There seems to be quite a bit of political debate on the Davis-Bacon Act these days. That stands to reason, as the shift in power in some states has given the repeal of this law some new life. Project labor agreements, collective bargaining, Card Check and many other pro-business vs. pro-labor discussions will be worth watching to see the effect on your business.
One thing we need to be careful of is that the U.S. Department of Labor has been staffing up and doing so with the mindset of finding employers who wrongfully classify and compensate their employees. A number of NSCA members don’t understand the W-2 vs. 1099 debate and don’t have good procedures or documentation if an audit does occur. Not only can employees and ex-employees come after you for misclassification and unpaid overtime, but also the feds are now just as anxious to collect unpaid withholding tax.
On prevailing wage, specifically, we have an interesting challenge going on with pre-fabrication and staging of assemblies outside of the jurisdiction of where the project is located. In conjunction with other trades and McGraw-Hill Construction Information Group, we are trying to determine whether the motivation for this trend (not a trend in our case) is strictly due to avoiding the local prevailing wage or if it is truly for the quality of the workmanship.
Imagine a day when an entire conference room is preassembled remotely, equipped with all the latest technologies and then shipped in a modular fashion to the job site. That might seem crazy, right? Or, what if a control and command room for a correctional facility was built remotely and shipped fully assembled? This day is coming, my friends.
So, the issue then becomes the enforcement of the prevailing wage being paid based upon the location of the project and not necessarily where the work was done. Folks, this is real and a few of our members have already been called upon by auditors from the DOL. They want to know why you choose to prefab racks in your office in Alabama when the job was in New York City. Be well prepared to defend your answer. Have your weekly certified payroll reports squeaky clean, and have your listings of sub-contractors in each file.
In my humble opinion, the more that construction costs are driven up by government mandates such as the Davis-Bacon Act, the more this will drive alternative methods of construction delivery and innovative techniques for competitive solutions.
We have also noticed a sneaky little trick with some public projects. In the fine print, some members have noticed a section on collecting a daily fine per employee until the proper payroll reports have been approved. I’ve heard of cases where the approval is delayed and fines are levied regardless of who is holding this up. My understanding is that the DOL is working behind the scenes to get these fines put in place to collect additional fees. It’s crazy, I know. –CW
PS – See what your state might be doing to battle prevailing wage requirements with NSCA’s interactive state map.