Published date: 09/19/2024
Question
If a vendor’s employee is paid a higher wage than the prevailing wage for a contracted job, should we report only the prevailing wage or the actual wage they are paid? For example, if the prevailing wage is $29.05 per hour but the employee is paid $32.00 per hour for other non-contract jobs, which wage should be reported?
Answer: When filling out the certified payroll report (CPR), you should report the amounts that employees are actually paid. In this case, $32.00 is what needs to be reported on the CPR. This information should match what is on the employees’ paycheck. If there are differences between these two documents, it can bring unnecessary attention to the situation. Agencies or prime contractors overseeing compliance might question why there is a difference and suspect mistakes are being made or that deception is at play. This could prompt them to look further into your records.
Question
If a non-profit like a Rural Electric Cooperative performs labor on a federally funded project themselves instead of contracting it out, are they required to pay and report wages in compliance with the Davis-Bacon Act?
Answer: This is a very good question. If you are a subcontractor on a DBA/DBRA project, all workers must be paid a prevailing wage and submit a certified payroll to the prime contractor for all work performed on the project. Even if the Rural Electric Cooperative is actually the client of the DBA/DBRA project, the work is still covered by these regulations. This means that the prevailing wage must be paid, and these reports must be maintained by the Co-op.
Question
Are individuals classified as 1099 contractors required to be paid prevailing wages?
Answer: There’s a lot of confusion around 1099s in the construction industry, so let’s clear things up. First and foremost, a 1099 is a tax form, not a type of employee. It’s a common misunderstanding to refer to independent contractors as “1099 employees.” This term is contradictory, much like calling someone a “little giant.” You are either an independent contractor or an employee. Period.
If you are using an independent contractor with the proper contract model in place, then technically, the short answer to this question is no, an individual classified as a 1099 contractor is not required to be paid prevailing wages. But (and this is a very big “but”), not utilizing the proper contract model can lead to problems, especially surrounding pay. While employing this type of contractor isn’t forbidden, there are stricter rules surrounding it. A 1099 is only required when your company needs a worker with a specialized skill that your company doesn’t typically employ. This also means that the worker is responsible for:
- Deciding what work they accept
- Negotiating the charge or pay for the work
- Scheduling when the work is performed.
It’s essential to understand the distinction and ensure that proper contracts are in place to avoid any complications.
.
.
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.
.
.
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.