Published date: 11/21/2024

Question

This question is regarding Fringe Benefits and the many ways they can be reported. If an employee is paid a higher wage rate than the minimum total package (wages + fringes) listed on the wage determination for a contracted job, could we exclude the fringes when reporting? Also, how would this affect OT hours?

Answer: Great question! When you are reporting employees’ wages for prevailing wage projects, it is very important that the information entered on the certified payroll report matches what the employee was actually paid. When individuals sign the statement of compliance (which gets submitted along with every certified payroll report), they need to understand that they are stating there has been “no willful falsification of the above statements may subject the contractor or subcontractor to civil or criminal prosecution”. You might be meeting the minimum total package as stated, but you are not accurately reflecting what is actually occurring when it comes your employee’s compensation.

Another thing I always try to remind people of: why open yourself up to unnecessary attention and scrutiny? A project owner or prime contractor that monitors compliance for the project could interpret this as a red flag that warrants further inspection. As a general rule of thumb, its best for everybody involved to avoid situations where a public agency feels compelled to look further into your records.

Lastly, it’s important to make sure you understand “how” the specific program you’re complying with requires fringes to be paid. While Federal Davis-Bacon allows for a total package (as long as the OT is still paid on the required prevailing wage rate), a state like California, for instance, requires both the wage and fringe to be met independently. Food for thought.

As for how this affects your OT pay, it would still be required to report the information that is paid to the employee while still meeting the prevailing wage requirements.

Question

Is the Davis-Bacon wage determination received at the beginning of a project valid and apply to the entire duration of the project?

Answer: Generally, yes – once a wage determination is incorporated into a contract, it is good for the life of the project. However, with the Davis Bacon Final Rules made effective October 23, 2023, there are now 3 exceptions to the duration of a wage determination. Per 29 CFR 1.6(c)(2)(iii), contracting agencies are required to incorporate new wage determinations for contracts where:

• New out-of-scope construction:
  • Where a contract is modified to include substantial additional construction not within the scope of work of the original contract. For example, adding the construction of a bridge to a project that originally specified the construction of a 6-story construction building.
• Additional time period not obligated:
  • Where an additional time period change is required for the contractor to perform the work what was not originally noted in the original contract. For example, a contractor originally bid a project with an estimated construction time of 2 years. Then, after multiple change orders, they realize construction will need an additional 3 years to complete the project. The initial estimated construction time more than doubled in this scenario.
• There is an existing indefinite-deliver-indefinite-quantity (IDIQ) contracts (and other similar long-term contracts not tied to a completion of a particular project).
  • Updates to IDIQ and similar contracts requires amendments on an annual basis so that they include the most recently updated wage determination(s).

These three exceptions apply to new contracts that were entered after the Final Rules effective date and specific existing contracts that fall into the above exceptions. I’ve included All Agency Memorandum 244, which goes into a general review of these changes. If you want a much more in-depth look at what kind of changes have occurred from the US Department of Labor’s (USDOL) Final Rule updates and how they affect organizations like yours, I encourage everybody to attend our upcoming Ignite 2025 Conference where we’ll have a session dedicated to the topic.

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Have a burning question about labor compliance that you’ve been eager to ask? Submit it anonymously to our live submission form and you might just see it answered in a future entry of our monthly Ask the Expert series! You can also check out our past entries here.

Want an opportunity to get questions like these and other topics answered in person? Check out our events page for our educational Spark Seminars. These are perfect opportunities for you to hear from industry experts and expand your prevailing wage knowledge.

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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.