Perplexed by the Prevailing Wage? We’ve Got Everything You Need to Know!
If your company is bidding on federal or government-funded projects, it’s important to understand prevailing wage rates, and how they align with the HVAC inspection, cleaning, and restoration industry.
Because prevailing wage rates can differ by state, industry, and/or project, they are somewhat intricate in nature. We sat down with a few members who have dealt with state prevailing wage rates to get their perspective, and we’ve also curated tips to dig through the complexity and help determine prevailing wage rates in your state. Read on to learn more.
What Are Prevailing Wage Rates, and How Do They Fit with the David-Bacon Act?
Earlier this month, the Department of Labor (DOL) released new Davis-Bacon Act regulations. Enacted in 1931, the Davis-Bacon Act is a federal law that requires contractors on federally funded construction projects to pay their workers prevailing wage rates, which are determined by the DOL. The Act is designed to promote fair wages, maintain quality in construction projects, and prevent unfair competition in the industry.
Under the Davis-Bacon Act, before starting work on a federal construction project, contractors must obtain "wage determinations" from the U.S. Department of Labor. These determinations specify the prevailing wage rates for various job classifications in the project's locality.
The recently revised Davis-Bacon Act regulations give the Labor Department greater latitude to set prevailing wages on federal construction projects.
All About Prevailing Wage Rates, and What They Mean for NADCA Members
Remember that for the most part, the term ‘prevailing wage’ is applied to laborers engaged in federal or locally funded projects, and the state wage rate is used to determine factors such as base payments, fringe benefits, and any other insurance or payments. Prevailing wages depend on several factors, including the classification of the laborer, where the job is taking place, and what type of job is being performed.
So just where does HVAC inspection, cleaning, and restoration fit? Members of the NADCA community who bid on public works projects often wonder how their state classifies the prevailing wage for air duct cleaning; and as many NADCA members have discovered, the majority of states with prevailing wage rates do not provide a specific classification for our industry. These jobs often fall under janitorial services or sheet metal work.
According to Michael Vinick of Duct & Vent Cleaners of America in Springfield, Massachusetts, some of the most basic work done by NADCA members may not even be eligible for prevailing wage rates. Vinick, who is long-time member and past president of NADCA, said tasks such as cutting and patching access holes in HVAC ductwork would most likely be covered by prevailing wages, but basic work like cleaning, vacuuming, or wiping the ductwork may not be eligible for prevailing wage laws. Again, this varies by state and even sometimes by city and municipality, so verifying rates is imperative before bidding a job.
Typically, the state division dedicated to occupational safety would determine whether or not an HVAC inspection, cleaning, or restoration job would be covered under prevailing wages.
Matt Mongiello, also a past president of NADCA, said that in the Northeast region of the U.S., a sheet metal wage rate classification is used for air duct cleaning projects, and that some states allow contractors to use more than one classification for a job.
Mongiello, of lnterior Maintenance Company in Lansdowne, Pennsylvania, said, "The strength of the unions in a particular state usually determines both the wage rate and the classification. The sheet metal unions in the Northeast are the reason why most of those states must use the sheet metal wage rate because they have claimed air duct cleaning as their own.”
Mongiello has years of experience dealing with prevailing wages, and advises contractors to seek guidance from their state's Department of Labor to determine their wage rate classification. "Some states specifically describe air duct cleaning projects in their prevailing wage rate descriptions, however the majority do not, and we are left to guess what rate to use.”
“In order to complete public works projects, contractors must submit a Certified Payroll form that shows the wages and benefits paid to each employee,” said Mongiello. The proper forms are either provided by a general contractor or may be found on the American Institute of Architects (AIA) website. AIA contracts and forms are recognized as industry standard documents for architects, contractors, engineers, attorneys, owners, and all other parties involved in a construction project. Find them here: https://aiacontracts.com.
Legal Issues to Consider
Contractors working under prevailing wages need to protect themselves against liability, and one way to do this is to have the DOL send a formal letter detailing the classification that is appropriate for a particular job. While it is unlikely that a contractor would be randomly audited by a state agency, the DOL is likely to investigate when a complaint is made about a company that is not using the correct prevailing wage rate.
“My company was audited once when an employee questioned the wage rate we were using,” Mongiello said. "We were mistakenly using the wrong wage rate, and we worked with our state's Department of Labor to reimburse the balanced amount owed to all the employees that worked on the project.”
"Needless to say, I am very careful now about using the correct rate, even though it can still be confusing to get a straight answer from the Department of Labor," Mongiello continued.
It’s Important to Be Proactive in Your State
RHP Mechanical Systems in Reno, Nevada is a NADCA member and contracting company that belongs to both the Plumbers and Pipefitters and the Sheet Metal Workers unions. Eric Scolari, of RHP Mechanical Systems, said his company set up an actual wage rate schedule and position in a local union, with a contract and designated HVAC clean air service technician rates. Rates were designated at all levels of HVAC cleaning, from entry-level to full technician.
Scolari said that in order to set the prevailing wage on a particular project, he must call for a ruling from the labor commissioner. “This often results in a two-pronged problem — either you can have a labor rate that is too low, or way too high. Sometimes your guys could be making more money per hour than they typically do, and then of course they want to continue making that wage.”
Scolari urged NADCA members to be more proactive about contacting state labor representatives, as many of them are not familiar with our industry. "Many people don't know there are specs out there to clean and verify the job was well done. NADCA members need to go talk to these officials, and let them know that we are not just cleaning duct work."
Contact Your State for Information on Prevailing Wages
Some states may not have laws regarding prevailing wages. For those that do, wages may vary by county, town, or other local laws, so it’s important to contact the correct state department directly for information about your specific area.
To learn about the prevailing wage rate in your state, here are a few recommended steps to follow:
- Check Government Websites: Start by visiting the official website of your state's labor department or equivalent agency. They often provide information about prevailing wage rates, including rates for various job classifications and projects.
- Search Online Databases: Some states have online databases that allow you to search for prevailing wage rates by occupation, location, and project type. These databases can provide you with up-to-date information.
- Contact the Labor Department: If you can't find the information you need online, consider contacting your state's labor department directly. They should be able to provide you with information about prevailing wage rates, any recent updates, and how they are determined.
- Consult Contractors' Associations: Contractors' associations and trade organizations in your state might also have information about prevailing wage rates. They often work closely with government agencies and may have resources available to their members.
- Talk to Local Unions: Labor unions that represent workers in the construction and related industries may have information about prevailing wage rates as well. They are often involved in advocating for fair wages and can provide insights.
- Review State Laws and Regulations: Familiarize yourself with the prevailing wage laws and regulations specific to your state. These laws outline how prevailing wage rates are determined, which projects they apply to, and any exemptions.
- Consult Legal Experts: If you're dealing with a complex project, it might be beneficial to consult legal experts who specialize in labor and employment law. They can provide guidance on complying with prevailing wage requirements.
Remember that prevailing wage rates can vary by location, occupation, and type of project, so it's important to ensure that you're looking at the most relevant information for your specific situation. Also, keep in mind that prevailing wage rates can change over time due to updates in labor laws and economic conditions.
Here’s How You Can Ensure You’re Paying Employees the Correct Prevailing Wage Rate
- Understand Applicable Laws: Familiarize yourself with the prevailing wage laws and regulations in your region. These laws specify which projects are subject to prevailing wage requirements, the types of jobs covered, and how rates are determined.
- Identify Job Classifications: Determine the specific job classifications for the workers on your project. Prevailing wage rates can vary based on the type of work being performed and the skill level of the workers.
- Check Government Sources: Refer to official government sources, such as your state's labor department website or other relevant agencies, to obtain the most up-to-date prevailing wage rates for the specific job classifications and geographic area of your project.
- Consult Published Schedules: Many states provide published schedules or wage determinations that outline the prevailing wage rates for different job roles. These documents are typically available online or can be requested from the relevant agency.
- Review Wage Determinations: If your project is subject to Davis-Bacon Act or similar federal prevailing wage laws, you can request wage determinations from the U.S. Department of Labor. These determinations provide specific wage rates for various job classifications in your area.
- Factor in Benefits and Overtime: Prevailing wage rates often include not only the base hourly wage but also fringe benefits and overtime pay. Ensure that you're calculating the total compensation correctly based on the prevailing wage requirements.
- Document Records: Maintain accurate and detailed records of your calculations, wage rates, and any correspondence with government agencies. This documentation can serve as evidence of your compliance with prevailing wage laws.
- Update as Needed: Prevailing wage rates can change, so stay informed about any updates or changes to the rates for your project. Regularly check government sources for the most current information.
- Contract Language: If you're hiring contractors, make sure that your contracts explicitly state the requirement to pay the prevailing wage rate and adhere to all applicable labor laws. This can help prevent misunderstandings and ensure compliance.
- Consult Experts: If you're unsure about how to properly calculate or apply prevailing wage rates, consider consulting legal experts, labor consultants, or professionals experienced in compliance with labor laws.
- Regular Audits: Conduct internal audits or engage external auditors to review your payroll records and practices to ensure ongoing compliance with prevailing wage requirements.
Remember that failing to pay the correct prevailing wage rate can lead to legal penalties, negative publicity, and strained relationships with workers and labor organizations. It's essential to take the necessary steps to ensure compliance and fair treatment of workers on your projects.
Next month, we’ll bring NADCA members more information about the recently revised Davis-Bacon Act, including how it may affect your business.
Portions of this article originally appeared in the July/August 2009 edition of DucTales.