Prevailing Wages on Public Works Construction

Pamela MartinDept. of Labor and Industrial Relations

Wage Standards Divisionhttp://labor.hawaii.gov/wsd

dlir.wages@hawaii.gov(808) 586 8771

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Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes

Objectives of this presentation:

Understand the who, what, when, where, why and how of Hawaii’s prevailing wage law

Know the prevailing wage rates for laborers and mechanics

Ensure your Certified Payroll Process is Compliant Identify Common Concerns for Contractors Recent Developments in Legislation

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3

12356 46

7754

68 34

591

335

369

221

27

86155

50

$1,303,782

$287,640

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

0

100

200

300

400

500

600

700

800

900

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15FY16 FY17YTD

Wage Standards Division, DLIRClaims Taken and Investigations Resolved

Prevailing wages (Ch. 104)

Unpaid wages (Ch. 388)

Min. wage & OT (Ch. 387)

Unlawful Termination (Ch. 378-Part III)

Other(child labor; family leave;lie detector tests)

Number of InvestigationsResolved

Back Wages and PenaltiesFound Due

Differences

Chapter 104 OT – after 8 hrs/day or

Sat, Sun or State Holidays (rate also 2x or 3x)

Wage Rate Schedule issued 2 times a year

Reporting itemized fringe benefits & date paid

All laborer & mechanics Only DLIR can issue

penalties

Davis Bacon OT- after 40 hours a

week Wage Rate Schedule

issued only once with the project

WH-347 Cert. payroll Owner-operated truckers

special treatment Contracting Agency can

issue penalties 4

1) The law applies to work performed at the public work site by any laborer or mechanic, includingowner-operators.

2) The law also applies when transportingmaterials, supplies, or equipment:

• to or from the public work site;

• between a public work site and another public work site; or

• between a public work site and a dedicated site;

when performed by a laborer or mechanic employed at the public work job site. (See HAR 12-22-1.1)

Who is covered by 104?

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Identify employees with classifications from the Wage Rate Schedule (WRS)

Classifications in Wage Rate Schedule are decided by the prevailing area practice.

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Classification Examples: Equipment Operator (Group 6) Laborer I Carpenter Apprentice Step 3,

Indentured on 9/1/12 Glazier

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A copy of an apprentice certification or status of agreement should be attached to the certified payroll submitted to the contracting agency.

Indenture date and current step or level of the apprentice should be provided for every apprentice listed on the certified payroll.

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Apprentices on Certified Payrolls

Prevailing area practice refers to the classification of work used by contractors whose wage rates were found to be prevailing in the area and published in the Wage Rate Schedule.

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What is prevailing area practice?

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What does Chapter 104 apply to?104 Applies to Construction Contracts

>$2,000 11

Hawaiian Electric Subcontractors

Public contract September 2015 determination that

because utility work is regularly excluded and Hawaiian Electric contract expands beyond utility work, some construction is included and subject to Chap 104, HRS

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Other Covered Projects Construction projects funded by Special Purpose

Revenue Bonds (SPRB). §104-2(g)(h), HRS

Construction projects for buildings where more than 50% is leased to a state or county agency. §104-2.5, HRS

The definition of “Public Works” includes private projects “where the funds or resources required to undertake the project are to any extent derived, either directly or indirectly, from public revenues of the State or any county, or from the sale of securities or bonds whose interest or dividends are exempt from state or federal taxes.” §104-2(a), HRS

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What type of project or activity is covered under construction?

New Construction Reconstruction Development Improvement Alteration Repair Renovation Painting

Decorating Dredging Shoring Sewer Inspection

and Repair

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Other activity performed by a laborer or mechanic employed at the site is included if

the activity is an integral part of or is in conjunction with a construction contract, or if there is substantial construction activity

involved in a supply, service, or other type ofnon-construction contract….

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…Other activities include: Demolition or excavation

Landscaping

Termite treatment; and

Installation at the construction site of items or articles fabricated off-site, such as shelving, drapery, and communications equipment

Manufacturing or furnishing of materials, articles, supplies, or equipment on the job site

Warranty work exceptwhen done by the manufacturer on defective products or equipment

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Common Challenges in Compliance

A. Prevailing wages

B. Fringe benefits

C. Overtime

D. Weekly pay requirement

E. Certified payrolls and record keeping requirements

F. Posting WRS on the job site, and furnishing the WRS to non-union employees. (Already covered in a previous slide.)

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Prevailing Wages:

The employer can pay any combination of the basic hourly rate and fringe benefits in order to meet the prevailing wage requirement in the applicable Wage Rate Schedule.

Basic Hourly Rate+ Fringe Benefits= Prevailing Wage

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Carpenter’s rate on 2/20/17:• basic hourly = $45.65• fringe benefits = $21.21• prevailing wage = $66.86

EXAMPLE: Refer to WRS #489, pg 1

Employer can either: pay the entire $66.86 directly to employees; or pay any combination of the basic hourly rate & fringe

benefits which equals $66.86.e.g. $55.86 as the basic hourly rate, and

$6.00 per hour for 401K; $5.00 for medical.20

A fringe benefit is a contributionirrevocably made by a contractor to atrustee or to a third person accordingto a fund, plan or program in providingbenefits to a laborer or mechanic, suchas medical, insurance and pension.

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What is a fringe benefit?

To be considered an allowable fringe benefit, the contributions must:

A. Fall into one of six categories:

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1. Health and welfare2. Life insurance, disability insurance*3. Vacation** and holiday pay4. Pensions5. Apprenticeship or similarly approved

programs6. Other bona fide fringe benefits determined by

DLIR

The allowable hourly fringe benefit credit is determined by dividing the monthly contributionrate by 173 hours. (See Hawaii Administrative Rule 12-22-4)

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Note: Since the hourly fringe credit is based on straight-time hours, credit can be used for straight- time hours only.

Method to Determine the Fringe Benefit Hourly Credit

for fringe benefits based on a monthly rate

eg. Monthly Health Premium: $865.00Hourly credit: $865.00 ÷ 173 hrs = $5.00/hr

So, if the prevailing wage is $55.00 per hr, the employer can take a $5.00 per hr fringe credit, and pay $50.00 per hour as the basic hourly rate.

For all hours worked on: Saturday; Sunday; a legal State holiday; or more than 8 hours on any other day

whether worked on one or more projects.

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When must overtime be paid under Chapter 104?

Overtime is computed at least 1.5 times the basic hourly rate, plus the fringe benefit rate at straight time. Note some classifications Sundays are 2 times; Labor Day 3 times. (See Note 13, Wage Rate Schedule)

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Calculating Overtime Prevailing Rate Taking a Fringe Benefit Credit for straight timeHow FB is given for all hours workedCARPENTERWRS 487

Straight Time

Overtime

Basic Hourly Rate $43.90 X1.5 $65.85Fringe Benefit $20.96 = $20.96Prevailing Rate $64.86 $86.81Possible Fringe Benefit Credit

$11.00 $0

Amount to Pay $53.86 $86.81

Weekly Pay Requirement All employees must be paid weekly

and within 5 working days after the end of the pay period.

Certified payrolls must be submitted to the contracting agency weekly.

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Certified Payrolls: Certification affirms that payrolls are

correct and complete and appropriate classifications and applicable prevailing wage rates are paid.

Penalty for falsified certified payrolls is $10,000, and a three year suspension from Chapter 104 work.

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Format of Certified Payrolls No standard form required. Any form that

includes all required information and is certified is acceptable including itemized fringe benefits.

DAGS has an electronic form that assists with compliance. www.hawaii.gov/pwd look for Construction Administration Forms -Construction Ongoing STATEMENT OF COMPLIANCE & DAGS-ECP FOR

PAYROLL AFFIDAVITS

Federal form WH-347 is also available on line at www.dol.gov/whd/forms/

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Signature required at bottom of form

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Employee Information

Required information on Certified Payroll:

Employee’s full name and home address

Employee’s Social Security Number (last four digits only)

Job Classification(s) Rate of pay including

applicable fringe benefits (itemized breakdown)

Daily and weekly number of hours worked

Straight time hours Overtime hours Total earnings Amount and purpose of

each deduction Net pay Payment date

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Other Requirements for Certified Payroll:

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Employer must preserve time and payroll records during the project, and for 3 years after its completion.

Certified payroll should be signed by an authorized official of the company for example, the owner, partner or corporate officer

Wage Rate Schedule updatesThe Wage Rate Schedule (WRS) Bulletin No. 489, effective February 20, 2017, is available on the Internet at: http://labor.hawaii.gov/rs

Notice by email contact: dlir.rs@hawaii.gov

Please call the Research & Statistics Office at (808) 586-9019 if you have any questions.

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WRS - Updates Current is WRS 489 Issued

February 20, 2017 Updated twice a year – on or

about Feb. 15 and Sept 15

When the prevailing wage increases the contractor must increase the wages accordingly. Future anticipated increases have been included where possible.

JAN FEB MAR

APR MAY JUN

JUL AUG SEP

OCT NOV DEC

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1. PAID not less than the prevailing wage for the job classification - See schedules below. (Note: The Wage Rate Schedule may also be downloaded at -http://labor.hawaii.gov/rs

3.

4.

PAID fringe benefits for all hours worked, including overtime.

PAID every week, within five working days after the end of the pay period.

2. PAID overtime at not less than time and one-half for all hours worked after 8 hours each day, and for all hours worked on Saturdays, Sundays, and legal State holidays.

5. GIVEN a copy of the applicable rate schedules (see below), unless covered by a collective bargaining agreement.

OAHU (Honolulu)830 Punchbowl StreetRoom 340Phone: 586-8777

HAWAII (Hilo)75 Aupuni StreetRoom 108Phone: 974-6464

WEST HAWAII(Kealakekua)Post Office BuildingPhone: 322-4808

KAUAI (Lihue)State Building3060 Eiwa StreetRoom 202Phone: 274-3351

MAUI (Wailuku)2264 Aupuni StreetPhone: 243-5322

If You Don't Receive the Above, Report to:Project Representative/Inspector: ______________________________ Phone: __________

NOTICE TO WORKERSWAGE INFORMATION

This project is subject to State Law, Chapter 104. Every laborer and mechanic employed on this job site must be:

For more information, contact the Department of Labor and Industrial Relations, Wage Standards Division:

H104-1 (Rev. 1/13)

-- Attach Applicable Wage Rate Schedules Here --

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Wage Standards Division websitelabor.hawaii.gov/wsd

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WHY Chapter 104, HRS?“This [law], like the Federal Davis-Bacon Act, has as its guiding principle that bids for construction of public works should be based on the relative skill and efficiency of the contractors concerned and not on a difference in wages paid.

To state the principle another way, government money, coming from the taxes of all of us, should not be used to subsidize contractors who are depressing the wages of some of us.”

(Standing Committee Report No. 318, 1955 Regular Session)

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Penalties $10,000 and suspension for delay or for

certification of falsified payrolls, and $1,000 a day for each day of delay(104-22(b) HRS)

Notification of Violation (NOV) (104-24,HRS)

• 1st – Equal 25% of back wages due or $250/offense up to $2,500

• 2nd – w/in 2 yrs of 1st NOV, Equal to amount of back wages or $500/offense up to $5,000

• 3rd - w/in 3 yrs of 2nd NOV, Equal to twice amount of back wages or $1,000/offense up to $10,000 and

• SUSPENSION FROM PUBLIC WORK FOR 3 YEARS (104-25, HRS)

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Enforcement Responsibilities

Both the Contracting Agency and the Department of Labor and Industrial Relations have joint responsibility

(Section 104-2(e) withhold; 104-2(f) include 104 requirements in contract;104-3(a) review certified payrolls; 104-4 terminate and go against sureties for failure to pay; 104-21 report violations; 104-22 withhold and order payment)

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RESOURCES Please call the Wage Standards Division

at 586-8771 Go on line at labor.hawaii.gov/wsd Other resources: Blog: Inside Hawaii

Wage Standards and the DLIR http://hawaiiwagestandards.blogspot.com/

Facebook: Hawaii Teens at Work MAHALO, be sure to fill out your evaluation!