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Classifying Employees (Davis-Bacon)

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. 

What is a Classification?

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:

example of employee classification davis-bacon

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.  

Have any further questions? Let’s get in touch.

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California AB 2143 Overview

The contents of this blog post have been transcribed from our YouTube video, “California’s New Solar Regulation and Requirements: AB2143”  

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. 

Table of Contents

Net Energy Metering Explained

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 this video 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

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The Roadway Excavation Quality Assurance Act

On August 16, 2023, New York Governor Hochul introduced the Roadway Excavation Quality Assurance Act, which then took effect on September 15, 2023. This act significantly impacts workers in the construction and utility industry, changing Labor Law §220 and adding a new section, Labor Law §224f. It specifically targets situations where private utility companies hire contractors or subcontractors to perform work that involves excavation or opening of public streets. The Roadway Excavation Quality Assurance Act aims to guarantee that workers engaged in these projects receive prevailing wages. This act can affect your projects in several different ways, including:

  1. Under the new law, contractors who obtain permits for street-related utility work are now obligated to pay the prevailing wage to all workers involved in the project. This applies to tasks such as opening or closing roads, sidewalks, curb cuts, and more.
  2. The legislation also establishes more stringent record-keeping requirements. Contractors and subcontractors working for utilities are now mandated to maintain records of prevailing wage payments at all times, regardless of whether local laws or ordinances necessitate it.
  3. All permits issued after the effective date of the law must include a copy of the Roadway Quality Assurance Act. This ensures that contractors and workers are aware of the prevailing wage requirement.
  4. Government entities granting permits for covered excavation projects are subject to specific requirements. Permits cannot be issued until there is a contractual agreement in place confirming the payment of prevailing wages. This agreement must also be filed with the relevant department of jurisdiction.
  5. Contractors and subcontractors in the utility sector must submit certified payrolls to the department of jurisdiction in accordance with Article 8 of the New York State Labor Law.

In conclusion, The Roadway Quality Assurance Act seeks to ensure fair compensation for workers engaged in excavation and construction projects on public streets. By mandating prevailing wages and outlining clear provisions, the Act promotes fair and competitive wages for those in the construction and utility industry.