Published date: 09/20/2023
Unless you’ve been living under a rock (or just don’t keep up with public works in general), you’ve probably heard all the noise generated in the last few weeks about the U.S. Department of Labor (USDOL) announcing the largest round of rule updates to the Davis-Bacon and Related Acts (DBRA) in nearly 40 years. With the changes going into effect October 23, 2023, now might be the next best opportunity for both project owners and contractors in the public works space to reevaluate their current processes for monitoring their labor compliance.
First thing’s first: it’s 2023. If you’re not already using some kind of electronic solution to help with Davis-Bacon and prevailing wage compliance, what are you doing? No, seriously… what are you doing? Save for a few exceptions, any public agency or prime contractor that doesn’t utilize some sort of software or application to help maintain compliance is wasting both time and effort that could be better served elsewhere. Consider this: most of us use electronic devices and applications for just about every other aspect of our lives… so why draw the line here?
In this blog, we’ll take a deep dive into the biggest advantages of electronic solutions – or, more specifically, web-based applications, since they offer the most capabilities and reap the biggest benefits – for both public agencies and prime contractors. But before we do, let’s first get a clearer picture of the typical obligations and responsibilities of each of these entities.
PS: if you are a subcontractor on a project, stay tuned for a future post where we’ll dive into which solutions work best when neither the prime nor agency have implemented a project-wide solution.
Public Agencies and Prime Contractors
Public agencies, or organizations that award public works contracts, have a bevy of items they keep track of to make sure that their contractors are complying with federal, state, and/or local prevailing wage regulations. Prime contractors often have a very similar list of responsibilities since they are ultimately responsible for all subcontractor compliance on their projects in addition to their own. Some of these shared responsibilities can range from:
- Collecting certified payroll reports (CPRs) and other required documentation from contractors
- Reviewing CPRs for completeness, accuracy, and potential violations
- Facilitating corrective action from contractors for any labor violations uncovered (including any applicable restitution and CPR revisions)
- Conducting employee interviews (also commonly referred to as field interviews, wage interviews, or – in the case of the USDOL – labor standards interviews). Note: these are more commonly conducted by agencies because DBRA requires it of them, but sometimes primes will do this as an added measure to monitor subcontractor compliance and mitigate risk.
- Making sure contractors are following apprenticeship and training program requirements
- Reporting on any project-specific workforce initiatives (like local hiring or other demographic goals)
Beyond the above items, prime contractors also have the responsibilities that are required of every contractor. These most notably include:
- Creating and submitting CPRs for their own employees on a weekly basis (Note: the submission frequency might differ slightly if the project is state and/or locally-funded)
- Following applicable apprenticeship program requirements for their own employees
- Retaining all records for three (3) years after the completion of a project and making them available upon request if being audited
How a Web-Based Solution Can Help
Benefit #1: It does the most tedious and mundane work for you
For public agencies and prime contractors that are reviewing certified payrolls submitted from multiple tiers of contractors (each with numerous employees), the weekly requirement can lead to a significant volume of submissions each month. This can become an extremely labor-intensive process, especially when handling CPRs manually. So much so, in fact, that many organizations may only review a fraction of what they receive because they simply don’t have the bandwidth.
A comprehensive web-based application can connect project owners and all contractors in one solution to greatly streamline this process. There is no software to download since everything is accessible through the web. Furthermore, you remove that silo; prime contractors and agencies become administrators of the application and can grant contractors system access (with customizable permissions), enabling them to directly submit their CPRs within the system. The admins can then rely on the application to validate the CPRs instead of having to review them manually (more on this in the next section).
Benefit #2: It’s easier to spot errors and it saves time
When manually reviewing CPRs, agencies typically watch for ‘red flags.’ When an issue is spotted, they often communicate with contractors via phone or email, which can result in a game of ‘tag’ with missed calls and back-and-forth messages. Likewise, there can be a similar process for primes when dealing with their subcontractors.
Some web-based applications can automatically detect errors or omissions in CPRs through built-in mathematical and logical checks. They can also simplify follow-up actions. If an awarding body or a prime contractor needs clarification on something or notices any missing details, they can directly communicate with their contractor within the system. The contractor can then quickly make the necessary edits and resubmit the CPR, allowing for a much more efficient process.
Benefit #3: It helps contractors properly mitigate risk
Because of the validation checks discussed above, contractors can rest easy knowing that mistakes and oversights can be caught before they become a problem. This is beneficial for a contractor of any size, but it’s especially valuable to prime contractors who – let’s be honest – carry the heaviest burden of risk. They can take swift action to help ensure that subcontractors correct their mistakes and in turn protect themselves from any outstanding liabilities.
Benefit #4: It can expedite the creation of certified payrolls and eliminate storage
Another great thing about web-based solutions is that they allow you to create digital records that are easy to populate, store, and access. For example, certified payrolls can be generated using data uploaded from the contractor’s existing payroll system so that you don’t have to reenter it manually. The documents are then archived electronically and can be accessed at a moment’s notice in multiple file formats. In case of an audit, you can promptly give auditors access to relevant records. And if you need to generate redacted versions that can be used to respond to Freedom of Information Act (FOIA) requests, make sure to find a solution that provides that capability so that you are not wasting hours redacting information.
Benefit #5: It’s easier to identify violations on the jobsite that don’t appear on paper
As previously mentioned, labor standards interviews (as referred to by the USDOL), are a standard part of agency compliance. And the right solution provider can offer significant advantages here as well – especially when they can sync with a certified payroll application.
Imagine an investigator (or a prime contractor) on the jobsite with an electronic tablet and a mobile app containing a digital SF-1446 form. They interview workers about their job and compensation, record responses in the app (which already has worker data synced from the certified payroll application), and then return to the office. Because of the integration between the two applications, there’s no need to manually cross-check the data recorded in the interviews with CPR submissions for those workers. The application would already do that for you and identify discrepancies that might result in violations.
Note: many primes are increasingly starting to do this themselves to give them even greater oversight on their projects and further mitigate risk.
Benefit #6: It allows for a better analysis of workforce programs
Some agencies incorporate workforce hiring goals into their labor compliance programs to promote equitable practices, diversity, inclusion, and community support. They track various ancillary reports looking at a plethora of workforce and local business data to measure progress on their initiatives. And they can access insights into these efforts with just a few clicks by employing a comprehensive labor compliance solution that can captures all of this data.
Note: prime contractors that are subject to these workforce initiatives can similarly reap the benefits of these reporting features and more easily prove they are hitting benchmarks.
Benefit #7: It can help agencies secure future funding or help primes win that next bid
Funding is crucial for government agencies to accomplish their objectives. And to secure and maintain that funding for future projects, they often need to demonstrate that they are upholding compliance as required of them by the USDOL. One of the best ways to do this by using an efficient electronic solution to establish a strong labor compliance program.
Likewise, prime contractors can build good merit and bolster their reputation by having an equally strong compliance process in place. And web-based applications that can do everything outlined above are one of the best ways to achieve that.
If you’d like to learn information on electronic solutions that can help provide each of the benefits mentioned about, please check out https://lcptracker.com/solutions/.
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.