The Basic Elements – Labor Standards Administration and Enforcement
Labor standards administration involves the activities that take place primarily before construction begins. Administration sets the stage for the compliance activities that occur during the construction phase.
- Determine Davis-Bacon applicability. The first and sometimes most difficult step is determining whether and to what extent Davis-Bacon wage standards apply to a particular contract or project. The Factors of Applicability (see Appendix, page 23) should be helpful. Most HUD-assisted construction work is covered by Davis-Bacon but there are some exceptions. The best and safest approach is to assume that Davis-Bacon requirements will be applicable whenever the contract/project involves construction work valued in excess of $2,000, then look more closely to see if there's any reason for non-coverage.
Assuming a determination has been made that Davis-Bacon wage and reporting requirements are applicable:
- Prepare the bid documents/contract. The contract for construction is the vehicle to ensure contractor compliance and Davis-Bacon wage enforcement. Therefore, the bid specifications and/or the contract for each project subject to Davis-Bacon wage rates must contain both a Davis-Bacon wage decision and labor standards clauses. These should be bound into the contract specifications or incorporated by specific reference in the bid/contract documents (see Labor Relations Letter 96-03).
- Davis-Bacon wage decisions. The Davis-Bacon wage decision is a listing of various construction work job classifications (such as Carpenter, Electrician, Plumber, Laborer, etc.) and the minimum wage rates (and fringe benefits, where prevailing) people performing work in those classifications must be paid. (See the Appendix, page 35, for more information regarding wage determinations and for information on how to add trade classifications not already on a wage decision.)
Wage Determinations On-Line (beta.sam.gov/) is the only official source to obtain wage determinations issued by DOL for construction contracts subject to the Davis-Bacon Act (DBA) and Related Acts (DBRA).
After logging on to https://beta.sam.gov/ (user names and passwords are not required), click “Selecting DBA WDs” in the “Davis-Bacon Act” column.
“Selecting DBA WDs” connects users to a searchable database of current Davis-Bacon general wage determinations.
The “WDs due to be revised” link connects users to information identifying specific wage determinations that will be revised/modified in the near future. This information alerts contracting agencies of upcoming revisions to wage determinations that they may need to incorporate into bid solicitations and/or contracts.
The “Sign up for alert service” provides email alerts concerning updates for wage determinations that may be needed for upcoming procurement actions. The alert service is specific to a wage decision(s) and can be found on the first page of any current wage decision(s) that is retrieved at https://beta.sam.gov/ (see bottom left for the link).
- Labor standards clauses. The labor standards clauses (aka, labor standards provisions, stipulations) obligate the contractor to comply with Davis-Bacon wage and reporting requirements and with the overtime provisions of the Contract Work Hours & Safety Standards Act (applicable only when the prime contract is valued at over $100,000). The labor standards clauses also provide remedies and sanctions should violations occur. HUD has standard forms containing the labor standards clauses appropriate for different programs: the HUD-4010 for CDBG and HOME; and the HUD-5370 and HUD-5370-EZ for Public and Indian housing. These forms are available on-line at:
- Verify contractor eligibility. Once you have selected the contractor to whom you want to award the contract, you must verify that the contractor is not ineligible (e.g., debarred) from participation in Federal programs. You only need to verify the eligibility of the prime contractor. The U.S. General Services Administration maintains a list of ineligible contractors which can be accessed on-line at: https://www.sam.gov/SAM/ (See On the Mark! OTM #6 (6/97) for more information about on-line verification.)
- Provide contractor training. Make certain the contractor understands its responsibilities for Davis-Bacon compliance: The principal contractor (also referred to as the prime or general contractor) is responsible for the full compliance of all employers (the contractor, subcontractors and any lower-tier subcontractors) with the labor standards provisions applicable to the project. HUD has published a Contractor’s Guide to Prevailing Wage Requirements for Federally-Assisted Construction Projects for this purpose. This Guide provides basic information and instructions to contractors concerning Davis-Bacon wage and reporting requirements. Hard copies of the Guide are available from the HUD Labor Relations Field Staff. In addition, the Guide is available in a download-able pdf file at the HUD Labor Relations Library. You may also wish to provide formal training separate from the contracting process for contractors who are interested in performing work on your HUD-assisted contracts and want to learn more about what is involved.
Labor Standards Enforcement
Labor Standards Enforcement involves the activities that take place during construction to ensure contractor compliance. Enforcement of federal labor standards involves certain compliance principles (see Appendix, page 38) applicable to almost every Davis-Bacon – covered project. Adhering to these principles will promote effective LCA contract compliance.
- Posting the wage decision and Davis-Bacon poster. The contractor is required to display on the job site a copy of the applicable Davis-Bacon wage decision and Department of Labor Form WH-1321, Davis-Bacon Poster. The purpose of this posting is to provide information to the construction laborers and mechanics working on the project about their entitlement to the prevailing wage for their trade, and to advise them whom to contact (the contract administrator) if they have any questions or want to file a complaint.
- Project Wage Rate Sheet (HUD-4720). Many wage decisions are multi-paged and cover several counties and/or more than one type of construction. To make this vital information easier to read and understand, contract administrators can offer a Project Wage Rate Sheet (HUD-4720) -a one-page listing of only the wage rates applicable to the specific project involved - for posting on the job site. This form is available in an on-screen fillable format which can be accessed via the HUD Forms or Office of Labor Relations websites.
- Davis-Bacon Poster. The Davis-Bacon Poster is available in English and Spanish via the DOL website. The poster in English is at www.dol.gov/whd/regs/compliance/posters/fedprojc.pdf . The link to the poster in Spanish is www.dol.gov/whd/regs/compliance/posters/davispan.pdf Both versions can be accessed via the Labor Relations website.
- Conduct on-site interviews with laborers and mechanics. The contract administrator or a designee (such as an agency construction inspector) must periodically conduct interviews with the construction workers on the job site. The purpose of the interviews is to capture observations of the work being performed and to get the workers’ views on the number of hours they work, the type of work they perform and the wages they receive. Information gathered during the interviews is recorded on Form HUD-11, Record of Employee Interview. Completed HUD-11s must be compared to the corresponding contractor and subcontractor certified payrolls to test and verify the accuracy of the payroll information. HUD-11 forms are available on-line in English and in Spanish in a fillable format via the HUD Forms website and at the OLR website.
- Review contractor and subcontractor certified payroll reports. In addition to comparing HUD-11s to the certified payroll reports, the contract administrator reviews the payroll reports generally to ensure all laborers and mechanics are being paid no less than the wage rates contained on the applicable Davis-Bacon wage decision for the classification of work they perform. Contract administrators should be particularly alert for indications of payroll falsification - misinformation on payrolls to conceal underpayments. Falsification on payrolls indicates a contractor or subcontractor is aware of its obligations, is knowingly underpaying its employees and is attempting to avoid detection of the violations.
- Discrepancies and/or underpayments on the payrolls. Some underpayments and other errors can appear on the face of the payroll records (i.e., do not involve falsification). In these cases, the contract administrator contacts the employer and/or prime contractor and provides instructions as to what steps should be taken to correct the payroll records and to pay any back wages that may be due to the affected workers.
- Indications of falsification on payrolls. The greatest threat to construction workers entitled to statutorily-mandated prevailing wage for their craft is from employers who know what is required, choose not to pay the required prevailing wage rates and falsify certified payroll reports to conceal the underpayments. Such willful violators see the workers’ underpayment as their own gain and engage in deception to increase this gain. In addition, willful violators that successfully escape detection and are not required to pay prevailing wages will continue to bid on Davis-Bacon contracts until their violations are disclosed and administrative sanctions such as debarment are imposed.
- Falsification indicators. HUD has prepared a list and explanation of four common falsification indicators that are detectable during payroll “spot-checks.” Information reported on payrolls that indicate falsification suggests willful, much more serious violations in terms of the amount of back wages that may be due and the number of employees affected. Such cases most often warrant investigation which can include on-site interviews, mailing questionnaires to employees, taking written statements or complaints, and other methods to gather and assess the facts of the case. See the Appendix (page 44) to this Guide for an explanation of willful violations and falsification indicators.
- Require the correction of all discrepancies, the payment of wage restitution found due, and the assessment and collection of CWHSSA liquidated damages, as appropriate. Contract administrators must ensure the full correction of all discrepancies disclosed during compliance monitoring conducted by the LCA, HUD or DOL. This includes the collection of documentation to demonstrate that corrective measures have been successfully completed.
- Examine and resolve probable violations and complaints of underpayment. Contract administrators must explore probable violations – particularly those involving falsification of payrolls and complaints alleging underpayments. In addition to the HUD-11, Record of Employee Interview, HUD has developed a questionnaire form (HUD-4730) and a complaint intake form (HUD-4731) for HUD and LCA use. The forms are available in on-screen fillable formats at the HUD forms website and via the Labor Relations website.
- Refer complex issues and/or falsification cases to HUD or DOL. Some issues may be more complex than you are able to address. HUD encourages LCA to consult with the Labor Relations Specialist for their area to secure appropriate guidance and support. HUD has decided, in consultation with DOL, that it will refer to DOL cases involving falsification of payrolls or related documents for DOL investigation. HUD strongly suggests that LCAs employ this strategy for cases involving falsification. Contact the HUD Labor Relations Specialist for your area for more information and guidance on such referrals.
- Take steps to ensure the full resolution of any monetary liability that has or may be imposed for labor standards reasons. Contract administrators must take prompt action to ensure that funds will be available to satisfy any labor standards liability that may be imposed. Actions include withholding from contract payments due to the contractor and requiring funding for an escrow account to guarantee the satisfaction of any restitution and/or liquidated damages assessment that may be pending at contract close-out.
- Recommend debarment against repeat violators. HUD has implemented a no-tolerance policy against contractors who are repeat violators of Davis-Bacon labor standards. The first time an employer is found in violation, the employer is required to pay full restitution to all affected workers and to pay any CWHSSA liquidated damages (for overtime violations) which may be assessed. In addition, the employer must provide written assurance of future compliance. If the employer promptly completes these corrective actions, HUD will not object if the LCA does not recommend debarment against the employer unless there are extenuating circumstances which warrant debarment. If the employer is found in violation again, the LCA must require full correction of any underpayments and payment of CWHSSA liquidated damages assessed. A debarment recommendation made by the LCA against the employer is expected.
- Prepare and submit enforcement reports. In accordance with DOL regulations (29 CFR Part 5, Section 5.7), the contract administrator must prepare and submit to HUD an enforcement report in any case where an employer (contractor or subcontractor) has underpaid its employees by $1,000 or more, or where there is reason to believe the violations are aggravated or willful; and prepare and submit to HUD semi-annual enforcement reports concerning all Davis-Bacon labor standards administration and enforcement activities involving all HUD-assisted programs.
- Employer-specific enforcement reports. These enforcement reports are used for three general purposes. First, to report to the Secretary of Labor on Davis-Bacon enforcement actions successfully completed in the field by all federal, state and local agencies. Secondly, we use an enforcement report to refer to the Wage and Hour Administrator investigative findings which are in dispute (e.g., where the employer contests findings of underpayment made against it and requests a hearing to appeal the findings). Thirdly, we use an enforcement report to make recommendations for debarment and other sanctions and for recommendations concerning liquidated damages computed for CWHSSA overtime violations. (See Labor Relations Letter LR-92-02 for additional guidance concerning employer-based enforcement reports.)
- Semi-annual Enforcement Reports. In April and October of each year, all federal agencies must report to DOL on all covered contracts awarded, and on all enforcement actions taken during the relevant 6-month period. HUD collects the reports from its client agencies and compiles a comprehensive report to DOL covering all HUD-assisted Davis-Bacon construction activity. A copy of the Semi-Annual Report form (HUD-4710) and instructions (HUD-4710i) for LCAs and are available at HUDClips and at the Labor Relations Library at www.hud.gov/program_offices/davis_bacon_and_labor_standards/olrform. The report may be completed on-screen, saved and attached to an email message for submission purposes. NOTE: States may report directly to DOL, as the state chooses. Public Housing Authorities, Indian Housing Authorities and Tribally-designated Housing Agencies should send data for Davis-Bacon - projects only; do not include data relating to HUD-determined maintenance wage rate projects, or projects subject to Tribally-determined wage rates (for construction or maintenance work).
Consulting Services We Provide
- Review public works preconstruction contracts
- Monitor DIR contractor/subcontractor certified payrolls
- Audit labor classification for each worker employed
- Review DIR pre-DAS 140/142 submissions
- Review CAC training fund contributions form CAC-2
- Review DIR Fringe Benefits Statement PW-26
- Monitor DIR wage determinations
- Audit fringe benefits allowances
- Review DIR holiday payment requirements
- Audit DIR travel & subsistence requirements
- Caltrans Labor Compliance
- County of Sacramento Labor Compliance
- City of Los Angeles Labor Compliance
- Los Angeles Unified School District Labor Compliance
- Federal Davis-Bacon Project Monitoring
- Federal DBE Implementation & Review
- Federal FAA AIP Goal Setting
- DIR & Davis-Bacon Training
- DIR Civil Wage Penalty Review
- Local-Hire Review (e.g., San Francisco)
- Skilled and Trained Workforce
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