Published date: 07/24/2024

Last month we posted a one-page guide outlining six steps for conducting your own internal assessment. One of those steps was to create a checklist of documents to keep track of. That said, understanding why these are important and what you should be looking for is critical to keeping your project compliant. After all, the point of an internal assessment is to identify what an auditor or an investigator might look for.

To help put this into perspective, here are six key questions you should be asking yourself to more efficiently guide your review process of those documents.

What is the funding source or jurisdiction of your project?

Funding sources for public works projects can include federal, state, or local government budgets, bonds, and grants. It’s important to know the funding source because it can have a drastic impact on what compliance requirements your project needs to follow.

For instance, certain states have their own prevailing wage rates that differ from Davis-Bacon. For projects funded by those states, their specific rates would need to be met (remember: if both federal and state funds are involved, the higher of the two rates must be paid). Even local jurisdictions or funding from specific departments of the federal government can sometimes have an impact on requirements, i.e., the Department of Treasury and the Inflation Reduction Act.

Are you following the correct wage determination(s)?

A wage determination outlines each classification to be utilized for a project and the respective minimum rates of pay and fringes for each. But not all determinations are the same. Any given wage determination can vary depending on the region, the type of construction, when the project was out for bid, or whether state-specific laws are at play. If you’re a contractor, you’ll typically receive the determination(s) for a project from the awarding body, which is often a government agency.

Are paystubs, daily logs, and certified payroll reports telling the same story?

Accurate pay stubs, daily logs, and certified payroll reports are vital for maintaining compliance, financial transparency, and trust in the industry. Discrepancies between these (and other) documents can raise red flags for auditors and investigators and warrant further scrutinization. Likewise, organizations also doing their own internal assessments should treat them the same way to avoid trouble down the road. 

Consider these scenarios: 

• What if a contractor’s daily log shows a worker on the jobsite during a week where they are not reported on a certified payroll? 

• What if daily reports describe electrical work being completed that week, despite there being no electricians appearing on certified payrolls? 

• What if the hours reported on a paystub don’t exactly match what is entered on a certified payroll?  

• What if the classifications on a certified payroll don’t match those listed on the project’s wage determination? 

Looking at each of these documents separately without referencing the others can make it difficult to spot mistakes, oversights, and in egregious cases, willful deception. Investigators will dig further into records if they are given reason to – so, don’t give them that reason. 

How are workforce goals being tracked?

Many Davis-Bacon projects will include an apprenticeship element (i.e. goals and/or ratios), and some states can even have their own rules (like California) . Some contracts, however, may take an even more proactive approach by setting specific hiring goals that address imbalances within the workforce. Examples include:

• Project Labor Agreements: These projects often have their own specific workforce requirements. For example, one of the most common workforce requirements is hiring people local to the project’s site of work. In addition, some projects may require the hiring of specific underrepresented or disadvantaged groups.

• Other industry-specific projects: A good example of this is HUD Section 3. The Housing and Urban (HUD) Development Act of 1968 channels employment and economic prospects from specific HUD funded initiatives towards low-income individuals and businesses that bolster their communities (please note: their requirements for how this is tracked have changed in recent years!). 

Tracking these workforce requirements can be challenging, especially when dealing with multiple contractors across different projects. Validating compliance and maintaining accurate records can become overwhelming for organizations if they don’t have the right tools in place. To streamline this process, it’s helpful to use a system that can efficiently track and manage these requirements, helping organizations stay on top of their goals and regulatory obligations.

Are you aware of every single vendor that steps foot on your project? How about the full scope of work each are contributing?

Monitoring all vendors and contractors involved with a project is vital – and they can be missed more easily than one might think. This can create a ripple effect that leads to potential compliance violations for project owners and prime contractors. The single most effective method for identifying vendors that would otherwise slip through the cracks is by performing field wage interviews. Conducted on project sites by entities enforcing labor compliance, such as contracting agencies or prime contractors, these interviews help verify the accuracy of certified payroll data by providing insights about what is occurring on the jobsite. They help prevent violations by:

• Verifying Hours and Scope of Work: Confirming that hours and classifications reported on certified payrolls align with the actual work performed and the tools utilized.

• Confirming Wage Rates and Benefits: Checking that workers receive the same wages, fringe benefits, and deductions as documented on certified payrolls.

• Identifying Potential Violations: Detecting discrepancies that may indicate non-compliance with labor laws and allowing prompt corrective action. 

• Documenting Compliance Efforts: Demonstrating proactive compliance efforts to uphold prevailing wage standards and mitigate legal risks. 

Curious about labor compliance software solutions that can help tie each of these aspects together? Check out https://lcptracker.com/solutions/ .

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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.