Prevailing Wage Compliance Adam Strong MDOT Prevailing Wage

Prevailing Wage Compliance Adam Strong – MDOT Prevailing Wage Compliance (517) 719 -7344 Ron Metevier Michigan Fair Contracting Center (989) 370 -4443 1

Labor Statutes • Davis Bacon Act (DBA) • Davis Bacon & Related Acts (DBRA) • Fair Labor Standards Act (FLSA) • Contract Work Hours & Safety Standards Act (CWHSSA) • Copeland “Anti-Kickback” Act (CA) State of Michigan Prevailing Wage Law • Public Act 166 of 1965 2

Prevailing Wage • A contractor may discharge their base hourly rate and fringe benefit obligations by: – Paying both in cash; – Making payments or incurring costs for “bona fide” fringe benefits; – Or, a combination thereof (29 CFR Part 5. 31) Base hourly rate + fringe benefit = Prevailing Wage 3

Examples of ‘Bona Fide’ Benefits • Training and Apprentice Programs (29 CFR 5. 16) • Pension Plans; 401 k plans (29 CFR 5. 26) • Vacation and Holiday (29 CFR 5. 28) • Health Insurance (29 CFR 5. 29) • Other bona fide fringe benefits (29 CFR 5. 29(c)) • Prevailing wage supplemental benefit (SUB) plans – Might have to be approved by USDOL 4

NOT a ‘Bona Fide’ Benefit • Company Trucks (including a gas allowance) • Paid Lodging • Tools • Cell Phones • Loan Payments • Uniforms • Unemployment/Workers Comp/Social Security 5

Hourly Credit Example Fringe Benefit Credit Example: Benefit Vacation Paid 40 hrs. X $20/hr. Total $800/yr. Blue Cross Yearly Premium $10, 800/yr. 401 K Employer Contribution of $3. 00/hr. To Calculate the Fringe Credit: $3. 00/hr. Benefit Vacation Calculation 40 hrs. X $20/hr. = $800/2, 080 hrs. Total $ . 38 Blue Cross $10, 800/2, 080 hrs. $5. 19 401 K $3. 00/hr. $8. 57 Credit $3. 00 *Note: This example assumes the employee worked a full year and accrued 2080 hours. Seasonal workers may work less than 2080 hours. In these cases, the actual total hours accrued would be used instead of 2080 hours. 6

Fringe Benefit Annualization (DBRA) 7

State Prevailing Wage Rate Schedule 8

Fringe Benefit Breakdown Must accompany first CPR where fringes are credited 9

Water Tower CDBG • Contractor was paying all hours worked in a single work week at straight time pay. • Contractor was paying $23 -$28 p/hr not posted rate. • Contractor was attempting to take deductions for items that were not considered “bona-fide” fringe benefits under USDOL guidelines (Hotels, per-deim, etc) • Claim was turned over to USDOL WH Division for full audit review. Contractor was found in non-compliance of DBRA and FLSA and was required to pay restitution. • If found in non-compliance again, possible disbarment from future Davis-Bacon projects along with Civil Money Penalties (CMP’s) and/or Liquidated Damages (LD’s) may be assessed (FLSA). 10

New Transportation Building for local Transportation Authority • Contractor was from S. Carolina and brought up with it out of town Hispanic workers. • First crew was arrested and deported. • Second crew was not making the required wage rate + fringe benefit as required per contract. • Contractor was found in non-compliance and required to pay restitution. • Some monies are held at the Department of Treasury due to deportation of workers or workers returning home to Mexico. • Additional contractors were misclassifying workers as Laborers, should have been carpenters. Back wages were paid to over 15 workers. 11

Wage Schedule(s) 12

Contract Responsibility • Prime is responsible for all contractors prevailing wage compliance (29 CFR 5. 5) • Prime is responsible for submission of all payroll to the contracting agency • Employer responsible for the payment of prevailing wage and worker classification • Payroll and basic records must be maintained during the course of work and preserved for a period of three years thereafter 13

Questions? Ron Metevier Michigan Fair Contracting Center (989) 370 -4443 Adam Strong– MDOT Prevailing Wage Compliance Specialist (517) 719 -7344 Strong. A 1@michigan. gov 14