Compliance Principles

There are several compliance principles, definitions and interpretations that affect every Davis-Bacon – covered project. Adhering to these principles will promote effective LCA contract administration and enforcement.

Responsibilities of employers. All employers (contractors, subcontractors and any lower-tier subcontractors) are required to pay all laborers and mechanics employed or working on the site of the work unconditionally and not less often than once a week, the full amount of wages and bona fide fringe benefits computed at rates not less than those contained in the wage decision. Employers must prepare, certify and submit weekly payroll reports reflecting all the laborers and mechanics (employees) engaged in construction on the site of the work. Employers may also be required to submit related documentation in order to demonstrate compliance.

Responsibilities of the principal (prime) contractor. The principal contractor (also referred to as the prime contractor) is responsible for the full compliance of all employers (itself, subcontractors, and any lower-tier subcontractors) with the labor standards provisions applicable to the project.

Site of work. The "site of work" is limited to the physical place or places where the construction called for in the contract will remain when work on it has been completed. "Site of work" includes other adjacent or nearby property used by the contractor/subcontractor in the construction of the project (e.g., fabrication sites) provided they are dedicated exclusively or nearly so to the performance of the contract or project, and are so located in proximity to the actual construction location that it would be reasonable to include them.

Laborers and mechanics. "Laborers" and "mechanics" are those individuals, whose duties are manual or physical in nature, including workers who are performing the work of a trade (e.g., Electrician). These terms include apprentices, trainees and helpers and, for contracts subject to CWHSSA, watchmen and guards. All laborers and mechanics may be paid no less than the applicable prevailing wage rate for the type of work they perform.

Employee. Every person who performs the work of a laborer or mechanic is "employed" regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such person.

Proper classification of work. Each laborer and mechanic shall be classified in accordance with the work classifications listed on the wage decision and the actual type of work he/she performs, and shall be paid the appropriate wage rate and fringe benefits for the classification regardless of their level of skill.

Split classification. Laborers and mechanics that perform work in more than one classification may be compensated at the rate specified for each classification provided that the employer maintains time records that accurately set forth the time spent in each classification in which the work was performed. If accurate time records are not maintained, the employee shall be compensated at the highest of all wage rates for the classifications in which work was performed.

Apprentice. An "apprentice" is a person employed and individually registered in a bona fide apprenticeship program, including Step-Up apprenticeship programs designed for Davis-Bacon construction work. Bona fide programs are those that have been registered with DOL, Employment and Training Administration, Office of Apprenticeship Training, Employer and Labor Services, Bureau of Apprenticeship and Training (BAT) or with a BAT-recognized State apprenticeship agency (SAC).

Trainee. A "trainee" is a person registered and receiving on-the-job training in a construction occupation pursuant to a training program approved in advance by the BAT.

Use of apprentices and trainees. Apprentices and trainees may be compensated at rates less than those prescribed by the wage decision for their craft only in accordance with the following parameters.

1. Registration. The apprentice or trainee shall be individually registered in a bona fide program certified by the BAT or a SAC.
2. Wage rates. Each apprentice and trainee shall not be paid less than the specified rate in the registered program for his/her level of progress. If the rate specified is represented as a percentage of the journeyworker rate for that craft, the percentage shall be applied to the corresponding wage rate contained in the applicable wage decision.
3. Fringe benefits. Apprentices and trainees must receive fringe benefits as specified in the approved apprenticeship or trainee program. If the program is silent as to fringe benefits for apprentices/trainees, the apprentices/trainees must receive the full fringe benefit specified on the applicable wage decision for their craft.
4. Ratio to journeyworkers. The maximum number of apprentices or trainees employed on the site of work may not exceed the ratio of apprentices or trainees to journeyworkers permitted to the employer by the BAT/SAC certified program. Apprentices or trainees who are employed at the site in excess of the allowable ratio shall be paid the wage rate contained on the applicable wage decision for the classification of work actually performed.
   Compliance with the allowable ratio shall generally be met on a day-to-day basis. However, back wages need not be asse ssed for minor, temporary, and inadvertent ratio imbalances which are promptly corrected.

Wages. The term "wages" means the basic hourly rate of pay plus any contribution irrevocably made by an employer to a bona fide fringe benefit fund, plan or program.

Fringe benefits. Fringe benefits may include:

1. Sick, vacation or holiday pay; costs to defray expenses of apprenticeship or similar programs; medical or hospital care; supplemental unemployment benefits; life insurance; pensions on retirement or death; compensation for injuries or illness resulting from occupational activity; other bona fide fringe benefits; or insurance to provide any of these.
2. In addition, fringe benefits may reflect the rate of costs to the employer that may be reasonably anticipated in providing bona fide fringe benefits pursuant to an enforceable commitment to carry out a financially responsible program.
3. Fringe benefits do not include employer contributions or payments required by other Federal, State or local law, such as FICA, workers’ compensation, or unemployment compensation.

Discharging prevailing wage obligations. Davis-Bacon prevailing wage rates generally appear as a basic hourly rate plus fringe benefits, if any.

“Prevailing wage” is made up of two interchangeable components: the basic hourly wage and fringe benefits. The total of the basic hourly wage and fringe benefits comprises the “prevailing wage” obligation. This obligation may be met by any combination of cash wages and creditable “bona fide” fringe benefits provided by the employer. For example:

1. The Davis-Bacon wage decision requires:
   Basic Hourly Rate $10.00
   Fringe Benefits $ 1.00
   Total Prevailing Wage $11.00

Employers may comply by paying:

1. $11.00 in cash wages;
2. $10.00 plus $1.00 in bona fide fringe benefits; or
3. Any combination of wages and benefits that totals $11.00 per hour.

Deductions. The employer may make payroll deductions as permitted by DOL Regulations 29 CFR Part 3. These regulations prohibit the employer from requiring employees to "kick-back" any of their earnings. Deductions may include employee obligations for income taxes, Social Security payments, insurance premiums, retirement, savings accounts, and any other legally permissible deduction authorized by the employee. Deductions may also be made for payments on judgments and other financial obligations legally imposed against the employee.

CWHSSA overtime. Contract Work Hour and Safety Standards Act (CWHSSA) overtime requirements are applicable to prime contracts valued at $100,000 or more, including any subcontracts subordinate to the prime. CWHSSA requirements apply only to laborers, mechanics, watchmen and guards employed on the site of work.

1. Overtime hours are defined as all hours worked at the site of work in excess of 40 hours in any workweek.
2. CWHSSA requires the payment of time and one-half the basic rate of pay for all hours worked in excess of 40 hours in a week.
3. Amounts paid to fulfill the fringe benefit portion of the prevailing wages listed in the wage determination – both contributions to bona fide benefit plans and cash payments made to meet wage determination fringe benefits requirements – are excluded in computing overtime obligations under CWHSSA.
4. CWHSSA requires the payment of overtime premium pay only if the laborer or mechanic works in excess of 40 hours in a work week on the CWHSSA-covered contract(s). Overtime hours worked, which are not subject to CHWSSA, may be subject to Fair Labor Standards Act overtime pay.
5. CWHSSA overtime violations are subject to liquidated damages calculated at the rate of $10 per day, per violation.

Payrolls and other reporting requirements. Payrolls and basic records relating to such payrolls shall be maintained by each employer with respect to his/her own workforce employed on the site of the work. The prime contractor shall maintain such records relative to all laborers and mechanics working on the site of the work. Payrolls and related records shall be maintained during the course of the construction work and preserved by the agency (HUD or LCA), the prime contractor and all employers for at least three years following the completion of the work. Such records shall contain:

1. The name and a individually identifying 4-digit number for each laborer and mechanic;
   
   Note: Employers must maintain each employee’s address and full social security number (SSN) at all times during the construction of the project and for no less than three years following its completion. This information must be made available to the prime contractor, HUD and/or the LCA upon request.
2. His or her correct work classification(s);
3. Hourly rates of pay, including rates of contributions or costs anticipated for fringe benefits;
4. Daily and weekly number of hours worked, including any overtime hours;
5. Gross earnings, deductions made, and actual net wages paid;
6. Evidence pertaining to any fringe benefit programs; and
7. Evidence of the approval of any apprenticeship or trainee program, the registration of each apprentice or trainee, and the ratios and wage rates contained in the program.

Certified payroll reports. Weekly certified payroll reports (CPRs) shall be submitted for each week any contract work is performed. Each employer shall prepare and certify such payroll reports to demonstrate compliance with the labor standards requirements.

1. CPR format. CPR information may be submitted in any format provided that the LRS can reasonably interpret the information to monitor employer compliance with the labor standards. Employers are encouraged to utilize DOL Payroll Form WH-347. Employers who choose to use other formats must ensure that all information from the WH-347 is included in their format. The WH-347 form is available on-line at the OLR web site (Labor Relations Forms), at HUDClips, and at: www.hud.gov/program_offices/davis_bacon_and_labor_standards/olrform
2. Submission requirements. CPRs shall be submitted for each employer beginning with the first week such employer performs work on the site of the work. CPRs shall be submitted promptly following the close of each such pay week.