DCCUMENT RESUME 02535 - [A1732733] (Restricted) [Administration of Minimum wage Rate Determinations Subject to Provisions of the Davis-Bacon Act]. March 8, 1977. 5 pp. Report to John Kane, Area Director, Department of Housing and Urban Development: Milwaukee Area Office, WI; by G. F. Stromvall, Regional Manager, Field Operations Div.: Regional Office (Chicago). izsue Area: Consumer and Worker Protection (900). Contact: Field Operations Div.: Regional Office (Chicago). Budget Vunction: Education, Manpower, and Social Services: Other LaboL Services (505). Organization Concerned: Department of Labor. Authority: DaTis-Bacon Act. The Davis-Bacon Act requires that workers employed on Federal or federally assisted construction projects costing in excess of $2,000 be paid minimum wages and benefits based on prevailing rates, as determined by the Secretary of Labor. Federal contracting agencies are responsible for enforcing minimum wage provisions pursuant to regulations issued by the Department of Labor (DOL). Findings/Conclusions: The Milwaukee Area Office sponsored training workshops and delegated enforcement responsibilities to grantees. Housing and Urban Development (BUD) instructions require actions to ensure contractor compliance. The area office retained responsibility for monitoring grantees' enforcement practices, but HUD representatives visited the Beloit project only once and did not visit the Sheboygan site. On the Sheboygan project, several instances of noncompliance were identified, including failure to interview workers, failure to follow conformance procedures, failure to obtain registration papers, and omission of applicable area wage determination from contract specifications. One wage payment violation and some inaccuracies were disclosed. On the Beloit project, it was found that the grantee had not interviewed employees, nor established procedures to ensure that contractors submitted payrolls, nor resolved .-nderpayments of wages. A limited payroll examinaticn revealed two examples of violations. In general, it was believed that the grantees and HUD were ineffective in assuring ccntractor compliance with labor standards. (HTV) *)ot mks'ak vailable to pub, 14-'"'? ~ UNITED STATES GENERAL ACCOUNTIN-G-OFFICE REGIONAL OFFICE CAL m OUILDING. le, FLOOR WCT iSOFS z:"' -. o sour" DOEARORN STRr T AT.- - -- CHICAGO. ILLINOIS 60604 :- +: ".......... arch 8, 14jCon;z'l--i 7;7a _ '' : Conti f f. .-.-- T h -- -- Mr. John ¥ane, Area Dire-tor U.S. Department of Housing and Urban Development Cv .. ZC//$i Milwaukee Area Office 744 N. 4th Street Hil.waukee, Wisconsin 53203 Dear Hr. Kane: '£he General A~ccountfig Office is reviewing the Department of Labor's (DOL) and Federal contracting agencies' administration and enforcement of dinimur, wage rate determinations issued for Federal or federally-assisted conastrcFion prfcects subject to the labor standard provisions of the Davis-a-co.. A:tC The review is being performed at DOL and selected Fedcral c<-.. utLing agencies and contractor sites in various regions. In Regioa 7 we te-.w.ed two Departmev.n of Housing and Urban Development (UW i:,t -,.d;.oojects administered by the Milwaukee Area Office. abce -avix-I-cmn Act requires that all workers employed on a Federal or fe!i.zilly-asststed construction project costing in excess of $2,000 besaid *drnrm wages and fringe benefits and that these be based on rates t!i -.cretary of Labor determines as prevailing on sitilar projects Sn the area. Every construction contract subject to the act must contain a provision stipulating that contractors and subcontractors must pay the workers at least once a week wages not less than those determined by the Secretary to be prevailing. Federal contracting agencies are responsible for enforcing the riituam wage provisions of the Davis-Bacon Act. Enforcement is carried omit pursuant to regulations and procedures issued by DOL which is also r,-ponsible for coordinating and monitoring the enforcement activities of Federal agencies. An objective of our review was to determine whether the enforcement efforts by DOL and Federal contracting agencies are ade- quate to ensure that contractors and subcontractors are complying with the iimirum wage provisions of the act. We reviewed enforcctent and monitoring practices of the Milwaukee Area Office and the respective grantees for the two HUD funded construc- tion projects shown as follows. Project and Construction HUD DOL wage location cost program Grantee determination Extension of open $125,600 Community Sheboygan 76-WI-14, pedestrian mall development Dept. of City 3/18/76i/ Sheboygan, Wi. Development One duplex and 13 $290,000 Section 8 Wisconsin 76-WI-41, single family Housing Finance 4/5t76 homes, Beloit, Wi. Authority a / The project determination instructed the grantee to use DOL ar _a wage determination WIS 75-2048, 3/14/75. ENFORCEMENT EFFORTS NOT FULL! EFFECTIVE The Milwaukee Area Office is responsible for enforcing wage standards on BUD funded construction projects in Wisconsin and instructing grantees on their responsibilities under the act. Accordingly, the Area Office sponsored training workshops on how to enforce the labor standards and delegated enforcement responsibilities to the grantees. BUD instructions require grantees take actions, including the follow- ing, to ensure contractors and subcontractors comply with the act. -- Obtain and review weekly certified payrolls. -- Interview a sufficient number of employees at the construction site and ascertain that they are paid the proper wage. -- Conform worker classifications that are not covered by the wage determination. -- Obtain written evidence that each apprentice is registered by the appropriate State or Federal agency. The Area Office retained responsibility for monitoring the grantees' enforcement practices at the Sheboygan and Beloit projects. In addition, the Area Office retained responsibility for interviewing construction workers at the Beloit site. However, HEn representatives visited the Belait project only once and did not visit the Sheboygan site. -2- The grantees' enforcement efforts on the Sheboygan and Beloit projects are discussed below. Sheboygan project Five prime contractors and one subcontractor worked on the construction project for extending the open pedestrian mall. These contractors employed about 52 laborers and mechanics. Our inquiries identified the following instances of noncompliance with the act. -Neither the grantee nor HUD representatives interviewed construction workers. -The grantee did not follow conformance procedures. The certified payrolls included seven worker classifications that were not shown an the wage determination. -Two, contractors did not submit certified payrolls weekly and two did not submit payrolls at 11. The grantee did not have a procedure to ensure timely receipt of certified payrolls. -The grantee did not obtain registration par-rs for one apprentice who worked on the project. -The grantee omitted the applicable area wage determination from the contract specifications, although the project wage determination was included. We examined one certified payroll for three of the five prime contractors and one subcontractor as follows. Pay period 'Contractor Location ended Peters Construction Milwaukee. Wi. 6/26/76 Sch4elk Electric Sheboygan Falls, Wi. 6/4176 RL A. Honold Co. Sheboygsn,' . 7/3/76 Buteyn Excavating Shboygan, Wi. 6/19/76 (subcontractor) .Our limited payroll examination disclosed one wage payment violation .and other inaccuracies summarized below. -- Peters underpaid a carpenter $3.50. The contractor used an obsolete union pay scale fiich was $0.20 an hour lover than the wage rate shown in the wage determination. -Peters, soaold, and Buteyn submitted inaccurate eertified payrolls that did not agree with wage rates and/or hours worked shows on supporting payroll and time records. -3- Beloit project One prime contractor and 13 subcontractors worked on the project for construction of one duplex and 13 single family homes. The contractors employed 55 laborers and mechanics. In July and October 1976 HUD representatives reviewed the grantee's enforcement .practices on this and other projects. BUD reported that' the grantee had sot: -- interviewed employees; -established procedures to ensure tiat contractors submitted required payrolls; and -- resolved underpayments of wages. While some corrective actions were initiated by the grantee, our inquiries indicated instances of noncompliance with the act or weak- nesses in enforcement as shown below. -BUD interviewed only one of the 55 employees who worked on the project, and the gratcee did not interview any employees. -The grantee did not follow conformance procedures In every insta.ce. One contractor used an "Insulator" classification for which a wage determination had not been requested. As the result of our inquiry, the grantee requested clarification of two other classifications used by one subcontractor. -- The grantee normally received certified payrolls on a monthly basis instead of weekly. We examined one certified payroll for 10 of the'13 subcontractors as follows. Pay period Contractor location ended City Wide Insulation Rockford, Il. 8125176 Bob Salberg Rockford, Il. 7/14/76 Uepp Plumbing & Beating Janeville, Wi. 8125/76 Wilson & Shipler Beloit, Wi. 7/17/76 Gary HcNeal Rockford, Il. 9/24/76 McGrath Electric Janesville, Wi. 9122/76 S & S Construci:.on Oregon, U1. 8/2a876 Rockford Floorcrafters Bockford, -ID. 10129/76 Alpine Decorators Rockford, IU. 10/22/76 Hallmark Drywall M aldison, Vi. ll/12/76 Our limited payroll examination and related inquiries identified the following wage payment violations. -City Wide paid!an insulator $2.85 an hour less than the rate included in the wage determination. Since the insulator worked 4-112 hours on t:c project, he was underpaid $12.83. -Hallmark paid two laborers $3.35 an hour less than the rate included in the wage determination. The two laborers delivered drywall and performed cleaning services at the prcject site and at other construction sites. Hallmark did not report the two laborers on the certified payrolls and did not allocate their time among the various jobs. There- fore, we could not quantify the underpayment. In our opinion, the grantees and BUD were ineffective in assuring that contractors complied with the labor standards of the Davis-Bacon Act and that employees working on the Sheboygan and Beloit projects had been paid the wages stipulated by DOL. Since BUD is responsible for enforcing the provisions of the act, we are referring these matters to you for appropriate investigation of contractors' violations and the grantees' failure to carry out enforce- ment responsibilities. We would appreciate being advised of the results of any investigations and actions taken by HUD and the grantees on noncompliance and contractors' violations. * copy of this letter is being sent to the Regional Ad-inistrator, Department of Housing and Urban Development, Region V, Chicago, Illinois, and to the Regionial Administrator, Employment Standards Administration, Department of Labor, Region V, Chicago, Illinois. Sincerely yours, Regional Hanager
Administration of Minimum Wage Rate Determinations Subject to Provisions of the Davis-Bacon Act
Published by the Government Accountability Office on 1977-03-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)