PREVAI LI NG WAGES ON PUBLI C WORKS CONSTRUCTI ON Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes PA M E L A M A RT I N A N D J U S T I N TA N O U Y E D E P T. O F L A B O R A N D I N D U S T R I A L R E L AT I O N S WA G E S TA N DA R D S D I V I S I O N H T T P : / / L A B O R . H AWA I I . G OV / W S D D L I R . WA G E S @ H AWA I I . G OV ( 8 0 8 ) 5 8 6 8 7 7 7 1
OBJECTIVES OF THIS PRESENTATION: Understand the who, what, when, where, why and how of Hawaii’s prevailing wage law Know the prevailing wage rates for laborers and mechanics Ensure your Certified Payroll Process is Compliant Identify Common Concerns for Contractors Recent Developments in Legislation 2
Labor.haw aii.gov/w sd 3
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Chapter 104 Notice of Violations Issued* $ OT Found Due 180 $1,200,000 $ Prevailing Wages 155 Found Due 153 160 $1,000,000 $ Penalty Found 140 Due # of Cases Closed 120 $800,000 106 # Suspended 100 86 $600,000 # of NOVs Issued 80 60 # of complaints 60 $400,000 filed 43 * All NOVs are 1st NOV's except 40 31 FY12 - One 2nd NOV; FY13 - One 2nd NOV; $200,000 FY15- One 2nd NOV; One 3rd 20 20 NOV; One 4th and One 5th NOV. FY 16 - One 2nd NOV 13 FY17 -Two 2nd NOV 6 FY18 - Three 2nd NOV 1 0 $- Two 3rd, One 4th, One 5th FY12 FY13 FY14 FY15 FY16 FY17 FY18 5
WHY Chapter 104, HRS? “This [ law] , like the Federal Davis-Bacon Act, has as its guiding principle that bids for construction of public works should be based on the relative skill and efficiency of the contractors concerned and not on a difference in wages paid. To state the principle another way, government money, coming from the taxes of all of us, should not be used to subsidize contractors who are depressing the wages of some of us.” (Standing Committee Report No. 318, 1955 Regular Session) 6
follow ing a federal standard from 1931, Haw aii 1955 7
WHAT DOES CH. 104 APPLY TO? 104 Applies to Public Construction Contracts >$2,000 8
OTHER COVERED PROJECTS • Construction projects funded by Special Purpose Revenue Bonds (SPRB). §104-2(g)(h), HRS • Construction projects for buildings where more than 50% is leased to a state or county agency. §104-2.5, HRS • The definition of “Public Works” includes private projects “where the funds or resources required to undertake the project are to any extent derived, either directly or indirectly, from public revenues of the State or any county, or from the sale of securities or bonds whose interest or dividends are exempt from state or federal taxes.” §104-2(a), HRS 9
What type of project or activity is covered under construction? Decorating New Construction Dredging Reconstruction Shoring Development Sewer Inspection Improvement and Repair Alteration Repair Renovation Painting 10
…Other activities include: Manufacturing or Demolition or excavation furnishing of materials, Landscaping articles, supplies, or equipment on the job Termite treatment; and site Installation at the Warranty work construction site of items or articles fabricated off- site, such as shelving, drapery, and communications equipment 11
Other activity performed by a laborer or mechanic employed at the site is included if the activity is an integral part of or is in conjunction with a construction contract, or if there is substantial construction activity involved in a supply, service, or other type of non-construction contract…. 12
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Who is covered by 104? 1) The law applies to work performed at the public work site by any laborer or m echanic , including owner-operators. 2) The law also applies when transporting materials, supplies or equipment • to or from the public w ork site , • betw een a public work site and another public work site, or • between a public work site and a dedicated site , when performed by a laborer or mechanic employed at the job site. (See HAR 12-22-1.1) 14
What is prevailing area practice? Prevailing area practice refers to the classification of work used by contractors whose wage rates were determined to be prevailing in the area and published in the Wage Rate Schedule. 15
IDENTIFY EMPLOYEES WITH CLASSIFICATIONS FROM THE WAGE RATE SCHEDULE (WRS) Classifications in Wage Rate Schedule are decided by the prevailing area practice. 16
CL CLASSIFICA IFICATIO ION EX EXAMPL PLES ES: : Equipment Operator (Group 6) Laborer I Carpenter Apprentice Step 3, Indentured on 9/1/12 Glazier 17
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WRS - UPDATES • Current is WRS 494 Issued February 18, 2019 FEB JAN MAR • Updated twice a year – on or about Feb. 15 and Sept 15 • Available on the Internet search for Hawaii Wage Rate Schedule APR MAY JUN • When the prevailing wage increases the contractor must increase the wages SEP JUL AUG accordingly. Future anticipated increases have been included where OCT NOV DEC possible. 19
WAGE RATE SCHEDULE UPDATES The Wage Rate Schedule (WRS) Bulletin No. 494, effective February 18, 2019, is available on the Internet at: labor.hawaii.gov/rs Notice by email contact dlir.research@hawaii.gov Please call the Research & Statistics Office at (808) 586-9019 if you have any questions. 20
Appre pprenti tices on on Cer ertified P Payrolls A copy of an apprentice certification or status of agreement should be attached to the certified payroll submitted to the contracting agency. Indenture date and current step or level of the apprentice should be provided for every apprentice listed on the certified payroll. To check on apprentices you can call: 586-8877 (Workforce Development Division Apprentice Office) 21
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Common Challenges in Compliance A. Prevailing wages B. Fringe benefits C. Overtime D. Weekly pay requirement E. Certified payrolls and record keeping requirements F. Posting WRS on the job site, and furnishing the WRS to non-union employees. (Already covered in a previous slide.) 23
Prevailing Wages: Basic Hourly Rate + Fringe Benefits = Prevailing Wage The employer can pay any combination of the basic hourly rate and fringe benefits in order to meet the prevailing wage requirement in the applicable Wage Rate Schedule. 24
EXAMPLE: Refer to WRS #493, pg 1 Carpenter’s rate on 9/19/18: – basic hourly = $49.45 – fringe benefits = $21.75 – prevailing wage = $71.20 Employer can either: pay the entire $71.20 directly to employees; or pay any combination of the basic hourly rate & fringe benefits which equals $71.20. e.g. $60.20 as the basic hourly rate, and $6.00 per hour for 401K; $5.00 for medical. 25
What is a fringe benefit? A fringe benefit is a contribution irrevocably made by a contractor to a trustee or to a third person according to a fund, plan or program in providing benefits to a laborer or mechanic, such as medical, insurance and pension. 26
To be considered an allowable fringe benefit, the contributions must: A. Fall into one of six categories: 1. Health and welfare 2. Life insurance, disability insurance* 3. Vacation* * and holiday pay 4. Pensions 5. Apprenticeship or similarly approved programs 6. Other bona fide fringe benefits determined by DLIR 27
Method to Determine the Fringe Benefit Hourly Credit for fringe benefits based on a monthly rate The allowable hourly fringe benefit credit is determined by dividing the monthly contribution rate by 173 hours. (See Hawaii Administrative Rule 12-22-4) eg. Monthly Health Premium: $865.00 Hourly credit: $865.00 ÷ 173 hrs = $5.00/ hr So, if the prevailing wage is $55.00 per hr, the employer can take a $5.00 per hr fringe credit, and pay $50.00 per hour as the basic hourly rate. Note: Since the hourly fringe credit is based on straight-time hours, credit can be used for straight- time hours only. 28
When must overtime be paid under Chapter 104? • Saturday; • Sunday; • a legal State holiday; or • more than 8 hours on any other day whether worked on one or more projects. Overtime is computed at least 1.5 times the basic hourly rate, plus the fringe benefit rate at straight time. Note some classifications Sundays are 2 times; Labor Day 3 times. (See Note 13, Wage Rate Schedule) 29
CALCULATING OVERTIME PREVAILING RATE TAKING A FRINGE BENEFIT CREDIT FOR STRAIGHT TIME HOW FRINGE BENEFIT IS GIVEN FOR ALL HOURS WORKED CARPENTER Straight Overtime Time WRS 493 Basic Hourly Rate $49.45 X1.5 $74.175 Fringe Benefit $21.75 = $21.75 Prevailing Rate $71.20 $95.925 Possible Fringe $11.00 $0 Benefit Credit Amount to Pay $60.20 $95.92 30
Weekly Pay Requirement All employees must be paid weekly and within 5 working days after the end of the pay period. Certified payrolls must be submitted to the contracting agency weekly. 31
Certified Payrolls: Certification affirms that payrolls are correct and complete and appropriate classifications and applicable prevailing wage rates are paid. Penalty for falsified certified payrolls is $10,000, and a three year suspension from Chapter 104 work. 32
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