P R E VA I L I N G WA G E S O N P U B L I C W O R KS

C O N S T R U C T I O N PA M E L A M A R T I N A N D J U S T I N TA N O U Y E

D E P T. O F L A B O R A N D I N D U S T R I A L R E L AT I O N S

WA G E S TA N D A R D S D I V I S I O NH T T P : / / L A B O R . H AWA I I . G OV / W S D

D L I R . WA G E S @ H AWA I I . G OV( 8 0 8 ) 5 8 6 8 7 7 7

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Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes

OBJECTIVES OF THIS PRESENTATION:

Understand the who, what, when, where, why and how of Hawaii’s prevailing wage law

Know the prevailing wage rates for laborers and mechanics

Ensure your Certified Payroll Process is Compliant

Identify Common Concerns for Contractors

Recent Developments in Legislation

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Labor.hawaii.gov/wsd

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153

106

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20 13

86

155

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0

20

40

60

80

100

120

140

160

180

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

FY12 FY13 FY14 FY15 FY16 FY17 FY18

Chapter 104 Notice of Violations Issued*$ OT Found Due

$ Prevailing WagesFound Due

$ Penalty FoundDue

# of Cases Closed

# Suspended

# of NOVs Issued

# of complaintsfiled

* All NOVs are 1st NOV's except FY12 - One 2nd NOV;FY13 - One 2nd NOV;FY15- One 2nd NOV; One 3rd NOV; One 4th and One 5th NOV.FY 16 - One 2nd NOVFY17 -Two 2nd NOVFY18 - Three 2nd NOV

Two 3rd, One 4th, One 5th

WHY Chapter 104, HRS?

“This [law], like the Federal Davis-Bacon Act, has as its guiding principle that bids for construction of public works should be based on the relative skill and efficiency of the contractors concerned and not on a difference in wages paid.

To state the principle another way, government money, coming from the taxes of all of us, should not be used to subsidize contractors who are depressing the wages of some of us.”

(Standing Committee Report No. 318, 1955 Regular Session)

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following a federal standard from 1931, Hawaii 1955

WHAT DOES CH. 104 APPLY TO?104 Applies to Public

Construction Contracts

>$2,000 8

OTHER COVERED PROJECTS• Construction projects funded by Special Purpose Revenue

Bonds (SPRB). §104-2(g)(h), HRS

• Construction projects for buildings where more than 50% is leased to a state or county agency. §104-2.5, HRS

• The definition of “Public Works” includes private projects “where the funds or resources required to undertake the project are to any extent derived, either directly or indirectly, from public revenues of the State or any county, or from the sale of securities or bonds whose interest or dividends are exempt from state or federal taxes.” §104-2(a), HRS

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What type of project or activity is covered under construction?

New ConstructionReconstructionDevelopmentImprovementAlterationRepairRenovationPainting

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Decorating Dredging Shoring Sewer Inspection

and Repair

…Other activities include: Demolition or excavation

Landscaping

Termite treatment; and

Installation at the construction site of items or articles fabricated off-site, such as shelving, drapery, and communications equipment

Manufacturing or furnishing of materials, articles, supplies, or equipment on the job site

Warranty work

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Other activity performed by a laborer or mechanic employed at the site is included if

the activity is an integral part of or is in conjunction with a construction contract, or if

there is substantial construction activity involved in a supply, service, or other type of

non-construction contract….

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1) The law applies to work performed at the public work site by any laborer or mechanic, includingowner-operators.

2) The law also applies when transportingmaterials, supplies or equipment

• to or from the public work site,

• between a public work site and another public work site, or

• between a public work site and a dedicated site, when performed by a laborer or mechanic employed at the job site. (See HAR 12-22-1.1)

Who is covered by 104?

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Prevailing area practice refers to the classification of work used by contractors whose wage rates were determined to be prevailing in the area and published in

the Wage Rate Schedule.

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What is prevailing area practice?

IDENTIFY EMPLOYEES WITH CLASSIFICATIONS FROM THE

WAGE RATE SCHEDULE (WRS)

Classifications in Wage Rate Schedule are decided by the prevailing area practice.

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CLASSIFICATION EXAMPLES: Equipment Operator (Group 6)

Laborer I

Carpenter Apprentice Step 3, Indentured on 9/1/12

Glazier

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WRS - UPDATES• Current is WRS 494 Issued

February 18, 2019• Updated twice a year – on or

about Feb. 15 and Sept 15• Available on the Internet search

for Hawaii Wage Rate Schedule• When the prevailing wage

increases the contractor must increase the wages accordingly. Future anticipated increases have been included where possible.

JAN FEB MAR

APR MAY JUN

JUL AUG SEP

OCT NOV DEC

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WAGE RATE SCHEDULE UPDATESThe Wage Rate Schedule (WRS) Bulletin No. 494, effective February 18, 2019, is available on the Internet at:

labor.hawaii.gov/rs

Notice by email contact dlir.research@hawaii.gov

Please call the Research & Statistics Office at (808) 586-9019 if you have any questions.

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A copy of an apprentice certification or status of agreement should be attached to the certified payroll submitted to the contracting agency.

Indenture date and current step or level of the apprentice should be provided for every apprentice listed on the certified payroll.

To check on apprentices you can call: 586-8877 (Workforce Development Division Apprentice Office)

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Apprentices on Certified Payrolls

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Common Challenges in Compliance

A. Prevailing wages

B. Fringe benefits

C. Overtime

D. Weekly pay requirement

E. Certified payrolls and record keeping requirements

F. Posting WRS on the job site, and furnishing the WRS to non-union employees. (Already covered in a previous slide.)

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Prevailing Wages:

The employer can pay any combination of the basic hourly rate and fringe benefits in order to meet the prevailing wage requirement in the applicable Wage Rate Schedule.

Basic Hourly Rate+ Fringe Benefits= Prevailing Wage

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Carpenter’s rate on 9/19/18:

– basic hourly = $49.45

– fringe benefits = $21.75

– prevailing wage = $71.20

EXAMPLE: Refer to WRS #493, pg 1

Employer can either: pay the entire $71.20 directly to employees; or pay any combination of the basic hourly rate & fringe

benefits which equals $71.20.e.g. $60.20 as the basic hourly rate, and

$6.00 per hour for 401K; $5.00 for medical.

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A fringe benefit is a contributionirrevocably made by a contractor to atrustee or to a third person accordingto a fund, plan or program in providingbenefits to a laborer or mechanic, suchas medical, insurance and pension.

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What is a fringe benefit?

To be considered an allowable fringe benefit, the contributions must:

A. Fall into one of six categories:

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1. Health and welfare2. Life insurance, disability insurance*3. Vacation** and holiday pay4. Pensions5. Apprenticeship or similarly approved

programs6. Other bona fide fringe benefits determined by

DLIR

The allowable hourly fringe benefit credit is determined by dividing the monthly contribution rate by 173 hours. (See Hawaii Administrative Rule 12-22-4)

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Note: Since the hourly fringe credit is based on straight-time hours, credit can be used for straight- time hours only.

Method to Determine the Fringe Benefit Hourly Credit

for fringe benefits based on a monthly rate

eg. Monthly Health Premium: $865.00Hourly credit: $865.00 ÷ 173 hrs = $5.00/hr

So, if the prevailing wage is $55.00 per hr, the employer can take a $5.00 per hr fringe credit, and pay $50.00 per hour as the basic hourly rate.

• Saturday;• Sunday;• a legal State holiday; or• more than 8 hours on any other day whether

worked on one or more projects.

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When must overtime be paid under Chapter 104?

Overtime is computed at least 1.5 times the basic hourly rate, plus the fringe benefit rate at straight time. Note some classifications Sundays are 2 times; Labor Day 3 times. (See Note 13, Wage Rate Schedule)

CALCULATING OVERTIME PREVAILING RATE TAKING A FRINGE BENEFIT CREDIT FOR STRAIGHT TIMEHOW FRINGE BENEFIT IS GIVEN FOR ALL HOURS WORKED

CARPENTERWRS 493

Straight Time

Overtime

Basic Hourly Rate $49.45 X1.5 $74.175Fringe Benefit $21.75 = $21.75Prevailing Rate $71.20 $95.925Possible Fringe Benefit Credit

$11.00 $0

Amount to Pay $60.20 $95.92

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Weekly Pay Requirement All employees must be paid weekly

and within 5 working days after the end of the pay period.

Certified payrolls must be submitted to the contracting agency weekly.

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Certified Payrolls: Certification affirms that payrolls are

correct and complete and appropriate classifications and applicable prevailing wage rates are paid.

Penalty for falsified certified payrolls is $10,000, and a three year suspension from Chapter 104 work.

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FORMAT OF CERTIFIED PAYROLLS• No standard form required. Any form that includes

all required information and is certified is acceptable including itemized fringe benefits.

• DAGS has an electronic form that assists with compliance. www.pwd.hawaii.gov look for Construction Administration Forms -Construction Ongoing STATEMENT OF COMPLIANCE & DAGS-ECP FOR PAYROLL

AFFIDAVITS

• Federal form WH-347 is also available on line at www.dol.gov/whd/forms/ Click on Forms

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Signature required at bottom of form

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EMPLOYEE INFORMATION

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REQUIRED INFORMATION ON CERTIFIED PAYROLL:

Employee’s full name and home address

Employee’s Social Security Number (last four digits only)

Job Classification(s)

Rate of pay includingapplicable fringe benefits (itemized breakdown)

Daily and weekly number of hours worked

Straight time hours

Overtime hours

Total earnings

Amount and purpose of deductions

Net pay

Payment date37

Other Requirements for Certified Payroll:

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Employer must preserve time and payroll records during the project, and for 3 years after its completion.

Certified payroll should be signed by an authorized official of the company for example, the owner, partner or corporate officer

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PENALTIES• $10,000 and suspension for delay or for certification

of falsified payrolls , and $1,000 a day for each day of delay(104-22(b) HRS)

• Notification of Violation (NOV) (104-24,HRS)

– 1st – Equal 25% of back wages due or $250/offense

– 2nd – w/in 2 yrs of 1st Equal to amount of back wages or $500/offense

– 3rd - w/in 3 yrs of 2nd Equal to twice amount of back wages or $1,000/offense and

– SUSPENSION FROM PUBLIC WORK FOR 3 YEARS (104-25, HRS)

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ENFORCEMENT RESPONSIBILITIES• Both the Contracting

Agency and the Department of Labor and Industrial Relations have joint responsibility

(Section 104-2 (e) withhold, (f) include 104 req in contract,104-3(a) review certified payrolls, 104-4 terminate and go against sureties for failure to pay; 104-21 report violations,104-24 withhold and order payment)

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DIFFERENCESCHAPTER 104

• OT – after 8 hrs/day or Sat, Sun or State Holidays (rate also 2x or 3x)

• Wage Rate Schedule issued 2 times a year

• Reporting itemized fringe benefits & date paid

• All laborer & mechanics

• Transporting of workers or materials

• Only DLIR can issue penalties

DAVIS BACON

• OT- after 40 hours a week

• Wage Rate Schedule issued only once with the project

• WH-347 Cert. payroll

• Owner-operated truckers special treatment

• Transporting not included

• Contracting Agency can issue penalties

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RESOURCES Please call the Wage Standards Division

at 586-8777 Go to labor.hawaii.gov/wsd Other resources: Blog: Inside Hawaii

Wage Standards and the DLIR http://hawaiiwagestandards.blogspot.com/

Facebook: Hawaii Teens at Work

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