Construction work that is financed in whole or in part with federal funds in excess of $2,000 must adhere to certain federal labor standards requirements established by the Department of Labor, primarily the Davis-Bacon Act. The following material summarizes the policies and procedures set forth by Knox County Community Development (KCCD) and must be followed when undertaking construction projects with applicable funding to ensure compliance with federal labor laws.
Applicable Labor Laws and Requirements:
- Davis-Bacon Prevailing Wages
- Copeland Anti-Kickback Act
- Contract Work Hours and Safety Standards Act
- Equal Employment Opportunity
The Davis-Bacon and Related Acts require payment of locally prevailing wages on federally-assisted projects, as determined by the Department of Labor’s Wage and Hour Division.
Purpose and Scope of Davis-Bacon
The goal of the Davis-Bacon Act is to ensure that laborers and mechanics are paid at least the minimum prevailing wage rate for a particular area while working on federally-assisted projects. Davis-Bacon applies to construction projects, and those projects can be broken down into four main categories:
- Building construction
- Highway Construction
- Residential Construction
- Heavy Construction
The type of construction project of your proposed activity determines the wage rates for that particular project. The Department of Labor’s Wage and Hour Division establishes the “Wage Determinations” for job classifications, and these lists are updated periodically. The Wage Determination establishes the minimum pay and benefits that a contractor must pay his/her workers/laborers.
The David-Bacon Related Acts (DBRA) requires payment of applicable prevailing wage rates to all laborers and mechanics “regardless of any contractual relationship which may be alleged to exist.” Whatever method of compensation that is utilized (piecework, weekly contract draw, etc.), the amount of weekly compensation divided by the actual hours of work performed for that week must result in an effective hourly wage rate for that week that is not less than the prevailing wage rate for the type of work involved. Overtime rate is applicable when contract work week exceeds 40.0 hours.
Compliance and Reporting Requirements
Following items are required before construction work commences:
- Completion of Section 3 Certification Document (simply, is your business considered Section 3 – Yes or No; a list of 3 criteria is provided to determine if your business is classified as Section 3). Section 3 Certification is a requirement of the Office of Community Development when HUD funding is used for projects involving housing construction, rehabilitation, or other public construction.
- Work classifications your business will be performing along with wage rates including any applicable fringe benefits paid. Note – wage rates must meet or exceed approved prevailing wage rates provided by Knox County Community Development in conjunction with DOL.
After award, additional compliance requirements:
- Weekly submittal of certified payroll report (CPR) along with a completed “Statement of Compliance” (page 2 of CPR) signed and dated by the appointed agent or authorized payroll officer.
What’s included on CPR (see CPR link above for example):
Contractor/Subcontractor’s Name, Address of Contractor, Payroll Number, Payroll Week Ending Date, Project Name and Assigned KCCD Contract Number. Payroll Week should follow your company’s weekly start and end dates.
– Name of employee and tax-id (last 4 of SSN or assigned tax-id number).
– Work Classification* (must be a classification identified on the prevailing wage determination list). *If a classification is not listed, in coordination with Knoxville Habitat, contractor will submit necessary documentation to request a new labor classification.
– Hours worked per day within the reported payroll week (identify ST and/or OT worked per classification). Hours reported pertains to applicable project work only.
– Total hours worked.
– Rate of pay (ST and/or OT rate when applicable).
– Total amount earned for hours reported (applicable project only, ST and/or OT totals when applicable).
– If applicable, Total wages earned, includes wages collected for any other work during the reported payroll week.
– If applicable, standard deductions (FICA, Federal Tax Withholding, Other Withholdings).
– Net total weekly wages.
Gap Work Report:
Provide a weekly CPR listed as “No Work Reported” for the corresponding payroll week along with a completed and signed “Statement of Compliance”. For extended gaps between project work, a simple document advising of the “no work” period and when work is expected to resume will suffice.
Note – Contractors Using Subcontractors (listed as Tier2 Subcontractor)
Accommodations can be made for Contractors using Subcontractors (identified as Tier2 Subcontractor on weekly CPR’s). If Tier2 subcontractor is paid by the job, the Contractor must submit document(s) explaining pay rate conversions (pay rates must equal or exceed approved prevailing wage rates)*. Contractors are responsible for reporting all necessary payroll information for work completed on the applicable project including subcontractor name(s), tax-id (last 4 SSN), dates and hours worked, and total amounts earned.
*Knoxville Habitat can help with pay rate conversion methods.
The Contractor must make every effort to supply all necessary payroll information, the Tier2 Subcontractor is considered an extension of the Contractor; and liable for meeting all requirements under the Davis-Bacon act.
On those occasions, due to Tier2 Subcontractors potentially working with multiple contractors and total weekly gross wages are not readily available and/or standard deductions do not apply (paid as 1099), the Contractor may submit a request explaining the business circumstances. If approved, the Contractor may forego reporting total weekly gross wages and standard deductions for Tier2 Subcontractor (still required to report dates and hours worked on applicable project). If not approved and the Contractor is unable to provide necessary payroll information, the Tier2 Subcontractor will work with Knoxville Habitat Compliance Team to ensure all reporting requirements are met.
Additional Requirements – On-site Compliance Interviews
Knox County Community Development will perform confidential interviews with craft/employees of contractors/subcontractors. These interviews are necessary to ensure craft personnel are aware of their rights under Davis-Bacon and to verify wage rate accuracy.
For additional questions please contact Knoxville Habitat Compliance: