Below are the principal categories of labor law that must be addressed when undertaking a government-funded housing or community development project. In this post, I'm going to focus on wages. I will focus on the rest in the upcoming couple posts.
- Contract Conditions
- Copeland "Anti-Kickback" Act
- Contract Work Hours and Safety Standards Act
- Equal Employment Opportunity and Section 3
In certain situations, HUD requires that HUD-funded projects pay federal "Davis-Bacon" or "prevailing" wages. These are minimum hourly wage rates by job classification that the federal Department of Labor sets periodically for each geographic area in the country. The wage rates are posted on DOL's website. It is important to figure out whether these wage rates are required early in the development process so that you know how it will affect your budget. To do that, you need to identify the source and amount of your project funding. CDBG or HOME funds will trigger federal Davis-Bacon wages. For CDBG, the federal wage rates apply to contracts over $2,000. For HOME, the federal wage rates apply to a project with 12 or more HOME-assisted units.
Beyond finding out funding sources and amounts, you should ask the following questions.
Who administers your HUD funds? Some pass through entities (most often states, less often localities) may layer their own requirements or their own interpretations of the federal requirements on top of federal law.
When do you plan to start construction? The effective date of the applicable Davis-Bacon wage rate schedule will be the most recent date that is prior to the construction contract execution date.
What is your building type? The Dept. of Labor (DOL) classifies wage rates by building type- Building, Heavy, Highway and Residential. DOL provides definitions of each on their website. Housing projects with up to four stories will be Residential. Nonresidential public improvements will generally be Highway if they involve streets, sidewalks or trails. If you are unsure of the building type, contact your local HUD Field Office for direction.
Will you use state or local funds that will trigger additional prevailing wages? Many states or localities require use of their own prevailing wage rates in addition to the federal prevailing wages. In these cases, you must use the higher prevailing wage rate for all job classifications. For example, in California, federally-funded public improvement contracts over $2,000 are considered "public works" that trigger state prevailing wages. However, federally-funded low-income affordable housing projects do not trigger state prevailing wages if they meet certain conditions.
If you determine that federal Davis-Bacon prevailing wage rates do apply to your project, go to the DOL website and select: 1) your region; 2) your building type; and 3) your applicable date based on your actual or projected construction contract execution date. Print out the applicable schedule. You will want to attach the schedule to your construction contract and reference it as a requirement, and require it to be attached and referenced in all of the general contractor's subcontracts as well.
On my next post I'll give some tips on contract conditions, including apprenticeships, the Copeland "Anti-Kickback" Act, and the Contract Work Hours and Safety Standards Act.