Government contractors have to deal with an enhanced level of regulation surrounding every aspect of their business, from bids through how payroll is handled. There are weekly reporting requirements as well, which carry a lot of weight when it comes to staying compliant. Contractors that work on Davis Bacon projects must follow every regulation exactly or face the potential of compliance action which can include financial and legal penalties.
According to the Department of Labor, there are six typical problems that contractors have when trying to comply with Davis-Bacon and Related Acts. Today we’re going to look at these and how you can prevent them on your next government construction project.
Davis Bacon Problem 1:Misclassification of laborers and mechanics
Every worker on a government project that falls under DBRA must be classified carefully according to the type of work they do. On any given job you may find workers classified as bricklayers, laborers, dry wall hangers and power equipment operators. Sometimes there are different grades of these jobs, for instance there are common laborers but there are also flaggers and landscape laborers listed on some wage determination.
Each of these jobs is listed on wage determinations with their corresponding prevailing wage rate, which is an hourly wage and an hourly fringe benefit rate. Paying everyone correctly comes down to first classifying workers correctly so that you use the correct wage determination. If you make a mistake on classifying workers, everything else in the process will be wrong.
How to avoid it
This usually happens for two reasons, the first being simple lack of attention to detail. You’ll typically get a list of work classifications in a bid solicitation packet along with wage determinations. These should be the work roles needed to carry out the project. Your first job is to make sure that every worker on the project is classified correctly and paid the correct prevailing wage rate. This should be reflected on your payroll reports that are submitted to the rewarding agency and any other required body.
This can also happen when workers forget to record their changing work roles in the field. For instance, if a worker does work that falls under general labor, then turns around and works as a painter, their time sheet needs to show each role and the time they worked as it. Each role will be paid at a different rate, so failing to track these in the field can create a cascade of compliance problems. Solving this comes down to training workers to recognize the importance of tracking changing work roles. You may want to switch to a digital time and attendance system to make it easy for workers to track. Last but not least, make sure you check every worker’s timesheet carefully and make sure their work classifications align with the work they actually performed.
Davis Bacon Problem 2:Failure to pay full prevailing wage, including fringe benefits/OT, for all hours
Not paying for every hour on site is a general labor law violation, but since prevailing wages are involved it’s also a DBRA compliance violation. Prevailing wages are listed on wage determinations in two parts, an hourly rate and an hourly fringe benefit rate. Adding up these numbers shows you the correct, full prevailing wage for each classification of work. If you only pay one of these numbers, or don’t pay the full amount per each hour, you are out of compliance with the law.
How to avoid it
You first have to make sure that you are using the correct wage determination for each classification of worker. This is the first step to making sure you’re paying everyone the correct prevailing wage. Next, make sure you correctly read the wage determination and that you add up the number under “rate” and the number under “fringes” to come up with the full prevailing rate. Remember, each of these are hourly pay rates.
This problem can also happen if workers are not tracking hours correctly, or if hand-written time sheets are mistranslated when keyed into a payroll system. While workers will always occasionally make mistakes, you can make it easier to do things right by using an intuitive, digital time and attendance system. You want it to be easy to clock in, track hours, change work roles and clock out. You also want it to be easy to correct hours so that mistakes are easy to fix. Switching to a digital time and attendance system can help reduce the types of errors that happen from manually transferring data from time sheets to payroll programs.
In regard to overtime, it is important that hours are tracked correctly, but that you are paying overtime correctly. Your state will have their own laws on what is and what is not overtime. For example, in California overtime is handled as follows:
- One and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek; and
- Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek. Source
Check with your state and local ordinances and make sure you are correctly applying overtime laws.
Davis Bacon Problem 3:Inadequate recordkeeping, like not counting all hours worked or not recording hours worked by an individual in two or more classifications during a day.
With most things surrounding prevailing wage work, one mistake can have a domino effect. Failing to track all hours might be a recordkeeping issue, but it leads to workers being paid incorrectly. For prevailing wage work, this includes hourly and fringe rates that must be corrected. If work classifications are not tracked correctly, the rate of pay will be off. Each of these issues creates a compliance issue that can lead to penalties.
How to avoid it
As a contractor that does prevailing wage work, you have enough to deal with, so it makes sense to remove obstacles whenever possible. Make it easy to track hours accurately by using a digital time and attendance system. It needs to be easy to use, accessible from multiple points such as smart phone, text, and any mobile device. Make sure your workers understand how to use it and how to get help with it if something goes wrong.
It’s also vital that everyone understands the need to track changes in work classifications. This means if they are an electrician, but work as a laborer for part of the day, it needs to be accurately tracked. This single mistake creates multiple compliance problems, so avoiding it is critical.
Davis Bacon Problem 4:Failure to maintain a copy of bona fide apprenticeship program and individual registration documents for apprentices.
Documentation is an important part of running a business, but for prevailing wage contractors it is crucial. This extends to keeping documentation of employees registered in apprenticeships programs. As set forth in Davis-Bacon and Related Acts, apprentices must be individually registered in an official bona fide apprenticeship program. Documentation is required to make sure that the program is legitimate, and that your employee is officially an apprentice.
How to avoid it
For official purposes, an apprentice is someone that is individually registered in a bona fide apprenticeship program.The program must be considered eligible under DBRA the program has to be registered and accepted as a qualifying program.
Individuals that fall under one of the two definitions can be apprentices on DBRA projects:
(a) A person employed and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the Bureau,
(b) A person in the first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been properly certified to be eligible for probationary employment as an apprentice. Source
To be safe, make sure you are extra diligent in obtaining documentation of your workers’ enrollment in a qualifying apprenticeship program. Store the information in multiple places and make sure you have a system in place for making sure these records are up to date. A solid workforce and payroll management system should have the ability to help you keep everything up to date.
Next, be sure that you verify the eligibility of every apprenticeship program you work with, and that you file documentation. A few resources to help you are:
Davis Bacon Problem 5:Failure to submit certified payrolls weekly.
Under DBRA, you are required to pay workers weekly and submit a special report to the awarding agency. The purpose of the report is to prove that you are following all regulations, and that workers are being paid correctly. Taking these steps weekly is not optional, it is required under the law and failing to do so leaves you out of compliance.
If you fail to submit reports, you might face compliance action, but before that happens there are other repercussions. For example, the awarding agency can withhold payment until you catch up with all reports. And apart from fear of compliance action, getting caught up can be a real challenge, so keeping up with weekly reporting is always best.
How to avoid it
The only real way to avoid this is to prioritize your certified payroll work. Every week you should pay your workers and submit your reports. A few things you can do to make this easier are to have a certified payroll checklist that helps your team stay organized with their payroll and reporting process.
Make sure that everyone understands how reporting works, and that the information you need to report is easily available. One of the most efficient ways to do this is to use a payroll system that collects and exports payroll reports that are formatted in a way that makes reporting easier. This not only makes reporting easier, but reduces errors from manually transferring data between multiple formats.
Davis Bacon Problem (6) Failure to post the Davis-Bacon poster and applicable wage determination.
According to DBRA, prevailing wage contractors must display the Davis-Bacon poster (WH-1321) in a prominent and readily accessible location on the job site. It has to be easy to view by all workers, so it cannot be in a restricted area. This poster must also have information filled out for the contracting officer for workers to contact if they have questions or a problem.
Additionally, you are required to post all applicable wage determinations for the job as well. These are the same wage determinations you use to figure out ever workers hourly pay. Failing to display both of these items can lead to a violation.
How to avoid it
This is the easiest mistake to avoid because you simply have to display the poster and wages to be compliant. Pick a well trafficked area, like a break room or where workers pick up their check, to make sure it is considered easy to view. It is acceptable to put it in a few locations as well, just to be safe.
You’ll want to make sure that you have the name and contact information of the contracting officer on the poster. You can also put contact information for the Wage and Hour Division of the DOL.
WHD contact information:
Monday-Friday 8 a.m. to 8 p.m. Eastern
These may be the top six mistakes reported by the DOL WHD, but there are many ways to find yourself out of compliance. Be sure that your payroll team is well versed on prevailing wage requirements, and that you regularly audit your own compliance and practices to stay ahead of the law. Here are a few resources to help you stay out of trouble on all your prevailing wage projects:
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.