A Practical

Guide

for States,

Indian Tribes

and MAKING Local Agencies

DAVIS-BACON

WORK

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June 2006

U.S. Department of Housing and Urban Development
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A Practical Guide

for States,

Indian Tribes and

Local Agencies

1

Streamlining Davis-Bacon

HUD’s Streamlining Davis-Bacon Initiative took shape following a comprehensive review and analysis of the paperwork, processes, and procedures

which had evolved over time both at the HUD level as well as among the

almost 4,800 State and local agencies to which HUD has delegated day-today labor standards administration and enforcement responsibilities. Our

review objectives were simple. We wanted to define exactly what HUD

and its client agencies were doing to protect the statutory rights of

construction workers to be paid prevailing wage rates. Second, with that

information and feedback, we wanted to implement improved performance

and accountability measures by making systemic changes aimed at achieving

more focused and effective and efficient use of scarce resources.

What we found...

What we found in our review was no surprise. There were widely divergent approaches, redundant processes, and a multitude of forms and

paperwork requirements. Basically, we found a law enforcement system

which had become encrusted with layers upon layers of requirements but

which had lost a clear sight of its purpose. Rather than a responsive,

accountable, and dynamic law enforcement system, there had developed a

ponderous, static, and too often arbitrary bureaucracy. We had to take

action.

What we did...

First, we identified and redefined our primary labor standards objectives

and identified who is/are responsible for their implementation. Second, we

stripped away unnecessary procedures, policies, and paperwork which did

not measurably contribute to those objectives. Finally, we initiated a marketing and implementation campaign communicating our new approach to

workers’ rights protection which we call Streamlining Davis-Bacon. This

Guide has been developed as part of our communications strategy and

describes in detail what Streamlining Davis-Bacon means to you in practical

terms. It will help you develop organizational and administrative approaches

which best work for you while still enabling you to meet your labor standards contractual responsibilities in the administration of HUD-assisted

programs as efficiently as possible. It will also be useful to you as a training

tool and ready reference for compliance staff.

Whom to contact...

The HUD Labor Relations Field staff is your support team available to provide

training and technical assistance in the administration of HUD programs subject

to Federal labor standards provisions. Please call upon the HUD Labor

Relations Field staff for your jurisdiction at any time. Also, please visit the

Office of Labor Relations at the HUD Home Page on the World Wide

Web. At this site you will have ready access to publications, forms, the

latest policy letters, and related links which will help you administer labor

standards. Most of the publications and forms referenced in this Guide are

available in the HUD Labor Relations Library at:

www.hud.gov/offices/olr

You can also obtain additional copies of this Guide and other publications

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

As part of our continuing efforts to maximize the effectiveness of our labor

standards program, the Office of Labor Relations took a bold but measured look at our overall mission and what we and our client agencies were

doing on a day-to-day basis to carry it out. We identified five Key Labor

Standards Objectives – the basics of what it is that we must accomplish

in order to protect workers’ rights. We also identified all of the policies,

procedures and paperwork at our disposal – what we do ourselves and

what we impose on contractors. Under Streamlining, we eliminated those

policies, procedures and paperwork requirements that were not statutory

or regulatory and that did not contribute to one or more of the Key

Objectives.

Key Labor Standards Objectives

I. Apply Davis-Bacon requirements properly. Make certain that

labor standards, including Davis-Bacon prevailing wage rates, are

applied where required. Ensure that any exemptions or exceptions

are identified.

II. Through education and advice, support contractor compliance

with labor standards. Provide basic training and technical support to

contractors to ensure that they understand their obligations under

prevailing wage and reporting requirements.

III. Monitor contractor performance. Perform reviews of certified

payroll submissions and other information to help ensure contractor

compliance with labor standards provisions and the payment of prevailing wages to workers.

IV. Investigate probable violations and complaints of underpayment.

Thoroughly explore any evidence of violations, especially allegations

of underpayment.

V. Pursue debarment and other available sanctions against repeat

labor standards violators. Carry-out a no-tolerance policy toward

contractors who violate prevailing wage laws.

Local Agency Responsibilities

for Davis-Bacon Labor Standards

Local contracting agencies (LCAs) that administer HUD programs agree to

administer and enforce Davis-Bacon requirements as a condition for receiving HUD program assistance. LCAs have the following responsibilities:

1. Designate appropriate staff (aka Contract Administrator) before the

start of construction to ensure compliance with all applicable labor

standards requirements and to act for and in liaison with HUD. Provide

the name(s) of the staff to the appropriate HUD Labor Relations Field

staff.

2. Establish a construction contract management system which

meets the standards of Part 85 (24 CFR – HUD regulations), Administrative Requirements for Grants and Cooperative Agreements to State,

Local and Federally Recognized Indian Tribal Governments.
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3. Ensure that all bid documents, contracts and subcontracts for

Davis-Bacon covered work contain Federal labor standards

provisions and the applicable Davis-Bacon wage decision.

4. Ensure that no contract is awarded to a contractor that is

ineligible (e.g., debarred) for Federally-assisted work.

5. Conduct on-site inspections including interviews with laborers

and mechanics employed on the construction project. Ensure that the

applicable Davis-Bacon wage decision and the Department of Labor’s

“Notice to All Employees” are posted at the job site.

6. Review certified payroll reports and related documentation.

Identify any discrepancies and/or violations. Ensure any needed

corrections are made promptly.

7. Maintain full documentation of Federal labor standards administration and enforcement activities.

8. Refer potential criminal or complex investigations to HUD, in

addition to Contract Work Hours and Safety Standards Act (CWHSSA)

liquidated damages assessments for overtime violations and debarment

recommendations.

9. Comply with all HUD requirements concerning special statutory,

program and/or other requirements.

10. Prepare Federal labor standards enforcement reports as required

in Department of Labor (DOL) regulations (29 CFR, Part 5, §5.7).

What Local Agencies Need to

Carry Out These Responsibilities

In addition to basic knowledge about labor standards administration and

enforcement, LCAs need basic reference and guidance materials. Many of

these materials are available on-line. A complete list of website addresses

referenced in this Guide is provided in the Appendix (Page 13). Also, the

HUD Labor Relations Field Staff can assist you in obtaining hard copies of

any materials offered in the Labor Relations Library on the HUD

Homepage.

Labor Relations Reference

and Guidance Materials

■ Specific Davis-Bacon Related Act (statute) for the program

involved. The clauses containing the Davis-Bacon labor standards

provisions for each HUD program are key to making proper decisions

concerning applicability. Determining whether Davis-Bacon wage rates

are applicable in specific cases may be the most difficult task that LCAs

face on a day-to-day basis. Excerpts from the HUD Related Acts – the

labor standards provisions – may be found in the Appendix (Exhibit 1)

to this Guide. In addition, you’ll find summary treatments explaining

the factors of applicability (how the language of the labor standards

clauses is interpreted and applied in real situations) for CDBG, HOME,

Public Housing, Indian Housing, and Hawaiian Homelands programs

(Exhibit 2).
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■ HUD Regulations: 24 CFR; Relevant Parts for the program involved.

Many times the regulations will contain further information about DavisBacon aspects of the program. HUD regulations are available on-line at:

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

■ DOL Regulations: 29 CFR; Parts 1, 3, 5, 6 & 7. These regulations

contain policy guidance and instructions for all agencies, including local

contracting agencies, in the administration and enforcement of DavisBacon wage and reporting requirements. These DOL regulations are

available on-line at the DOL homepage at: www.dol.gov/dol/allcfr/

Title_29/toc.htm

■ Labor Relations Letters. This is a special directives series designed

to provide current and thorough guidance on Davis-Bacon issues in

HUD programs. Popular topics include Davis-Bacon applicability under

HOME, and prevailing wage requirements concerning self-employed

laborers and mechanics. Labor Relations Letters are available on-line at

the HUD Labor Relations Library.

■ Labor Relations Desk Guides. These Guides such as this Practical

Guide, provide basic information, instructions, advice and assistance

concerning prevailing wage requirements in HUD programs. HUD

also offers a Contractor’s Guide – an easy to use resource that

explains Davis-Bacon wage and reporting requirements and what

contractors must do to comply with these requirements. These

Guides are available on-line at the HUD Labor Relations Library and in

hard copy through the HUD Customer Service Center (see page 1)

or through your HUD Labor Relations Field staff.

■ On the Mark! Series. Also available at the Labor Relations Library,

this series contains simple, one-page suggestions containing timesaving tips to improve efficiency and effectiveness including new

technologies and services available through the Internet.

The Basic Elements – Labor Standards

Administration and Enforcement

Labor Standards Administration

Involves the activities that take place primarily before construction begins.

Administration sets the stage for the enforcement activities that occur

during the construction phase.

1. Determine Davis-Bacon applicability. The first and sometimes most

difficult step is determining whether and to what extent Davis-Bacon

wage standards apply to a particular contract or project. The Factors of

Applicability (in the Appendix) should be helpful. Most HUD-assisted

construction work is covered by Davis-Bacon but there are some

exceptions. The best and safest approach is whenever the contract/

project involves construction work that is valued in excess of $2,000 to

assume that Davis-Bacon rates will be applicable and then look more

closely to see if there’s any reason for non-coverage.
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Assuming that a determination has been made that Davis-Bacon wage

rates are applicable:

2. Prepare the bid documents/contract. The contract for construction is the vehicle to ensure contractor compliance and Davis-Bacon

wage enforcement. Therefore, the bid specifications and/or the

contract for each project subject to Davis-Bacon wage rates must

contain both a Davis-Bacon wage decision and its own labor standards

clauses. These are often bound into the contract specifications.

a. Davis-Bacon Wage Decisions. The Davis-Bacon wage decision

is a listing of various construction work job classifications (such as

Carpenter, Electrician, Plumber, Laborer, etc.) and the minimum

wage rates (and fringe benefits, where prevailing) that people

performing work in those classifications must be paid. DavisBacon wage decisions are available on-line at no cost at:

www.wdol.gov (See On the Mark! OTM #8 (10/2005) for more

information about this on-line service.) You can also contact the

HUD Labor Relations staff for assistance and/or for a copy of a

Davis-Bacon wage decision.

b. The labor standards clauses. The labor standards clauses obligate

the contractor to comply with Davis-Bacon wage and reporting

requirements and provide for remedies and sanctions should

violations occur. HUD has standard forms that contain the labor

standards clauses appropriate for different programs: the HUD4010, Federal Labor Standards Provisions, for CDBG and HOME;

and the HUD-5370 for Public and Indian housing. These forms are

available on-line at: www.hudclips.org/cgi/index.cgi

3. Verify contractor eligibility. Once you have selected the contractor

to whom you want to award the contract, you must verify that the

contractor is not ineligible (e.g., debarred) from participation in Federal

programs. You only need to verify the eligibility of the prime contractor.

The U.S. General Services Administration maintains a list of debarred

contractors which can be accessed on-line at: http://epls.arnet.gov

(See On the Mark! OTM #6 (6/97) for more information about on-line

verification.)

4. Provide contractor training. Make certain the contractor understands its responsibilities for Davis-Bacon compliance: The principal

contractor (also referred to as the prime or general contractor) is

responsible for the full compliance of all employers (the contractor,

subcontractors and any lower-tier subcontractors) with the labor

standards provisions applicable to the project. HUD has published a

Contractor’s Guide to Prevailing Wage Requirements for

Federally-Assisted Construction Projects for this purpose which

provides basic information and instructions to contractors concerning

Davis-Bacon wage and reporting requirements. Hard copies of the

Guide are available from the HUD Labor Relations Field Staff. In

addition, the Guide is available in a download-able PDF file at the HUD

Labor Relations Library.

You may also wish to provide formal training separate from the

contracting process for contractors who are interested in performing

work on your HUD-assisted contracts and want to learn more about

what is involved.
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Labor Standards Enforcement

Involves the activities that take place during construction to ensure contractor compliance.

1. Posting the wage decision and Notice to All Employees. The

contractor is required to display on the job site a copy of the applicable Davis-Bacon wage decision and the form WH-1321, Notice to

All Employees. The purpose of this posting is to provide information to

the construction laborers and mechanics working on the project

about their entitlement to the prevailing wage rate for their trade and

to inform them of whom to contact (the contract administrator) if

they have any questions or want to file a complaint.

a. Project Wage Rate Sheet (HUD-4720). Many wage decisions

are multi-paged and cover several counties and/or more than one

type of construction. To make this vital information easier to read

and understand, contract administrators can offer a Project Wage

Rate Sheet (HUD-4720) – a one-page listing of only the wage

rates applicable to the specific project involved – for posting on

the job site. A blank copy of the Project Wage Rate Sheet is in the

Appendix. In addition, this form is available in an on-screen fillable

format at HUDClips and the Office of Labor Relations website.

b. Notice to All Employees. The Notice to All Employees form is

available on-line at HUDClips (www.hudclips.org/cgi/index.cgi).

2. Conduct on-site interviews with laborers and mechanics. The

contract administrator or a designee (such as an agency construction

inspector) must periodically conduct interviews with the construction

workers on the job site. The purpose of the interviews is to capture

observations of the work being performed and to get the workers’

views on the hours they work, the type work they perform and the

wages they receive. Information gathered during the interviews is

recorded on form HUD-11, Record of Employee Interview. The

HUD-11’s are compared to the corresponding contractor and subcontractor certified payrolls to test and verify the accuracy of the payroll

information. HUD-11 forms are available on-line in a fillable format in

HUDClips (see website list in the Appendix).

3. Review contractor and subcontractor certified payroll reports.

In addition to comparing HUD-11’s to the certified payroll reports, the

contract administrator reviews the payroll reports generally to ensure

that all laborers and mechanics are being paid no less than the wage

rates contained on the applicable Davis-Bacon wage decision for the

type of work they perform. Contract administrators should be particularly alert for indications of payroll falsification – misinformation on

payrolls to conceal underpayments. Falsification on payrolls indicates an

employer (contractor or subcontractor) is aware of its obligations, is

knowingly underpaying their employees and is attempting to avoid

detection of the violations.

a. Discrepancies and/or underpayments on the payrolls. Some

underpayments and other errors can appear on the face of the

payroll (i.e., do not involve falsification). In these cases, the contract
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administrator contacts the employer and/or the prime contractor

and provides instructions as to what steps should be taken to correct

the payroll and to pay any back wages that may be due to the

affected workers.

b. Indications of falsification on payrolls. Information reported on

payrolls that indicates falsification suggests much more serious

violations in terms of the amount of back wages that may be due and

the number of employees affected. Such cases most often warrant

investigation which can include on-site interviews with the workers,

mailing questionnaires to employees, taking written statements or

complaints, and other methods to gather and assess the facts of the

case. In addition to the HUD-11, Record of Employee Interview,

HUD has developed a questionnaire form (HUD-4730) and a

complaint intake form (HUD-4731) for HUD and State and local

agency use. The forms are available in on-screen fillable formats at

HUDClips and the Office of Labor Relations web site. HUD has

prepared a list and explanation of four common falsification indicators

that are easy to detect during payroll “spot-checks.” See Exhibit 3 in

the Appendix at the back of this Guide.

4. Investigate probable violations and complaints of underpayment.

Contract administrators must investigate probable violations – particularly

those involving falsification of payrolls and complaints alleging underpayments.

5. Recommend debarment against repeat violators. HUD has implemented a no-tolerance policy against contractors who repeat violations of

Davis-Bacon labor standards. The first time an employer is found in

violation, the employer is required to pay full restitution to all affected

workers and to pay any CWHSSA liquidated damages (for overtime

violations) which may be assessed. In addition, the employer must

provide a written assurance of future compliance. If the employer

promptly completes these corrective actions, HUD will not object if the

LCA does not recommend debarment against the employer unless there

are extenuating circumstances which warrant debarment. If the employer

is found in violation again, the LCA must require full correction of any

underpayments and payment of CWHSSA liquidated damages computed

and a debarment recommendation made by the LCA against the employer is expected.

6. Prepare and submit enforcement reports. In accordance with

DOL regulations (29 CFR, Part 5, §5.7), the contract administrator

must prepare enforcement reports on any case where an employer

(contractor or subcontractor) has underpaid its employees by $1,000

or more or where there is reason to believe the violations are aggravated

or willful; and semi-annually concerning all Davis-Bacon labor standards

administration and enforcement activities involving all Federal agencies and

programs.

a. Employer-based enforcement reports. These enforcement

reports are used for three general purposes. First, to report to the

Secretary of Labor on Davis-Bacon enforcement actions successfully

completed in the field by all Federal and local agencies. Secondly, we

use an enforcement report to refer to the Wage and Hour Administrator investigative findings which are in dispute (e.g., where the

employer contests findings of underpayment made against it and

requests a hearing to appeal the findings). Third, we use an enforcement report to make recommendations for debarment and other
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sanctions and for recommendations concerning liquidated damages computed for CWHSSA overtime violations. (See Labor

Relations Letter LR-92-02 for additional guidance concerning

employer-based enforcement reports.)

b. Semi-annual Enforcement Reports. All Federal agencies and

LCAs administering programs covered by Davis-Bacon wage

requirements must report to DOL on all covered contracts

awarded, and on all enforcement actions taken each six months.

HUD collects the reports from its client agencies and compiles a

comprehensive report to DOL covering all HUD-assisted DavisBacon construction activity. A copy of the Semi-Annual Report

form (HUD-4710) and instructions (HUD-4710i) for LCAs are

included in the Appendix and are available on HUDClips and the

Office of Labor Relations web site. The report may be completed

on-screen, saved and attached to an email message for submission

purposes.

Ten Steps to Streamlining

Davis-Bacon – What and Why

You may have already noticed in the discussions above some of the

streamlining measures HUD has put in place. These measures are described in more detail here:

1. LCAs do not have to obtain wage decisions from HUD.

Prior practice: Previously, LCAs were required to obtain a Davis-Bacon

wage decision for each contract/project from HUD Labor Relations and

were required to submit a form (SF-308, Request for Wage Determination) in order to make the request.

Streamlined: HUD now allows LCAs to obtain Davis-Bacon wage

decisions from any source available to them. For example, LCAs can

obtain wage decisions on-line at the WDOL web site. Or the LCA can

use a copy of the wage decision they already may have on file (provided

the copy is still current). LCAs that wish to continue obtaining wage

decisions from HUD can make the request by telephone, fax, mail or

email. HUD can send the applicable wage decision back to the LCA by

any of these means also. LCAs can obtain wage decisions immediately

from the WDOL web site and, in most cases, depending on the form of

delivery requested by the LCA (e.g., email) LCAs should be able to

obtain wage decisions from HUD within 24 hours or less.

2. Preconstruction Conferences for labor standards purposes

are optional.

Prior practice: LCAs were required to hold a preconstruction conference

(PCC) for each contract/project. During the PCC, the labor standards

applicable to the project were described in detail. A copy of an attendance

roster and complete minutes of the PCC were required in the contract file.

Streamlined: HUD acknowledges that there are many good reasons

to hold a PCC such as discussing construction inspections, progress and

contractor payment requirements, Section 3 employment and training

and other issues particular to the project. However, HUD has determined that the time and resources used to conduct and document PCCs

for labor standards purposes have not yielded measurably better results.

Many contractors have prior Davis-Bacon contract experience and
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have demonstrated successful performance. These contractors don’t

require the repetitive basic training such as provided in most PCC

presentations. Basic training for contractors new to Davis-Bacon

projects can be provided more efficiently through printed guidelines

such as HUD’s Contractor’s Guide to Prevaililng Wage Requirements for

Federally-Assisted Construction Projects. Contractors who intend to

comply can become familiarized with the fundamentals through the

Guide and contact the contract administrator concerning any questions specific to the project. Contractors who understand the requirements and who may choose not to comply will in all likelihood not be

persuaded to full compliance with a PCC labor standards presentation.

3. Project Wage Rate Sheets are offered for Davis-Bacon projects.

Prior practice: HUD considered Davis-Bacon wage decisions inviolate and

strongly discouraged any efforts to simplify or translate for any reason the

content of a wage decision. As discussed earlier in this Guide, many

Davis-Bacon wage decisions are lengthy and can cover several counties

and/or types of construction work. In other words, not all of the information

contained in a Davis-Bacon wage decision is relevant to the specific project

to which it applies. HUD required LCAs to utilize the complete text of wage

decisions at all times even though the wage decision frequently contained

many pages of irrelevant information.

Streamlined: Besides being in the construction contract to obligate the

compliance of the prime contractor and any subcontractors (where

HUD still recommends use of the full wage decision text in most cases),

there are three important uses for the applicable Davis-Bacon wage

decision. One is for the contractor’s and any subcontractors’ understanding about the specific wage rates that must be paid. The second is

for posting at the job site so that the laborers and mechanics understand their rights. The third is for contract administrator’s use in

reviewing certified payroll reports.

A Project Wage Rate Sheet (HUD-4720) is a one-page, easy to read

listing of the work classifications and wage rates that are applicable to the

project. This one-page listing is much more user-friendly than the full-text

wage decision for these three uses: A Project Wage Rate Sheet spells out

more clearly the work classifications and wage rates contained in the

wage decision for the contractor and subcontractors. The Project Wage

Rate Sheet is much easier for laborers and mechanics to understand so

that they can tell whether they are paid properly. And last, a Project

Wage Rate Sheet – a one-page listing – is more helpful as a ready reference for contract administrators reviewing payroll reports.

LCAs can prepare a Project Wage Rate Sheet for contracts using the

on-screen fillable versions at HUDClips and the Office of Labor Relations

web site or the copy in the Appendix. The Project Wage Rate Sheet

should be prepared only after the wage decision has been “locked-in”

by contract award or start of construction, as applicable. HUD Labor

Relations staff are available to provide assistance to LCAs in preparing

Project Wage Rate Sheets.

4. Eliminate certain unnecessary or duplicative processes and

notices to HUD.

Prior practice: LCAs were required to send to HUD a start of construction
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notice and a final compliance report for each project. LCAs also were

required to date stamp certified payrolls on receipt, and to date and

initial certified payrolls when the payrolls were reviewed.

Streamlined: HUD has eliminated the start of construction notice

and final compliance report. The important information collected in

these reports is already captured in enforcement reports required by

DOL regulations, therefore, the reports were duplicative. (See

Streamlining measure #10, below.) In addition, date stamping payrolls

on receipt and dating and initialing payrolls on review are actions

inconsistent with a results-oriented approach and therefore are no

longer mandated.

5. An LCA can develop its own enforcement file system.

Prior practice: LCAs were required to utilize filing systems mandated by

HUD involving certain numbers and labeling of files and other file maintenance conditions.

HUD believes that LCAs can best determine how to maintain their files

provided that certain minimum requirements are met. The minimum

requirements include compliance with DOL regulations that certified

payrolls and basic records relating to the payrolls are preserved not less

than three years after completion of the project and the resolution of

any enforcement actions which may carry over after completion. In

addition, the files must be maintained in such a way that the LCA can

utilize them to demonstrate its own compliance with its labor standards

administration and enforcement responsibilities. For example, the LCA

must be able to demonstrate to a HUD monitor where it is documented that the eligibility of the prime contractor was verified for each

contract.

6. LCAs can target on-site interviews with laborers and mechanics.

Prior practice: LCAs were required to conduct on-site interviews with a

“representative sampling” of all laborers and mechanics on each project.

HUD did not offer a consistent guideline as to what constituted a “representative sampling.”

Streamlined: HUD is much more interested in using on-site interviews

as a proactive enforcement tool than as a means to meet a “representative sampling” quota. Rather than conducting interviews randomly for

the sake of assembling a sample, LCAs are encouraged to focus interviews to projects or groups of workers where violations are suspected

or alleged. In this way, on-site interviews can be used to support a

specific on-going investigation. HUD realizes that such focusing may

mean that fewer on-site interviews may be conducted randomly;

HUD considers focusing a far more effective means of utilizing on-site

interview resources.

7. Payroll reviews limited to spot-checks and HUD-11 comparison;

the Goal: to detect falsification.

Prior practice: LCAs were required to thoroughly review each certified

payroll submitted for each project. Any discrepancy, omission or error in the
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record had to be noted and corrected regardless of its significance.

Streamlined: HUD found much more serious violations involving

more underpaid workers and significantly more wage restitution could

be missed because the contract administrator was over tasked with

HUD-mandated payroll minutiae. HUD recognizes that it is not

possible to conduct 100% payroll reviews, therefore, it is not possible to identify and correct every discrepancy and underpayment. It is

also the case that the violations disclosed behind falsified payrolls are

much more egregious (both in terms of affected workers and the

amount of underpayment) than violations that appear on the face of

the payroll. Accordingly, HUD has prioritized payroll reviews so that

the objective is to detect falsification and so that our enforcement

activities will yield the greatest impact. HUD has developed guidance

on how to detect falsification through spot-checks and HUD-11

interview comparison. See Payroll Falsification Indicators in the Appendix (Exhibit 3).

8. Routine payroll review results can be communicated to the

employer and/or prime contractor by telephone and documented with a record to the file.

Prior practice: LCAs were required to document each payroll review with

a written notice to the prime contractor concerning any and all corrections

that were needed.

Streamlined: Many times, the types of deficiencies which come to the

attention of the contract administrator can be handled more efficiently

and just as effectively with good informal communication (e.g., a telephone call, etc.) with the employer/prime contractor rather than with

formal letters. Examples of the types of issues that could easily be

addressed informally – assuming the cooperation of both sides –

include a missing payroll report or missing apprenticeship certificate,

requests for employee authorizations for deductions, small underpayments that appear on the face of the payroll, and similar matters. With

the employer/prime contractor’s cooperation, these matters can be

disposed of quickly with a telephone call and a brief note to the

contract file documenting the call. If the employer/prime contractor

does not respond appropriately to this type of communication, it may

be necessary to resort to more formal means.

The last two Streamlining measures are about how we will better

use the resources we have to meet our key objectives. Through

Streamlining, we’ve eliminated substantial amounts of paperwork and

processes so that we can redirect those resources to other activities that

will produce improved Davis-Bacon enforcement and accountability.

9. Strenuously enforce Davis-Bacon requirements aiming

enforcement activities at willful violators. Recommend

debarment against repeat violators.

Prior to Streamlining, our enforcement activities were not as focused

and therefore were not as effective. The greatest threat to construction

workers receiving the statutorily-mandated prevailing wage for their

craft is from employers who know what is required, choose not to pay

the required prevailing wage rates and falsify certified payroll reports to
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conceal the underpayments. Such willful violators see the workers’

underpayment as their own gain and engage in deception to increase

this gain. In addition, willful violators that successfully escape detection

and are not required to pay prevailing wages will continue to bid on

Davis-Bacon contracts until their violations are disclosed and administrative sanctions such as debarment are imposed.

HUD has made it a priority to target labor standards enforcement

activities at willful violators (i.e., employers that falsify certified payrolls)

and to recommend debarment against repeat violators. Barring

aggravated circumstances, such as requiring kickbacks of wages from

employees, contract administrators that issue findings of underpayment

against a willful violator for a first offense will require from the

employer a written statement assuring future compliance in addition

to full wage restitution for all underpaid employees. If the employer is

found in violation of labor standards again, contract administrators will

recommend debarment based in part upon the breach of assurance of

future compliance secured after the prior violation.

10. Improve reporting systems on labor standards administration

and enforcement.

These reports are required by regulation and are important vehicles

for recommendations concerning the disposition of investigative

findings and debarment against employers that violate Davis-Bacon

requirements. These reports also allow the Secretary of Labor to

gather important information about government-wide Davis-Bacon

contracting and enforcement.

HUD has relieved LCAs of certain reporting and processing requirements which were duplicative or unnecessary in order to promote full,

timely and accurate LCA participation in the enforcement reporting

system required by DOL regulations. In this way we enhance our

accountability for Davis-Bacon labor standards administration and

enforcement and can better measure our performance in applying

Davis-Bacon wage standards where applicable and in protecting the

right of the laborers and mechanics to receive prevailing wages when

employed on covered work in HUD programs.
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13

Davis-Bacon –

Related 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

IHBG – Indian Housing Block Grant

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*

GSA List of Parties Excluded from Federal Procurement and Non-Procurement Programs (Debarred List):

http://epls.arnet.gov

HUD Office of Labor Relations (Labor Relations Library):

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

Davis-Bacon Wage Decisions:

www.wdol.gov

DOL Regulations:

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

DOL Forms:

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

*Web addresses active as of June 2006.
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HUD Program Davis-Bacon Related Acts

Programs administered by local contracting

agencies (LCA’s):

CDBG: Housing and Community Development Act of

1974, as amended (HCDA); Section 110*:

(a) All laborers and mechanics employed by contractors or subcontractors

in the performance of construction work financed in whole or in part

with assistance received under this title shall be paid wages at rates not

less than those prevailing on similar construction in the locality as

determined by the Secretary of Labor in accordance with the DavisBacon Act, as amended.... Provided, That this section shall apply to the

rehabilitation of residential property only if such property contains not

less than 8 units....

(b) Subsection (a) shall not apply to any individual that—

 (1) performs services for which the individual volunteered;

 (2) (A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee for such

services; and

 (3) is not otherwise employed at any time in the construction work.

* Section 107(e)(2) of the HCDA permits the Secretary of HUD to waive the

provisions of Section 110 in connection with grants to Indian tribes. This waiver

action was taken and can be found in HUD regulations at 24 CFR §1003.603.

HOME: National Affordable Housing Act of 1990 (NAHA);

Section 286:

(a) In General. Any contract for the construction of affordable housing

with 12 or more units assisted with funds made available under this

subtitle shall contain a provision requiring that not less than the

wages prevailing in the locality, as predetermined by the Secretary of

Labor pursuant to the Davis-Bacon Act..., shall be paid to all laborers

and mechanics employed in the development of affordable housing

involved,....

(b) Waiver. Subsection (a) shall not apply if the individual receives no

compensation or is paid expenses, reasonable benefits, or a nominal

fee to perform the services for which the individual volunteered and

such persons are not otherwise employed at any time in the construction work.

EXHIBIT 1
A Practical Guide

for States,

Indian Tribes and

Local Agencies

15

EXHIBIT 1

Public Housing: U.S. Housing Act of 1937, as amended

(USHA); Section 12*:

(a) Any contract for loans, contributions, sale, or lease pursuant to this Act

....shall also contain a provision that not less than the wages prevailing in

the locality, as predetermined by the Secretary of Labor pursuant to the

Davis-Bacon Act..., shall be paid to all laborers and mechanics employed

in the development of the project involved (including a project with

nine or more units assisted under section 8 of this Act, where the

public housing agency or the Secretary and the builder or sponsor enter

into an agreement for such use before construction or rehabilitation is

commenced), and the Secretary shall require certification as to compliance with the provisions of this section prior to making any payment

under such contract.

(b) Subsection (a) and the provisions relating to wages (pursuant to subsection (a)) in any contract for loans, annual contributions, sale, or lease

pursuant to this Act, shall not apply to any individual that –

(1) performs services for which the individual volunteered;

(2) (A) does not receive compensation for such services; or

(B) is paid expenses, reasonable benefits, or a nominal fee for such

services; and

(3) is not otherwise employed at any time in the construction work.

* Section 12(a) of the USHA also mandates the payment of HUD-determined

prevailing wage rates to all maintenance laborers and mechanics engaged in the

operation of PHA low-income housing projects.

Native American Housing Assistance and Self-Determination

Act of 1996, as amended, (NAHASDA); Section 104(b)*:

(1) In general. Any contract or agreement for assistance, sale, or lease

pursuant to this Act...shall also contain a provision that not less than

the wages prevailing in the locality, as predetermined by the Secretary

of Labor pursuant to the Act of March 3, 1931 (commonly known as

the Davis-Bacon Act;...); shall be paid to all laborers and mechanics

employed in the development of the affordable housing involved, and

the Secretary shall require certification as to compliance with the

provisions of this paragraph before making any payment under such

contract or agreement.

(2) Exceptions. Paragraph (1) and the provisions relating to wages

(pursuant to paragraph (1)) in any contract or agreement for assistance,

sale, or lease pursuant to this Act, shall not apply to any individual who

receives no compensation or is paid expenses, reasonable benefits,

or a nominal fee to perform the services for which the individual

volunteered and who is not otherwise employed at any time in the

construction work.
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EXHIBIT 1

(3) Application of Tribal Laws. Paragraph (1) shall not apply to any

contract or agreement for assistance, sale, or lease pursuant to this Act,

if such contract or agreement is otherwise covered by one or more

laws or regulations adopted by an Indian Tribe that requires the payment of not less than prevailing wages, as determined by the Indian

tribe.

* Section 104(b)(1) of NAHASDA also mandates the payment of HUD-determined

prevailing wage rates to all maintenance laborers and mechanics engaged in the

operation of NAHASDA-assisted affordable housing projects.

Housing Assistance for Native Hawaiians, Title VIII of the

Native American Housing Assistance and Self-Determination

Act of 1996, as amended, (NAHASDA); Section 805(b)*:

(1) In general. Any contract or agreement for assistance, sale, or lease

pursuant to this title shall contain – ...

(B) a provision that an amount not less than the wages prevailing in the

locality, as predetermined by the Secretary of Labor pursuant to

the Act commonly known as the “Davis-Bacon Act”...shall be paid

to all laborers and mechanics employed in the development of the

affordable housing involved.

(2) Exceptions. Paragraph (1) and provisions relating to wages required

under paragraph (1) in any contract or agreement for assistance, sale,

or lease under this title, shall not apply to any individual who performs

the services for which the individual volunteered and who is not otherwise employed at any time in the construction work and received no

compensation or is paid expenses, reasonable benefits, or a nominal fee

for those services.

* Section 805(b)(1) also mandates the payment of HUD-determined prevailing wage

rates to all maintenance laborers and mechanics engaged in the operation of

NAHASDA-assisted affordable housing projects.
A Practical Guide

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CDBG: Factors of Labor Standards

Applicability

1. ...construction work financed...

CDBG can finance activities other than “construction work” which do

not trigger Davis-Bacon requirements; e.g., real property acquisition,

purchase of equipment, architectural and engineering fees, other services

(legal, accounting, construction management), and other non-construction

items (furniture, business licenses, real estate taxes, tenant allowances

for such items).

Also, financing is not limited to the act of paying for the construction

work directly. Financing can mean, for example, using CDBG assistance

to pay the interest charged or to reduce the interest rate on a construction loan (including certain collateral accounts). Generally, financing also

means using CDBG funds to provide permanent financing (take-out

loan) following construction.

2. ...in whole or in part...

If CDBG funds finance only a portion of a construction work, labor

standards are applicable to the entire construction work.

 3. All laborers and mechanics employed by contractors

or subcontractors...

Labor standards provisions do not apply to employees of the grantee

(force account workers) that may be engaged on an otherwise covered

project. Note: The construction work is covered but these force account

workers are excluded.

 4. ...shall apply to the rehabilitation of residential property only if

such property contains not less than 8 units.

Typically, single-family homeowner properties are excluded under this

exemption. However, property is not limited to a specific building.

Property is defined as one or more buildings on an undivided lot or on

contiguous lots or parcels, which are commonly-owned and operated

as one rental, cooperative or condominium project. Examples of 8+

unit properties include:

■ 5 townhouses side-by-side which consist of 2 units each.

■ 3 apartment buildings each consisting of 5 units and located on

one tract of land.

■ 8 single-family (not homeowner) houses located on contiguous

lots.

Further, HUD has concluded that the term “rehabilitation” as used

within the statutory language is not meant to preclude new construction from this exemption. The Conference Report on the HCD Act of

1974 indicated that at the time that the statute was written, residential construction was not an eligible activity. However, subsequent

changes to the statute now permit the use of CDBG (and other Title I

funds) for residential new construction. Accordingly, residential new

construction is treated in the same manner as residential rehabilitation

for Davis-Bacon purposes.

EXHIBIT 2
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HOME: Factors of Labor Standards

Applicability

 1. ...affordable housing with 12 or more units assisted with funds

made available under this subtitle..

Unlike CDBG, the standard for coverage is assisted not financed –

which provides for much broader application. This means that DavisBacon requirements are operable without regard to whether the

HOME funds are used for construction or non-construction activities.

Non-construction activities include real property acquisition, architectural and engineering fees, and other professional services. In some

cases, Davis-Bacon requirements may be triggered when HOME funds

are used to provide downpayment assistance to individual homebuyers.

[LCAs should refer to HUD’s HOME regulations (24 CFR 92.354(a)(2))

or consult with HUD Labor Relations Staff if their project involves

downpayment assistance to homebuyers.]

This also recognizes that HOME projects can contain units that are not

assisted by HOME. The threshold applies only to the number of units

assisted by HOME. For unit threshold purposes, we use the number of

units identified as “HOME” units under the program definition whether

determined on a pro-rata basis, specific designation or other means

allowable by HUD’s Office of Community Planning and Development

(CPD).

Note also that once Davis-Bacon requirements are triggered, the labor

standards are applicable to the construction of the entire project –

including the portions of the project other than the assisted units.

 2. Any contract for the construction of affordable housing with 12 or

more units assisted with funds...

Davis-Bacon requirements are applicable to contracts for construction

covering 12 or more HOME-assisted units. Davis-Bacon does not

follow “construction work” or “projects”. This factor has implications in

two ways:

First, a HOME project with 12 or more assisted units that is constructed under multiple contracts each containing less than 12 HOME

units is not covered. (Note: HOME regulations prohibit breaking a single

project into multiple contracts for the purpose of avoiding Davis-Bacon.)

Second, if multiple HOME projects each containing less than 12 assisted

units are grouped into a contract(s) for construction that covers a total

of 12 or more assisted units, the contract is covered.

 3. Sweat Equity.

HOME provides for a sweat equity program (see NAHA Sec. 255) which

permits members of an eligible family to provide labor in exchange for

acquisition of property for homeownership or to provide labor in lieu

of, or as a supplement to, rent payments. Such sweat equity participants

are exempt from Davis-Bacon prevailing wage requirements.

EXHIBIT 2
A Practical Guide

for States,

Indian Tribes and

Local Agencies

19

Public Housing: Factors of Applicability

 1. Any contract for loans, contributions, sale, or lease pursuant to

this Act...

Prevailing wage requirements apply through provisions required in

any contract for loans, contributions, sale, or lease.... Generally, the

“contract” referenced, here, relates to the Annual Contributions

Contract between HUD and the public housing agency. This term

(contract) may also relate to an Agreement to Enter Into a Housing

Assistance Payments Contract (AHAP) or an Agreement to Enter Into

a Project Rental Assistance Contract (APRAC). These Agreements

are executed for housing projects that will receive Section 8 rental

assistance.

Prevailing wage applicability is not tied to a funding source nor to a

specific use of any funds. This means that Federal funding for development or operations work is not a prerequisite to Davis-Bacon or

HUD-determined wage rate applicability.

2. ...(HUD-determined wage rates) shall be paid to all architects, technical engineers, draftsmen, and technicians employed

in the development, and all maintenance laborers and mechanics

employed in the operation..., ... (Davis-Bacon wage rates) shall

be paid to all laborers and mechanics employed in the development...

Notice that, unlike other HUD labor standards provisions, the USHA

makes no distinction between laborers and mechanics employed by

the agency and those employed by contractors and subcontractors.

This means the “force account” labor – workers employed directly by

the agency, whether on a full-time, part-time, permanent or temporary basis – must receive the prevailing wages applicable to the work

they perform.

3. ... (Davis-Bacon wage rates) shall be paid...in the development

of the project involved (including a project with nine or more

units assisted under Section 8 of this Act, where the public

housing agency or the Secretary and the builder or the sponsor

enter into an agreement for such use...before construction or

rehabilitation is commenced)...

Notice, also, that the only applicability thresholds pertain to Section 8

projects: there must be 9 or more Section 8-assisted units and there

must be an agreement for the Section 8 assistance before construction

begins. These agreements are referred to as AHAPs and/or APRACs.

The 9 unit threshold refers to the number of units in the project that

are Section 8-assisted, not to the total number of units in the project.

The USHA contains no unit threshold for public housing.

While the USHA does not contain a dollar threshold, HUD observes

the statutory Davis-Bacon Act $2,000 threshold for development

work and has implemented a $2,000 threshold for maintenance

contracts.
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Indian Housing under NAHASDA:

Factors of Applicability

 1. Any contract or agreement for assistance, sale, or lease pursuant to

this Act...

Similar to the USHA (public housing), prevailing wage requirements apply

through provisions required in any contract or agreement for assistance,

sale, or lease.... Prevailing wage applicability is not tied to a funding

source nor to a specific use of any funds. This means that Federal funding

for the particular development or operations work is not a prerequisite

to Davis-Bacon or HUD-determined wage rate applicability.

2. ...(HUD-determined wage rates) shall be paid to all architects,

technical engineers, draftsmen, and technicians employed in the

development, and all maintenance laborers and mechanics employed in the operation..., ... (Davis-Bacon wage rates) shall be paid

to all laborers and mechanics employed in the development...

Again, NAHASDA mirrors the USHA in that it makes no distinction

between laborers and mechanics employed by the agency and those

employed by contractors and subcontractors. This means that “force

account” labor – workers employed directly by the agency, whether on a

full-time, part-time, permanent or temporary basis – must receive the

prevailing wages applicable to the work they perform.

3. Threshhold.

NAHASDA contains no dollar or number of units threshold. However,

HUD observes the statutory Davis-Bacon Act $2,000 threshold for

development work and has implemented a $2,000 threshold for maintenance contracts.

4. (HUD-determined and/or Davis-Bacon wage provisions) shall not

apply to any contract or agreement..., if such contract or agreement is otherwise covered by one or more laws or regulations

adopted by an Indian Tribe that requires the payment of not less

than the prevailing wages, as determined by the Indian Tribe...

This provision allows for the preemption of Federally-determined (HUDdetermined and/or Davis Bacon) wage rates where a Tribe has determined prevailing wage rates for operations and/or development work.

Note that the tribal determination must be of rates that “prevail”1

 and the

tribal law or regulation must be applicable to the work in question. (See

also ONAP Program Guidance 2003-04, dated 2/4/2003.)

5. Sweat Equity.

HUD has concluded that, consistent with a provision in the USHA

(predecessor to NAHASDA), family members providing sweat equity

labor for construction or rehabilitation of a home assisted under NAHASDA

are excluded from prevailing wage (HUD-determined and/or DavisBacon) coverage. Sweat equity means members of an eligible family may

contribute labor toward the development of a homeownership project.

These sweat equity participants are not covered by prevailing wage

requirements. (See also, ONAP Program Guidance 2003-03, dated 2/4/2003.)

1

 HUD has not defined “prevailing” for the purposes of tribally-determined wage rates.

HUD also has not prescribed policies or procedures for the administration or enforcement of such tribal rates. HUD defers to each Tribe to establish the definitions, parameters and methodology for the determination, administration and enforcement of triballydetermined prevailing wage rates.
A Practical Guide

for States,

Indian Tribes and

Local Agencies

21

Native Hawaiian Housing under

NAHASDA: Factors of Applicability

 1. Any contract or agreement for assistance, sale, or lease pursuant to this Act...

Similar to the USHA (public housing), prevailing wage requirements

apply through provisions required in any contract or agreement for

assistance, sale, or lease.... Prevailing wage applicability is not tied to

a funding source nor to a specific use of any funds. This means that

Federal funding for the particular development or operations work is

not a prerequisite to Davis-Bacon or HUD-determined wage rate

applicability.

2. ...(HUD-determined wage rates) shall be paid to all architects, technical engineers, draftsmen, technicians employed in

the development, and all maintenance...laborers and mechanics

employed in the operation..., ...(Davis-Bacon wage rates) shall be

paid to all laborers and mechanics employed in the development...

Again, NAHASDA mirrors the USHA in that it makes no distinction

between laborers and mechanics employed by the agency and those

employed by contractors and subcontractors. This means that “force

account” labor – workers employed directly by the agency, whether

on a full-time, part-time, permanent or temporary basis – must

receive the prevailing wages applicable to the work they perform.

3. Threshhold.

NAHASDA contains no dollar or number of units threshold. However,

HUD observes the statutory Davis-Bacon Act $2,000 threshold for

development work and has implemented a $2,000 threshold for

maintenance contracts.

4. Sweat Equity.

HUD has concluded that, consistent with a provision in the USHA

(predecessor to NAHASDA), family members providing sweat equity

labor for construction or rehabilitation of a home assisted under

NAHASDA are excluded from prevailing wage (HUD-determined

and/or Davis-Bacon) coverage. Sweat equity means members of an

eligible family may contribute labor toward the development of a

homeownership project. These sweat equity participants are not

covered by prevailing wage requirements. (See also, ONAP Program

Guidance 2003-03, dated 2/4/2003.)
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Payroll Falsification Indicators

Certified payroll reports are fairly straightforward records of employees, work

classification, hours worked, rate(s) of pay, gross earnings, deductions and net

wages paid. The information required for certified payrolls involves no more

than the information any responsible employer must maintain concerning its

basic business operations.

Davis-Bacon compliance basically involves three factors: 1. The type (classification) of work performed; 2. The number of hours worked; and 3. The prevailing

wage rate for that classification. A fourth factor involves the actual payment of

wages by check and/or cash. In order to conceal underpayments, a willfully

violating employer must falsify the payroll report as it pertains to one or more of

these factors. There are four falsification indicators that are easy to detect on

certified payrolls in a “spot-check”:

1. Ratio of laborers to mechanics. Look for excessive use of laborers over

mechanics. Generally there should be no more than one laborer for each

mechanic (1:1) except for landscaping, or cement or other paving work.

Indicative of: Misclassification. Workers are performing higher-paying

mechanic duties but are misclassified and paid at lower Laborer wage rates.

2. Too few or irregular hours. Look for employees that never work 40

hours per week; for crews that work in a scattered fashion; for hours

reported in tenths or hundredths (e.g., 13.6 hours). Most people work a

40-hour workweek. Most crews work together on a job site. Most employers and employees track work hours by whole, half and quarter hours not

by tenths or hundredths.

Indicative of: Reduction of Hours. Actual hours worked are reduced to

“fit” in a fabricated calculation: (Reduced hours) x (Rate required on wage

decision) = Substandard wages actually paid based upon a lower rate of pay.

3. Discrepancies in wage computations. Look for gross wages paid in

“round” numbers (e.g., $700) that don’t agree with the product of reported hours multiplied by the rate of pay. For example, a payroll showing

20 hours times $33.68 (the rate on the wage decision) and gross wages of

$700. (20 hours times $33.68 equals $676.60 not $700.)

Indicative of: Falsification of rate of pay such as piece work or

lower (but more even) rate. For example, the wage decision requires

$33.68/hour for the type of work performed but the employer chooses to

pay $17.50 per hour. (40 hours times $17.50 equals $700.) The employer

can’t make the fabricated calculation “fit” precisely because the DavisBacon wage rate is not an even figure.

4. Extraordinary deductions. Look for unidentified or disproportionate

deductions, for example, an employee whose savings account deduction is

nearly as much or more than the weekly take-home pay.

Indicative of: Kickbacks or basic underpayment. The employer takes

his “cut” from the back end of the computation (after gross earnings)

rather than the front end (falsifying the classification, hours or wage rate).

If these indicators appear on payrolls you will want to take preliminary steps

to test whether the payrolls are accurate or false. For example, you can target

on-site interviews or send questionnaires to the affected workers to get their

perspective and compare the interview and/or questionnaire statements to the

payroll reports. If an investigation is warranted, you will want to learn what

information on the payrolls is false and what is true. (Employers rarely falsify

all of the information on payrolls.) Eventually, you will need to compute the

amounts of backwages that are due and knowing what information on the

payroll is true can be critical to making these computations.

 Exhibit 3
23
EXHIBIT 4

24
25
26
27
: 2005–321-332

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