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A
Timeline of Davis -
Bacon Requirements for
CDBG Projects
can be
found at the end of this
chapter.
Introduction
Construction management under CDBG requires that certain procedures be
followed in order to comply fully with applicable Federal requirements. Federal
labor standards are one component that requires recipients, contractors, and
subcontractors, to meet and document compliance with certain rules associated
with the employment of workers on construction projects. This chapter
describes the policies and procedures that must be followed when undertaking
construction projects with CDBG funds, which include labor standards, payroll
requirements, pre-construction meetings, and inspection and approval
procedures.
“Davis-Bacon And Labor Standards Contractor Guide Addendum” publication, a
helpful resource guide, is available on cdbgSC.com or can be obtained from
https://www.hudexchange.info/resource/6717/davis-bacon-and-labor-standards-
agency-contractor-guide-and-contractor-addendum/.
Section 1 – Davis-Bacon Act Requirements
The Davis-Bacon Act is applicable to all contracts for construction, alteration
and/or repairs, including painting or decorating, equipment installation and
demolition (as applicable) in excess of $2,000 that involve CDBG funds (in whole
or part), with the exception of rehabilitation of a residential structure or
residential properties under one ownership that will contain less than eight units
when completed. These provisions do not apply to construction work done by
employees of the grantee (force account workers). Employees of utilities are
exempt providing they are only extending service to the property.
The requirements of Davis-Bacon are:
Construction Contract Provisions: The
construction contract must include labor
standards clauses and a Davis Bacon Wage
Decision. The clauses describe the
responsibilities of the contractor and
provide for enforcement of federal labor standards. These clauses are
often referred to as the “HUD 4010” form and are incorporated in the
CDBG Contract Special Conditions
.
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Minimum Wages: The minimum wage to be paid laborers and
mechanics (including apprentices and trainees) must be based on the U.S.
Department of Labor's (DOL) determination of the prevailing wage rates
for the locality, and may be no less than the federal minimum wage rate
established by the Federal Labor Standards Administration (FLSA). The
FLSA minimum wage rate is $7.25 per hour, effective July 2009. More
information is available at:
https://www.dol.gov/agencies/whd/minimum-wage
Wage Rate Decisions: A wage decision is a schedule of construction
work classifications and wage rates that must be paid to workers
employed in those classifications. Wage decisions are established for
defined geographic areas (county or group of counties) and by
construction type. A wage decision includes the original decision and any
subsequent modifying, superseding, or correcting provisions of the original
decision.
Recipients must obtain wage rate decisions from DOL prior to bid
advertisement, and these determinations must be included in bid
documents and the construction contract.
Recipients with Internet access can obtain their own wage rate
determinations directly from the Wage Determinations www.SAM.gov web
site at https://sam.gov/content/wage-determinations.
Recipients must be sure to obtain the correct wage rate determination for
each labor category based on project location, construction type, and
date. When the correct wage rate determination is found, the recipient
must print the document and include it in the bid specifications and
contract.
It is critical that recipients obtain the appropriate type of wage
decision, particularly if determinations are accessed online as
discussed above. There are four types:
Building construction – Building construction is the construction
of sheltered enclosures with walk-in access for the purpose of
housing persons, machinery, equipment or supplies. It includes
all construction of structures, and incidental items such as the
installation of utilities, grading, and paving. The structures need
not be habitable to be building construction.
Highway Construction – This category includes projects
involving the construction, alteration or repair of roads, streets,
highways, runways, taxiways, alleys, trails, paths, parking areas
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and other similar projects not incidental to building or heavy
construction.
Residential Construction – Residential construction projects are
those involving the construction, alteration or repair of single
family homes or apartment buildings of no more than four
stories in height. This includes all incidental items in the
construction such as site work, parking areas, utilities, streets
and sidewalks.
Heavy Construction - Heavy construction projects are projects
that are not properly classified in one of the other three
categories. Because of this, projects within this classification
may require the issuance of separate wage schedules. Examples
of projects that may fall into this category include: bridges,
drainage projects, flood control projects, sewers, water mains
and supply lines, and storage tanks. Some counties may have a
“Heavy” construction wage decision which includes sewer and
water lines. Other counties may have a separate wage decision
for “Heavy” and a separate wage decision for “Sewer and Water
Line.” You may contact the Grants Administration Labor
Specialist for assistance.
Multiple Wage Schedules - Most CDBG assisted projects fit in a single
construction category and multiple schedules are generally not allowed,
except where the activities are substantial, separate and distinguishable
construction elements and not incidental. Substantial is generally defined
by DOL as more than 20% of total project cost.
Important Notes about Multiple Schedules:
The project/contract specifications must clearly delineate the
portions of the project subject to each wage decision issued.
All wage decisions must be posted at the job-site with an
explanation as to where each wage decision applies.
The prime contractor must agree to establish adequate controls to
ensure that all laborers and mechanics are paid in accordance with
the wage schedules.
Prime Contractors, subcontractors, and lower-tier subcontractors
must agree to prepare, submit and maintain accurate employee
time and payroll records to demonstrate compliance with all wage
decisions applicable to the project.
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The Grants
Administration Labor
Specialist will review a
Report of Additional
Classification and Rate
and the supporting
documentation for
completeness, then
forward the report to
DOL for final approval.
Labor/Mechanic Classes: If, after obtaining the wage decision, it is
found that a class of laborer or mechanic not listed in the wage
determination is to be employed on the project, the recipient must notify
the Grants Administration Labor Specialist in writing so that an effort can
be made to conform the laborer or mechanic to a classification already
existing on the decision.
Where surveying is performed in direct support of construction crews,
such activity may be covered by DBRA. The status of survey crew
members as laborers and mechanics depends on the duties they perform.
Survey crew members who normally spend more than 50 percent of their
time performing primarily physical and/or manual duties while employed
by a contractor or subcontractor in work performed immediately prior to
or during actual construction on the site of the work will be considered a
laborer or mechanic covered by Davis-Bacon requirements. The
classification used for survey crew members may differ from area to area
both in nomenclature (job titles) and in the content of duties performed
by particular classifications.
Requesting Additional Classifications: If a trade classification does
not appear on the wage decision and the laborer or mechanic cannot be
conformed to an existing classification on
the wage decision, the grantee must
complete and submit to Grants
Administration a
Report of Additional
Classification and Rate
(available in the
attachments to this chapter.) This Report
should identify the classification needed,
recommend a wage rate, and include
supporting documentation such as a copy of
the Notice to Proceed issued to the
contractor identifying the contract/project, a
description of work to be performed for the
classification and statements from both the
contractor and the employee agreeing to the proposed wage rate and any
bona-fide fringe benefits. See the Attachments to this chapter for more
information.
In general, additional classifications and wage rates can be approved if:
The requested classification is used by construction industry in the
area of the project. (The area is usually defined as the county
where the project is located.) Classifications requested must
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identify the specific trade and should not involve generic titles such
as operator, mechanic or installer.
The work to be performed by the requested classification is not
performed by another classification already on the applicable wage
decision. Conformance is not appropriate when the work of the
proposed classification is already performed by a classification on
the wage decision and employees must be paid at the wage rate
for the appropriate work.
The proposed wage rate and any fringe benefits bear a reasonable
relationship to the rates on the wage decision and not to a
particular rate or the lowest rate. It is not permissible to
automatically use the lowest rate in a work category (laborer,
equipment operator, etc.) by default. In making the request,
consider the entirety of the rates within the relevant category and
consider where the proposed wage rate falls within those listed on
the applicable wage determination.
The workers that will be employed in the added classification or the
worker’s representatives, if applicable, must agree with the
proposed wage rate.
In order to facilitate processing of additional classification requests, each
request should include information describing the duties of the affected
employee.
Period of Effectiveness: A general wage decision is effective for 90
days and a project wage decision shall be effective for 180 days from the
date of such decision. A project wage decision relates only to
construction work on the decision and is generally only issued if a general
wage decision has not been published. If the contract is not awarded
within the effective period, the wage decision is void. If it appears that a
wage decision may expire prior to contract award, the recipient must
request a new wage decision.
Modifications: Ten days prior to bid opening, the recipient shall either
check the web sites again or contact Grants Administration to determine if
any modifications to the wage rate decision have been issued. Maintain
documentation that this was done.
A modification to a general or project wage decision published/received
less than 10 days before bid opening may be disregarded if it is found that
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there is not a reasonable amount of time to notify prospective bidders of
the modification before bid opening. A record of such finding must be
made to the project file.
Retroactive: If the recipient fails to include the wage decision, or for any
reason the wrong wage decision is included in the contract, the applicable
wage decision reflecting the proper rates must be incorporated into the
contract and be retroactive to the beginning of the construction. The
recipient can either terminate and re-solicit or incorporate the wage
decision by change order, provided the contractor is compensated for any
increases in wages resulting from the change.
Locked in Date/Contract Delays: General wage decisions are locked in
on the date bids are opened provided the contract is awarded within
ninety days after bid opening. If a wage decision has been issued, and if
a contract has not been awarded within ninety days of bid opening, or if
construction has not begun within ninety days of contract award, the
recipient should check the Wage Decisions Online web site or contact
Grants Administration to determine if the wage decision is still prevailing
and if there have been any modifications issued. For negotiated
contracts, the lock-in date is at contract award date.
Non-compliance: Non-compliance with the labor standards contract
provisions may result in withheld funds, sanctions, or contract
termination.
Timeline of Davis Bacon Requirements for CDBG Projects
Timeframe Action Required
45 days before bid
advertising
If General Wage Determination is not available,
submit
Request for Wage Determination
to Grants
Administration
10 days before bid
advertising
If General Wage Determination is available, submit
Request for Wage Determination
to Grants
Administration or obtain from web site
10 days before bid
opening
Determine if any modifications have been issued for
the wage rate determination
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Timeframe Action Required
90 days after bid
opening
If no contract awarded, determine if any
modifications have been issued for the wage rate
determination
90 days after
contract award
If construction has not begun, determine if any
modifications have been issued for the wage rate
determination
Section 2 - The Copeland "Anti-Kickback" Act
The Copeland "Anti-Kickback" Act requires that payment to employees must be
made at least once a week without subsequent deductions or rebate on any
account except "permissible" payroll deductions. The recipient must obtain
payrolls and a
Statement of Compliance
from contractors and subcontractors
weekly. The recipient must check these payrolls for accuracy. Each employer
and the recipient must maintain the basic records supporting the payrolls for
three years after completion of the work.
See Section 7 of this chapter for more information on weekly payroll
requirements.
Section 3 - Contract Work Hours and Safety Standards Act
Work Hours
The Contract Work Hours and Safety Standards Act (CWHSSA) requires that
laborers and mechanics shall not work in excess of forty hours in any work week
on the covered project unless they receive overtime compensation at a rate not
less than one and one-half times the basic rate of pay for those overtime hours
plus any fringe benefits. CWHSSA does not apply to prime contracts of $100,000
or less.
Safety Standards
Safety Standards and Accident Prevention provisions require contractors to:
Comply with the safety standards provisions of applicable laws, building
and construction codes, the "Manual of Accident Prevention in
Construction" published by the Associated General Contractors of America,
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Proper documentation of
violations by the
recipient is critical; an
appeal by the contractor
can be won if there is
poor documentation by
the recipient.
the requirements of the Occupational Safety and Health Act of 1970, and
the requirements of Title 29, Section 1518.
Exercise every precaution at all times for the prevention of accidents and
the protection of persons (including
employees) and property.
Maintain at the construction office or other
well-known place on the job site, all articles
necessary for giving first aid to the injured,
and make standing arrangements for the
immediate removal to a hospital or to a
doctor's care those persons (including
employees), who may be injured on the job
site. In no case shall employees be permitted to work at a job site before
the employer has made a standing arrangement for removal of injured
persons to a hospital or doctor's care.
Penalties
Contractors in violation of the Contract Work Hours and Safety Standards Act
may also be liable to the United States for liquidated damages, computed at
$27.00 per day for each employee who worked overtime and was not paid
overtime wages. Funds may be withheld from contractors and subcontractors to
satisfy unpaid wages and liquidated damages.
Contractors and subcontractors must be advised in writing that, if they are
aggrieved by the withholding of a sum of liquidated damages, they have the
right to appeal within fifty days. A written appeal must state the reason for
liquidated damages and should be addressed to Grants Administration.
Section 4 - The Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) contains Federal minimum wage rates and
overtime (O/T) requirements. These requirements generally apply to any labor
performed and may be pre-empted by other Federal standards such as the Davis
Bacon and Related Act prevailing wage requirements and Contract Work Hours
and Safety Standards Act O/T provisions. Only the DOL has the authority to
administer and enforce FLSA. HUD will refer to the DOL any possible FLSA
violations that are found on HUD projects.
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Any person or firm who
has been declared
ineligible because of
previous instances of
non-compliance may
not participate in any
contract involving CDBG
funds.
Section 5 - General Labor Requirements
DOL guidelines include additional requirements as listed below. Recipients
should note that they are responsible for insuring compliance by contractors and
subcontractors. Inclusion of appropriate clauses in contracts, as well as
monitoring by the recipient, is therefore very important.
Compliance Responsibility: The prime contractor is responsible for
compliance by any subcontractor or lower tier subcontractor with all labor
provisions and other Federal or State requirements. Subcontractors
communicate through the prime contractor. The Grantee will consider the
Contractor to be the sole point of contact with regard to contractual
matters.
Records Availability: The contractor must make pertinent records available
for review and permit on-the-job interviews of employees.
Monitoring: The recipient must monitor the construction and conduct on-
the-job interviews with a representative number of workers on the job
site, and from a representative sample of trades. The results should be
compared to the applicable payrolls for the date the interview was
conducted to determine if there are any discrepancies. Depending on the
length of the contract period, whether subcontractors are used, or
whether different workers are utilized over the life of the contract, it may
be appropriate to conduct interviews on multiple occasions to ensure the
samples are representative. A suggested
Record of Employee Interview
form (HUD-11) is included in the attachments to this chapter. The
recipient may use this form or a facsimile to gather the required
information. See the “Job Site Interviews” section of this chapter for more
details regarding employee interviews.
Non-compliance: Contractors and subcontractors may be terminated for
non-compliance and will be liable for any
excess cost involved in completing the work.
Contractor Eligibility: Prior to awarding
any prime contract, recipients must
verify the eligibility of the prime
contractor, document in the file and
provide the “Certification Regarding
Debarment, Suspension, Ineligibility,
and Voluntary Exclusion – Lower Tier
Covered Transactions”. In addition, all
subcontractors must be eligible to receive federal funding.
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Subcontractor eligibility is the responsibility of the prime contractor and
should be addressed at the pre-construction conference. If there is
reason to believe that a subcontractor is ineligible, inquire further to learn
the subcontractor’s status, and notify the prime contractor immediately if
an ineligible subcontractor must be terminated. Contractor eligibility may
be checked on-line at https://sam.gov/content/entity-information (click on
Entity Information).
Material Suppliers: The manufacture and delivery to the work site of
supply items (i.e., sand, gravel, concrete) provided by a bona-fide
material supplier operating facilities serving the public in general, are not
subject to DBRA requirements.
Supply and Installation: Installation work performed in conjunction with
an equipment supply contract is subject to Davis-Bacon and Related Acts
where it involves more than an incidental amount of the construction
activity, which is generally defined by the US Department of Labor as 20
percent. Items to consider are whether installation involves structural
modifications to buildings to accommodate the equipment or the extent of
the cost of installation relative to the cost of the equipment or total
project cost.
Required Postings: The wage decision and any additional wage
classifications obtained plus the Employee Rights poster (WH-1321) must
be displayed in a prominent place on the job site that is easily accessible
to the construction workers employed at the project and where the
posters will not be destroyed by wind or rain, etc. Employee Rights
posters (WH-1321) are available in English and Spanish online at
HUDClips.gov. This and other posters may be downloaded from the US
Department of Labor website and include:
“Federal Minimum Wage” (WHD-1088)
https://www.dol.gov/agencies/whd/posters/flsa
Employee Rights Under the Davis-Bacon Act” (WH-1321)
https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fedprojc.p
df
“Your Rights under the Family and Medical Leave Act of 1993”
(WH-1420);
https://www.dol.gov/agencies/whd/posters/fmla
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“Notice Employee Polygraph Protection Act” (WH-1462); and
https://www.dol.gov/agencies/whd/posters/employee-polygraph-
protection-act
Definitions:
Wages: Refers to the basic hourly rate of pay plus any
contributions to a bona-fide fringe benefit fund, plan or program.
Fringe Benefits: Fringe benefits typically include health insurance
premiums, retirement contributions, life insurance, vacation,
holidays, sick leave, etc. Fringe benefits do not include employer
payments or contributions required by other Federal, State or local
laws, such as the employer’s contribution to Social Security, some
disability insurance payments, or unemployment compensation.
Some wage decisions include fringe benefits which are usually
listed as an hourly fringe rate. If the wage decision includes a
fringe benefit rate, the fringe benefit rate will need to be added to
the basic hourly rate. Prevailing wage requirements may be met by
any combination of cash wages and creditable bona fide fringe
benefit plans or programs.
The
total
hourly wage rate paid to any laborer or mechanic
(basic wage or basic wage plus fringe benefits) may be no less
than the total wage rate (basic wage or basic wage plus fringe
benefits) on the wage decision for their craft. If the value of
the fringe benefit(s) provided by the contractor is less than the
fringe benefit rate on the wage decision, add the balance of the
wage decision’s fringe benefit rate to the basic rate paid to the
employee.
For example, if the wage decision requires $10/hour basic rate
plus $5/hour fringe benefits, the contractor must pay no less
than that total ($15/hour) in the basic rate or basic rate plus the
fringe benefits provided. The obligation could be met in several
ways: the employee could be paid the base wage and fringe
benefits as stated in the wage decision, or $15 in base wages
with no fringe benefits, or $12 basic wage plus $3 fringe
benefits. Additionally, the base wage could be “off-set” by more
fringe benefits such as paying $9 basic wage plus $6 fringe
benefits, as long as the total amount complies with the Davis-
Bacon Wage and Fringe Benefit rate. Please be aware that the
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amount of the base wage used to “off-set” fringe benefits is
limited by certain IRS and FLSA requirements.
The effective hourly rate must be reflected on the certified
payroll. The rate may be no less than the rate plus fringe on
the wage decision for the classification of work performed. If
the wage decision contains a fringe benefit, check either 4(a) or
4(b) on the
Statement of Compliance
. Checking 4 (a) indicates
that the contractor is paying the required fringe benefit to bona
fide plans or programs; and 4(b) indicates that the contractor is
paying any required fringe benefit amount directly to the
employee by adding the fringe benefit rate to the basic hourly
rate of pay. If the contractor is paying a portion of the required
fringe benefit to bona fide programs and the balance directly to
the employee, the contractor must explain those differences in
box 4(c).
If the wage decision contains fringe benefits but the payroll
does not indicate how fringe benefits were paid (neither 4(a) or
4(b) is marked on the
Statement of Compliance
), the Contractor
may be asked to submit corrected payrolls and will be required
to pay wage restitution if underpayments occurred. If the basic
hourly rate for any employee is at least as much as the total
wage rate on the wage decision (basic hourly rate plus the
fringe benefit rate), no correction is necessary.
The overtime rate is computed at one and one-half times the
basic rate of pay plus any fringe benefits. For example, if the
wage decision requires $10/hour basic plus $5/hour fringe
benefits, the overtime rate would be: ($10 x 1½) = $20/hour.
The premium pay (1/2 time pay) is not applied to frnge
benefits.
The Grantee should inform every contractor and subcontractor
working on a CDBG-funded project that they must maintain a
complete set of payrolls, including evidence of fringe benefit
payments for at least three years after the project is completed.
The prime contractor must keep a complete set of all payrolls
for every contractor and subcontractor.
Laborer or Mechanic - “Laborers” and “mechanics” mean anyone
who is performing construction work on the project, including trade
journeymen.
Salaried Workers/Working foreman - A Foreman or supervisor that
regularly spends more than 20 percent of their time performing
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construction work are covered “laborers and mechanics” for labor
standards purposes, whether they are salaried or paid hourly.
Exclusions – People whose duties are primarliy administrative.
Executive or clerical employees are not laborers or mechanics.
Examples include superintendents, office staff, timekeepers,
messengers, etc.
Employees - 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. This means that even if there is a contract
between a contractor and a worker, the contractor must make sure
that the worker is paid at least as much as the wage rate on the
applicable wage decision for the classification of work they perform.
Owners of businesses working with their crew may certify to the
payment of their own prevailing wages in conjunction with their
employees. Owner-operators of power equipment (contracts for
man and machine) sole-proprietors, self employed mechanics
and/or independent contractors (contracts for piece work) may not
submit their own payrolls certifying to their own wages BUT must
be carried on the responsible contractor’s certified payroll report.
Split-classification - If you have employees that perform work in
more than one classification, you can pay the wage rates specified
for each classification only if you maintain accurate time records
showing the amount of time spent in each classification of work. If
you do not maintain accurate time records, you must pay these
employees the highest wage rate of all of the classifications of work
performed.
Apprentices - The contractor must furnish a certification from the
DOL Bureau of Apprenticeship and Training or a Bureau of
Apprenticeship and Training recognized state apprenticeship
agency for each apprentice employed on the project. All
apprentices and trainees must be identified in each payroll
submission. The ratio of apprentices to journeymen must not
exceed the approved ratio under their respective program and their
wage rate must not be less than prescribed under those programs.
Volunteers - Exceptions to the labor requirements are made for
volunteer services on a case-by-case basis. Contact Grants
Administration for approval.
Helpers - Federal labor standards do not recognize the “Helper”
classification. A contractor must re-classify any employee listed as
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An
Outline for a
Preconstruction
Conference
is
available in the
attachments to this
chapter.
a helper on weekly payrolls with a classification listed on the
appropriate wage decision.
Site of Work – The “site of work” is where the Davis-Bacon wage
rates apply. Usually this means the boundaries of the project.
“Site of work” can also include other adjacent or virtually adjacent
property used by a contractor or subcontractor in the construction
of the project, like a fabrication site that is dedicated exclusively, or
nearly so, to the project.
Section 6 - Pre-Construction Conference
Immediately following contract award, the engineer or architect will hold a pre-
construction conference with the prime contractor and any subcontractors.
However, the recipient must play an active role in ensuring that the contractor
and subcontractors understand and comply with CDBG requirements. The
purpose of the pre-construction conference is to apprise the contractor and
subcontractors of labor standards, equal opportunity, Section 3 and other
contract obligations and responsibilities. A pre-construction conference also
serves as an opportunity for all parties to discuss how the project is expected to
progress, the schedule for completion, who has review
authority for contracts, and method and schedule of
payments, change orders, etc. It also allows an
opportunity to obtain any outstanding contract
documents and provide the contractor with posters for
the construction site.
The recipient must keep an attendance roster and
minutes of the pre-construction conference. The
minutes must contain:
Project name, location, and description, wage determination number,
Contractor and known subcontractor's names,
Contract amount
Date, time, and place of conference,
Conference attendees,
A list of the specific CDBG requirements that were discussed, and
Summary of other items covered.
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Following execution of contract documents and completion of the pre-
construction conference, the recipient should issue a "Notice to Proceed" to each
prime contractor that establishes the contract execution date, construction start
date and scheduled completion date. Provide Grants Administration with a copy
of the Notice to Proceed, which is used to make a labor report to HUD, as
required.
Section 7 - Weekly Payrolls
Payrolls must be submitted for each week of actual work. Each contractor,
subcontractor and any lower tier subcontractor is required to complete and
submit payrolls no later than seven work days following the completion of the
workweek. Payrolls should be completed on the
Payroll
form (DOL Form WH-
347) or equivalent information, which must be submitted along with the
Statement of Compliance
. These forms, along with a
Contractor Payroll
Checklist
, are included in the attachments to this chapter. A “fillable” PDF
Payroll
form
can found on-line at:
https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/wh347.pdf
Submission Requirements
Weekly payrolls should be numbered consecutively beginning with Number 1.
The last payroll must be marked "FINAL." A payroll must be submitted promptly
following the close of each pay week in which work occurs until completed. If no
work is performed during a given week, weekly payrolls need not be submitted
provided that payrolls are being numbered sequentially or, if no work is to be
performed on the project for a longer period of time, the
contractor/subcontractor may submit a written notice of the no work period. A
sample notice form is in the attachments to this chapter.
Contractors and subcontractors must include their Internal Revenue
Service (IRS) Employee Identification Number (or last four digits of their
Social Security Number if self-employed) on the first payroll in the upper
right hand corner of the front page.
The payroll must be signed by a principal of the firm (owner or officer
such as the president, treasurer or payroll administrator) or by an
authorized agent (a person authorized by a principal in writing to sign the
payroll reports). Signature authorization (for persons other than a
principal) should be submitted with the first payroll signed by such an
agent. Such a certification also designates the authorized individual to
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Deductions not included
on the list of permissible
deductions may be
transacted only upon
written authorization
from the Secretary of
Labor or his designee.
sign the payroll
Statement of Compliance
. Should the designee be
changed, a new certification must accompany the next payroll.
For contracts executed on or after January 18, 2009, payrolls shall not
report employee’s addresses or full Social Security Number (SSN).
Instead, the first payroll on which each employee appears shall include
the employee’s name and an individually identifying number, usually the
last four digits of the employee’s SSN. Afterward, the identifying number
does not need to be reported, unless it is necessary to distinguish
between employees, e.g., if two employees have the same name.
Employers must maintain the current address and full SSN for each
employee and must provide this information upon request to the
contracting agency or other authorized representative responsible for
federal labor standards compliance monitoring. Prime contracts may
require a subcontractor to provide this information for the prime
contractor’s records.
The payroll should show only the regular and overtime hours worked on
this project. Show both the daily and total weekly hours for each
employee. If an employee performs work at job sites other than the
project for which the payroll is prepared, those “other job” hours should
not be reported on the payroll. In these cases, the employer should list
the employee’s name, classification, hours worked for this project only,
the rate of pay and gross earnings for this project, and the gross earned
for all projects. Deductions and net pay may be based upon the
employee’s total earnings (for all projects) for the week.
Make sure the payroll is signed with an original signature in ink.
Signatures in pencil, signature stamps, Xerox, pdf and other facsimiles are
not acceptable
.
Review Process
Payrolls should be reviewed weekly by the recipient (initialed and dated) and
compared with the wage decision issued for that project. Payrolls should reflect
the workers on the job site for that week with the proper classification and pay
rate. Payroll submissions must be complete and signed by the contractor or
authorized representative and all deductions must be properly authorized.
Prompt review will allow the recipient to initiate
corrective action before a problem multiplies and
while the workers are still available.
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Also, make sure payroll deductions are adequately documented and permissible.
Permissible deductions are identified on the
Permissible Payroll Deductions
form
in the attachments to this chapter.
Deductions that are required by law, such as FICA or income taxes, need
no documentation.
Adequate documentation for other deductions include a copy of the
written agreement between the employee and the employer for the
payroll deduction, a copy of a court order, or a written statement from the
employee authorizing the deductions. These types of documentation
should be in the employee’s personnel file.
It is also necessary to check information on the HUD-11 form,
Record of
Employee Interview
, against weekly payrolls. The payroll examiner must sign
the HUD-11's as well as initial and date each payroll reviewed.
Violations
When any violation of labor standards requirements results in an underpayment
of wages to employees, the recipient shall take necessary action to insure
restitution is made to each affected employee by the contractor. Contact the
Grants Administration Labor Specialist for assistance when violations
occur. Underpayment of wages to employees of $1,000 or more must be
reported to the Department of Labor.
Section 8 – Job Site Visits and Employee Interviews
The recipient is required to conduct visits of the construction site to see if
applicable DOL posters and the wage decision are posted.
Labor standards also require the recipient to conduct interviews with construction
employees using the
Record of Employee Interview (HUD 11) form
to determine
compliance with the applicable wage decision and payrolls.
Job Site Interviews
The following standards and requirements apply to job site interviews:
The person performing interviews must be knowledgeable of labor
standards procedures.
Understand that labor standards enforcement is in the same
category as other contract requirements.
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Interviews are confidential and should not be conducted by
employees of the prime contractor or subcontractor.
Failure of contractors to comply with labor standards requires
corrective action and may result in the imposition of sanctions.
Employee interviews shall be:
Sufficient in number to establish the degree of accuracy of records.
Representative of all classifications of employees on the project.
Recipients should attempt to interview a representative sample of all
classifications of employees on the project, including a representative
number of employees from a representative sample of trades as well as
contractors or subcontractors. Interviews should be particularly targeted
to projects, groups of employees or contractors where problems are
suspected. Results of the interviews should be compared to the
applicable payrolls for the date the interview was conducted to determine
if there are any discrepancies. Depending on the length of the contract
period, whether subcontractors are used, or whether different workers are
utilized over the life of the contract, it may be appropriate to conduct
interviews on multiple occasions to ensure the samples are representative.
Place of Interview:
On job site if it can be conducted properly and privately (this is a
one-on-one process).
Employee's home.
Recipient's office.
By mail.
The interviewer should see that the wage determination and other
required posters are properly displayed.
The interviewer should observe the duties of workers before initiating
interviews.
To initiate the interview, the authorized person shall:
Properly identify himself/herself.
Clearly state purpose of interview.
Advise the worker that information given is confidential, and his/her
identity will be disclosed to the employer only with the employee's
written permission.
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When conducting employee interviews, the interviewer should pay
particular attention to:
Employee's full name.
Permanent mailing address.
The last date the employee worked on that project and number of
hours worked on that day. The interviewer should make it clear
that these questions relate solely to work on the project and not
other work.
Hourly rate of pay. The aim is to determine if the worker is being
paid at least the minimum required by the wage decision.
The interviewer should be sure the worker is not quoting their net
hourly rate or "take-home" pay.
If it appears the individual may be underpaid, the interviewer
should closely question the worker:
Ask for any records.
Arrange to re-interview the employee.
Enter the worker's statement of his/her classification.
Observe duties and tools used:
The employee must be observed performing duties on the job
as part of the interview process.
If worker's statements and observations made by the
interviewer indicate the individual is performing duties
conforming to classification, indicate this on the
Record of
Employee Interview
form (HUD-11).
If there are discrepancies, detailed statements are necessary.
Enter any comments necessary.
Enter date interview took place.
The payroll examiner must compare information on the HUD-11 form with
the payroll submission:
If no discrepancies appear, "None" should be written in the
comment space of the HUD-11 form.
If discrepancies do appear, appropriate action should be initiated
with the employer. Only the name of the employee interviewed,
the date of the interview, and the interviewer’s observation may be
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Employers are not required
to submit checks (certified
or otherwise) to correct
underpayments. Restitution
payments are reported and
certified by the employer on
a correction payroll.
released to the employer. Any statements of the employee cannot
be disclosed without prior written consent.
When necessary action has been completed, the results must be
noted on the interview form.
Section 9 - Restitution for Underpayment of Wages
Where underpayments of wages have occurred,
the employer will be required to pay wage
restitution to the affected employees. Wage
restitution must be paid promptly in the full
amounts due, less permissible and authorized
deductions. All wages paid to laborers and
mechanics for work performed on the project
including wage restitution, must be reported on
a certified payroll report.
Notification to the Prime Contractor: The contract administrator will notify
the prime contractor in writing of any underpayments that are found
during payroll or other reviews. The notice will describe the
underpayments and provide instructions for computing and documenting
the restitution to be paid. The prime contractor is allowed 30 days to
correct the underpayments. If wage violations are not corrected within 30
days after notification to the prime contractor, the recipient may withhold
payment due to the contractor of an amount necessary to ensure the full
payment of restitution. Note that the prime contractor is responsible to
the contract administrator for ensuring that restitution is paid. If the
employer is a subcontractor, the subcontractor will usually make the
computations and restitution payments and furnish the required
documentation through the prime contractor.
Computing Wage Restitution: Wage restitution is simply the difference
between the wage rate paid to each affected employee and the wage rate
required on the wage decision for all hours worked where underpayments
occurred. The difference in the wage rates is called the adjustment rate
.
The adjustment rate times the number of hours involved equals the gross
amount of restitution due.
Correction Payrolls: The employer will be required to report the restitution
paid on a correction certified payroll. The correction payroll will reflect the
period of time for which restitution is due (for example, Payrolls #1
through #6, or payrolls for a specified beginning date through a specified
ending date). The correction payroll will list:
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Each employee to whom restitution is due and their work
classification,
The total number of work hours,
The adjustment wage rate (the difference between the required
wage rate and the wage rate paid),
The gross amount of restitution due,
Deductions, and
The net amount to be paid.
A properly signed
Statement of Compliance
must be attached to the
correction certified payroll.
Generally, the contractor is not required to obtain the signature of the
employee on the correction payroll to evidence receipt of the restitution
payment or to submit copies of restitution checks (certified, cashiers,
canceled or other, or employee-signed receipts or waivers) in order to
document the payment.
Review of correction certified payroll: The contractor administrator will
review the correction payroll to ensure that full restitution was paid. The
prime contractor shall be notified in writing of any discrepancies and will
be required to make additional payments, if needed. Additional payments
must be documented on a supplemental correction payroll within 30 days.
Unfound workers: Sometimes, wage restitution cannot be paid to an
affected employee because, for example, the employee has moved and
can't be located. After wage restitution has been paid to all of the workers
who could be located, the employer must submit a list of any workers who
could not be found and paid, providing their names, Social Security
Numbers, last known addresses and the gross amount due. In these
cases, at the end of the project the prime contractor will be required to
place in a deposit or escrow account an amount equal to the total amount
of restitution that could not be paid because the employee(s) could not be
located. The Program Administrator should continue to attempt to locate
the unfound workers for three years after the completion of the project.
After three years, any amount remaining in the account for unfound
workers should be credited and/or forwarded by the Program
Administrator to Grants Administration.
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Section 10 - Construction Management
Construction management or construction project management involves the
overall planning, coordination, and control of a project from inception to
completion aimed at ensuring CDBG requirements are met and that the project is
carried out in accordance with the technical specifications of the contract.
The most common responsibilities of construction management fall into the
following categories: Planning, Cost Management, Time Management, Quality
Management, Contract Administration, Safety Management, and Project Team
Coordination. Coordination includes organizing and implementing project
controls, defining roles and responsibilities, developing communication protocols,
and identifying elements of project design and construction which are not
consistent with program requirements.
Construction management must be directed by the recipient but coordinated with
the engineer or architect in conjunction with the grant/project administrator
since the engineer or architect may not be familiar with CDBG requirements,
approved activities, budgets, or grant periods. Responsibilities include:
Supervision of construction work, inspections to determine compliance
with technical specifications and approval of progress payments are the
responsibility of a qualified individual such as the project engineer or
architect.
The recipient is responsible for compliance with CDBG requirements
including equal opportunity, labor standards and Section 3.
The recipient must also ensure that the contract is consistent with the
approved CDBG activities and budget and that costs are eligible.
Contract administration involves communication, gathering information and
monitoring:
Project progress and reporting;
Monitoring time of performance;
Determining eligible costs;
Monitoring total costs within budget;
Monitoring compliance with CDBG requirements;
Monitoring project scope and accomplishments;
Obtaining approvals for any project changes.
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Revised 09/22 Page 23
The prime contractor is the main point of contact for all subcontractors. It is
important for the prime to identify all subcontractors to be used in the project
early. Subcontractors must be acceptable to the owner and not on the debarred
list. They should be invited to attend the pre-construction conference so they
will know what the CDBG requirements are, including Section 3. Subcontractors
must be reported by the prime contractor and included on the
Contract/Subcontract Activity Report.
The prime contractor is responsible for all labor compliance and getting correct
payrolls from all subcontractors that worked on the project the preceding week.
The prime is responsible for getting any necessary corrections on payrolls as well
as wage restitution. It is very important that the grantee know the time of
performance for all subcontractors so that payrolls can be collected, interviews of
employees completed and any necessary corrections made prior to the
subcontractor completing his work and leaving the jobsite.
Progress Inspections
The architect/engineer must conduct periodic inspections of the contractor's
work for compliance with specifications, drawings and conditions of the contract.
These inspections must be documented in writing and kept in the CDBG
project files.
Prior to approval of progress payments to contractors, recipients must make sure
all work is completed as stated; that all payrolls have been submitted and are
accurate and complete; wage violations are corrected and any restitution paid;
and that all charges are allowable. Materials that are not installed are not a
CDBG eligible expense.
Progress payments should be reviewed by the recipient and project grant
administrator to ensure work completed is consistent with the approved
application and environmental review by construction line item, quantities and
location. The pay request should also be compared to the contract and
substantial deviations in quantities may require an approved change order prior
to payment. The review should also assess the time of performance remaining
and whether it is consistent with the contract period.
A verification of the mathematical computations on the pay requests should be
done and also a determination made of eligible and ineligible CDBG costs.
Ineligible CDBG costs must be paid by the grantee or other source. To assist in
verifying cost eligibility the project is required to be bid out and billed in separate
divisions for CDBG eligible and other costs.
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Revised 09/22 Page 24
Recipients should withhold at least 10 percent of each progress payment as a
retainage until the end of the project to ensure there are funds available to
address any unanticipated issues (e.g., payroll issues, insufficient progress, etc.).
The
Construction Contract Draw Request Review Checklist
must be completed
prior to submission of a
Request for Payment
to Grants Administration, and
should be kept on file for review at monitoring.
Change Orders
Change orders should be kept to an absolute minimum. The recipient must
obtain written approval from Grants Administration for all change orders,
including no cost change orders, using the
CDBG Change Order Transmittal (C-2)
form
(included in the attachments to
Chapter 8 Procurement and Contracting
),
prior to execution and work being completed.
Documentation submitted with every change order must include:
Supporting justification which describes why the change is necessary,
Itemized cost estimates,
A cost and price analysis (usually conducted by an engineer) that
determines the basis for costs being reasonable, and
Any revised plans and specifications.
In addition to the change order documentation, the recipient must submit an
updated
Section 102 Disclosure Form
if the construction contract amount and
any other pertinent information has changed.
If a change order will result in a significant change in the scope of the approved
project as proposed in the CDBG application, a project amendment or budget
revision may also be necessary. (See Chapter 15: Reporting, Amendments and
Monitoring.)
The architect/engineer or project inspector usually prepares change orders;
however, the recipient must approve and authorize change orders before they
are given to the contractor and executed. The proposed change should also
be verified and/or recommended for approval by the project engineer,
project manager, architect or other technical support personnel. The
recipient should compare such change orders to the CDBG construction budget
prior to approval.
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Revised 09/22 Page 25
Final Inspections
When construction work has been completed, the contractor must certify
completion of work to the recipient and submit a final request for payment.
Before work is accepted and final payment is made to the contractor, the
recipient should verify that:
All payrolls have been received and checked and any necessary restitution
has been made (including final Section 3 reports).
All other required Equal Opportunity and Labor Standards provisions have
been satisfied.
All contract submissions have been received.
All claims and disputes involving the contractor have been resolved and a
release of liens from the contractor and all subcontractors has been
provided.
Files are complete.
As-built plans have been filed with the recipient, if applicable.
Forms and resources listed here can be downloaded from www.cdbgSC.com
Chapter 9: Construction Management & Labor Standards
Attachments
Construction Management
Outline of a Pre-construction Conference
Construction Contract Draw Request Review Checklist
Davis Bacon
Davis-Bacon And Labor Standards Contractor Guide Addendum – Federal
Publication
Requesting Additional Classifications
Additional Classification and Rate Report
Additional Classification and Rate Instructions
Additional Classification Request Documentation Requirements
Minimum Wage, Payroll and Checklists & Minimum Wage Posters,
Notices, etc.
Authorization to Make Other Deductions
Authorization to Make Other Deductions Sample
Certificate Designating Employee to Supervise Payment
Sample Contractor Letter for Additional Rate Classification Request
Permissible Payroll Deductions
Labor Standards Checklist
No Work Performed Notice - Sample
Payroll Form WH-347 and Statement of Compliance
Payroll Checklist for Contractors
Permissable Payroll Deductions
Sample Correction Payroll
Employee Interviews
Record of Employee Interview
Record of Employee Interview Instructions
Record of Employee Interview & Instructions – Spanish Version
