Published date: 04/29/2021
Let’s continue the conversation about the most frequent issues contractors struggle with when it comes to prevailing wage. Today’s topic: misclassifications.
Yes, this one might seem more nuanced on the surface, but it is actually one of the most prevalent and pervasive mistakes made in the public works construction industry (just google it – you’ll see). And there’s no better place to start than by first discussing what exactly constitutes as prevailing wage work – because as basic as it might seem, one of the most common errors contractors make right off the bat is thinking that certain types of work don’t fall under prevailing wage.
According to the Davis-Bacon Act (DBA), which sets forth the prevailing wage laws instituted on federally funded construction, prevailing rates must be paid to all employees of contractors and subcontractors performing work on a project. The United States Department of Labor (USDOL) defines these workers as laborers and mechanics who:
- Perform work that is manual or physical in nature;
- Use tools; or
- Perform the work of a trade.
As you can see, this is a pretty broad definition. Because of this, some contractors may easily make the mistake of thinking it’s open to interpretation. But we’re sorry to say – it’s not.
Scope of Work
Forget about whatyou feel should or should not count as prevailing wage work. Fines and penalties in this industry don’t care about your feelings. They only uphold the law. Clearly, when most people think of construction, they visualize a worker building something. But in reality, the scope of work subject to prevailing wage extends far beyond that. Any kind of demolition, installation, repair work, or alteration performed on a construction site can also be subject to prevailing wage. And yes, this can even include painting, decorating, or landscaping.
Some other commonly overlooked trades that can potentially be subject to prevailing wage include surveying, equipment repair, and material delivery. However, these kinds of work require closer inspection because they are not necessarily subject just on their own merits alone. For example, surveying work that was performed during the design phase and before the contract was awarded does not qualify as prevailing wage work. (When it comes to survey questions, you should consult the Field Operations Handbook Ch. 15 and All Agency Memorandums (AAM) 212 and 235 to have a complete understanding.) Likewise, material suppliers that simply deliver materials but do not assist laborers or mechanics via manual work in moving or installing the material are exempt as well. Foremen, too, can be exempt from prevailing wage unless they actually participate in craft work and spend a significant enough amount of their time doing so.
Typically, the line is drawn when the work is not “manual” in nature. This means employees of contractors that are executive, administrative, or professional workers are not covered by prevailing wages.
Scope of work is only the tip of the iceberg. Since we’ve broadly covered what kind of work is subject to prevailing wage, now we need to be able to differentiate it. Because as most everyone knows, not all covered work is created equal. And this is where contractors seem to err the most.
On any given project, there’s a variety of different trades performing work. Electricians, carpenters, equipment operators – you name it. Often times, there are different subcategories within a craft, a.k.a. classifications. And each of those classifications will have a different prevailing rate associated with them.
The contractor needs to assess the type of work being performed and pay the worker appropriately according to the classification’s designated rate. Typically, with federal projects, these rates and their work descriptions are outlined in the wage determinations that are provided by the project owner or entity awarding the contract. Note: the key here is in the details. It might seem like there are nuanced differences between one classification and another. On top of that, if you do work on both federal projects and other state/local projects, there may be differences in how the governing agency defines a classification. That is something to keep an eye out for.
One common mistake contractors make is lumping multiple different classifications of work into one broad category. Another error may be always defaulting to a worker’s job title when it comes to pay. The fact of the matter is, the correct rate of pay is determined by the nature of the work performed rather than what the employee’s position is on paper. For example, if a worker is a carpenter by trade, but spends a day finishing concrete in the school’s parking lot, then the associated prevailing wage rate required for that day’s work would be specific to the craft classification of concrete finisher or cement mason (depending on the area practice), not as a carpenter.
This kind of distinction can come back to bite contractors, especially if the awarding agency performs onsite visits to the jobsite and conducts field interviews. These are part of a federal regulation whereby an investigator talks to workers about their job and compensation while also observing the work being performed that day. They then compare these findings to certified payroll reports to makes sure that what is being reported on paper accurately reflects what is happening on the jobsite.
The last thing you should be wary of is conformances. As a contractor, there may be a time where there’s an oversight in the wage determinations provided by the awarding body and some classifications are not included when they are, in fact, needed on the jobsite. If you feel this is the case, it is always better to file a conformance request with the awarding body. And yes, there’s a form for that: SF1444. Don’t assume that just because an awarding body didn’t include it in the determination you are off the hook and can lump that work in with another craft. The burden is on the contractor to rectify the situation and they can still be held liable if an auditor or investigator uncovers the discrepancy.
If you’d like to learn more about conformances, misclassifications, and many other aspects of Davis-Bacon compliance, check out LCPtracker Academy – an online platform where you can take on-demand classes and earn certifications in prevailing wage compliance. For more information on the various certification programs and a full course list, visit www.lcptracker.com/academy.