Understanding Wage Rates Under California’s Prevailing Wage Law

Posted by National Alliance for Fair Contracting on

8-16-17
Richard E. Donahoo

California’s Prevailing Wage Law requires contractors to pay specific wage rates on public works projects. The rates are published by the State’s Department of Industrial Relations (“DIR”). The published rates include many different prevailing wage rates, which are based on the geographic location and the type of work that is performed. The rates are organized and published by the DIR in General Prevailing Wage Determinations, which set forth the rates for worker classifications (e.g., Laborer, Carpenter, Plumber, Operator). The specific rates applicable for each craft, classification, or type of work, and for each geographic locality throughout the state, can be located on the DIR website at http://www.dir.ca.gov. Understanding how to read a General Determination is important to understanding the required rate.

Prevailing Wage Determinations

California Labor Code (section 1774) states that workers must be paid not less than the “specified prevailing rates of wages” to all workmen employed in the execution of the contract. These specific rates are found in the General Determinations, which correspond to the type of work actually performed by individual workers. As explained in the State’s Public Works Manual,

“A worker’s title or status with the employer is not determinative of an individual’s coverage by the prevailing wage laws. What is determinative is whether the duties performed by the individual on a public works project constitute covered work. An individual who performs skilled or unskilled labor on a public works project is entitled to be paid the applicable prevailing wage rate for the time the work is performed, regardless of whether the individual holds a particular status such as partner, owner, owner-operator, independent contractor or sole proprietor, or holds a particular title with the employer such as president, vice-president, superintendent or foreman. For example, a “working” foreman or a “working” superintendent – one who performs labor on the project in connection with supervisorial responsibilities – is entitled to compensation at not less than the prevailing rate for the type of work performed.”

The Basic Hourly Rate vs Total Rate

General Determinations include both a Basic Hourly Rate and the Total Hourly Rate for each location and classification. Employers are required by California law to pay employees the Basic Hourly Rate as the minimum hourly wage for all hours worked. The Total Hourly Rate includes the Basic Hourly Rate and additional compensation for “employer payments” which are typically fringe benefits such as health insurance, vacation, pension and other “fringe benefits.” Employers can choose to pay fringe benefits directly to employees as part of their wages or can obtain an offset for the employer’s “actual cost” of the benefit provided to the employee that was paid into a bona fide health, pension, vacation, or fringe benefit plan. Either way, the total compensation paid by the employer to the employee must match the Total Hourly Wage set by the Director in the General Determination.

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White House stops plan for companies to report worker pay by race and gender

Posted by National Alliance for Fair Contracting on

By James F. Peltz – Contact Reporter
August 30, 2017 at 2:15 pm

The White House has halted an Obama administration rule that would require businesses to report worker pay data by gender, race and ethnic groups in hopes of narrowing wage gaps among workers.

The plan was announced by President Obama in early 2016 and was set to take effect early next year.

But the Trump administration, siding with the U.S. Chamber of Commerce and others, contended that the data collection would be too burdensome for firms and questioned how effective the information might be in fighting wage discrimination.

Critics of the White House move, which came in a memo from the Office of Management and Budget on Tuesday, were outraged.

“Make no mistake – it’s an all-out attack on equal pay,” Fatima Goss Graves, president of the National Women’s Law Center, said in a statement. “Today’s action sends a clear message to employers: If you want to ignore pay inequities and sweep them under the rug, this administration has your back.”

The plan would have expanded a 2014 executive order that the Labor Department collect wage data by gender, race and ethnicity from federal contractors.

The Equal Employment Opportunity Commission had proposed that all employers with at least 100 workers submit the data across 10 job categories and 12 pay ranges on a form they already are required to submit annually that includes employment data by gender, race and ethnicity.

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AGC of Ohio Chief Debunks Prevailing Wage Detractors

Posted by National Alliance for Fair Contracting on

Submitted by Karen Andryscik on
August 28, 2017 – 8:19am

By Richard J. Hobbs, Executive Vice-President – AGC Columbus

After 36 years at the helm of the Associated General Contractors of Ohio (an organization composed of open shop/nonunion and union commercial contractors throughout the state), I’ve heard many outrageous, false claims about significant savings by removing Ohio’s prevailing-wage law. I respond to the Aug. 19 op-ed by Butch Valentine, Laurelville’s volunteer fire chief, blaming the Ohio wage law for the inability to build a new fire station.

Valentine contended that the law inflates the cost of a new facility by 37.5 to 50 percent. This is an outrageous statement. Construction labor represents on average 22-25 percent of a project cost, depending on complexity. Valentine indicated that the cost of a $800,000 fire station would be increased by $300,000 to $400,000. Either his original architectural plans excluded labor costs or he was counting on volunteer construction labor.

He went on to cite inaccurate claims as factual. His referred to the Legislative Service Commission study of 2002 that was thoroughly debunked by Ohio State University Professor Herbert Weisberg, and by a 2017 study from researchers at Bowling Green State, Kent State and Colorado State universities. It found that “LSC had no valid basis” to its claimed cost savings. Valentine further asserted that prevailing-wage projects had less competition. Wrong again. The 2017 study found that projects covered by prevailing wages had more competition, and that more of those contracts went to Ohio construction companies, not out-of-state firms.

Valentine also suggested that Indiana has seen significant savings by repealing its prevailing-wage law. Once again, false. The Indiana Republican assistant House majority leader candidly admitted this year that his state hasn’t “seen a dime of savings out of it,” and that claims of huge savings from repeal, like Valentine’s, were just “rhetoric.”

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Infrastructure, Jobs And Economic Growth

Posted by National Alliance for Fair Contracting on

By ENERGY TOMORROW BLOG
on August 21, 2017 at 10:00 AM

We’ve posted quite a bit recently about the need for streamlining the federal permitting process for energy infrastructure (see here and here). An API study earlier this year estimated investments in needed natural gas and oil infrastructure could total more than a trillion dollars and potentially generate more than 1 million jobs through 2035. That’s a lot of economic potential linked to infrastructure – and in that context, President Trump’s new executive order modernizing and bringing greater accountability to the federal permitting process certainly is welcome.

It coincides with release of a new study, for North America’s Building Trades Unions (NABTU), detailing the jobs and economic impacts of energy infrastructure construction. NABTU President Sean McGarvey and API President and CEO Jack Gerard talked about the study and America’s energy infrastructure needs during a conference call with reporters.

The pipeline employment study estimated that $6 billion to $28 billion was spent annually o n new additions to and the reconstruction of existing pipelines from 2006 to 2016:

 

The study:

Industrial construction is an important source of jobs for the skilled construction trades. Individuals who engage in industrial construction have certifications, licensing, and training that provide guarantees that they are competent in difficult, specialized work. Pipeline workers are an important segment of this group. Pipelines are important to the efficient operation of the U.S. economy, and pipeline construction is an important source of family supporting jobs for construction workers.

McGarvey said the study’s findings are noteworthy they show support for the economy during a period that included a recession. Pipeline construction jobs bolster America’s middle class, he said. McGarvey:

“We’re talking about average weekly earnings of almost $1,200 a week, to keep folks squarely in the middle class. We look forward, based on this study, to show the real impact of this industry on maintaining that floor.”

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Flawed System Lets Contractors Cheat Workers on Federal Building Jobs

Posted by National Alliance for Fair Contracting on

AUG 21 2017, 4:58 AM ET
by MARYAM JAMEEL

This story was originally published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.

Like many buildings of its vintage, the century-old headquarters of the United States General Services Administration was once lined with asbestos.

The hazardous mineral, used for fireproofing, filled nearly a half-million square feet of the building on F Street in downtown Washington. It took more than a hundred licensed workers almost a year to pry out the substance during a renovation that began in 2011. The workers would log nightly nine-hour shifts, spent mostly in air-tight spaces that reached 100 degrees.

The pay for this grueling task was dictated by the Davis-Bacon Act, a 1931 law that promises specific wages and benefits for construction work on government buildings and infrastructure. The compensation set by the U.S. Department of Labor under the act, based on location and job duties, is often higher than what’s offered on private-sector projects.

Three workers on the GSA job who spoke to the Center for Public Integrity said their employer didn’t tell them what they were owed under the law. They and 124 others filed a complaint with the Labor Department’s Wage and Hour Division in 2011.

Investigators found in the workers’ favor, saying they should have earned $25.47 per hour including benefits, as skilled laborers, a specific category of employee under Davis-Bacon. Instead, their supervisors paid them $15.84 an hour and classified their work as general labor. Six years after the complaint was filed, the investigation remains open on appeal. The workers still haven’t gotten their back pay.

“You feel powerless,” said Luis Fonseca, one of the asbestos removal workers.

But in some ways, Fonseca and his former co-workers already have beaten the odds.

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Minnesota minimum wage set to rise with inflation in 2018

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The minimum wage will rise by 15 cents to $9.65 per hour for most businesses around the state.

By Erin Golden Star Tribune
AUGUST 17, 2017 – 11:38PM

Minnesota’s minimum wage will increase next year by 15 cents to keep up with inflation, rising to $9.65 per hour for workers at many businesses across the state.

The increase, announced Thursday by the Minnesota Department of Labor and Industry, is effective Jan. 1, 2018. It’s the result of a 2014 law that boosted the minimum wage to $9.50 and required the state to begin calculating automatic inflationary increases for each year, starting with 2018.

About 250,000 Minnesota workers earn less than $9.65 per hour. Gov. Mark Dayton and Lt. Gov. Tina Smith said in a statement that the wage bump is aimed at helping those residents build economic stability.

“Our state and nation was founded on the belief that hard work and opportunity should go hand in hand,” Smith said. “Raising the minimum wage will help make this value a reality for thousands of Minnesotans, many of them people of color and women with children.”
The new rate applies to workers at businesses with annual gross revenue of $500,000 or more. Employees at businesses with lower revenue, who now make $7.75 per hour, will see their minimum wage rise by 12 cents, to $7.87 per hour. That will also be the new training rate for workers younger than 20 for the first 90 days of employment, and for youth workers under age 18.

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North America’s Building Trades Unions Succeeds in Beating Back 3 Anti-Prevailing Wage Amendments

Posted by National Alliance for Fair Contracting on

09/11/2017 – 3:47pm

As the U.S. House of Representatives was voting last week on appropriations bills to keep the federal government running, Rep. Steve King (R-Iowa) attempted to amend every piece of legislation to undo Davis-Bacon protections that ensure fair prevailing wages are paid on publicly funded construction projects.

Fortunately, King’s efforts to cut wages have been unsuccessful. Every Democratic member and 54 Republicans voted “no,” on all three of King’s amendments. Each vote on King’s three amendments failed 173-240, with 54 Republicans siding with all Democrats in voting “no.” Every member of the Massachusetts delegation voted “no” in support of fair wages for America’s building trades workers.

Prevailing wage standards are a minimum wage for skilled construction work on publicly funded projects – including bridges, roads, water projects, tunnels, pipelines, municipal buildings, courthouses, schools and libraries. It is a market determination based on government surveys of the average pay rate (wages, fringe benefits, training contributions) for each construction craft in a geographic area. These standards are intended not only promote a level playing field for local businesses, but to support the training programs needed to prepare local workers for careers in the skilled crafts.

Research consistently shows that prevailing wage standards lead to better economic and industry outcomes – including more local jobs, less poverty, and safer, more efficient and productive worksites – with no significant impact on total project costs.

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Federal lawmakers seek to crack down on wage theft

Posted by National Alliance for Fair Contracting on

By Mark Gruenberg, Press Associates Union News Service
August 20, 2017

WASHINGTON

Saying too many bosses steal workers’ wages, congressional Democrats introduced legislation to crack down on wage theft, through stiff fines, enabling worker class action suits, and, in the worst cases, threats of criminal prosecution.

The measure is designed to particularly help low-wage workers, the lawmakers said. But overall, citing Economic Policy Institute data, they said employers steal at least $15 billion yearly from workers.

“Today, across the country, many people are putting in long hours on the job and working hard for an honest day’s pay, only to have their employers cheat them out of their wages,” said Senate co-sponsor Ed Markey, D-Mass.

“While the vast majority of employers do the right thing and treat workers fairly, too many others force their workers to work off the clock, refuse to pay workers the minimum wage, deny workers overtime pay even after they work more than 40 hours a week, steal workers’ tips, or knowingly misclassify workers to avoid paying fair wages.

“This bill will strengthen fundamental protections to allow workers to get the money they have earned through hard work and it will crack down on the corporations that subject workers to these abuses. These steps will help ensure our country can work for all Americans, not just the wealthiest few, so our economy grows from the middle out, not the top down,” he added.

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Raise wages, boost economy: Letters (CA)

Posted by National Alliance for Fair Contracting on

By Letters to the Editor
September 6, 2017 at 12:01 am

Re: “State’s not-so-affordable housing plans” [Opinion, Aug. 31]: Your editorial advocates cutting the pay of construction workers to pad the profits of housing developers. Finally, we have an honest summation of the argument of the housing industry against the prevailing wage: profits before people.

The editorial, however, lacked credibility as well as heart. In outlandish fashion, it cited the recent bought-and-paid-for study funded by the California Homebuilding Foundation to say that the prevailing wage would result in a 37 percent increase in housing costs. The organization, of course, is made up of some of the biggest contractors and real estate developers in the state. And just as your editorial acknowledged, when it comes to maximizing profits, they’d rather pay their poverty wage than a prevailing wage.

In that process, distorting the truth and the facts is no big deal, and the predicted 37 percent housing cost increase that you quoted in your editorial has no basis in reality. In fact, it is up to six times higher than some numbers that the study’s same authors put out in some of their own previous reports.

More credible research puts the added cost of construction related to the prevailing wage at around 3 percent. The increase is then easily made up by savings associated with the skilled-and-trained prevailing wage work forc

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Builders, construction workers settle fight over California wage theft bill (CA)

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BY ALEXEI KOSEFF
SEPTEMBER 14, 2017 9:52 AM

A contentious proposal that would put California builders on the hook for wage theft violations by their subcontractors has advanced to Gov. Jerry Brown after a last-minute agreement between the author and opponents.

The Assembly on Wednesday sent to the governor’s desk Assembly Bill 1701, which would allow construction workers who have not been paid for a job to seek their back wages and benefits, with interest, from the general contractor, even if they did not work directly for that company on the project.

Both the building industry and construction trade unions lobbied heavily on the measure, by Assemblyman Tony Thurmond, D-Richmond, in the final weeks of session, plastering websites with digital advertisements, passing out fliers on the sidewalk outside the Capitol and setting up an electronic billboard across the street.

Unions argued that AB 1701 gives workers a legal remedy when subcontractors skip town or file for bankruptcy before paying employees, while the building industry warned that it could drive up the cost of construction and worsen California’s housing crisis by potentially forcing them to pay twice for labor.

Yet the measure received overwhelming support Wednesday when it came up for a vote in the Assembly, passing 52-13. Just before that, Thurmond said, he submitted a letter to the Legislature stating his intent to carry a follow-up bill. It will remove a section of AB 1701 that builders worried could be used to hold them liable for further monetary damages.

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