For federal construction projects in the United States exceeding $2,000, the Davis-Bacon Act requires contractors to pay their “laborers and mechanics” the “prevailing wage.” Typically, a federal construction contract will incorporate a wage determination which outlines the prevailing wages for the workers expected for the project. But what if you discover that you need another type of worker not listed on the wage determination?
Here are five things you should know about adding wage rates to an existing DBA wage determination.
1. What is a wage determination?
Prepared by the Wage and Hour Division of the U.S. Department of Labor, a wage determination is a document listing the prevailing hourly wages and fringe benefits for each classification of laborer or mechanic in one of four types of construction—building, heavy, highway, and residential. Because the prevailing wage varies with geography, WHD prepares wage determinations on a regional basis, oftentimes a multi-county area. So, for example, WHD has prepared a wage determination of prevailing wage rates for highway construction projects in the Kentucky counties of Boone, Campbell, Kenton and Pendleton. You can check out WHD’s library of wage determinations at wdol.gov.
2. A contractor can add a wage rate through the conformance process.
DBA wage determinations do not list every classification conceivably necessary to perform on every federal construction contract. So, a contractor can seek to add a necessary classification, during the performance period, through the conformance process. But to add the additional classification, the contractor must satisfy a three-part test:
- The work performed by the requested classification cannot be performed by a classification already in the wage determination.
- The requested classification is one used in the area by the construction industry.
- The proposed wage rate, including any bona fide fringe benefits, must bear a “reasonable relationship” to the rates in the wage determination.
3. The conformance process is narrowly limited.
Conformances are granted sparingly to preserve the integrity of the bidding process. Typically, a challenge to a wage determination—based on, say, its failure to include a classification that a contractor knows it will need on the project—should occur before contract award. Otherwise, an awardee could simply use the conformance process as a tactic to pay its workers less than was expected by other offerors. For this reason, additional classifications and rates (particularly lower ones) will likely only be approved if they were not foreseen or anticipated before the contract was awarded.
4. When does a new wage rate bear a “reasonable relationship” to rates in the wage determination?
The analysis on this point focuses on comparing apples to apples. For example, if the proposed classification and wage related to a skilled worker, then the focus is on the wages of skilled workers in the wage determination. Or if the new wage relates to power equipment operator, then the wages of the wage determination’s power equipment workers take center stage. And so on.
In addition, differentiating between union wages and non-union wages plays an important role. As you could likely guess, if the wage determination itemizes predominantly union wages, then a new wage would need to bear a “reasonable relationship” to the union wages, with little or no focus on the non-union wages. And vice versa.
5. WHD Must Approve a Conformance Request.
To initiate a conformance request, a contractor prepares an SF-1444 and submits it to the contracting officer. The contracting officer reviews the form, indicates whether the contracting agency agrees with the request, and then forwards the request to the WHD’s Branch of Construction Wage Determinations for approval.
If the BCWD denies the conformance or sets the conformed wage too high, a contractor can appeal to the WHD Administrator. And if the Administrator’s decision doesn’t make the contractor smile, it can take its dispute to the Department of Labor’s Administrative Review Board.
Though sometimes difficult, it is possible to obtain a conformance to a wage determination. Give us a call if you need to add wage rate to your federal construction contract.