Calculating overtime on prevailing wage jobs can be confusing since there are multiple laws that may come into play, including prevailing wage laws and Contract Work Hours and Safety Standards Act (CWHSSA) laws. Overtime has to calculated at various rates for those that work under multiple trade classifications. Additionally, each state handles overtime differently, so for state prevailing wage projects you have to be mindful of local laws and how they impact your payroll.
Overtime laws can be difficult to contend with, but it’s important to fully understand your responsibilities. Errors, even those that come from mistakes and oversites, can lead to legal and financial hardship. For instance, this Florida contractor violated several federal labor laws, including failing to pay required overtime, and ended up owing $124,075 in back wages and fringe benefits. And the Department of Labor (DOL) was investigating this Baltimore based federal contractor for Davis-Bacon violations and uncovered additional mistakes on overtime, costing them $293,000.
Understanding Overtime for Oregon Public Works Contractors
In Oregon, overtime is handled quite differently for prevailing wage work than it is for other types of work. While this isn’t unusual, it can be problematic for companies to deal with, especially if they do both public and private projects. Today we’re going to take a closer look at how overtime is handled for prevailing wage contractors working in the state.
How to count OT hours in Oregon
Projects subject to Oregon’s prevailing wage rate law must pay overtime for any hours worked over 8 in a single day, or work done on Saturdays, Sundays and all legal holidays. This is true even if the worker does not work 40 hours in the work week. This is not how overtime works for non-prevailing wage projects in Oregon, which usually start overtime only after 40 hours have been worked in a work week regardless of hours worked per day.
This means a company may be required to pay some workers overtime once they hit 40 hours in a week but may owe overtime to others if they work over 8 hours a day on prevailing wage projects. This makes it critical to understand the law and your obligations under it. It is also important to have accurate time and payroll systems in place to handle the complexities of your situation.
Overtime and alternative schedules
While overtime must be paid on all hours over 8 per day on prevailing wage projects, there is an exception. If a contractor has an alternative “four-ten” work schedule, where a work week consists of four consecutive ten-hour days, overtime does not kick in until after 10 hours have been worked. There are some provisions to be aware of in regard to alternative four-ten schedules and overtime:
- The four-ten schedule must be an official and established policy that is in writing.
- The ten-hour shifts must be worked on four consecutive days between Monday and Friday.
- Hours worked on the weekend are subject to regular overtime rules for prevailing wage work.
- The four-ten schedule has to apply to all work an employee does for the company, both prevailing and private. They cannot be required to have a four-ten schedule for one type of work and a standard schedule for other work.
Failing to adhere to any alternative schedule rules results in overtime being owed an all hours over 8 in a day for that week.
Calculating OT for prevailing wage work
Overtime must be paid at a rate of not less than one- and one-half times the base rate of pay, including the zone pay but NOT including fringe benefits. To determine the rate, you first calculate overtime on the hourly base rate, and then you add the hourly fringe rate for each hour worked.
Prevailing wage overtime = (Hourly base rate x 1.5) + the hourly fringe rate
If an hourly base rate is $30 per hour, the overtime rate would be $45 per hour. The hourly fringe rate is paid at the normal rate for the trade classification and is not multiplied by 1.5 regardless of overtime.
If a worker is owed premium pay, such as a shift differential, zone pay or hazard pay, the additional amount is added to the base hourly rate. And if a worker performs work under multiple wage rates, you must pay at least 1.5 times the weighted average of rates earned for the applicable daily or weekly overtime.
Overtime and weekends and holidays
You are required to pay overtime for all hours worked on the weekend as well as the following six holidays:
- New Year’s Day
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Christmas Day
If one of these holidays falls on the weekend, the preceding Friday or Monday, whichever is closest, is considered the recognized holiday. Hours worked on that day must then be paid at the overtime rate, exactly the same as if it was the officially date of the holiday.
As you can see, overtime rules are complicated and add a layer of complexity to dealing with payroll for prevailing wage projects. You should make sure that everyone involved in the payroll process is well-versed in the law, and be sure to have a system of checks in place to catch errors. If you do a lot of prevailing wage work, it may pay to invest in payroll software designed to handle certified payroll. The right software can greatly reduce errors, limit manual steps, and give key employees back hours a week so they can focus on other tasks on their to-do list.
Additional prevailing wage resources for Oregon contractors:
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.