to employees in writing. Importantly, payments required by federal, state or local law are not considered fringe benefit contributions.
Questions concerning whether fringe benefits are bona fide should be referred to the Wage and Hour Division. Contact information for the local Wage and Hour Division office can be obtained from a contract administrator.
Can benefits be in cash?
A roofing contractor may discharge his obligation for paying basic hourly rates and fringe benefits when both are contained in a wage determination in one of the following ways: by paying at least the basic hourly rate and making a contribution for the fringe benefits in the wage determination; by paying in cash for the basic hourly rate and making an additional cash payment in lieu of required benefits; or by a combination of these methods, such as paying an hourly rate, partly in cash and partly in payment or costs for fringe benefits, which total at least the wage determination.
Regardless of the method chosen, the total hourly wage rate paid to any laborer or mechanic (basic wage or basic wage plus fringe benefits) may not be less than the total wage determination for a given craft (basic wage or basic wage plus fringe benefits). If the value of the fringe benefit(s) a contractor provides is less than the fringe benefit rate on the wage determination, he will need to add the balance of the wage determination fringe benefit rate to the basic rate paid to employees.
For example, if the wage determination requires $10 per hour basic rate plus $5 per hour fringe benefits, a contractor must pay no less than $15 per hour in the basic rate or the basic rate plus whatever fringe benefit is provided. Unlike wages that are required to be paid weekly on a project covered by the Davis-Bacon Act, contributions to a fringe benefits plan are required to be made at least quarterly. Regular contributions made, or costs incurred, for more than one week of work are deemed to have been constructively made during each of those weekly periods in which the work was performed.
Are the wage rates accurate?
Roofing contractors who believe the stated wage rate for a particular wage classification is too high can request reconsideration of the wage determination. Roofing contractors also can request reconsideration of a ruling regarding the application of a wage determination to a specific construction project.
Requests should be in writing, accompanied by supporting data, to the Wage and Hour Division. Supporting data should include information from other area roofing contractors regarding the wages they pay. The Wage and Hour Division is required to respond within 30 days of the request or notify the requester within this time frame that additional time is needed.
If reconsideration of a wage determination has been sought and denied, an appeal may be filed with the Administrative Review Board. Requests for review of wage determinations must be filed and any new wage determination resulting from the appeal must be issued before a contract is awarded or project is started. A roofing contractor can continue to pay the wage rate he requests until a final decision is rendered. If the final decision is adverse to the contractor, he will have to pay any additional wages that may be necessary to satisfy the established wage rate.
What if a rate isn't listed?
Many roofing contractors experience this problem when the wage determination requires a roofing contractor to pay employees at the ironworker rate rather than the cheaper sheet-metal worker rate. If a contract's wage determination does not contain a classification of workers needed to complete construction, a roofing contractor must submit to the contracting officer a request for the addition of the needed classification(s). Proposed wage rates and fringe benefits also must be submitted.
The contracting officer should require that any classification of laborer or mechanic not listed in the wage determination that is to be employed under the contract be classified in the wage determination. But an additional classification, even if undisputed, is not valid unless DOL approves it. Therefore, relying on the contracting officer is not sufficient. If a dispute exists, the matter must be referred to the Wage and Hour Division for resolution.
Approval of the additional classification and proposed wage rate and fringe benefits requires the following criteria be met: The work to be performed by the classification requested is not performed by any other classification in the wage determination; the classification is used in the area by the construction industry; and the proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination.
All conformance notices should be responded to in writing within 30 days of receipt. These responses either approve or deny the request or inform the submitting agency additional time will be required. Failure to receive a response does not constitute approval. If a response is not received, the Wage and Hour Division should be contacted.
If a roofing contractor has employees who perform work in more than one classification, he can pay the wage rates specified for each classification only if he maintains accurate time records showing the amount of time spent in each classification of work. If a roofing contractor does not maintain accurate time records, he must pay the employees the highest wage rate for the work performed.
What about apprentices?
A roofing contractor may employ an apprentice on a Davis-Bacon Act project if the employee is individually registered in an apprenticeship program recognized by DOL, the Employment and Training Administration, or Bureau of Apprenticeship and Training or with a state apprenticeship agency recognized by the Bureau of Apprenticeship and Training.
Alternatively, an employee can be classified as an apprentice if he is in the first 90 days of probationary employment as an apprentice who is not individually registered in a program and has been properly certified to be eligible for probationary employment as an apprentice.
Trainees must be registered in a construction occupation under a program that has been approved in advance by DOL as meeting its standards for on-the-job training programs and certified.
Information about wage rates paid to apprentices and trainees is not reflected in Davis-Bacon wage determinations. The proper wage rates to be paid to apprentices and trainees are those specified by the particular programs in which they are enrolled and expressed as a percentage of the journeyman rate on the wage determination.
In the event employees reported as apprentices and trainees on a covered project have not been properly registered within the meaning of the regulations and contract stipulations or are used at a job site in excess of the ratio to journeyman permitted under the approved program, they must be paid the applicable wage rates for laborers and mechanics. This applies regardless of worker classifications that may be listed on the submitted payrolls and skill level.
Helper classifications may be added to a wage determination when a helper's duties are defined and distinct from those of the journeyman and laborer classifications; the use of helpers is an established prevailing practice in the area; and the term "helper" is not synonymous with "trainee" in an informal training program.
What about supervisors?
The wage rates for supervisory employees are not regulated by the Davis-Bacon Act because their duties primarily are administrative or executive in nature. However, such employees who devote more than 20 percent of their time during a workweek to mechanic or laborer duties are mechanics and laborers for the time spent and must be paid at least the appropriate wage rates specified in the wage determination.
What if I don't pay prevailing wages?
Roofing contractors who fail or refuse to pay prevailing wages will be ordered to pay restitution to underpaid workers. More important, if the secretary of labor finds a roofing contractor to be in aggravated or willful violation of the Davis-Bacon Act, the contractor will be ineligible to participate in any Davis-Bacon Act contract for up to three years. This often is referred to as "debarment" and will include the contractor and any firm, corporation, partnership or association in which the contractor has a substantial interest.
How long should I keep records?
Roofing contractors must maintain payroll records relating to the work on a project covered by the Davis-Bacon Act for three years. The records should include the rates of contributions or costs anticipated for bona fide fringe benefits or actual costs incurred in providing such benefits. The records also must show the commitment to provide such benefits is enforceable and that the plan is financially responsible and has been communicated in writing to the roofing contractor's employees.
Other answers
There are an abundance of other questions roofing contractors have about projects covered by the Davis-Bacon Act, and I suggest contractors take their questions to a project's contract administrator. A contract administrator is responsible for the proper administration and enforcement of federal labor standards provisions on contracts covered by Davis-Bacon requirements. The contract administrator provides preconstruction advice and support, including ensuring the proper Davis-Bacon wage determination and contract clauses are incorporated into the contract. The contract administrator also monitors labor standards compliance by conducting interviews with construction workers and reviewing payroll reports and oversees any enforcement actions.
If there are questions that may not be appropriate for the contract administrator or a roofing contractor is unsatisfied with a contract administrator's response, the contractor should discuss his questions with legal counsel.
Philip J. Siegel is an attorney with the Atlanta-based law firm Hendrick, Phillips, Salzman & Flatt.
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