We’re excited to share that we’ll be attending this year’s CLEANPOWER Conference at the Minneapolis Convention Center, running from May 6th to May 9th. Find us at Booth #3363 to connect!
The CLEANPOWER Conference, hosted by American Cleanpower, is a gathering open to those in the clean energy industry, including (but not limited to) the wind, solar, hydrogen, and transmission industries. This event is an opportunity for major players in the clean energy industry, ranging from construction firms to corporate stakeholders, to network and see the newest updates in the space.
This trade show hosts speakers, engagement events, hundreds of exhibitors, clean energy representatives from all across the country, and thousands of visitors to connect in one space.
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With the growing regulations surrounding clean energy, our goal is to share information about the prevailing wage sector and how businesses can avoid penalties and remain in compliance with prevailing wage laws. We’ll be providing key tips to stay above the evolving changes across the clean energy sector like the Inflation Reduction Act, Assembly Bill 2143 (AB2143), the Davis Bacon Act, and plenty more.
Catch us at Booth #3363 and find out more about CLEANPOWER here.
The Inflation Reduction Act opens tax incentives available to all taxpayers, and the requirement to comply with regulation to keep these credits becomes a rising priority. Amongst these requirements are the apprenticeship requirements. There are three main apprenticeship requirements under IRA: the Labor Hour Requirements, Ratio Requirements, and Participation Requirements. All requirements must be met to qualify for certain tax benefits and to avoid penalties.
The first requirement is the Labor Hour Requirement. This requirement sets a percentage of registered apprentice hours performed in reference to the total labor hours across the project. These percentages vary depending on the beginning of construction.
If construction on your project began before January 1st, 2023, 10% of your overall project’s labor hours should be performed by registered apprentices.
If the project began after December 31st, 2022, and before January 1st, 2024, 12.5% of hours should be registered apprentice hours.
Any construction occurring after December 31st, 2023 will have a 15% percentage requirement.
Ratio Requirement
When apprentices are on a project, they are typically supervised by journeymen. However, the provisions for the ratio at which the number of apprentices that a journeyman may supervise can vary. Under IRA, taxpayers must ensure that they are meeting the applicable supervision requirements under the state or federal provisions. The ratio will be determined either by the DOL or the applicable State apprenticeship agency. You may consult the applicable body to find your journeyman to apprentice ratio to avoid violations.
Base Participation Requirement
The base participation requirement for apprentices under IRA is as follows:
Each taxpayer, contractor, or subcontractor that hires 4 or more employees to work on a qualified facility must employ at least 1 registered apprentice. This requirement is maintained across the life of the project and is applicable across all contractors.
Let’s examine a few scenarios to see how this is applied.
In scenario one, a contractor begins work on site and is going to have 6 employees. The participation requirement states that, because a minimum of 4 employees are performing work, at least 1 registered apprentice should be on payroll.
In scenario two, a contractor is consistently employing a different employee each week. Once the employee count of workers on site meets 4, a registered apprentice must be employed.
Good Faith Effort Exception
A contractor may possibly be exempt from apprenticeship requirements if they demonstrate the “Good Faith Effort Exception”. Under this exception, a taxpayer would be considered compliant under the apprenticeship requirements if they’ve demonstrated attempts to request an apprentice from a registered apprenticeship program and one of the following occurs: 1) The request is denied through no fault of the taxpayer, or 2) No response is provided within 5 business days after the request was received by the apprenticeship program.
As noted by the IRS, “The good faith effort exception only applies to the specific portion of the request for apprentices that was not responded to or was denied. If a request was not responded to or was denied, the taxpayer must submit an additional request(s) to a registered apprenticeship program after 120 days to continue to be eligible for the good faith effort exception.”
As provided by the IRA requirements, records must be kept, such as those indicating these attempts and proof of instances of exemption to thoroughly document efforts.
How to Employ Apprentices
The IRS Guidance references an apprenticeship program tool, available at apprenticeship.gov. The Office of Apprenticeship’s “partner finder” and “apprenticeship job finder” tools provide access to different apprenticeship programs depending on your location and occupation. You may use either of these tools to find an apprenticeship program for a classification being employed on your project, and you may reach out to halls listed and attempt to employ a registered apprentice.
You may also reach out to any state or local apprenticeship programs or offices in the project region that would assist in dispatching apprentices to meet this requirement.
Penalties
Per 87 FR 73580 Section 2, taxpayers who are unable to meet the ratio or participation requirements, or the “Good Faith Effort Exception”, may have to pay a penalty of $50 multiplied by the number of hours for which the requirement was not satisfied to the Secretary of Labor. If this is determined by the Secretary of Labor to be an intentional disregard for the provisions, the fine increases from $50 to $500 per hour. Taxpayers may also be forced to pay back the majority of credit received.
With this in mind, it’s important to meet the Apprenticeship Requirements under IRA and avoid costly penalties. If you have any questions or need further assistance, feel free to contact us.
Renewable energy projects are triggering new regulations across the country and Illinois is no exception. The Climate and Equitable Jobs Act, also known as CEJA, issues the requirement to pay prevailing wages on all qualified renewable energy projects. We uncover this and other newly introduced Illinois provisions here.
CEJA was passed under Public Act 102-0662 by the Illinois General Assembly on September 15, 2021. This act focuses on incentives for renewable energy projects, rebates for electric vehicle charging, and a reduction of pollutant emissions. As the provisions for projects in the renewable energy sector expand, the labor standards are being changed to meet this demand. One of these standards is the requirement to pay prevailing wages, with the exception of distributed generation projects that serve a residential facility or houses of worship under 100kW AC. As this act assists in transitioning out of fossil fuel-dependent energy systems, the goal to reach is 100% carbon-free power by 2050. This directive is charged by the Illinois Power Agency who is responsible for credit program implementation and other developments.
Adjustable Block Program
The Adjustable Block Program, also known as “Illinois Shines”, aims to make solar energy accessible for people across Illinois. This program was established by the Future Energy Jobs Act, but it experienced significant expansion under CEJA, and incorporates the requirement to pay prevailing wages. Workers engaged in the construction of applicable projects submitted under this program must be paid prevailing wage rates, and such projects can be identified as “public works”. This further extends the program’s requirements to intersect with Illinois public works projects requirements.
Minimum Equity Standard
The Minimum Equity Standard was enacted under CEJA and creates an equity accountability mandate. Several monitoring, reporting, and facilitation requirements are established and are applicable to work occurring under the Illinois Power Agency’s renewable energy procurements, including those under the Illinois Shines program. This accountability mandate introduces “Equity Eligible Contractors” (EEC), giving contractors an opportunity to be recognized as certified vendors. EECs gain access to opportunities to receive incentive credits and a reserved block of project capacity.
In the context of projects, EECs must meet an overall project percentage goal of “Equity Eligible Persons” in the project workforce. This percentage increases each year, with the required percentage increasing to 30% by 2030. For the purposes of the MES, “project workforce” includes: employees, contractors and their employees, and subcontractors and their employees, whose job duties are directly required by or substantially related to the development, construction, and operation of a participating project. This shall include both the project installation workforce and the workforce in administrative, sales, marketing, and technical roles where those workers’ duties are performed in Illinois. An Equity Eligible Person (EEP) must meet at least one of the following categories, as ordered by the Climate and Equitable Jobs Act:
Persons who graduate from or are current or former participants in the Clean Jobs Workforce Network Program, the Clean Energy Contractor Incubator Program, the Illinois Climate Works Pre-apprenticeship Program, the Returning Residents Clean Jobs Training Program, or the Clean Energy Primes Contractor Accelerator Program, and the solar training pipeline and multi-cultural jobs program created in paragraphs (a)(1) and (a)(3) of Section 16-108.21 of the Public Utilities Act;
Persons who are graduates of or currently enrolled in the foster care system;
Persons who were formerly incarcerated; [or]
Persons whose primary residence is in an equity investment eligible community. (20 ILCS 3855/1-10).
For example, if the project EEP goal is to secure 10% of the workforce and the total project workforce is 100 employees, 10 must be EEPs.
Conclusion
The push toward clean energy is increasing in prominence, and the drive to get businesses involved in the transition isn’t slowing down. Credit incentives amongst other forms of benefits are being introduced in these new programs, but the requirements that work alongside them can’t be dismissed. Maintaining compliance is a major force in earning renewable energy benefits, and keeping up with regulations is part of the process.
Stack of paper, Document, many jobs waiting to be done on the table, busy concept
The contents of this blog post have been partially transcribed from our YouTube series, “Apprenticeship Series”
California prevailing wage mandates the use of apprentices on public works projects. Amongst the apprenticeship requirements are the proper documentation practices. We’ll be uncovering the DAS (Division of Apprenticeship Standards) 140, 142, and 7 forms and how to maintain compliance with the apprenticeship requirements.
The DAS 140 form is the “Notice of Award” form. So, it’s most applicable to contractors utilizing an apprentice-able craft. The document is meant to work as a notice to apprentice halls that you’re working on a prevailing wage project. Enforced by Labor Code 1777.5(e), the law states, “Before commencing work on a contract for public works, every contractor shall submit contract award information to an applicable apprenticeship program that can supply apprentices to the site of the public work.” For a step-by-step guide, you can visit this video on our YouTube channel, “How to Fill Out a California DAS 140 Form.”
Completing the DAS 140 Form
The top of this form should be filled out with all of your basic info. This includes:
• Your company name
• Your company’s address
• Project address
• Awarding agency’s address
• Your state license number
• Your company’s phone number
• The date your contract was executed
• The actual or expected date that your company will start on site
The remainder of the top half of the form requires that you list the following:
• The estimated number of journeymen hours being worked
• The occupation/craft being utilized
• The estimated number of hours you’ll have an apprentice work
• An estimate of the dates you plan to utilize them
• The apprenticeship program/hall the form is going to
Entering a “0,” “TBD,”, “N/A” or blank on the following boxes may invalidate the form. So, if you don’t have the exact dates or hours, it’s best practice to place an estimate.
Finding Apprenticeship Halls
Since this document goes out to all apprentice halls of each of your apprentice-able crafts, multiple versions of this may be filled out and sent. The website listed at the top of this form is where you’d find all halls that this form is to be sent to.
You can access this site here. Let’s do an example.
In our example, we are employing Laborers for a project located in San Diego County.
Once you hit “search,” a list of halls will pop up. Your DAS 140 form should go to all listed halls before you start on site. Even if the specific hall listed does not cover the scope of work you will be performing, the DIR still considers it to be applicable, and a DAS 140 form will still have to be sent.
Which Box to Check
There’s 3 options to choose from. Box 1, Box 2, or Box 3. Only one box should be selected.
Check off Box 1 if you’re signatory to a union hall and approved to train. Write the name of the union you’re signatory to on this line. If you’re checking box 1, then the DAS 140 would only have to be sent to this one hall.
Check box 2 if you are complying to a specific hall’s standards, paying your training to this hall, but are not approved to train. When you’re box 2, you will have to submit the DAS 140 to all halls listed on the DIR website.
If you check box 3, this means you will not be complying to any union’s standards and will be making your training payments for the listed classification to the CAC. You will also have to submit a DAS 140 to all halls listed on the DIR website.
DAS 140 Penalties
It’s crucial that this form is filled and sent out correctly, otherwise penalties of $300 per day, per classification may accrue, and that is a costly mistake.
The DAS 142 Form
The DAS 142 form is the “Apprentice Request Dispatch” form. For a step-by-step guide, you can visit this video on our YouTube channel, “How to Fill Out a California DAS 142 Form.” This form is utilized to help aid contractors in hitting a 20% apprentice ratio. Per CCR Title 8 Section 230.1, 20% of the workforce that you employ should consist of registered apprentices.
An apprentice is an employee who is undergoing an apprenticeship program approved by the Department of Apprenticeship Standards and is also registered in the state of California.
Apprenticeship Registration
If an employee is not registered with the state as an apprentice, they cannot be classified as an apprentice and must be paid the journeyman rate when working on a public works project. This discretion is also applicable if their apprenticeship status has expired by the time they’ve performed work on site. You can access this information using the DIR apprenticeship status lookup tool.
Completing the DAS 140 Form
The first section of this form outlines the website contractors can use to verify where the form can be sent. It also references the increments that you must hire an apprentice under.
In the second section, contractors must list the date, the applicable apprenticeship committee the form is being sent to, and your contractor information. If you checked box 2 or 3 on the DAS140, this form should be sent to the corresponding halls that your DAS 140 form was sent to.
In the third section, you must list the project information. If you have any questions regarding this portion of the form, please refer to your prime contractor.
The fourth section is the most important one. This is how the apprentice will know where to go and what time to show up. Let’s break it down.
The areas above are going to be filled out with two points in mind. First, the requested apprentice must be hired in 8 hour increments as referenced in Section 1. Second, the form must be sent 72 hours before the apprentice is needed as referenced in Section 5.
This 72 hour notice does not include weekends or holidays.
If this form is sent without these two criteria being fulfilled, it may be considered invalid. Underneath the dispatch request information, you should input the following:
• The number of apprentices needed
• The craft or trade they will work under
• The date and time they’re expected to report
• The name of the person they’re to report to on site
• The address of the project
It’s important to note that all information should be filled out accurately. Again, if any “0s,” “N/As,” “TBDs,” or blanks are located on the form, it may be considered invalid.
DAS 7 Form
Proof of approval to train apprentices includes an “approval to train” letter from your union, or a DAS 7 form.
The DAS 7 is a form intended to be filled out by the union hall verifying that your company is approved to train for the applicable craft. This form may be requested to verify that marking Box 1 on the DAS 140 form is accurate.
Contractors’ priority with this form is to ensure that it’s readily available to fulfill this request.
If you do not have this documentation, then your company may not be approved to train. With this, you may need to check Box 2 or Box 3 on the DAS 140 form to reflect an accurate status. For more information or resources, feel free to watch our Apprenticeship Series and contact us if you need further assistance.
When working on a federally funded project, regulations are sensitive to keep up with. Failure to do so can result in costly penalties. Prevailing wage is a frequent standard to be in compliance with in federally funded projects, and the law that put this forth is the Davis Bacon act.
The Davis Bacon Act, also known as the DBA, is a rule applicable to federally funded projects that requires a minimum wage to be paid to workers, also known as the prevailing wage. This wage is consistent of a base hourly rate and fringe benefits. Alongside paying prevailing wages is the requirement to submit weekly certified payroll reports and maintain records. The Davis Bacon wages and posters should be posted on the site, easily visible to all workers. These requirements are applicable to all contractors within all tiers of the project, and penalties may be issued if in violation.
What Projects are Applicable to the Davis Bacon Act?
Applicability under the Davis Bacon Act is subject to a $2000 dollar threshold, so it is applicable to projects with a minimum of $2000 in overall project value.
The act is then in effect for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. This is further defined under 29 CFR 5.2 under “Public building or public work.”
Who Is Owed Prevailing Wages?
As stated, prevailing wages are the minimum amount required to be paid out to workers on this project, referred to by the Davis Bacon Act as the “laborers or mechanics.” Laborers or mechanics includes “at least those workers whose duties are manual or physical in nature” as defined by 29 CFR 5.2. So, this excludes positions such as executive, professional or clerical, those commonly seen in administrative positions. The definition does include apprentices. Prevailing wages also applies only to workers performing on the site of work.
Where do I Find the Wages for my Project?
The DBA wages are posted on sheets known as “Wage Determinations” and are available online via sam.gov. The Wage Determination for your project includes a list of work titles, also known as classifications, and their corresponding wage rates.
The information you would need for your wage determination are your project’s Bid Due or Opening Date, the project County, State, and the project Construction Type.
Negotiated contracts would use the date of award. Competitively bid projects should look to the wage determination that was in effect 10 days prior to the bid opening date.
Here’s an example. Our project is competitively bid and had a bid due date of January 16th, 2024. The project is based in San Diego County, California, and has a “Heavy” construction type.
Upon inputting the applicable information onto the sam.gov site, you would click on the wage determination fit for your project. There may be multiple modifications
made. Our project had a bid due date of January 16th, 2024. Because we have to take the wage determination in effect 10 days prior to the bid due date to find our effective date.
10 days before January 16th would gives us an effective date of January 6th, 2024, which falls under Modification 0. Modification 0 is applicable for projects with effective dates from January 5th to January 11th.
If workers on your project are performing work that isn’t covered under the classifications listed on the Wage Determination sheet for your project, you have the option of submitting a SF 1444 Form, which is a request for an additional classification.
After finding your wage determination, proper wage payments should be issued to employees. While paying the base rate and fringe amount, other important things to look out for are footnotes or asterisks on your rate. This can include additional amounts required to be paid per classification or notices to changes in the rate.
Please note, there are no general frequent increases made to Davis Bacon wage determinations, and the rate found at the beginning of the project is grandfathered in during its entirety. However, local and federal minimum wage changes are to be taken into account.
Recordkeeping Requirements
The Davis Bacon Act requires submission of Certified Payroll Reports on a weekly basis. 29 CFR 5.5(a)(3) states that payroll records must include the following: the employee name, address, social security number, correct classification, hourly rate of wages paid, daily and weekly number of hours worked, deductions, and actual wages paid. The certified payroll report must also be signed under a “statement of compliance”, indicating that all its contents are accurate and cleared by the signer. A certified payroll report template issued by the U.S Wage and Hour Division contains these requirements for payroll reporting, known as the WH347 Form.
Alongside certified payroll reports, other documentation expected to be maintain includes additional records relating to fringe benefits and apprenticeship and training as applicable. Please note, additional recordkeeping is not limited to these types of documentation. Any form of record that displays the full picture of employees’ pay, or acts as “support” toward the payroll record would go toward this requirement.
Apprenticeship Requirements
Under 29 CFR 5.2, Apprentices are defined as “helpers” that are employed and individually registered in a genuine apprenticeship program. Apprentices are generally undertaking training and developing skills to excel within their occupation. If using an apprentice on your project, you must meet the following:
1) Verify that your apprentice is properly certified by a program registered with the Employment and Training Agency’s (ETA) Office of Apprenticeship (OA), or with a State Apprenticeship Agency recognized by the OA.
2) If counting apprenticeship costs as a fringe benefit, the costs must bear a “reasonable relationship” to benefits provided to workers.
3) The costs incurred for apprenticeship must not offset costs incurred for another classification.
4) Pay the appropriate wages including the percentage of hourly rate required by the apprenticeship or training program and the approved program fringe benefits.
5) Utilize apprentices in accordance with the program-issued ratio of permitted apprentice to journeyman performing oversight.
To find the proper rates or wages to pay your apprentices, it’s best practice to consult with the program or union that you intend to utilize apprentices from to verify the rates they enforce. The Davis Bacon Act does not establish wage rate for apprentice-level workers.
Penalties
It’s vital that these requirements are met to avoid the potential penalties that come with violation. These penalties include:
1) Suspension of funds and withholding (29 CFR 5.9(a))
2) Debarment for breach of contract clauses under the requirements listed for this act (29 CFR 5.5(a)(7))
3) Restitution for unpaid wages and liquidated damages under CWHSSA (29 CFR 5.5(b)(2))
4) Withheld funds for unpaid wages and liquidated damages (29 CFR 5.5(b)(3))
Further penalties may be imposed for additional violations found, and enforcement is held by the Division of Labor in which violations are evaluated for the appropriate remedial action.
Avoid paying restitution interest, facing debarment, and encountering criminal action amongst other penalties by remaining informed and compliant with the Davis Bacon Act requirements.
Tune into the remainder of this series where we uncover updates made to the Davis Bacon Act known as the “final rule.” These updates provide context to the items we’ve discussed in today’s video and provide additional information in remaining compliant.
To get a full picture on prevailing wage, you can watch this video for a full overview. Have any further questions? Let’s get in touch.
The contents of this blog post have been transcribed from our YouTube video, “What is Prevailing Wage?”
Project funding and changes in policy within the construction industry have increased the applicability of prevailing wage payments on projects. Enforcement is increasing, and the need to be in-the-know is higher than ever. Here is our summary of prevailing wage and what you should know to remain informed with the evolving project requirements.
The U.S Department of Labor, also known as the DOL, defines prevailing wage as “the average wage paid to similarly employed workers in a specific occupation in the area of intended employment.” These average wages are then set to become a standard for payment. In short, prevailing wages can be known as the minimum wage that must be paid to employees performing work on Public Work construction projects. Prevailing wage varies depending on the actual work being performed by employees and the location of the Public Work.
As mentioned, prevailing wages are typically paid on public works projects across the nation. The definition of “Public Works” may vary from state to state. For example, per California Labor Code 1720, “Public Works” is defined as “the Construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds. It can include preconstruction and post-construction activities related to a public works project.”
Prevailing Wage Applicability
Although public works projects are common in prominence with the payment of prevailing wage, prevailing wages may still be applicable to other construction projects that are not considered “public works.”
Taxpayers performing construction and attempting to claim tax credits and incentives under the Inflation Reduction Act can be required to pay Davis Bacon prevailing wages depending on the tax credit or incentive. Prevailing Wage applicability can also vary depending where your project is. In California, projects subject to Prevailing Wage are those that complete work under the Public Works definition, and are receiving public funding over $1000.
Exemptions to prevailing wage payment in California include projects less than $1000 in public funding and specific worker types, such as security guards and volunteers. The liability to pay prevailing wage in California is also project-wide and isn’t the general contractor’s sole responsibility. All contractors, sub and tier, are required to pay the prevailing wage rates if their applicability is triggered.
What’s at Stake
It’s best practice to remain informed on the prevailing wage information on the state and federal level to avoid underpayment penalties. In California, for example, Labor Code section 1775 states that penalties are assessed at no less than forty dollars ($40) for each employee and day they worked and were paid less than the prevailing wage rate. The penalty escalates to $120 for each calendar day if the violation is found to be an intentional disregard for prevailing wage.
Federal consequences can include debarment, payment for insufficient amounts on unpaid wages, liquidated damages for overtime underpayments, and contract termination amongst other penalties.
We offer a general state-by-state overview of compliance at the Federal and/or State levels. For more information or resources, feel free to watch our Frequently Asked Questions series and contact us if you need further assistance.
Proper classification of employees is a principal point in remaining in compliance with federal regulations. Here’s a breakdown of what “classifications” are and how you use them.
A “classification” is an identifier or title signifying the skill, work, responsibilities, and duties of an employee. Classifications serve as a way of categorizing your employee, and this aids in defining things such as job roles and wage rates. Other commonly exchanged terms in the realm of classifications include “trades” or “crafts.” The term “craft” is used synonymously alongside “trade” and means “an occupation requiring manual skill.”
How to Classify an Employee Under Prevailing Wage
Employees should be classified based on their scope of work. An employee’s scope of work description would include the skills, tasks, machines/tools being used, and even materials being handled. The Wage and Hour Division (WHD) publishes the prevailing wage rates covered under the Davis Bacon Act that includes a list of classifications and the rates owed. These can be found at sam.gov. Here are the main steps to keep in mind as you complete your search:
1) The following are used to find your Davis Bacon project’s wages:
a. Your project’s state
b. Your project’s county
c. Construction type
d. Your project’s bid advertisement date (alternately, the contract award date)
Entering this information onto the wage determinations page should generate the applicable wages for your project.
The classifications within the wage determination are listed with a union code identifier above the classification title. This may look like this:
This identifier points to the union that was surveyed to retrieve the classification’s rates. Please note, you do not need to be signatory to a union for this to be applicable. The union within the identifier could be referred to for the scope of work description or comprehensive list of tasks that would be performed by its corresponding classification. As previously mentioned, this would include the main identifiers that would align with whatever skills, tasks, machines/tools being used, or material being handled by your employees. Common classifications can include Laborers, Carpenters, or Electricians. If you’d like to contact the union to find their scope of work description, you can decipher what union is listed with the following indicators:
• A four-letter abbreviation of the classification
• The local union number following the abbreviation
From the above screenshot, the listed union would be the Laborers Local 89.
There are no established nationwide standard classification definitions under the Davis Bacon Act, so contractors are encouraged to examine “local area practice.” Thus, the act refers to the Wage and Hour Division (who publishes the wage determinations) and/or local construction industry stakeholders for determining the classification of your employees (scope of work assigning assistance).
Best Practice for Classifying an Employee on Payroll
When reporting on payroll, it’s best practice to classify employees based on the work they performed within the day. This affects how an employee appears throughout the week if they are skilled in several trades and certified to perform different types of work – they might be used to complete a variety of tasks across the project. So, they should be classified as such. Keeping timecards and descriptions of the work completed can assist with recordkeeping.
Let’s use some of the previously listed common classifications as an example.
If an employee were performing tasks exclusive to Laborers on Monday and were then performing tasks exclusive to Carpenter on Tuesday, the employee would be reported as the Laborer classification on Monday and the Carpenter classification on Tuesday.
This is additionally important to note because of the difference in required wage rates to the classifications. If an employee were listed as a Classification A and receiving the wages assigned to Classification A but were actually performing the tasks of a Classification B, a classification with a higher wage rate, the contractor may be subject to penalties for misclassification and underpayments.
What are the Effects of Misclassifying Employees?
The Wage and Hour Division closely examines the classification of employees. A common mistake in classifying employees is assigning an “independent contractor” status. In a recent case based in Alabama, an aviation maintenance shop was reported misclassifying employees as independent contractors. The Department of Labor recovered $127,249 back in wages from this case.
Conclusion
Classifications help in standardizing work across the industry. Maintaining records of the scope of work performed by your employees and classifying them appropriately prevents contractors from misclassifying employees and potential underpayment penalties.
Renewable energy is taking the construction space by storm and keeping up with regulations can be a tough feat, but we’re here to help. We’ll be discussing changes made to California’s net energy metering program that came into effect January 1st, 2024 in this overview of Assembly Bill 2143, also known as AB 2143.
Net energy metering is a tool that allows customers with renewable energy systems, namely solar panels, to gain credit for solar projects exceeding 15 kW of energy generated that is fed back into the grid. So, extra energy gathered from a renewable energy source can be sold for credit.
Applicability and Requirements
AB2143 is applicable to contractors entering into a contract to perform work on a renewable electrical generation facility or associated battery storage.
The requirements include:
• Paying Prevailing Wages
• Maintaining and Verifying Payroll Records
• Submitting digital copies of payroll records biannually
Paying Prevailing Wages
Prevailing wages are the minimum rate required to be paid out to workers in a specific occupation, also known as a classification. California prevailing wage rates are issued by the Department of Industrial Relations, also known as the DIR. Not only are there required base rates assigned to each occupation type, but there are also fringe amounts and provisions that can differ per classification. For an in-depth review on prevailing wage, you can visit thisvideo on our YouTube channel.
Maintaining and Verifying Payroll Records
The second requirement is the requirement to Maintain and Verify Payroll records. Payroll records must be accurate and display the following:
• Employee name
• Address
• Social security number
• Work classification
• Straight time and overtime hours worked each day and week
• Actual wages paid
They must also be signed under penalty of perjury, which is a legal statement by the signer verifying that all information on the payroll record is true.
These payroll records must also be available for inspection or furnished upon request to the awarding body and Division of Labor Standards Enforcement, also known as the DLSE.
Biannual Payroll Submissions
Finally, each contract must submit digital copies of certified payroll records biannually. The dates for submission are July 1st and December 31st of each year. The commission team that monitors Net Energy Metering projects will be retaining these records as public record for five years.
So, to summarize the key points, prevailing wages must be paid at minimum to employees on renewable energy projects, payroll records of these wages must be kept and available upon inspection or request, and records must be submitted biannually.
Penalties
While the requirements can be vast, violation of the requirements can pose major issues. AB 2143 is enforced through the following means:
A civil wage and penalty assessment can be issued. So, if a contractor is found to be in violation, interest will accrue on all due and unpaid wages and the violator will be publicly listed by The Labor Commissioner. Construction workers cannot be underpaid and administrative complaints or civil action can be pursued for violation of the bill.
Additionally, willful violation can result in revoked eligibility for the energy facility to receive service pursuant to AB 2143 Section 769.2(d).
Exemptions
Please note, this bill is not applicable to the following (as derived from AB 2143 Section 769.2(f)):
“
• A residential renewable electrical generation facility that is eligible to receive service pursuant to the standard contract or tariff developed pursuant to Section 2827.1 and has a maximum generating capacity of 15 kilowatts or less of electricity.
• A residential renewable electrical generation facility that is eligible to receive service pursuant to the standard contract or tariff developed pursuant to Section 2827.1 and that is installed on a single-family home.
• A project that is a public work, as defined in Section 1720 of the Labor Code, and that is subject to Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code.
• A renewable electrical generation facility that serves only a modular home, a modular home community, or multiunit housing that has two or fewer stories.
“
Conclusion
With everything discussed in mind, it’s important to be aware of and comply with the requirements of AB2143. Our team works closely with contractors through dozens of project types to assist in remaining compliant. If you would like in-depth assistance, please feel free to get in touch.
A New York Labor Law published in August of 2023 has triggered prevailing wage requirements on certain roadway construction work by utility company contractors. Here’s an overview of what this act is and what requirements are posed for you.
The New York Roadway Excavation Quality Assurance Act came into effect on September 15th, 2023. The rules under this law are enforced on “all contracts for construction solicited on or after the effective date.” A contract is “solicited” when bidders on a project are requested to submit their offers. If there was no solicitation or contract, the act is enforced on work performed under a permit issued on or after the effective date. If a permit was required for the job but not obtained, the work would still be covered.
The type of work covered under this law is defined as a “covered excavation project.” This includes “construction work issued to a contractor or subcontractor of a utility company by the state, a county, or a municipality.” The work covered isn’t exclusive to excavation, and the law generally covers “projects requiring a permit to excavate, open, or otherwise use a street to perform utility work are covered by this law.” This can include the opening, patching, and closing of the street as well.
Covered types of utility work include “Electric, gas, water, steam, sewer, fuel, geothermal and telephone/telegraph.
Prevailing Wage Requirements
With the effective date and types of covered work in mind, the payment of prevailing wage rates would follow. The payment of prevailing wages is applicable to all contractors and subcontractors and would go to the laborers, workers, or mechanics performing work for the utility company, For an extensive overview of what prevailing wages are, you can visit this video on our YouTube channel.
Contractors are recommended to contact the nearest Bureau of Public Work district office to gather which prevailing wage rates are applicable to the different types of utility work.
Recordkeeping Requirements
Alongside the payment of prevailing wages, contractors are instructed to maintain records of payment. Per the Quality Assurance Act guidance, “Contractors and subcontractors to a utility are now always required to keep records of the payment of prevailing wages.” Commonly kept records for general prevailing wage documentation includes certified payroll reports, pay stubs/itemized wage statements, and fringe benefit documentation. The overarching best practice is to keep all documents that provide a full picture of the employees’ pay.
Enforcement and Penalties
Regulations of The Quality Assurance Act and penalties for violation are further defined through the following Labor Laws:
Labor Law 220, which defines the 8 hour workday,
Labor Law 220(a), which requires contractors to maintain statements showing the amounts due for wages toward employees and the payment of prevailing wages.
Labor Law 220(b), which defines withheld payments on laborers’ wages,
Labor Law 223, which defines the contractor’s responsibility if found non-compliant with the proper payment of wages
Labor Law 224-b, which defines the stop-work order if a contractor is found to be non-compliant,
And Labor Law 227, which penalizes contractors who have failed to pay prevailing wage rates. This can result in being guilty of a misdemeanor and, in certain cases, a fine of $500 – even imprisonment.
Conclusion
The payment of prevailing wages under the New York Roadway Quality Assurance Act is important to maintain to keep your business above penalties and remain in compliance with the prevailing wage laws.
The Inflation Reduction Act, or, the IRA is the biggest investment in clean energy in the United States. The goal is to fight climate change and increase economic opportunity. The tax incentives are available to all taxpayers, corporate and private entities that meet the criteria within each tax provision. For many of these provisions come the inclusion of prevailing wage and apprenticeship requirements.
On August 16th, 2022, the Inflation Reduction Act was signed into action, providing tax incentives for several tax credit provisions that involve clean energy projects.
One specific example Is the Production Tax Credit. This provides taxpayers the possibility of acquiring $2.60 per kilowatt hour credit for electricity produced at qualified facilities. To gain this credit, taxpayers would have to satisfy the prevailing wage and apprenticeship requirements, otherwise that credit is reduced.
In the context of the IRA, a taxpayer is anyone attempting to receive the tax credit or incentive, and this includes contractors.
The Davis-Bacon Act and the Related Acts itself are not subject under the IRA, including enforcement regulations. However, there are similarities in how certain provisions are derived.
The IRA follows the same prevailing wage requirement as it pertains to “Laborers & Mechanics” under DBA.
Apprentices are expected to have the same certification requirements under DBA.
What’s considered the “Site of Work” and “Construction, Alteration, and Repair” are defined the same both under DBA and IRA.
Requirements to Obtain Tax Credits
The IRS 87 FR 73580 guidance outlines requirements for obtaining tax credits. The two main ones to be found for prevailing wage are (1) the payment of prevailing wage rates and (2) maintaining records. The applicable rates are to be found for laborers and mechanics as defined at 29 CFR 5.2(m), performing construction, alteration, or repair.
Remember, there is no exception for independent contractors.
Maintaining Records
Section 16.001-1(a) of the Income Tax Regulations states taxpayers must keep records to establish the amount of claimed credits. This documentation should include the applicable wage determination provided by the DOL and documentation showing each worker, their classification, gross pay, hours worked, and proper prevailing wage rate of pay. This includes the appropriate fringe benefits. It’s important that these records are maintained to prove the requirements are being met.
If a taxpayer fails to pay prevailing wage rates, they can still be considered to have satisfied the requirements if they:
Pay the laborers or mechanics the difference between the paid wages and the prevailing wage rates, plus interest of 3%; and
Pay a $5,000 fine per laborer or mechanic who was underpaid, to the Secretary of Labor
This fine increases to three times the sum of (a) and $10,000 per violation if it was found to have been an intentional underpayment.
The IRA Proposed Rules
On August 29th, 2023, the IRS and the Treasury issued “proposed rules” that would update the PWA (prevailing wage and apprenticeship) requirements under the Inflation Reduction Act. The document provides clarification on many issues that arose after the original guidance was published in November of 2022. Some of the highlights include:
A denial of a request for a qualified apprentice would not automatically qualify the taxpayer for the Good Faith Effort Exception. There would be a requirement to resubmit a request for apprentices every 120 days, in the event of a valid denial by the apprenticeship program.
A new general wage determination is required to be used when a contract is changed to include additional, substantial construction, alteration, or repair work not within the scope of work of the original contract, or to require work to be performed for an additional time period not originally obligated.
Apprentices not in a Registered Apprenticeship Program, or not supervised at the correct ratio, must be paid at the full prevailing wage rate for the classification and cannot have those hours counted towards the Apprentice Labor Hour Requirement.
Many major topics are addressed, including cure and penalty provisions for failure to meet the requirements. Any taxpayer wishing to claim the increased tax credits should ensure that they are familiar with these proposed regulations. Alliant is here to help answer any questions, help clients stay informed, and to ensure full compliance with all of the IRA PWA requirements. If you’d like any further assistance, feel free to contact us.
