A Contractor’s

Guide to

Prevailing

Wage

Requirements

for

Federally-Assisted

Construction

Projects

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June 2006

U.S. Department of Housing and Urban Development
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A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

i

Introduction

This Guide has been prepared for you as a contractor performing work on

construction projects that are assisted by the Department of Housing and

Urban Development and subject to Davis-Bacon prevailing wage requirements. This Guide does not address contractor requirements involved in

direct Federal contracting where HUD or another Federal agency enters

into a procurement contract. In this latter case, the Federal Acquisition

Regulations (FAR) are applicable. While the guidance contained in this Guide

is generally applicable to any Davis-Bacon covered project, specific questions

pertaining to direct Federal contracts should be addressed to the Contracting Officer who signed the contract for the Federal agency.

Our objective here is to provide you with a guide which is simple and nonbureaucratic yet comprehensive and which will help you better understand

and comply with Davis-Bacon labor standards. HUD’s Office of Labor

Relations worked closely with the Department of Labor’s Wage and Hour

Division to make sure that the labor standards provisions in your contract

and the specifics of complying with them represent the latest information. It

is the Department of Labor which has general administrative oversight of all

Federal contracting agencies, such as HUD, which administer the day-to-day

responsibilities of enforcing Davis-Bacon provisions in construction contracts

they either fund or assist in funding.

There are three chapters in this Guide. The first chapter offers a brief

description of the laws and regulations associated with Federal labor

standards administration and enforcement and discusses both what’s in your

contract that requires Davis-Bacon compliance and your responsibilities.

The second chapter deals with labor standards and payroll reporting

requirements. The third chapter discusses what can happen in the event

there is a dispute about the wage rates that should be (or have been) paid

and any back wages that may be due.

Finally, not all HUD construction projects are covered by Davis-Bacon wage

rates. For the purpose of this Guide, we are assuming that a determination

has already been made that Davis-Bacon wage rates are applicable. Should

you wish assistance in determining whether Davis-Bacon wage rates apply to

a particular project or if you need other related technical assistance, please

consult with the HUD Labor Relations Field staff for your area. If you don’t

know which staff to contact, a list of Labor Relations field offices and their

geographic areas and telephone numbers can be found on HUD’s Home

Page at the address below.

Visit the Office of Labor Relations

on the World Wide Web HUD Home Page at:

http://www.hud.gov/offices/olr

Obtain additional copies of this Guide and other publications at our web site

or by telephone from HUD’s Customer Service Center at (800) 767-7468.

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A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

Table of Contents

Introduction............................................................................................... i

CHAPTER 1.

Laws, Regulations, Contracts and Responsibilities

1-1 Davis-Bacon and Other Labor Laws.................................. 1-1

a. The Davis-Bacon Act (DBA) ........................................................ 1-1

b. The Contract Work Hours and Safety Standards Act

(CWHSSA)................................................................................... 1-1

c. The Copeland Act (Anti-Kickback Act) ........................................ 1-2

d. The Fair Labor Standards Act (FLSA).......................................... 1-2

1-2 Davis-Bacon Regulations ........................................................ 1-2

1-3 Construction Contract Provisions ...................................... 1-2

1-4 Responsibility of the Principal Contractor ..................... 1-3

1-5 Responsibility of the Contract Administrator .............. 1-3

CHAPTER 2.

How to Comply with Labor Standards

and Payroll Reporting Requirements

SECTION I — THE BASICS

2-1 The Wage Decision ................................................................... 2-1

a. The work classifications and wage rates ..................................... 2-1

b. Posting the wage decision ............................................................ 2-2

2-2 Additional “Trade” Classifications

and Wage Rates........................................................................... 2-2

a. Additional classification rules....................................................... 2-2

b. Making the request ....................................................................... 2-2

c. HUD review ................................................................................. 2-3

d. DOL decision................................................................................ 2-3

2-3 Certified Payroll Reports ........................................................ 2-3

a. Payroll formats ............................................................................. 2-3

b. Payroll certifications ..................................................................... 2-4

c. “No work” payrolls ...................................................................... 2-4

d. Payroll review and submission ..................................................... 2-4

e. Payroll retention ........................................................................... 2-4

f. Payroll inspection ........................................................................ 2-5

iii
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2-4 Davis-Bacon Definitions .......................................................... 2-5

a. Laborer or mechanic. ................................................................. 2-5

b. Employee .................................................................................... 2-5

c. Apprentices and trainees ............................................................ 2-5

d. Prevailing wages or wage rates .................................................. 2-6

e. Fringe benefits............................................................................. 2-7

f. Overtime ..................................................................................... 2-7

g. Deductions .................................................................................. 2-7

h. Proper designation of trade........................................................ 2-8

i. Site of work ................................................................................. 2-8

SECTION II — REPORTING REQUIREMENTS

2-5 Completing a Payroll Report ................................................ 2-8

a. Project and contractor/subcontractor information ................... 2-9

b. Employee information................................................................. 2-9

c. Work classification ...................................................................... 2-9

d. Hours worked............................................................................. 2-9

e. Rate of pay .................................................................................. 2-9

f. Gross wages earned ................................................................. 2-10

g. Deductions ................................................................................ 2-10

h. Net pay ..................................................................................... 2-10

i. Statement of compliance .......................................................... 2-10

j. Signature ................................................................................... 2-11

SECTION III — PAYROLL REVIEWS AND CORRECTIONS

2-6 Compliance Reviews .............................................................. 2-11

a. On-site interviews..................................................................... 2-11

b. Project payroll reviews ............................................................. 2-11

2-7 Typical Payroll Errors

and Required Corrections. ................................................. 2-11

a. Inadequate payroll information ................................................. 2-12

b. Missing addresses and Social Security Numbers .................... 2-12

c. Incomplete payrolls .................................................................. 2-12

d. Classifications ............................................................................ 2-12

e. Wage rates................................................................................. 2-12

f. Apprentices and trainees .......................................................... 2-12

g. Overtime ................................................................................... 2-12

h. Computations............................................................................ 2-13

I. Deductions ............................................................................... 2-13

j. Fringe benefits........................................................................... 2-13

k. Signature ................................................................................... 2-13

l. On-site interview comparisons ................................................ 2-13

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A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

2-8 Restitution for Underpayment of Wages ..................... 2-13

a. Notification to the employer/prime contractor..................... 2-13

b. Computing wage restitution ..................................................... 2-14

c. Correction payrolls................................................................... 2-14

d. Review of correction CPR ........................................................ 2-14

e. Unfound workers ...................................................................... 2-14

CHAPTER 3.

Labor Standards Disputes, Administrative Reviews,

Withholding, Deposits and Escrow Accounts, and

Sanctions

3-1 Introduction ................................................................................. 3-1

3-2 Administrative Review on

Labor Standards Disputes ..................................................... 3-1

a. Additional classifications and wage rates ...................................... 3-1

b. Findings of underpayment ............................................................ 3-2

3-3 Withholding.................................................................................. 3-2

3-4 Deposits and Escrow Accounts ............................................ 3-3

3-5 Administrative Sanctions ....................................................... 3-4

a. DOL debarment ........................................................................... 3-4

b. HUD sanctions ............................................................................. 3-4

3-6 Falsification of Certified Payroll Reports ......................... 3-4

Index ........................................................................................................ A-1

Acronyms and Symbols ................................................................... A-3

Davis-Bacon – Related Web Sites............................................... A-3

Exhibits

HUD-4720, Project Wage Rate Sheet ............................................. A-4

WH-347, Payroll Form ..................................................................... A-5

 Statement of Compliance.................................................. A-6

v

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A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

CHAPTER 1.

Laws, Regulations, Contracts

and Responsibilities

The following paragraphs describe what the labor standards laws and

regulations actually say and what they mean to you on HUD projects:

1-1 Davis-Bacon and Other Labor Laws

a. The Davis-Bacon Act (DBA)

The Davis-Bacon Act requires the payment of prevailing wage rates

(which are determined by the U.S. Department of Labor) to all

laborers and mechanics on Federal government and District of

Columbia construction projects in excess of $2,000. Construction

includes alteration and/or repair, including painting and decorating,

of public buildings or public works.

Most HUD construction work is not covered by the DBA itself since HUD seldom

contracts directly for construction services. Most often, if Davis-Bacon wage rates apply

to a HUD project it is because of a labor provision contained in one of HUD’s “Related

Acts” such as the U.S. Housing Act of 1937, the National Housing Act, the Housing and

Community Development Act of 1974, the National Affordable Housing Act of 1990,

and the Native American Housing Assistance and Self-Determination Act of 1996. The

Related Acts are often referred to as the Davis-Bacon and Related Acts or DBRA.

b. The Contract Work Hours and

Safety Standards Act (CWHSSA)

CWHSSA requires time and one-half pay for overtime (O/T) hours

(over 40 in any workweek) worked on the covered project. The

CWHSSA applies to both

direct Federal contracts and

to indirect Federally-assisted

contracts except where the

assistance is solely in the

nature of a loan guarantee or

insurance. CWHSSA violations carry a liquidated

damages penalty ($10/day per

violation). Intentional violations of CWHSSA standards

can be considered for Federal

criminal prosecution.

1-1

CWHSSA does not apply to prime contracts of $100,000 or less. In

addition, some HUD projects are not covered by CWHSSA because

some HUD programs only provide loan guarantees or insurance.

CWHSSA also does not apply to construction or rehabilitation

contracts that are not subject to Federal prevailing wage rates (e.g.,

Davis-Bacon wage rates, or HUD-determined rates for operation of

public housing and Indian block grant-assisted housing). However,

even though CWHSSA overtime pay is not required, Fair Labor

Standards Act (FLSA) overtime pay is probably still applicable. (See

also Labor Relations Letter SL-95-01, CWHSSA Coverage threshold for

overtime and health and safety provisions, available on-line at the HUD

Labor Relations Library at: www.hud.gov/offices/olr/library.cfm)
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c. The Copeland Act (Anti-Kickback Act)

The Copeland Act makes it a Federal crime for anyone to require

any laborer or mechanic (employed on a Federal or Federallyassisted project) to kickback (i.e., give up or pay back) any part of

their wages. The Copeland Act requires every employer (contractors and subcontractors) to submit weekly certified payroll reports

(CPRs) and regulates permissible payroll deductions.

d. The Fair Labor Standards Act (FLSA)

The FLSA contains Federal minimum wage rates, overtime (O/T),

and child labor requirements. These requirements generally apply

to any labor performed. 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.

1-2 Davis-Bacon Regulations

The Department of Labor (DOL) has published rules and instructions

concerning Davis-Bacon and other labor laws in the Code of Federal

Regulations (CFR). These regulations can be found in Title 29 CFR

Parts 1, 3, 5, 6 and 7. Part 1 explains how the DOL establishes and

publishes DBA wage determinations (aka wage decisions) and provides

instructions on how to use the determinations. Part 3 describes

Copeland Act requirements for payroll deductions and the submission

of weekly certified payroll reports. Part 5 covers the labor standards

provisions that are in your contract relating to Davis-Bacon Act wage

rates and the responsibilities of contractors and contracting agencies to

administer and enforce the provisions. Part 6 provides for administrative proceedings enforcing Federal labor standards on construction and

service contracts. Last, Part 7 sets parameters for practice before the

Administrative Review Board. These regulations are used as the basis

for administering and enforcing the laws.

1-3 Construction Contract Provisions

Each contract subject to Davis-Bacon labor standards requirements

must contain labor standards clauses and a Davis-Bacon wage decision.

These documents are often bound into the contract specifications.

a. The Labor Standards Clauses

The labor standards clauses describe the responsibilities of the

contractor concerning Davis-Bacon wages and obligate the

contractor to comply with the labor requirements. The labor

standards clauses also provide for remedies in the event of violations, including withholding from payments due to the contractor

to ensure the payment of wages or liquidated damages which may

be found due. These contract clauses enable the contract administrator to enforce the Federal labor standards applicable to the

project. HUD has standard forms that contain contract clauses.

For example, the HUD-2554, Supplementary Conditions to the

Contract for Construction, which is issued primarily for FHA

multifamily housing and other construction projects administered

by HUD; the HUD-4010, Federal Labor Standards Provisions,

which is used for CDBG and HOME projects, and the HUD-5370,

General Conditions of the Contract for Construction – Public and

Indian Housing Program.

DOL Regulations are

available on-line on the

World Wide Web:

http://www.dol.gov/dol/

allcfr/Title_29/toc.htm

HUD program labor standards

forms are available on-line at:

www.hudclips.org/cgi/

index.cgi

1-2
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

b. Davis-Bacon Wage Decisions

The Davis-Bacon wage decision (or wage determination) is a

listing of various construction work classifications, such as Carpenter, Electrician, Plumber and Laborer, and the minimum wage

rates (and fringe benefits, where prevailing) that people performing work in those classifications must be paid.

Davis-Bacon wage decisions are established by the DOL for

various types of construction (e.g., residential, heavy, highway)

and apply to specific geographic areas, usually a county

or group of counties. Wage decisions are modified

from time to time to keep them current. In most

cases, when the contract is awarded or when construction begins, the wage decision is “locked-in” and no

future modifications are applicable to the contract or

project involved.

1-4 Responsibility of the Principal Contractor

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. Because

of the contractual relationship between a prime contractor and his/her

subcontractors, subcontractors generally should communicate with

the contract administrator only through the prime contractor. (See

Contract Administrator, below.)

To make this Guide easier to understand, the term “prime contractor” will

mean the principal contractor; “subcontractor” will mean all subcontractors

including lower-tier subcontractors; and the term “employer” will mean all

contractors as a group, including the prime contractor and any subcontractors

and lower-tier subcontractors.

1-5 Responsibility of the Contract Administrator

The contract administrator is responsible for the proper administration and enforcement of the Federal labor standards provisions on

contracts covered by Davis-Bacon requirements. We use this term to

represent the person (or persons) who will provide labor standards

advice and support to you and other project principals (e.g., the owner,

sponsor, architect), including providing the proper Davis-Bacon wage

decision (see ¶2-1, The Wage Decision) and ensuring that the wage

decision and contract clauses are incorporated into the contract for

construction. The contract administrator also monitors labor standards

compliance (see ¶2-6, Compliance Reviews) by conducting interviews

with construction workers at the job site and reviewing payroll reports, and oversees any enforcement actions that may be required.

The contract administrator could be an employee or agent of HUD,

or of a city or county or public housing agency. For HUD projects

administered directly by HUD staff, usually FHA-insured multifamily

projects, the contract administrator will be the HUD Labor Relations

field staff. But many HUD-assisted projects are administered by

local contracting agencies such as Public Housing Agencies (PHAs),

1-3

All current Davis-Bacon wage

decisions can be accessed on-line

at no cost at:

www.wdol.gov
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1-4

Indian tribes and tribally-designated housing entities (TDHEs), and

States, cities and counties under HUD’s Community Development

Block Grant (CDBG) and HOME programs. In these cases, the contract administrator will likely be local agency staff. In either case, the

guidance for you remains essentially the same.

The DOL also has a role in monitoring Davis-Bacon administration and

enforcement. In addition, DOL has independent authority to conduct

investigations. A DOL investigator or other DOL representative may

visit Davis-Bacon construction sites to interview construction workers

or review payroll information.
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

CHAPTER 2.

How to Comply with

Labor Standards and Payroll

Reporting Requirements

Where to start?

Now that you know you’re on a Davis-Bacon project and you know some

of the legal and practical implications, what’s next?

SECTION 1 — THE BASICS

2-1 The Wage Decision

Davis-Bacon labor standards stipulate the wage payment requirements

for Carpenters, Electricians, Plumbers, Roofers, Laborers, and

other construction work classifications that may be needed

for the project. The Davis-Bacon wage decision that

applies to the project contains a schedule of work classifications and wage rates that must be followed. If you don’t

have it already (and by now you should), you’ll want to get

a copy of the applicable Davis-Bacon wage decision.

a. The Work Classifications and Wage Rates

A Davis-Bacon wage decision is simply a listing of different work

classifications and the minimum wage rates that must be paid to

anyone performing work in those classifications. You’ll want to

make sure that the work classification(s) you need are contained in

the wage decision and make certain you know exactly what wage

rate(s) you will need to pay. Some wage decisions cover several

counties and/or types of construction work (for example, residential and commercial work) and can be lengthy and difficult to read.

Contact the contract administrator (HUD Labor Relations field staff

or local agency staff) if you have any trouble reading the wage

decision or finding the work classification(s) you need.

To make reading lengthy wage decisions easier for you,

the contract administrator may prepare a Project

Wage Rate Sheet (HUD-4720). This Sheet is a one-page

transcript that will show only the classifications and wage

rates for a particular project. A blank copy of a Project

Wage Rate Sheet is provided for you in the appendix.

Also, a fillable version of this form is available on-line at

HUDClips (see web address in the Appendix). Contact

the contract administrator monitoring your project for

assistance with a Project Wage Rate Sheet.

2-1

Remember, the wage decision

is contained in the contract

specifications along with the

labor standards clauses. See ¶1-3,

Construction Contract Provisions.
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b. Posting the Wage Decision

If you are the prime contractor, you will be responsible for

posting a copy of the wage decision (or the Project Wage Rate

Sheet) and a copy of a DOL poster called Notice to All Employees

(Form WH-1321) at the job site in a place that is easily accessible

to all of the construction workers employed at the project and

where the wage decision and poster won’t be destroyed by wind

or rain, etc. The Notice to All Employees poster is available on-line

at HUDClips (see address in the Appendix).

2-2 Additional “Trade” Classifications and Wage Rates

What if the work classification you need isn’t on the wage

decision? If the work classification(s) that you need doesn’t appear on

the wage decision, you will need to request an additional classification and wage rate. This process is usually very simple and you’ll want

to start the request right away. Basically, you identify the classification

you need and recommend a wage rate for DOL to approve for the

project. There are a few rules about additional classifications; you’ll find

these rules in the DOL regulations, Part 5, and in the labor clauses in

your contract. The rules are summarized for you here:

a. Additional Classification Rules

Additional classifications and wage rates can be approved if:

1) The requested classification is used by construction contractors in the area of the project. (The area is usually defined as

the county where the project is located).

2) The work that will be performed by the requested classification is not already performed by another classification that is

already on the wage decision. (In other words, if there already

is an Electrician classification and wage rate on the wage

decision you can’t request another Electrician classification

and rate.)

3) The proposed wage rate for the requested classification “fits”

with the other wage rates already on the wage decision. (For

example, the wage rate proposed for a trade classification such

as Electrician must be at least as much as the lowest wage rate

for other trade classifications already contained in the wage

decision.) And,

4) The workers that will be employed in the added classification

(if it is known who the workers are/will be), or the workers’

representatives, must agree with the proposed wage rate.

b. Making the Request

A request for additional classification and wage rate must be made

in writing through the contract administrator. (If the contract

administrator is a local agency, the agency will send the request

to the HUD Labor Relations staff.) If you are a subcontractor, your

request should also go through the prime contractor. All you need

to do is identify the work classification that is missing and recommend a wage rate (usually the rate that employer is already paying

to the employees performing the work) for that classification.

You may also need to describe the work that the new classification

will perform.

2-2
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

c. HUD Review

The HUD Labor Relations field staff will review the requested

classification and wage rate to determine whether the request

meets the DOL rules outlined in paragraph 2-2(a), above. If additional information or clarification is needed, the staff will contact

the prime contractor (or contract administrator for local agency

projects) for more information, etc. If the Labor Relations review

finds that the request meets the rules, the staff will give preliminary

approval on the request and refer it to the DOL for final approval.

The staff will send to you a copy of the preliminary approval/

referral letter to the DOL.

If the HUD Labor Relations staff doesn’t think the request meets

the rules and if agreement can’t be reached on the proper classification or wage rate for the work described, the HUD Labor

Relations staff will not approve the request. In this case, the staff

will send your request to the DOL with an explanation why HUD

believes that the request shouldn’t be approved. The DOL still has

final decision authority. You will receive a copy of the disapproval/

referral letter to the DOL.

d. DOL Decision

The DOL will respond to HUD Labor Relations in writing about

the additional classification and wage rate request. HUD Labor

Relations will notify you of the DOL decision in writing. If the DOL

approves the request, the prime contractor must post the approval

notice on the job site with the wage decision.

If the DOL does not approve the request, you will be notified about

what classification and wage rate should be used for the work in

question. You will also receive instructions about how to ask for

DOL reconsideration if you still want to try to get your recommendation approved.

2-3

It’s always a good idea to talk to the contract administrator before submitting an additional

classification and wage rate request. The contract administrator can offer suggestions and

advice that may save you time and increase the likelihood that DOL will approve your request.

Usually, the contract administrator can give you an idea about what the DOL will finally decide.

2-3 Certified Payroll Reports

You’ll need to submit a weekly certified payroll report (CPR) beginning with the first week that your company works on the project and

for every week afterward until your firm has

completed its work. It’s always a good idea to

number the payroll reports beginning with

#1 and to clearly mark your last payroll for

the project “Final.”

a. Payroll Formats

The easiest form to use is DOL’s

WH-347, Payroll. A sample copy of the

WH-347 is included in the back of this Guide. You may access a

fillable version of the WH-347 on-line at HUDClips (see web

address in the Appendix). Also, the contract administrator can

provide a few copies of the WH-347 that you can reproduce.

You are not required to use Payroll

Form WH-347. You are welcome to

use any other type of payroll, such as

computerized formats, as long as it

contains all of the information that is

required on the WH-347.
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b. Payroll Certifications

The weekly payrolls are called certified because each payroll is

signed and contains language certifying that the information is true

and correct. The payroll certification language is on the reverse

side of the WH-347. If you are using another type of payroll format

you may attach the certification from the back of the WH-347,

or any other format which contains the same certification language on the WH-347 (reverse).

An alert prime contractor that reviews subcontractor

payroll submissions can detect any misunderstandings

early, prevent costly underpayments and protect itself

from financial loss should underpayments occur.

2-4

DOL’s website has Payroll Instructions,

and the Payroll Form WH-347, in a “fillable”

PDF format at this address:

www.dol.gov/esa/programs/dbra/

forms.htm and at HUDClips.

c. “No Work” Payrolls

“No work” payrolls may be submitted whenever there is a

temporary break in your work on the project, for example, if

your firm is not needed on the project right now but you will be

returning to the job in a couple of weeks. (See Tip Box, below, for

“no work” payroll exemption!) However, if you know that your firm

will not be working on the project for an extended period of

time, you may wish to send a short note to the contract administrator to let them know about the break in work and to give an

approximate date when your firm will return to the project. If

you send a note, you do not need to send “no work” payrolls.

d. Payroll Review and Submission

The prime contractor should review each subcontractor’s payroll

reports for compliance prior to submitting the reports to the

contract administrator. Remember, the prime contractor is responsible for the full compliance of all subcontractors on the contract

and will be held accountable for any wage restitution that may be

found due to any laborer or mechanic that is underpaid and for any

liquidated damages that may be assessed for overtime violations.

All of the payroll reports for any project must be submitted to the

contract administrator through the prime contractor.

e. Payroll Retention

Every contractor (including every subcontractor) must keep a

complete set of their own payrolls and other basic records such

as time cards, tax records, evidence of fringe benefit payments,

If you number your payroll

reports consecutively,

you do not need to submit

“no work” payrolls!
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

for a Davis-Bacon project for at least 3 years after the project is

completed. The prime contractor must keep a complete set of all

of the payrolls for every contractor (including subcontractors) for

at least 3 years after completion of the project.

f. Payroll Inspection

In addition to submitting payrolls to the contract administrator,

every contractor (including subcontractors) must make their own

copy of the payrolls and other basic records available for review

or copying to any authorized representative from HUD or from

DOL.

2-4 Davis-Bacon Definitions

Before we discuss how to complete the weekly payroll forms, we

need to review a couple of definitions. These definitions can help you

understand what will be required of you:

a. Laborer or Mechanic

“Laborers” and “mechanics” mean anyone who is performing

construction work on the project, including trade journeymen

(carpenters, plumbers, sheet metal workers, etc.), apprentices,

trainees and, for CWHSSA purposes, watchmen and guards.

“Laborers” and “mechanics” are the two groups of workers that

must be paid not less than Davis-Bacon wage rates.

1) Working foremen. Foremen or supervisors that regularly

spend more than 20% of their time performing construction

work and do not meet the exclusions in paragraph 2 below are

covered “laborers” and “mechanics” for labor standards

purposes for the time spent performing construction work.

2) Exclusions. People whose duties are primarily administrative,

executive or clerical are not laborers or mechanics. Examples

include superintendents, office staff, timekeepers, messengers,

etc. (Contact the contract administrator if you have any

questions about whether a particular employee is excluded.)

b. Employee

Every person who performs the work of a laborer

or mechanic is “employed” regardless of any contractual relationship which 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 wage decision for the

classification of work they perform. Note that

there are no exceptions to the prevailing wage

requirements for relatives or for self-employed

laborers and mechanics.

c. Apprentices and Trainees

The only workers who can be paid less than the wage rate on the

wage decision for their work classification are “apprentices” and

“trainees” registered in approved apprenticeship or training

2-5

For more information about working subcontractors, ask the contract administrator

or your HUD Labor Relations Field Staff for

a copy of Labor Relations Letter LR-96-01,

Labor standards compliance requirements for

self-employed laborers and mechanics. Labor

Relations Letters and other helpful Labor

Relations publications are available at HUD’s

Labor Relations web site (see the list of web

site addresses in the Appendix).
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programs, including Step-Up apprenticeship programs designed

for Davis-Bacon construction work. Approved programs are

those which have been registered with the DOL or a DOLrecognized State Apprenticeship Council (SAC). Apprentices and

trainees are paid wage rates in accordance with the wage schedule in the approved program.

2-6

Most often, the apprentice/trainee wage rate is

expressed as a series of percentages tied to the

amount of time spent in the program. For example,

0-6 months: 65%; 6 months – 1 year: 70%; etc. The

percentage is applied to the journeyman’s wage rate.

On Davis-Bacon projects, the percentage must be

applied to the journeyman’s wage rate on the

applicable wage decision for that craft.

1) Probationary apprentice. A “probationary apprentice”

can be paid as an apprentice (less than the rate on the wage

decision) if the DOL or SAC has certified that the person is

eligible for probationary employment as an apprentice.

2) Pre-apprentice. A “pre-apprentice”, that is, someone who

is not registered in a program and who hasn’t been DOL- or

SAC-certified for probationary apprenticeship is not considered to be an “apprentice” and must be paid the full journeyman’s rate on the wage decision for the classification of work

they perform.

3) Ratio of apprentices and trainees to journeymen. The

maximum number of apprentices or trainees that you can use

on the job site can not exceed the ratio of apprentices or

trainees to journeymen allowed in the approved program.

d. Prevailing Wages or Wage Rates

Prevailing wage rates are the wage rates listed on the wage decision for the project. The wage decision will list a minimum basic

hourly rate of pay for each work classification. Some wage decisions include fringe benefits which are usually listed as an hourly

fringe rate. If the wage decision includes a fringe benefit rate for a

classification, you will need to add the fringe benefit rate to the

basic hourly rate unless you provide bona fide fringe benefits for

your employees.

1) Piece-work. Some employees are hired on a piece-work

basis, that is, the employee’s earnings are determined by a

factor of work produced. For example, a Drywall Hanger’s

earnings may be calculated based upon the square feet of

sheetrock actually hung, a Painter’s earnings may be based

upon the number of units painted. Employers may calculate

weekly earnings based upon piece rates provided the weekly

earnings are sufficient to satisfy the wage rate requirement

based upon actual hours, including any overtime, worked.

Accurate time records must be maintained for any piece-work

employees. If the weekly piece rate earnings are not sufficient,

the employer must recompute weekly earnings based upon the

actual hours worked and the rate on the wage decision for the

work classification(s) involved.
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

e. Fringe Benefits

Fringe benefits can include health insurance premiums, retirement

contributions, life insurance, vacation and other paid leave as well

as some contributions to training funds. 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 or some disability insurance payments.

Note that 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) you provide is less than the fringe benefit rate on the wage decision, you

will need to add the balance of the wage decision 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, you must pay no less than that total ($15/hour) in the basic rate

or basic rate plus whatever fringe benefit you may provide. You can meet this obligation

in several ways: you could pay the base wage and fringe benefits as stated in the wage

decision, or you could pay $15 in base wage with no fringe benefits, or you could pay

$12 basic plus $3 fringe benefits. You can also off-set the amount of the base wage if you

pay more in fringe benefits such as by paying or $9 basic plus $6 fringe benefits; as long

as you meet the total amount. The amount of the base wage that you may off-set with

fringe benefits is limited by certain IRS and FLSA requirements.

2-7

f. Overtime

Overtime hours are defined as all hours worked on the contract

in excess of 40 hours in any work week. Overtime hours must be

paid at no less than one and one-half times the regular rate of

basic pay plus the straight-time rate of any required fringe benefits.

g. Deductions

You may make payroll deductions as permitted by DOL Regulations 29 CFR Part 3. These regulations prohibit the employer

from requiring employees to “kick-back” (i.e., give up) any of their

earnings. Allowable deductions which do not require prior DOL

permission 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

judgements and other financial obligations legally imposed against

the employee.

Referring to our example above where the wage decision

requiring a $15 total wage obligation ($10 basic wage

plus $5 fringe benefits) was met by paying $9 base wage

plus $6 fringe benefits: Note that overtime rates must be

based on one and one-half times the basic rate as stated

on the wage decision. In the above example, the employer

must pay for overtime: $15/hr ($9 basic + $6 fringe)

plus $5 (one-half of $10, the wage decision basic rate)

for a total of $20 per hour.
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h. Proper Designation of Trade

You must select a work classification on the wage decision for each

worker based on the actual type of work he/she performed and

you must pay each worker no less than the wage rate on the wage

decision for that classification regardless of their level of skill. In

other words, if someone is performing carpentry work on the

project, they must be paid no less than the wage rate on the wage

decision for Carpenters even if they aren’t considered by you to be

fully trained as a Carpenter. Remember, the only people who can

be paid less than the rate for their craft are apprentices and

trainees registered in approved programs.

1) Split-classification. If you have employees that perform work

in more than one trade during a work week, you can pay the

wage rates specified for each work classification in which

work was performed only if you maintain accurate time

records showing the amount of time spent in each classification. 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.

i. 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 II

REPORTING REQUIREMENTS

2-5 Completing a Payroll Report

What information has to be reported on the payroll form?

The weekly payroll form doesn’t ask for any information that you don’t

already need to keep for wage payment and tax purposes. For example,

you need to know each employee’s name, address and social security

number; his or her work classification (who is working for you and

what do they do?), the hours worked during the week, his or her rate

of pay, the gross amount earned (how much did they earn?), the

amounts of any deductions for taxes, etc., and the net amount paid

(how much should the paycheck be made out for?). No more information than you need to know in order to manage your work crew and

make certain they are paid properly. And, certainly, no more information than you need to keep for IRS, Social Security and other tax and

employment purposes.

You are required to submit certified payrolls to illustrate and document

that you have complied with the prevailing wage requirements. The

purpose of the contract administrator’s review of your payrolls is to

verify your compliance. Clearer and complete payroll reports will

permit the contract administrator to complete reviews of your

payroll reports quickly.

2-8

For many contractors,

the Weekly Certified

Payroll is the only

Davis-Bacon paperwork

you need to submit!
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

a. Project and Contractor/Subcontractor Information

Each payroll must identify the contractor or subcontractor’s name

and address, the project name and number, and the week ending

date. Indicate the week dates in the spaces provided. Numbering

payrolls is optional but strongly recommended.

b. Employee Information

The first payroll on which each employee appears must contain the

employee’s name, address and Social Security Number. Afterward,

the address and Social Security Number only need to be reported

if there is a change in this information.

c. Work Classification

Each employee must be classified in accordance with the wage

decision based on the type of work they actually perform.

1) Apprentices or Trainees. The first payroll on which any

apprentice or trainee appears must be accompanied by a copy

of that apprentice’s or trainee’s registration in a registered or

approved program. A copy of the portions of the registered or

approved program pertaining to the wage rates and ratios shall

also accompany the first payroll on which the first apprentice

or trainee appears.

2) Split classifications. For an employee that worked in a split

classification, make a separate entry for each classification of

work performed distributing the hours of work to each

classification, accordingly, and reflecting the rate of pay and

gross earnings for each classification. Deductions and net pay

may be based upon the total gross amount earned for all

classifications.

d. Hours Worked

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, you should list the employee’s name, classification, hours 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.

e. Rate of Pay

Show the basic hourly rate of pay for each employee for this

project. If the wage decision includes a fringe benefit and you

do not participate in approved fringe benefit programs, add the

fringe benefit rate to the basic hourly rate of pay. Also list the

overtime rate if overtime hours were worked.

1) Piece-work. For any piece-work employees, the employer

must compute an effective hourly rate for each employee each

week based upon the employee’s piece-work earnings for

that week. To compute the effective hourly rate, divide the

piece-work earnings by the total number of hours worked,

including consideration for any overtime hours. 2-9
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The effective hourly rate must be reflected on the certified

payroll and the hourly rate may be no less than the wage rate

(including fringe benefits, if any) on the wage decision for the

classification of work performed. It does not matter that the

effective hourly rate changes from week-to-week, only that

the rate is no less than the rate on the wage decision for the

classification of work performed.

2-10

Only one employee authorization is

needed for recurring (e.g., weekly)

other deductions. Written employee

authorization is not required for income

tax and Social Security deductions.

f. Gross Wages Earned

Show the gross amount of wages earned for work performed on

this project. Note: For employees with work hours and earnings

on other projects, you may show gross wages for this project over

gross earnings all projects (for example, $425.40/$764.85) and base

deductions and net pay on the “all projects” earnings.

g. Deductions

Show the amounts of any deductions from the gross earnings.

“Other” deductions should be identified (for example, Savings

Account or Loan Repayment). Any voluntary deduction (that is,

not required by law or by an order of a proper authority) must be

authorized in writing by the employee or provided for in a collective bargaining (union) agreement. A short note signed by the

employee is all that is needed and should accompany the first

payroll on which the other deduction appears.

h. Net Pay

Show the net amount of wages paid.

i. Statement of Compliance

The Statement of Compliance is the certification. It is located on

the reverse side of a standard payroll form (WH-347). Be sure to

complete the identifying information at the top, particularly if you

are attaching the Statement of Compliance to an alternate payroll

form such as a computer payroll. Also, you must check either

4(a) or 4(b) if the wage decision contains a fringe benefit. Checking 4(a) indicates that you are paying required fringe benefits to

approved plans or programs; and 4(b) indicates that you are

paying any required fringe benefit amounts directly to the employee by adding the fringe benefit rate to the basic hourly rate of

pay. If you are paying a portion of the required fringe benefit to

programs and the balance directly to the employee, explain those

differences in box 4(c).

Remember, 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 11⁄2) + $5 = $20/hour.

Only one Statement of Compliance is required for each

employer’s weekly payroll no matter how many pages

are needed to report the employee data.
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

j. Signature

Make sure the payroll is signed with an original signature. 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.

SECTION III

PAYROLL REVIEWS AND CORRECTIONS

2-6 Compliance Reviews

The contract administrator or other inspector may visit the project site

and interview some of the workers concerning their employment on

the project. The DOL may also independently conduct its own reviews

(see ¶1-5). In addition, the contract administrator will periodically

review payrolls and related submissions, comparing the interview

information to the payrolls, to ensure that the labor standards requirements have been met. You will be notified by the contract administrator if these reviews find any discrepancies or errors. You will be given

instructions about what steps must be taken to correct any problems.

a. On-Site Interviews

Every employer (contractor, subcontractor, etc.) must make their

employees available for interview at the job site with the contract

administrator or other agency representative, or HUD or DOL

representative. The interviews are confidential and the employee

will be asked about the kind of work they perform and their rate of

pay. Every effort will be made to ensure that these interviews

cause as little disruption as possible to the on-going work. The

interviewer will record the interview information, usually on a form

HUD-11, Record of Employee Interview, and forward the interviews

to the contract administrator.

b. Project Payroll Reviews

The contract administrator will compare the information on the

interview forms to the corresponding payrolls to ensure that the

workers are properly listed on the payrolls for the days, work

classification and rate of pay. The contract administrator will also

review the payroll submissions to make certain that the payrolls

are complete and signed; that employees are paid no less than the

wage rate for the work classification shown; apprentice and trainee

certifications are submitted (where needed); employee or other

authorizations for other deductions are submitted (where needed);

etc.

2-7 Typical Payroll Errors and Required Corrections

The following paragraphs describe common payroll errors and the

corrective steps you must take.

2-11
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a. Inadequate Payroll Information

If an alternate payroll format used by an employer (such as some

computer payrolls) is inadequate, e.g., does not contain all of the

necessary information that would be on the optional form WH-347,

the employer will be asked to resubmit the payrolls on an acceptable form.

b. Missing Addresses and Social Security Numbers

If the first payroll on which an employee appears does not contain

the employee’s address and Social Security Number, the employer

will be asked to supply the missing information. A short note

providing the information is all that is needed.

c. Incomplete Payrolls

If the information on the payroll is not complete, for example, if

work classifications or rates of pay are missing, the employer will

be asked to send a corrected payroll.

d. Classifications

If the payrolls show work classifications that do not appear on the

wage decision, the employer will be asked to reclassify the employees

in accordance with the wage decision or the employer may request

an additional classification and wage rate (See ¶2-2). If reclassification results in underpayment (i.e., the wage rate paid on the payroll is

less than the rate required for the new classification), the employer

will be asked to pay wage restitution to all affected reclassified

employees. (See ¶2-8 for instructions about wage restitution.)

e. Wage Rates

If the wage rates on the payroll are less than the wage rates on the

wage decision for the work classifications reported, the employer

will be asked to pay wage restitution to all affected employees.

f. Apprentices and Trainees

If a copy of the employee’s registration or the approved program

ratio and wage schedule are not submitted with the first payroll

on which an apprentice or trainee appears, the employer will be

asked to submit a copy of each apprentice’s or trainee’s registration and/or the approved program ratio and wage schedule. If the

ratio of apprentices or trainees to journeymen on the payroll is

greater than the ratio in the approved program, the employer

will be asked to pay wage restitution to any excess apprentices or

trainees. Also, any apprentice or trainee that is not registered in

an approved program must receive the journeyman’s wage rate

for the classification of work they performed.

g. Overtime

If the employees did not receive at least time and one-half for any

overtime hours worked on the project, the following will occur:

1) If the project is subject to CWHSSA overtime requirements, the

employer will be asked to pay wage restitution for all overtime hours worked on the project. The employer may also

be liable to the United States for liquidated damages

computed at $10 per day per violation. Or,

2-12
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

2) If the project is not subject to CWHSSA, the employer will

be notified of the possible FLSA overtime violations. Also, the

contract administrator may refer the violations to the DOL

for further review.

h. Computations

If the payroll computations (hours worked times rate of pay) or

extensions (deductions, net pay) show frequent errors, the

employer will be asked to take greater care. Wage restitution

may be required if underpayments resulted from the errors.

i. Deductions

If there are any “Other” deductions that are not identified, or if

employee authorization isn’t provided, or if there is any unusual

(very high, or large number) deduction activity, the employer will

be asked to identify the deductions, provide employee authorization or explain unusual deductions, as necessary.

2-13

HUD does not enforce or attempt to provide advice on employer obligations

to make deductions from employee earnings for taxes or Social Security.

However, HUD may refer to the IRS or other responsible agency copies of

certified payroll reports that show wages paid in gross amounts (i.e., without

tax deduction) for its review and appropriate action.

j. Fringe Benefits

If the wage decision contains fringe benefits but the payroll does

not indicate how fringe benefits were paid [neither 4(a) nor 4(b)

is marked on the Statement of Compliance], the employer may

be asked to submit corrected payrolls and will be required to

pay wage restitution if underpayments occurred. However, if the

basic hourly rates for the employees are 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.

k. Signature

If the payroll Statement of Compliance is not signed or is missing,

the employer will be asked to submit a signed Statement of

Compliance for each payroll affected. If the Statement of Compliance is signed by a person who is not a principal of the firm and

that person has not been authorized by principal to sign, the

employer will be asked to provide an authorization or to

resubmit the Statement(s) of Compliance bearing the signature(s)

of a principal or other signatory.

l. On-Site Interview Comparisons

If the comparison of on-site interviews to the payrolls indicates

any discrepancies (for example, the employee does not appear on

the payroll for the date of the interview), the employer will be

asked to submit a corrected payroll report.

2-8 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.

a. Notification to the Employer/Prime Contractor

The contract administrator will notify the employer and/or prime

contractor in writing of any underpayments that are found during
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payroll or other reviews. The contract administrator will describe

the underpayments and provide instructions for computing and

documenting the restitution to be paid. The employer/prime

contractor is allowed 30 days to correct the underpayments.

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.

b. 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. You may also

compute wage restitution by calculating the total amount of

Davis-Bacon wages earned and subtracting the total amount of

wages paid. The difference is the amount of back wages due.

c. 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 a beginning date and ending date). The

correction payroll will list each employee to whom restitution

was paid and their work classification; the total number of work

hours involved (daily hours are usually not applicable for restitution); 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 actually paid. A

signed Statement of Compliance must be attached to the correction payroll.

d. Review of Correction CPR

The contract administrator will review the correction certified

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, documented

on a supplemental correction payroll within 30 days.

e. 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 (i.e., unfound

workers) providing their names, Social Security Numbers, last

known addresses and the gross amount due. In such 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 contract administrator will

continue attempts to locate the unfound workers for 3 years after

the completion of the project. After 3 years, any amount remaining in the account for unfound workers will be credited and/or

forwarded by the contract administrator to HUD. 2-14

In most cases, HUD no longer requires

employers to submit checks or copies

of checks (certified, cashiers, canceled

or other) to correct underpayments.

Restitution payments are reported

and certified by the employer on a

correction payroll.

The contract administrator may

communicate directly with a

subcontractor when the underpayments

are plainly evident and the subcontractor

is cooperative. It is best to work through

the prime contractor when the issues

are complex, when there are significant

underpayments and/or the subcontractor

is not cooperative. In all cases, the

subcontractor must ensure that the

prime contractor receives a copy of the

required corrective documentation.
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

CHAPTER 3.

Labor Standards Disputes,

Administrative Reviews,

Withholding, Deposits and

Escrow Accounts,

and Sanctions

What happens when things go wrong?

3-1 Introduction

Even in the best of circumstances, things can go wrong. In a DavisBacon context, “things going wrong” usually means there’s a difference

of opinion or a dispute about whether and to what extent underpayments have occurred. These disputes are usually between the contract

administrator and one or more employers (the prime contractor and/

or a subcontractor). The dispute may involve something simple such as

an additional classification request that is pending before the DOL; or

something as significant as investigative findings following a complaint

of underpayment. This chapter discusses some of what you may

expect and what you can do to make your views known and to lessen

any delays in resolving the problem or issue.

3-2 Administrative Review on Labor Standards Disputes

As mentioned in the Introduction above, a dispute about labor standards and compliance can arise for a number of reasons. The labor

standards clauses in your contract and DOL regulations provide for

administrative review of issues where there is a difference of views

between the contract administrator and any employer. The most

common circumstances include:

a. Additional Classifications and Wage Rates

Additional classification and wage rate requests are sometimes

denied by the DOL. An employer that is dissatisfied with the

denial can request reconsideration by the DOL Wage and Hour

Administrator. The employer may continue to pay the wage rate,

as requested, until a final decision is rendered on the matter. When

the final decision is known, the employer will be required to pay

any additional wages that may be necessary to satisfy the wage rate

that is established.

1) Reconsideration. The DOL normally identifies the reasons

for denial in its response to the request. Any interested person

(for example, the contract administrator, employer, representatives of the employees) may request reconsideration of the

decision on the additional classification request. The request for

reconsideration must be made in writing and must thoroughly 3-1
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address the denial reasons identified by the DOL. Employer

requests for reconsideration should be made through the

contract administrator but may be made directly to the DOL.

(See ¶2-2(d), and also DOL Regulations 29 CFR 1.8.) All requests

initiated by or made through the contract administrator or

HUD must be submitted through the HUD Headquarters

Office of Labor Relations.

2) Administrative Review Board. Any interested party may

request a review of the Administrator’s decision on reconsideration by DOL’s Administrative Review Board. DOL

regulations 29 CFR Part 7 explain the procedures for such

reviews. (See also 29 CFR 1.9.)

b. Findings of Underpayment

Compliance reviews and other follow-up enforcement actions

may result in findings of underpayment. The primary goal in every

case and at every step in this process is to reach agreements

about who may have been underpaid and how much wage

restitution may be due and, of course, to promptly deliver

restitution to any underpaid workers. The contract administrator

will usually work informally with you to reach such agreements.

You will have an opportunity to provide additional information to

the contract administrator that may explain apparent inconsistencies and/or resolve the discrepancies.

If informal exchanges do not result in agreement, the final determination and schedule of back wages due will be presented to you in

writing and you will be permitted 30 days in which to correct the

underpayment(s) or to request a hearing on the matter before the

DOL. The request for hearing must be made in writing through the

contract administrator and must explain what findings are in

dispute and the reasons. In such cases, HUD is required to submit

a report to DOL for review and further consideration. All requests

for DOL hearing must be submitted through the HUD Headquarters Office of Labor Relations.

1) DOL review. The DOL will review the contract administrator’s

report and the arguments against the findings presented in the

hearing request. The DOL may affirm or modify the findings

based upon the materials presented. You will be notified in

writing by the DOL of the results of its review; you will be

given an opportunity to correct any underpayments or to

request a hearing before a DOL Administrative Law Judge

(ALJ). (See DOL Regulations 29 CFR 5.11 (b) and 29 CFR Part 6,

Rules of Practice for Administrative Proceedings.)

2) Administrative Review Board. Contractors and/or subcontractors may request a review by the Administrative Review

Board of the decision(s) rendered by the DOL ALJ in the

administrative hearing process. See DOL regulations 29 CFR

Part 7 for more information about this proceeding.

3-3 Withholding

The contract administrator shall cause withholding from payments due

to the prime contractor to ensure the payment of wages which are

3-2
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

believed to be due and unpaid, for example, if wage underpayments

or other violations are not corrected within 30 days after notification

to the prime contractor. DOL may also direct the withholding of

contract payments for alleged wage underpayments. Withholding is

considered to be serious and is not taken unless warranted. If withholding is deemed necessary, you will be notified in writing. Only the

amounts needed to meet the contractor’s (and/or subcontractors’)

liability shall be withheld.

3-4 Deposits and Escrows

In every case, we attempt to complete compliance actions and

resolve any disputes before the project is completed and final payments are made. Sometimes, corrective actions or disputes continue

after completion and provisions must be made to ensure that funds

are available to pay any wage restitution that is ultimately found due.

In these cases, we allow projects to proceed to final closing and

payments provided the prime contractor deposits an amount equal

to the potential liability for wage restitution and liquidated damages, if

necessary, in a special account. The deposit or escrow account is

controlled by the contract administrator. When a final decision is

rendered, the contract administrator makes disbursements from the

account in accordance with the decision. Deposit/escrow accounts

are established for one or more of the following reasons:

a. Where the parties have agreed to amounts of wage restitution that are due but the employer hasn’t furnished evidence

yet that all of the underpaid workers have received their back

wages, e.g., some of the workers have moved and could not be

located. The amount of the deposit is equal to the total amount of

restitution due to workers lacking payment evidence. As these

workers are paid and proper documentation is provided to the

contract administrator, amounts corresponding to the documented payments are returned to the depositor. Amounts for any

workers who can not be located are held in the deposit/escrow

account for three years and disbursed as described in ¶2-8(e) of

this Guide.

b. Where underpayments are suspected or alleged and an

investigation has not yet been completed. The deposit is

equal to the amount of wage restitution and any liquidated damages, if applicable, that are estimated to be due. If the final determination of wages due is less than the amount estimated and

placed in the escrow account, the escrow will be reduced to the

final amount and the difference will be returned to the depositor.

If the parties agree to the investigative findings, the amounts due

to the workers will be disbursed from the escrow account in

accordance with the schedule of wages due. Amounts for

unfound workers will be retained as described above (See ¶2-8(e)

and 3-4(a)).

If the parties do not agree and an administrative hearing is requested,

the escrow will be maintained as explained in ¶3-4(c), below. 3-3

Remember, the prime contractor is responsible and will be held liable for any

wage restitution that is due to any worker employed in the construction of the

project, including workers employed by subcontractors and any lower-tier

subcontractors. See ¶1-4, Responsibility of the Principal Contractor, and ¶2-8,

Restitution for Underpayment of Wages.
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c. Where the parties are waiting for the outcome of an administrative hearing that has been or will be requested contesting a

final determination of wages due. The deposit shall be equal to the

amount of wage restitution and liquidated damages, if applicable,

that have been determined due. Once a final decision is rendered,

disbursements from the escrow account are made in accordance

with the decision.

3-5 Administrative Sanctions

Contractors and/or subcontractors that violate the labor standards provisions may face administrative sanctions imposed by HUD and/or DOL.

a. DOL Debarment

Contractors and/or subcontractors that are found by the Secretary

of Labor to be in aggravated or willful violation of the labor standards provisions of the Davis-Bacon and Related Acts (DBRA) will

be ineligible (debarred) to participate in any DBRA or Davis-Bacon

Act contracts for up to 3 years. Debarment includes the contractor

or subcontractor and any firm, corporation, partnership or association in which the contractor or subcontractor has a substantial

interest. Debarment proceedings can be recommended by the

contract administrator or can be initiated by the DOL. Debarment

proceedings are described in DOL regulations 29 CFR 5.12.

b. HUD Sanctions

HUD sanctions may include Limited Denials of Participation (LDPs),

debarments and suspensions.

1) LDPs. HUD may issue to the employer a limited denial of

participation (LDP) which prohibits the employer from further

participation in HUD programs for a period up to one year.

The LDP is usually effective for the HUD program in which the

violation occurred and for the geographic jurisdiction of the

issuing HUD Office. HUD regulations concerning LDP’s are

found at 24 CFR 24.700-24.714.

2) Debarment and suspensions. In certain circumstances,

HUD may initiate its own debarment or suspension proceedings against a contractor and/or subcontractor in connection

with improper actions regarding Davis-Bacon obligations.

For example, HUD may initiate debarment where a contractor

has been convicted for making false statements (such as false

statements on certified payrolls or other prevailing wage

certifications) or may initiate suspension where a contractor

has been indicted for making false statements. HUD regulations concerning debarment and suspension are found at

24 CFR Part 24.

3-6 Falsification of Certified Payroll Reports

Contractors and/or subcontractors that are found to have willfully

falsified payroll reports (Statements of Compliance), including correction certified payroll reports, may be subject to civil or criminal

prosecution. Penalties may be imposed of $1,000 and/or one year in

prison for each false statement (see Section 1001 of Title 18 and

Section 231 of Title 31 of the United States Code).

3-4

Remember, if you have any

questions or need assistance

concerning labor standards

requirements help is always

available. Contact the

contract administrator for

the project you’re working

on or the HUD Field Labor

Relations staff in your area.
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

Index

Acronyms ............................................................................................... v, A-3

Additional classifications......................................................................... iii, 2-2

Administrative Review Board .............................................................1-2, 3-2

Administrative Review on Labor Standards Disputes ............................v, 3-1

Apprentices .......................................................................... iv, 2-5, 2-9, 2-12

Apprentices and trainees ........................................................................... 2-5

Pre-apprentice ................................................................................... 2-6

Probationary apprentice.................................................................... 2-6

Ratio of apprentices and trainees to journeymen ............................. 2-6

Basic Hourly Rate ................................................................................2-6, 2-9

Certified Payroll reports ................................................ iii, 1-2, 2-3, 2-8, 3-4

“No work” payrolls ........................................................................... 2-4

Payroll certifications .......................................................................... 2-4

Payroll formats................................................................................... 2-3

Payroll inspection ............................................................................... 2-5

Payroll retention ................................................................................ 2-4

Payroll review and submission .......................................................... 2-4

Compliance Reviews ................................................................................ 2-11

Construction Contract Provisions............................................................. 1-2

HUD-2554 ........................................................................................ 1-2

HUD-4010 ........................................................................................ 1-2

HUD-5370 ........................................................................................ 1-2

Labor standards clauses .................................................................... 1-2

Contract administrator ....................... iii, 1-3, 2-1–2-5, 2-11, 2-14, 3-1-3-4

Contract provisions ....................................................................... iii, 1-2, 2-1

Contract Work Hours and Safety Standards Act ..........................iii, 1-1, A-3

Copeland Act .......................................................................................... iii, 1-2

Correction payrolls .............................................................................. v, 2-14

CPR ..................................................................................................... 2-3, A-3

CWHSSA ........................................................................................iii, 1-1, A-3

Davis-Bacon Act .............................................................................. iii,1-1, 1-2

Davis-Bacon Definitions ......................................................................... iv, 2-5

Apprentices and trainees................................................................... 2-5

Fringe benefits ................................................................................... 2-7

Laborer or mechanic ........................................................................ 2-5

Working foremen .............................................................................. 2-5

Davis-Bacon Regulations ................................................................iii, 1-2, A-3

Davis-Bacon Wage Decisions ..................................................................... 1-3

Davis-Bacon Act ............................................................. iii, 1-1, 1-2, 3-4, A-3

 DBA ....................................................................... iii, 1-1, 1-2, 3-4, A-3

 DBRA ................................................................................. 1-1, 3-4, A-3

Debarment ..............................................................................................v, 3-4

Deductions .......................................................iv, 1-2, 2-7, 2-10, 2-13, 2-14

Deposits and Escrow ..............................................................................v, 3-3

DOL .......................................... 1-2–1-4, 2-2–2-7, 2-11, 3-1–3-4, A-3, A-5

DOL investigator ....................................................................................... 1-4

DOL regulations ................................................................. 2-2, 3-1–3-4, A-3

Employee ................................................................................................ iv, 2-5

Fair Labor Standards Act ...............................................................iii, 1-2, A-3

FLSA................................................................................................... A-3 A-1
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Falsification ..............................................................................................v, 3-4

Findings of underpayment.......................................................................v, 3-2

Fringe benefits...................................................... iv, 1-3, 2-6, 2-7, 2-9, 2-13

Gross wages.........................................................................................iv, 2-10

HUD Home Page ............................................................................................ i

HUD Labor Relations field staff .......................................................i, 1-3, 2-2

HUD-11 ................................................................................................... 2-11

Labor Relations Staff.........................................................................i, 1-3, 2-2

Limited Denial of Participation ........................................................... 3-4, A-3

Liquidated damages.................................................................. 1-1, 2-12, 3-3

Local contracting agencies ......................................................................... 1-3

Net pay .......................................................................................iv, 2-10, 2-14

Notice to Employees ................................................................................. 2-2

On-site Interviews.................................................................................... 2-11

Overtime ...................................................... iv, 1-1, 1-2, 2-7, 2-9, 2-12, A-3

Payroll certification ................................................................................. iii, 2-4

Payroll errors .......................................................................................iv, 2-11

Payroll format ............................................................................... iii, 2-3, 2-12

Payroll retention ..................................................................................... iii, 2-4

Payroll submissions ................................................................................ iii, 2-4

Piece-work ..........................................................................................2-6, 2-9

Posting the wage decision .......................................................................... 2-2

Prevailing wages or wage rates .................................................................. 2-6

Prime contractor ......................................................1-3, 2-2, 2-4, 2-14, 3-3

Principal contractor ............................................................................... iii, 1-3

general contractor............................................................................. 1-3

Project Wage Rate Sheet ................................................................... 2-1, A-4

Proper designation of trade ................................................................... iv, 2-8

Rate of Pay .................................................................................... iv, 2-9, 2-11

Site of Work ........................................................................................... iv, 2-8

Split-classification ....................................................................................... 2-8

Statement of Compliance ............................................. 2-10, 2-13, 2-14, 3-4

Step-Up apprenticeship programs............................................................ 2-6

Subcontractor ..................................................................... 1-3, 2-2, 2-4, 3-1

lower-tier subcontractors................................................................. 1-3

Suspension .................................................................................................. 3-4

Trainees ................................................................................. iv, 2-5, 2-6, 2-12

Typical Payroll Errors ...........................................................................iv, 2-11

Unfound workers ..........................................................................v, 2-14, 3-3

Wage Decision .............................................. iii, 1-3, 2-1–2-3, 2-6–2-14, A-4

Wage Restitution..........................................................v, 2-13, 2-14, 3-2–3-4

Computing wage restitution........................................................ v, 2-14

Correction payrolls ..................................................................... v, 2-14

Unfound workers ........................................................................ v, 2-14

Withholding ..................................................................................... v, 1-2, 3-2

Work Classification ............................. iv, 2-1, 2-3, 2-6, 2-8, 2-9, 2-11, 2-14

World Wide Web ............................................................................................ i

A-2
A Contractor’s Guide

to Prevailing

Wage Requirements

for Federally-Assisted

Construction Projects

A-3

Acronyms and Symbols

CDBG – Community Development Block Grant

CFR – Code of Federal Regulations

CPR – Certified Payroll Report

CWHSSA – Contract Work Hours and Safety Standards Act

DBA – Davis-Bacon Act

DBRA – Davis-Bacon and Related Acts

DOL – Department of Labor

FHA – Federal Housing Administration

FLSA – Fair Labor Standards Act

HUD – Housing and Urban Development (Department of)

IHA – Indian Housing Authority

LCA – Local Contracting Agency

LDP – Limited Denial of Participation

O/T – Overtime

PHA – Public Housing Agency

S/T – Straight-time

SAC – State Apprenticeship Council/Agency

TDHE – Tribally-Designated Housing Entity

§ – Section

¶ – Paragraph

Davis-Bacon –

Related Web Sites*

HUD Office of Labor Relations:

www.hud.gov/offices/olr

HUD Regulations:

www.access.gpo.gov/nara/cfr/cfr-table-search.html

HUDClips (Forms and Publications):

www.hudclips.org/cgi/index.cgi

DOL Davis-Bacon and Related Acts Homepage:

www.dol.gov/esa/programs/dbra/index.htm

DOL Regulations:

www.dol.gov/dol/allcrf/Title_29/toc.htm

Davis-Bacon Wage Decisions:

www.wdol.gov

DOL Forms:

www.dol.gov/esa/programs/dbra/forms.htm

*Web addresses active as of June 2006
A-4
A-5
A-6
Labor Relations Desk Guide

LR01.DG

U.S. Department of Housing and Urban Development

Office of Labor Relations

Washington, DC 20410

Official Business

Penalty for Private Use $300

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