LABOR COMPLIANCE REQUIREMENTSFOR

CALIFORNIA PUBLIC WORKS PROJECTS

NIGEL A.L. BROOKS

THE BUSINESS LEADERSHIP DEVELOPMENT CORPORATION

LABOR COMPLIANCE REQUIREMENTS FORCALIFORNIA PUBLIC WORKS PROJECTS

Big industry...

Federal, State of California, county, and city financed projects offer huge opportunities for contractors. According to the Department of Industrial Relations there are almost 6,000 public works projects sponsored by State of California agencies, counties, cities, school districts, and other special districts between July 2010 and 2011 ✝.

Public works projects should set the standard for all construction projects in terms of governance, administrative, operational, and compliance activities because of the strict regulatory requirements resulting from taxpayers money being put to work.

The Federal Public Buildings, Property, and Works Code, The State of California Public Contracts Code, and various local county and city codes address how projects must be bid and conducted.

Prevailing wages...

Because labor is a major component of any construction project, public works projects are subject to Federal and State labor laws for the payment of prevailing wages and the use of apprentices.

The Davis-Bacon Act applies to Federally funded projects over $2,000, and the California Labor Code applies to State, county, and city financed projects. Section 16001 of the California Code of Regulations states the requirement for public works projects to be subject to prevailing wages:

www.dir.ca.gov/t8/16001.html

Counties and cities may have specific requirements also. For example, San Francisco has its own Office of Labor Standards Enforcement for county and city laws and regulations.

Link to City and County of San Francisco – Office of Labor Standards Enforcement:

www.sfgsa.org/index.aspx?page=391

✝ Source: Public Works Seminar – January 21, 2010

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Prevailing wage rates are the minimum for particular work classifications (trades and crafts) for workers on public works projects.

Federal (Davis-Bacon) requirements for prevailing wages...

All contractors (prime and subs) performing work on Federal and Federally assisted projects over $2,000 must pay workers prevailing wages (basic hourly rate and fringe benefits):

Includes workers (laborers and mechanics) performing manual work, such as working foremen, apprentices, and trainees, and also security guards and watchmen under the Contract Hours and Safety Standards Act

Includes truck drivers who are not owner-operators, and all other owner-operators

Excludes architects, engineers, and executive, administrative, professional, and clerical personnel

Rates are set by the Secretary of Labor

Links to Department of Labor – Davis-Bacon and related acts:

www.dol.gov/compliance/laws/comp-dbra.htm

www.dol.gov/compliance/laws/comp-dbra.htm#recordkeeping

www.dol.gov/whd/programs/dbra/wh347.htm

www.dol.gov/compliance/laws/comp-cwhssa.htm

Covered contractors must maintain basic records and submit weekly certified payrolls, optionally using form WH347, in compliance with 29 CFR, Subtitle A Regulations Parts 3 and 5:

www.access.gpo.gov/nara/cfr/waisidx_99/29cfr3_99.html

www.access.gpo.gov/nara/cfr/waisidx_99/29cfr5_99.html

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Basic records for each employee must include:

Name, address, and social security number

Work classification(s)

Hourly rates of pay, including contributions or anticipated costs for bona fide fringe benefits or cash equivalents

Daily and weekly hours worked

Deductions

Actual wages paid

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Form WH347

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State of California requirements for prevailing wages...

The State of California – Department of Industrial Relations – Division of Labor Standards Enforcement – Public Works Manual provides a clear description of prevailing wage laws, including:

Who does the law protect?

What must public works contractors do to comply with the law?

What is the enforcement process?

This is a very comprehensive guide that includes sections of the Labor Code, links to resources, and lists of court cases.

Link to Division of Labor Standards Enforcement – Public Works Manual:

www.dir.ca.gov/dlse/PWManualCombined.pdf

Link to Department of Industrial Relations – Labor Law:

www.dir.ca.gov/DLSE/dlse.html

www.dir.ca.gov/dlse/dlsePublicWorks.html

Link to California Code of Regulations Title 8, Chapter 8, Subchapter 3:

www.dir.ca.gov/t8/ch8sb3.html

Link to Department of Industrial Relations – CalPublicWorks:

www.calpublicworks.com

State of California requirements for prejob/preconstruction meetings...

California Code of Regulations Title 8, Chapter 8, Subchapter 4, Section 16421 Appendix A – Checklist of Labor Law Requirements itemizes the topics to be discussed at a prejob or preconstruction meeting:

www.dir.ca.gov/t8/16421_appendixA.html

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This checklist addresses Federal and State Labor Law requirements applicable to public works contracts in California, and other aspects of Federal and State laws that must be complied with on public works projects:

Checklist of Labor Law Requirements – Page 1

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Checklist of Labor Law Requirements – Page 2

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State of California forms requirements for paying prevailing wages...

Links to forms to be used in conjunction with paying prevailing wages – these forms are presented on subsequent pages:

Division of Apprenticeship Standards (DAS 140, 142, 1, CAC2):

www.dir.ca.gov/DAS/PublicWorksForms.htm

Division of Labor Standards Enforcement – Journeymen Wage Determinations:

www.dir.ca.gov/dlsr/DPreWageDetermination.htm

Division of Apprenticeship Standards – Apprentice Wage Determinations:

www.dir.ca.gov/DAS/PWAppWage/PWAppWageStart.asp

Division of Labor Standards Enforcement – Certified Payroll (A-1-131) and Fringe Benefits (PW26) Forms:

www.dir.ca.gov/dlse/DLSE-PublicWorks.htm

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Forms presented herein include:

Representative Journeyman Wage Determination (Carpenter)

Representative Apprentice Wage Determination (Carpenter Apprentice)

DAS 140 – Public Contracts Award Information

DAS 142 – Request For Dispatch Of An Apprentice

DAS 1 – Apprentice Agreement

A-1-131 – Public Works Payroll Reporting Form

PW 26 – Statement Of Employer Payments (Fringe Benefits)

CAC 2 – Training Funds Contribution (California Apprenticeship Council)

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Representative Journeyman Wage Determination (Carpenter)Page 1

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Representative Journeyman Wage Determination (Carpenter)Page 2

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Representative Apprentice Wage Determination (Carpenter)

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DAS 140 – Public Contracts Award Information

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DAS 142 – Request For Dispatch Of An Apprentice

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DAS 1 – Apprentice Agreement – Page 1

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DAS 1 – Apprentice Agreement – Page 2

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A-1-131 – Public Works Payroll Reporting Form – Page 1

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A-1-131 – Public Works Payroll Reporting Form – Page 2

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PW 26 – Statement Of Employer Payments (Fringe Benefits)

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CAC 2 – Training Funds Contribution(California Apprenticeship Council)

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State of California – apprenticeship requirements on public works...

In order to qualify for the appropriate rate, all apprentices must be certified – otherwise the journeyman rate must be paid.

Link to Description of Apprenticeship Programs:

www.dir.ca.gov/databases/das/aigstart.asp

Link to Apprentice Certifications:

www.dir.ca.gov/DAS/appcertpw/AppCertSearch.asp

All electricians who work for a contractor with a C-10 license must be certified.

Link to Electrician Certifications:

www.dir.ca.gov/das/ElectricalTrade.htm

How are Federal and State of California prevailing wages determined?

The Department Labor determines prevailing wages for Federally financed projects by surveys that are conducted every three years. It first determines if more than 50 percent of the workers in a single classification are paid the union or the same wage rate. If so, then its sets the prevailing wage rate as the union or same wage rate. If not, then it sets the prevailing wage rate as an average wage rate.

Link to Davis-Bacon frequently asked questions:

www.dol.gov/whd/programs/dbra/faqs.htm

The Department of Industrial Relations determines prevailing wages for public works projects in California. To do so, it considers the rates paid to the majority of workers engaged in a particular craft or type of work within a locality, and in the nearest labor market area. If there is no single rate paid to a majority, then either the single or modal rate paid to the greater number of workers becomes the prevailing wage rate. The mode is the most frequently occurring value in a distribution.

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Wage rates in a local market may be influenced by collective bargaining agreements; those that may have been predetermined for Federal public works in the local labor market; and data provided by employers, employer associations, and labor organizations.

An argument for prevailing wages is that the concept drives wages in the construction industry across both public works and private works, whether contractors are signatories to labor agreements or not, providing a strong income base for taxation and consumer spending. For public works projects, it should provide a level playing field for competitors on the basis of wages paid per hour. A contractor's competitiveness is thus based upon the efficiency and effectiveness of the project, or willingness to reduce profit.

Note: travel and subsistence rates usually have to be paid to out-of-area workers.

An argument against prevailing wages is that the concept interferes with free market economics, and as a consequence owners overpay for work performed.

As with any laws and regulations, there are always opportunities for circumvention.

Link to California Department of Industrial Relations frequently asked questions:

www.dir.ca.gov/dlsr/FAQ_PrevailingWage.html

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Components of prevailing wage rate determinations include:

Basic hourly rate – this is the minimum “cash” wage paid to workers

Employer payments for fringe benefits including:

Health and welfare

Vacation

Pension

Travel to out of area projects

Subsistence

Worker protection and assistance programs

Industry advancement and collective bargaining agreement administrative fees

Apprenticeship and other authorized training programs

The total of all components is the straight hourly rate.

Employer payments for fringe benefits, except training funds, are made on behalf of workers:

If union members – into approved fund plans or as fees

If non-union members – into approved employee benefit fund plans or in cash if workers do not participate in plans

Training funds are always paid to approved funds or to the California Apprenticeship Council.

Prevailing wage determinations define the number of hours in a working day, and the overtime rates for second and third shifts, Saturdays, and Sundays.

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Overtime rates are multiples of basic rates to which fringe benefits are added.

How should Federal and State of California certified payrolls be prepared?...

Certified payrolls (both Davis-Bacon and State of California) must be prepared based upon underlying records that include name, address, social security number, and work classification of each employee and owner-operator performing work, and the straight time and overtime hours worked each day for each week, the fringe benefits, and the actual per diem wage paid to each owner, journeyperson, apprentice worker, or other employee who works on a public works project.

Owners of enterprises such sole proprietors, partners in general partnerships, members of limited liability companies, and shareholders of corporations who self perform work are treated as employees for prevailing wage purposes, even though they may otherwise be treated as self-employed. This practice is to ensure the level playing field between self-employed and employee workers.

Owner-operators own and operate their own machinery. They earn prevailing wages and are paid a rental for the use of their machinery in addition. Owner-operator individuals must be included in the certified payroll of the contractor who engages them (with a few exceptions); when equipment is used, the rate includes prevailing wages and the equipment rental. The owner-operator includes their employees in their own certified payrolls.

For State of California financed projects, apprentices must be used for those crafts that are apprenticeable for projects with a total contract amount of $30,000 or more, regardless of whether the contractor is a union signatory or not. Apprenctices must be registered in approved training programs to qualify for the prevailing wage rate; otherwise they must be paid at the journeyman rate.

Link to Davis-Bacon reference material:

www.gpo.gov/davisbacon/referencemat.html

Link to Department of Industrial Relations reference material:

www.dir.ca.gov/DAS/DAS_BuildingCompliance/Contractors/FAQs.html

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For more information...

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About Nigel A.L Brooks...

Nigel A.L Brooks is a management consultant to entrepreneurs, business enterprise owners, executives, and managers, and the enterprises they serve. He specializes in developing the entrepreneurial, leadership, and managerial competencies that build sustainable advantage from vision to value. He is an author and a frequent speaker.

He obtained his professional experience as a partner at Andersen Consulting (now Accenture, Ltd.), as a vice president at Booz Allen Hamilton, Inc. (now Booz and Company), as a senior vice president at the American Express Company, as president of Javazona Cafes, Inc., and as president of The Business Leadership Development Corporation. He has been a contributing editor for the Bank Administration Institute magazine, and has served on boards of entrepreneurial networks. He was educated at the University of Exeter, Devon, United Kingdom.

His clients are in the financial services, food services, high-tech, manufacturing and distribution, pharmaceuticals, oil and gas, professional services, retail and wholesale, transportation, and government industries.

He has experience in North and Latin America, Europe and Asia-Pacific.

www.nigelalbrooks.com

About The Business Leadership Development Corporation (BLD)...

The Business Leadership Development Corporation is a professional services firm that works with entrepreneurs, lifestyle business enterprise owners, executives, and managers, and the enterprises they serve.

BLD develops entrepreneurial, leadership, and managerial competencies that achieve performance excellence by building sustainable advantage from vision to value through:

Strategic Management Consulting Executive Coaching and Mentoring Professional Training via The Center For Business Leadership

Development (CBLD) Motivational Speaking

www.bldsolutions.com

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