Streamlining Program represents a key component in Labor Relations' efforts to
improve program operations. Under Streamlining, the Office of Labor Relations
took a bold but measured look at our overall mission and what we did on a daily
basis to carry it out. We identified processes and paperwork that did not contribute
outcomes commensurate with the effort needed. They were eliminated. We identified
those activities which most contributed to our mission and enhanced their impact.
These activities make up our basic labor standards administration and enforcement
protocol. Finally, we refocused our resources. Davis-Bacon Streamlining was launched
for all HUD clients and local contracting agencies in April 1997.
Office of Labor Relations welcomes comments and suggestions about the Davis-Bacon
Streamlining Program, particularly suggestions for additional Streamlining measures.
This section provides a brief overview of Davis-Bacon
Streamlining and Labor Standards Administration and Enforcement Objectives:
- Apply Federal labor standards properly. Make certain that labor standards,
including Davis-Bacon prevailing wage rates, are applied where required. Ensure
that any exemptions or exclusions are identified.
- Through education
and advice, support contractor compliance with labor standards. Provide basic
training and technical support to contractors to ensure that they understand their
obligations under prevailing wage and reporting requirements.
contractor performance. Perform reviews of payroll submissions and other information
to help ensure contractor compliance with labor standards provisions and the payment
of prevailing wages to workers.
- Investigate probable violations
and complaints of underpayment. Throughly explore any evidence of violations,
especially allegations of underpayment.
- Pursue debarment against
repeat labor standards violators. HUD will not tolerate contractors who violate
Achieving the Objectives
With those key
objectives in mind, we identified an initial 12 measures that would improve our
day-to-day operations supporting those objectives. These 12 measures form the
foundation of Moving Forward è Making Sense:
- Local contracting
agencies (LCAs) do not have to obtain Davis-Bacon wage decisions from HUD. In
the past, all local contracting agencies (e.g., Public housing agencies, Indian
housing authorities, Community Development Block Grant recipients) were required
to obtain from HUD a Davis-Bacon wage determination for each covered contract
or project. This process sometimes caused delays (waiting to receive the wage
decision; backlogs at HUD) but in any case created additional burden on both the
LCAs and HUD staff.
Now, LCAs do not need to obtain wage decisions from
HUD but can use any alternative access available including an on-line subscription
service. The point is, it's not necessary for the LCA to get the wage decision
from HUD - it's only necessary that the LCA has the appropriate wage decision
from whatever source. Of course, LCAs are welcome to continue receiving wage decisions
through HUD if they so choose.
- Preconstruction conferences
are optional for labor standards purposes. Many contractors engaged in Davis-Bacon
contracts are already familiar with the wage and reporting requirements. In these
cases, it's not necessary or particularly useful for the contracting agency to
conduct a "Pre-Con" explaining labor standards provisions to the experienced contractor.
There are many good reasons to hold a Pre-Con, scheduling inspections and draws,
for example. But a labor standards presentation for an experienced contractor
isn't necessarily one of them. Additionally, contractor education on labor standards
doesn't have to occur at a preconstruction conference. For example, it may be
more convenient to schedule a labor standards discussion at another time or in
a conference call. LCAs may use their discretion to determine whether labor standards
training for contractors is necessary and how best to provide that training.
We do want to make certain that contractors understand fully their obligations
under Federal labor standards and to that end we have published a Contractor's
Guide to Davis-Bacon. This Guide explains in plain English Davis-Bacon prevailing
wage and reporting requirements. It also discusses common errors and how to correct
- Use wage decision transcripts for projects. Generally
speaking, there are 3 copies of the applicable Davis-Bacon wage decision serving
each project or contract: The first copy goes in the bid or contract specifications
to let the contractor know the wage rates that must be observed on the job and
to obligate the contractor to comply; a second copy is posted on the job site
so the laborers and mechanics know what wage rate is assigned to their classification;
and a third copy is used by the contract administrator to monitor contractor compliance
(payroll reviews). Many times, Davis-Bacon wage determinations are several pages
long and may cover more than one county and/or more than one kind of construction
(residential and building, for example). These wage decisions can be difficult
to read, especially for people who don't read wage decisions often or if you're
in a hurry. For these reasons, we developed a Project Wage Rate Sheet -
a one-page transcript of the wage rates applicable to a particular contract or
The Project Wage Rate Sheet is prepared after the wage decision
"locks-in" (after the effective date). It does not replace the wage decision but
simply lays out for easy reference all of the work classifications and wage rates
that apply to that contract. A Project Wage Rate Sheet will remove any doubt a
contractor may have about the wage rates that must be paid to any particular classification
and can quickly disclose any misunderstanding. Posted on the job site with the
wage decision, a Project Wage Rate Sheet is fast and easy for workers to review
to make sure that they are paid no less than the rate to which they are entitled.
And, finally, as part of the contract file, a Project Wage Rate Sheet makes payroll
review spot-checks much more efficient since there's no need to flip between pages
for different rates. Even the process to complete the Project Wage Rate Sheet
can be helpful by identifying work classifications that are missing from the wage
decision and that are needed for the project and will need to be conformed (i.e.,
Additional Classifications and Wage Rates).
Project Wage Rate Sheets
are optional. We offer the format as a tool to help contract administrators work
as efficiently as possible and to improve the effectiveness of our labor standards
- Discontinue start of construction notice. Previously,
LCAs were required to send to HUD a start of construction notice for each contract
or project. Because there are other reporting systems that are required by Federal
regulation that can capture this information for HUD use, we have discontinued
this requirement. (See item #12 below concerning required reports.)
- LCAs can develop their own enforcement file system. Federal regulations
require that contract administrators maintain full documentation of labor standards
administration and enforcement activities. Earlier instructions from HUD to LCAs
included guidance on what a "proper" enforcement file system should contain, some
guidance described the number and types of files required. LCAs are free now to
develop their own filing systems for labor standards purposes provided that the
"system" allows that specific files can be made available upon request by authorized
representatives of HUD and the DOL; and that the certified payrolls and related
documents are preserved for a period of not less than three years after completion
of the contract or project. It's also important that the contract administrator
is able to retrieve from the files the documentation evidencing that all actions
required for labor standards administration and enforcement were taken.
- Discontinue date stamp on certified payroll report (CPR) receipt.
Contract Administrators were required to date stamp CPRs and related documents
upon receipt from the contractor. As a routine practice, date stamping payrolls
was found to involve far more effort than any benefit warranted. Accordingly,
this requirement has been eliminated.
- Discontinue date/initial
on each CPR when reviewed. The person(s) conducting reviews of certified payrolls
was required to date and initial each payroll as it was reviewed. As with date
stamping, this practice was found not to have a benefit that equaled the effort
required. What is important is that the payrolls and related submissions are reviewed
and any discrepancies are corrected.
- Target enforcement
activities at willful violators. While any violation disclosed on a covered
project must be rectified, the focus of our enforcement activities is on willful
violators. These employers know what is required of them to comply with Davis-Bacon
wage rates but purposely underpay their employees. These cases involve the most
egregious violations, the most wage restitution, and the employers we most want
debarred from further participation in HUD programs.
on-site employee (HUD-11) interviews. DOL Davis-Bacon regulations require
contracting agencies to include in their enforcement protocol on-site interviews
with the laborers and mechanics performing the contract or project work. On-site
interviews with the workers provide another perspective of the employer's performance
with respect to labor standards ~ a means to test the accuracy of the payroll
reports. (The data collected in the interview is often recorded on a HUD Form
11, Record of Employee Interview. On-site interviews are sometimes referred to
as HUD-11 interviews.) More importantly, perhaps, the interviewer can provide
a firsthand account of his or her observations on-site including the number of
workers on-the-job or in a particular crew and the duties they were performing.
HUD recognizes that on-site interviews are an invaluable tool in Davis-Bacon
enforcement and that it is a resource that should be used to its greatest advantage.
Accordingly, we strongly encourage Contract Administrators to target on-site interviews
to projects, contracts, employers where violations are suspected and the interview
data can be most useful. Targeting may mean that no interviews are
conducted on certain contracts where remote monitoring (such a payroll reviews)
indicates full compliance so that more interviews may be conducted where problems
are indicated. Targeting does not mean closing our eyes but, rather, focusing
our sights on potential violations.
- Limit CPR reviews to
"spot checks" and HUD-11 comparison. Goal: Detect falsification. Since our
enforcement activities are aimed at willful violators, and since willful violators
must conceal the underpayment ~ falsify payroll reports and/or related documents
~ in order to give the appearance of compliance, our reviews of payrolls and related
submissions are aimed at detecting falsification.
basically involves three factors: 1. the type (classification) of work performed;
‚ 2. the number of hours worked; and 3. the prevailing rate for that classification.
A fourth factor involves the actual payment of wages either in by check or cash.
In order to conceal underpayment, a willfully violating employer must falsify
the payroll report as it pertains to one or more of these factors. There are four
falsification indicators that are easy to detect on payrolls in a "spot check":
- Ratio of laborers to mechanics. Look for excessive
use of laborers over mechanics. Generally, there should be no more than one laborer
for each mechanic (1:1) except for landscaping, or cement or other paving work.
Indicative of: Misclassification. Workers are performing mechanic's
duties but are misclassified and paid at lower Laborers' wage rates.
- Too few or irregular hours. Look for employees that never work
40 hours a week; for crews that work in a scattered fashion; for hours reported
in tenths or hundredths (e.g., 13.6 hours). Most people are on a 40-hour workweek.
Most crews work together on a job site. Most employers and employees track work
hours by whole, half and quarter hours not by tenths or hundredths.
Indicative of: Falsification of hours. Actual work hours are reduced to "fit"
in a fabricated calculation: (Reduced hours) x (Rate required on wage decision)
= Actual gross wages based on lower rate of pay.
in wage computations. Look for gross wages in "round" numbers (e.g., $700)
that don't agree with product of reported hours multiplied by the rate of pay.
For example, a payroll showing 20 hours times $33.68 (the rate on the wage decision)
and gross wages of $700. (20 hours times $33.68 equals $673.60 not $700.)
Indicative of: Piece work or lower (but more "even") hourly rate such
as $17.50 (40 hours times $17.50 equals $700). The employer can't make the fabricated
calculation "fit" precisely because the Davis-Bacon wage rate is not an even figure.
- Extraordinary deductions. Look for unidentified or
disproportionate deductions, for example an employee whose savings account deduction
is nearly as much or more than weekly take home pay.
Kickbacks or basic underpayment. The employer takes his "cut" from the back end
of the computation (after gross earnings) rather than the front end (falsifying
the classification, hours or wage rate).
- Routine CPR review results can be communicated informally and documented
with memo to the file. Many payroll reviews will disclose minor
discrepancies that do not involve or suggest falsification or willful violations.
Rather than prepare a written notice to the contractor for such routine corrections
(as was required in the past), the Contract Administrator may communicate these
results informally, by telephone, for example. A memo to the file or other record
of the communication should be maintained in the enforcement file so that the
Contract Administrator can "track" outstanding requests and closure on corrective
actions. Determinations involving willful violations, falsification and/or large
findings of underpayment must be communicated to the prime contractor in writing,
particularly if withholding from contract payments is contemplated.
- Improve reporting systems on labor standards administration and enforcement.
DOL regulations establish and require our compliance with 2 systems of enforcement
reports (see 29 CFR §5.7). The first system (§5.7(a)) operates on a case-by-case
basis: a report must be made whenever a single employer is found to have underpaid
its employees by $1,000 or more, or where there is reason to believe the violations
are willful or aggravated. These reports are the means by which debarment is recommended.
The second system (§5.7(b)) operates semi-annually and involves a synopsis of
all covered contracting activity and all labor standards enforcement.
is committed to utilizing these required reporting systems as fully as possible
to further our key objectives. Ensuring that enforcement reports are accurate,
timely and fully documented (where necessary) is a priority for HUD and contracting
agencies. Guidance for these reports is available at this site: See
Labor Relations Letter LR-92-02; and Semi-Annual
Labor Standards Report.