Administration and Enforcement of Davis-Bacon Act in Projects in North Carolina

Published by the Government Accountability Office on 1977-05-26.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                         ,OCUMSNT RESUME
02537 - [A1792797] (Restricted)
[Administration and Enforcement of Davis-Bacon Act in Projects
in North Carolina]. May 26, 1977. 4 pp.
Report to Hugh B. Campbell, Assistant Regional Administrator,
Department of Labor: Wage and Hour Div., Atlanta, GA; by Kyle E.
Haem (for Marvin Colbs, Regional Manager, Field Operations Div.:
Regional Office (Atlanta)).
Issue Area: Consumer and WorEer Protection: Standards, Laws, and
    Regulations Enforcement (903).
Contact: Field Operations Div.: Regional Office (Atlanta).
Budget Function: Education, Manpower, and Social Services: Other
    Labor Services (505).
Authortty: Davis-Bacon Act. Local Fiscal Assistance Act of 1972.
    Federal Revenue Sharing Act.
         Selected Federal contracting age-cies and construction
sites in the Department of Labor's (DOL) Region V were reviewed
to determine whether their enforcement efforts relative to the
Davis-Bacon Act ensured that contractors and subcontractors
complied with the minimum wage provisions of the act.
Findings/Conclusions: Under Federal revenue sharing, the North
Carolina Department of Administration was the recipient of
nearly $900,000 for renovation and repair of a custodial care
facility. Several insctaces of noncompliance with the Act and
with DOL labor standards were noted. Among the violations and
inaccuracies found were certified payrolls not submitted, no
interviews with workers, pay at less than prevailing rates,
underpayment, overtime not paid, and misclassification of
workers. Recommendations: Appropriate investigations should ba
made of the contractors' violations and of the Government's
failure to carry out its enforcement responsibilities. (DJ)
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                     UNITED STATES GENERAL ACCOUNTING OFFICE                         5
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                              ATLANTA, GsoRGIA        30303

                                                                      MAY 2 6 1977

Mr. Hugh B. Campbell, Assistant Regional Administrator
iage and Hour Division
U.S. Department of Labor
Room 331, 1371 Peachtree Street, NE
Atlanta, Georgia   36309
Dear Mr. Campbell:

      The General Accounting Office is reviewing the Department of Labor's
(DOLo and Federal contracting agencies' administration and enforcement of
minimus wage rate determinations issued for Federal or federally-assisted
construction projects subject to the labor standards provisions u. the
Davis-facon Act. We are making the review at DOL and at selected Federal
contracting agencies and contractor sites in various regions, including
Region IV.

      The Davis-Bacon Act requires that all workers employed on a Federal
or federally-assisted construction project costing in excess of $2,000
be pai4 at least the wages and fringe benefits which the Secretary of
Labor ietermines as prevailing on similar projects in the area. On con-
struction projects funded under the State and Local Fiscal Assistance Act
of 1972 (Federal Revenue Sharing Act), Davis-Bacon Act coverage applies
where 25 percent or more of the project cost is paid out of federal revenue
sharing funds and the total cost of the project exceeds $2,000.

      Every construction contract subject to t0- act must contain a pro-
vision stipulating that contractors and subcont. ictors pay their workers,
at least once a week, wages that are not less than those which the Secretary
of Labor determines to be prevailing. By agreement between the Secretary
of Labor and -hq Secretary of Treasury, DOL is responsible for enforcing
the minimumnwage provisions of the Davis-Bacon Act on covered projects
financed under the Federal Revenue Sharing Act.

     An objective of our review is to determine whether the enforcement
efforts by DOL and the Federal contracting agencies are adequate to ensure
that contractors and. subcontractors are complying with the minimum wage
provisions of the act.

     One of the projects we selected for review in Region IV was the in-
terior renovation and roof repair to certain buildings at the Western
Carolina Center, a state operated custodial care facility in Morganton,
North Carolina (Burke County). Total construction cost of this proJect--
about $899,730--was paid wit'. funds received under the Federal Revenue
Sharing Act.

      The Wage and Hour Division of the Atlanta Regional Office for
Employment Standards Administration has overall responsibility for enforc-
ing labor standards on covered projects financed with revenue sharing funds
in North Carolina. For Western North Carolina, this responsihility has been
delegated to the Charlotte, North Carolina, Wage and Hour Area Office., Al-
though Department of Treasury regulations provide that recipient governments
shall require that all laborers and mechanics working on construction projects
subject to the act be covered by labor standards specified by the Secretary
of Labor, the area office is still responsible for investigating complaints of
noncompliance with labor standards, making such investigations as may be neces-
sary to aesure compliance with the act, and educating recipient governments
regarding their responsibilities under the act.

     On the WesLern Carolina Center project, the North Carolina Department
of Administration was the recipient of the revenue sharing funds. The state
contracted with Odell Associates, Inc.--an architect and engineering firm-
to act as its Project Architect/Et,:ineer and to enforce the labor standards.

     Under Treasury and, DOL enforcement standards, recipient governments are
required to insure thae contractors and subcontractors are in compliance with
the act. Among other enforcement activit.es, they are to obtain and review
weekly certified payrolls, to interviev a reasonable number of workers at the
construction site to see if they are being paid at the proper rates, to con-
form rates for classifications employed on the project but not included in
the DOL wage determination. and to determine that laborers and mechanics are
paid for all. hours worked in excess of 8 hours in any :alender day at not
less than one and ore-half times their basic rate of pay.

     Two general contractors, two prime contractors, and six subcontractors
worked on the interior renovation and roof repair project at the Western
Carolina Center. Except for the installation of some electrical equipment
by Dallas Electric Contractors, Inc., all of the work on this project had
been completed at November 8, 1976. Our inquiries identified the following
instances of noncompliance with t'he act and with DOL instructiontl concerning
labor standards.

     -- only one pr--.me contractor submitted certified payrolls. The
        architect tcld us that this contractor submitted 42 payrolls
        at one time, after he had completed work on the project. Aftez;
        being told that GAO was going to review this project, the archi-
        tect sent a letter, dated October 5, 1976. to the two general
        contractors and t.he other prime contractor requesting them to
        provide the required payrolls to the owne.. In response to this
        letter one general contractor, one prime contractor, and four
        subcontractors submitted their payrolls to the Western Carolina
        center. At the completion of our review of this project on
        November 11, 1976, one general contractor, B.rke Construction
        tomnpa.:y, Inc., and two subcontractors, Cate City Roofing
        Company and Eugene Ford Painting. had not submitted their certi-
        fied payrolls.

      -- Neither recipient government nor DOL representatives interviewed
         construction workers.

      -The recipient government did not follow conformance procedures.
        Three contractors used workers in five classifications tha- were
        not included in the wage determination.

      -Five contractors paid employees less than the prevailing wage
        rates as determined by DOL.

     Ouz limited payroll examination and related inquiries identified
the following wage payment violations.

     -Two contract.ors did not pay their employees overtime for work
       in excess of 8 fours in a calendar day. Dallas Electrical
       Contractors, Inc. underpaid four employees about $240. Gate
       City Roofing Co. did not submit certified pP- rolls. However,
       by applying the DOL decision wage rates to overtime hours
      worked by employees in three classifications, we estimate that
       these employees were underpaid at least $1,400.

     -Dallas Electrical C-ntractors, Inc. underpaid an electrician
       about $56. The contractor paid the employee $2.75 an hour
       instead of the $4.14 wage rate required by the wage determination.

     --Anchor Construction Corporation underpaid six laborers and one
       carrnenter about $10.   e~lSaorers were paid $0.02 an hour less
       thae the predetermined wage rate and the carpenter was paid $0.06
       an hour less than the predetermined wage rate.

     -- Miller-Brooks Roofing Company underpaid two sheet metal workers
        about $11. The contractor paid these two wozkers $3.15 and $3.75
        an hour respectively, instead of the $4.15 wage rate required by
        the wage determination.

     In addition to our examination of certified payrolls, we reviewed
the payroll records of two contractors who did not submit the required
payrolls. Our review disclosed the following wage payment violations and

    --Burke Construction Company, Inc. classified and paid one employee
      as a carpenter helper although this classification was not included
      in the wage determination. In the absence of a conformance agree-
      ment between the contractor and the contracting officer, this
      employee should have been paid at rates issued for the classification
      of work actually performed. Based on the rate issued in DOL's wage
      determination for carpenters, this employee was underpaid about

     -Burke Cowntruction Company, Inc. underpaid seven carpenters
       about $23. The contractor paid six of these employees $4.00
       an hour and the other one $3.75 an hour instead of the $4.06
       wage rate required by the wage determination.

     -Gate City Roofing Company classified and paid three employees
       as sheet metal helpers and two employees as roofer helpers although
       these classifications were not included in the wage determination.
       In the absence of a conformance agreement between the contractor
       and the recopient government, these employees should have been
       paid at the wage rate for the classification of work actually
       performed. We did not compute the total underpayment but it
       could be as much as $0.90 an hour for sheet metal workers and
       $0.25 an hour for roofers.

      Since DOL is responsible for enforcing the provisions of the act
  : revenue sharing projects, we are referring these matters to you for
appropriate investigation of the contractors' violations and of the
recipient government's failure to effectively carry out its enforcement
responsibilities. We would appreciate being advised of the results of
any investigations and actions taken by DOY. and the recipient govern-
ment in connection with the matters discussed herein.

      A copy of this letter is being sent to the Regional Administrator,
Employment Standards Adcinistrat!,n, Department of Labor, Region IV,
and to the Office of the Assistant Secretary, Employment Standards
.'.nminlstration, Washingtuon D.C.

                                  Sincerely yours,

                                   arvin Colbs
                                  Regional Manager