Author: Alliant Consulting

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Prevailing Wage in Ohio

In the heart of the Buckeye State, Chapter 4115 of the Ohio Revised code sets the prevailing wage for the state of Ohio. The Ohio Department of Commerce enforces provisions that set the minimum wage and hour requirements for laborers and mechanics working on public works projects in Ohio. These statutes apply to all partially and fully publicly funded projects over the following threshold values:

  • New Building Construction: $250,000.00
  • Building Construction (reconstruction, repair, renovation, etc.): $75,000.00
  • New road or bridge construction: $96,901.00
  • Road or Bridge construction (reconstruction, repair, renovation, etc.): $28,789.00

These thresholds are adjusted every two years and cannot decrease or increase by more than 3% at a time. The law aims to ensure that workers are paid fairly for their work on public projects and to prevent contractors from underbidding one another by paying their workers less than the prevailing wage. It is important to note that Ohio state is committed to protecting the rights of workers shown through Ohio revised Code Section 4115.071, which stipulates that the public authority contracting for a public works project must appoint one of their employees as a “prevailing wage coordinator” for the life of the project to protect the rights of workers and ensuring that they are compensated fairly for their work on public projects.

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Fringe Benefits Overview

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Fringe Benefits are an important factor of prevailing wage and can include a variety of benefits in addition to normal wages. According to the IRS, they are considered a form of compensation for services rendered. These benefits can include health or pension plans, among others. In the context of prevailing wage, fringe benefits are significant for two reasons:

  1. What counts as a Fringe Benefit: It is essential to determine what can be categorized as a fringe benefit. The amount must be paid to a 3rd party on behalf of and to benefit the employee. Examples of bona fide fringe benefit plans include health or pension plans.
  2. Factoring into Prevailing Wage: Fringe benefit payments may be taken into account when calculating prevailing wage rates for employees. Employers need to calculate the hourly cost of providing these benefits to the employees. This amount can be added to regular wages when determining the total compensation offered to employees to meet the prevailing wage requirements.

On August 23, 2023, the Department published in the Federal Register the final rule, “Updating the Davis-Bacon and Related Acts Regulations.”  The final rule updates regulations issued under the Davis-Bacon and Related Acts. The final rule is effective on October 23, 2023.

The final rule adds new paragraph (c) to § 5.25 to codify the principle of annualization that is used to calculate the amount of Davis-Bacon credit that a contractor may receive for contributions to a bona fide fringe benefit plan (or the reasonably anticipated costs of an unfunded benefit plan) when the contractor’s workers work on both DBRA-covered and private (non-DBRA) work. Contractors, plans, and other interested parties may request an exception from the annualization requirement by submitting a request to WHD, but such exceptions may be granted only if the benefit provided by the plan is not continuous in nature and does not compensate both DBRA-covered and non-DBRA work.

Generally, Fringe Benefits encompass employer contributions relayed to employees, firmly entrusted to a trustee or an external party as part of a genuine fringe benefit fund plan or program. This plan should be reasonably anticipated and represent a binding financial commitment for the employees’ benefit. It’s important to note that employer contributions mandated by federal, state, or local regulations do not fall under the category of fringe benefits.

Fringe benefits can be confusing, but taking these factors into account will help you remain compliant and avoid penalties! 

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Prevailing Wage in Hawaii

Prevailing Wage Hawaii

Surf, sand, and prevailing wage in the Land of Aloha!? Chapter 104 of the Hawaii Revised Statutes (HRS) established and details Prevailing Wage mandates in Hawaii. The code sets the minimum wage and hour requirements for laborers and mechanics working on public works projects in Hawaii. It requires contractors and subcontractors to pay their workers no less than the prevailing wage rate for similar work in the same locality. The law aims to ensure that workers are paid fairly for their work on public projects and to prevent contractors from underbidding one another by paying their workers less than the prevailing wage. It is important to note that Chapter 104 applies to all public works projects over $2,000 involving a Governmental Contracting Agency, regardless of funding source. By enforcing this law, Hawaii is committed to protecting the rights of workers and ensuring that they are compensated fairly for their work on public projects.

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Inflation Reduction Act Renewable Energy Projects

With heightened concern regarding the United States’ staggering carbon emissions, the Inflation Reduction Act (IRA) is pushing to reduce the country’s carbon emission output by roughly 40% by 2030. To reach this ambitious climate investment, the IRS has issued a plan to promote development in regions that are or have previously been dependent on the fossil fuel industry, whether through extraction, processing, or steady usage. These areas are known as energy communities.

To entice developers to initiate and construct projects in energy communities, the IRS and the Department of Treasury have issued guidance on how to obtain investment tax credits and production tax credits for renewable energy-specific projects, outlined in Notice 2023-38.

The available tax credits include a 2% energy community bonus, which increases the base investment tax credit (ITC) amount or the production tax credit (PTC) rate. Additionally, if a project satisfies prevailing wage and apprenticeship requirements, a 10% energy community bonus is provided instead.

Notice 2023-38 provides extensive insight into the components that make up energy communities, requirements developers must satisfy to receive bonuses, and applicable project components that will be accepted by the IRS.
 

For further information, please refer to the following links:
1. https://www.jdsupra.com/legalnews/what-is-an-energy-community-irs-6672439/
2. https://www.foley.com/en/insights/publications/2023/05/treasury-irs-guidance-content-bonus-credit-energy.

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Prevailing Wage for California Temporary Staffing Agencies

Awarding Agencies

Misclassifying employees from Temporary Staffing Agencies is a frequent mistake in prevailing wage. It’s important to know how contractors utilizing these employees are subject to the prevailing wage requirements on applicable projects. 

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What is a Temp Agency?

A temporary staffing agency, or most popularly known as a temp agency, is a recruiting firm that acts as an intermediary between candidates looking for work and companies needing short-term employees or indefinite temporary positions. Temp agency employees work for what is referred to as a “host employer” (or an employer who has general supervisory authority over the worksite) but are on the payroll of a “primary employer.” The primary employer can be either: A temp agency that hires workers and sends them to work for a host employer, or a professional employer organization (PEO) that puts a host employer’s employees on the PEO’s payroll as its own employees. 

What are the Prevailing Wage Requirements?

Prevailing wages are expected to be paid on certain project types. Public works projects most commonly enforce the payment of prevailing wages. Temp agencies may be called in by contractors to assist in performing work for these projects. The “primary employer” status designates which body, between the Temp agency and the hiring contractor, would be held under the prevailing wage requirements in this situation. 

When it comes to prevailing wage, temporary staffing agencies must register with the DIR if the temp agency submits their own payroll as the primary employer (See CCR Title 8, § 16410). However, if the hiring contractor includes the temp 

employee on their payroll and can submit payroll for them, the temp agency does not need to be registered with the DIR. 

Temp Employees, Apprenticeship, and Violation Penalties

As referenced on the DIR’s FAQ website, “Apprenticeship requirements are the responsibility of the contractor. If a Contractor relies on the temp agency and there are problems, it is the Contractor who will be responsible for any resulting penalties.” 

Apprenticeship standards are enforced on public works projects and published under Labor Code 1777.5. Meeting these standards are included within a contractor’s duties on public works projects. If a contractor chooses to utilize employees from a temp agency in place of a valid request for apprentices, the contractor may be in violation. 

Some of the requirements regarding apprenticeship standards can include but are not limited to not employing apprentices if utilizing an apprenticeable craft, late and/or DAS 140 forms not being sent for apprenticeable crafts, and/or failure to make training payments for all hours worked. 

1777.7(a)(1) notes that contractors who violate any of the apprenticeship standards found in §1777.5 “shall forfeit as a civil penalty” an amount not exceeding $100 “for each full calendar day of noncompliance.” 

Conclusion

Although temp agency employees can be beneficial when it comes to saving time on training and hiring, employers must be aware and do their due diligence to ensure they are meeting the prevailing wage requirements when they are choosing to work with temp agencies to avoid costly penalties on California State Funded Public Works projects.

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Misclassification

Employers are obligated by state law to classify their employees properly and pay them accordingly. While employers can misclassify employees unintentionally, misclassification is illegal and can have stiff legal ramifications. It is important to understand that workers who are misclassified are deprived of essential mandated benefits such as workers compensation if injured on the job and/or unemployment benefits.
 
One of the most prevalent instances where misclassification occurs is when employers classify their employees as independent contractors to avoid paying state minimum wage, overtime rates and payroll taxes. Investigation under these circumstances has increased; therefore, it is best practice for employers to know the difference and maintain proper records to avoid misclassification.
 
Some criteria of an Independent Contractor:

  • Run their own business
  • Paid upon completion of project
  • Provides own materials, tools and equipment
  • Work with multiple clients
  • Temporary relationship until project is completed
  • Decides when and how they will perform the work
  • Decides what work they will do

For  More Guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act (FLSA) click here

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Women In Construction

Since 2016, the number of women in construction has been steadily increasing and has now reached an all-time high. The industry has had a continued high demand for workers and within the past few years, employers and labor groups have been removing obstacles in order to broaden the selection of workers in the trades.

Although these obstacles have been lowered significantly, experts have explained that women are typically harder to recruit due to less experience and often require more flexible hours for childcare considerations. To combat this, experts say companies should set goals for diversity hiring and focus on inclusion and safety. Many women don’t see construction as a career option so it’s important to show them that women already have a place on the jobsite. Recently, U.S. Secretary of Commerce Gina Raimondo revealed the Million Women in Construction Initiative. This initiative has a goal of doubling the number of women in construction, from 1 million to 2 million, in the next 10 years. With more efforts being put into place, we hope to see the continuing rise of women in the trades.

If you would like further information please click here: Percentage of women in construction higher than ever