Presented by: Clancy Finnegan · Fringe Benefits $10.00 TOTAL Prevailing Wage $30.00 A contractor...

Presented by:Clancy Finnegan

Did You Know?

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That Betty White (1922) is older than sliced bread (1928)

In an average lifetime a person will swallow 70 assorted insects and 10 spiders while sleeping.

There are 189 people in the US named LOL.

All polar bears are left handed.

NBA superstar Michael Jordan was cut by his high school basketball team.

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What is the purpose of this training?

To briefly educate project personnel about the state & federal PW regulations,

to provide data collection strategies, and

to provide direction on how to ensure compliance.

Classification Wages/TRR Reporting

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Classification

Wages& TRR

Reporting

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Federal and State minimum wage laws.PW is a component of TRRs

Applicable to contracts funded in whole or part with federal and/or state funds.◦ Local Ordinances

Wages and fringe benefits that are established based on data provided by contractors through a voluntary, periodic survey process.

The intent is to establish wages and fringe benefits that are reflective of the area where the project is located, which…

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What

prevents local wage standards from being undercut.

Promotes competitive bidding by establishing a wage standard that all contractors must follow.◦ Non-compliance – bidding advantage

Tends to attract a workforce that is well trained; resulting in quality workmanship and projects that are completed on time and on budget.

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Why

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To ensure that the labor specificationsincorporated into a contract funded in whole or part with federal and/or state funds are followed. The specifications include but are not limited to:

federal Davis-Bacon and Related Acts Minnesota prevailing wage law

◦ WDs - wage determinations (federal and/or state)

◦ state truck rental rates – Apply to MnDOT only.

Provide contract administration assistance and education to contractors and the Contracting Agency (CA), and…

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Special Provisions Division A

Investigate alleged PW violations which may entail

◦ interviewing workers, inspectors, PEs, contractors,

◦ analyzing various records,

◦ issuing findings,

◦ conducting informal conferences,

◦ issuing determinations,

◦ processing restitution, and

◦ referring matters to other governmental authorities for administrative, civil or criminal action.

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MnDOT/USDOT/County Recent Criminal CasesThe owner of a Danner pled guilty to “Wire Fraud” in July 2011.

The owner of Watab Hauling pled guilty to “Theft By Swindle” in January 2013.

The minority owner of Honda Electric pled guilty to “False Statements” in July 2014.

The majority owner of Honda Electric was convicted on16 counts of “Theft By Swindle” in March 2016.

All contractors were charged with a felony, ordered to pay restitution and were or will be debarred. Some of the contractors also received prison sentences.

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to ensure that all contractors comply with the contract labor provisions.

The project personnel may include:◦ Project managers, project engineers, inspectors, office

managers, accountants, consultants, etc.

Failure to enforce could subject the agency to possible loss of funds and legal action.

Again, the main goal is to ensure that a contractor complies with the proper

Classifications Wages/TRR Reporting14

All contractors and trucking entities(Brokers, MTOs & ITOs) must be included in MnDOTs vendor systembefore performing work on projectsfunded through MnDOT.

Where should the PP look to see if a contractor or trucking entity is registered with MnDOT?

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Visit: http://transport.dot.state.mn.us/reference/refvendor.aspx

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The less characters used in the search box will display a greater number of vendor names. Other searching suggestions: T J Trucking may be T.J. Trucking or T. J. Trucking or Tom Johnson Trucking. Also, vendor names may have the word and or & in the name. If the search doesn’t display the vendor name that you’re looking for, then:

Do this for all:Contractors, Brokers, MTOs and ITOsShort name (DBA) results only

If absent, the vendor needs to complete and sign:

◦ contractor vendor form (non-trucking entity), or ahttp://www.dot.state.mn.us/const/labor/documents/forms/contractorform2015.pdf

◦ trucking company vendor formhttp://www.dot.state.mn.us/const/labor/documents/forms/ truckvendorform2015.pdf

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Then submit it to:amanedia.dear@state.mn.us

lcusupport.dot@state.mn.us

Classification

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Wages& TRR

Reporting

Labor Classifications are the foundation for PW.

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Who is subject to PW?◦ A laborer or mechanic (worker) that performs “work”

under a contract. ◦ Work is considered duties that are manual or physical in

nature as distinguished from mental or managerial duties.

Workers include◦ Laborers (100s)◦ Specialty Equipment Operators (200s)◦ Equipment Operators (300s / 500s)◦ Truck Drivers (600s)◦ Skilled Journeyman (700s)

◦ Owner, supervisor, foreman and family members are subject to PW if performing work… 20% Federal Rule

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A worker must be classified based on the actual work performed regardless of the worker’s skill level.

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To determine an applicable classification of labor, the PP shall make a decision based on a “same or similar trade or occupation”. In order to do this, the PP shall refer to the◦ wage decision(s) incorporated into the contract,◦ MN definition rules for laborers / specialty crafts, or◦ Dictionary of Occupational Titles (O*NET OnLine)

If unsure, the PP should contactthe LCU for assistance or instructions.

Work that is unclear will be referred to MnDLI for a determination.

Apprentices may be paid less than the PW rate only if the following are met:

◦ the apprentice is performing the work of the trade,

◦ the apprentice is registered with the USDOL or the MnDLI,

◦ the ratio of (apprentices and trainees) to journeymen on the project meets the ratio requirements specified under the registered program. If no ratio defined, MnDLIstandard will apply. (supervised by journeyman of same company)

◦ Failure to comply with above-mentioned terms: apprentice is considered a journeyman for PW purposes.

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How are apprentices compensated (STATE)?

◦ Apprentice must be compensated according to the rate specified in the program based on level of progress.

So how is the rate determined?

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$16.37

Carpenter

How are apprentices compensated (FEDERAL)?

◦ Apprentice must be compensated according to the rate specified in the program based on level of progress, or as a percentage of the PW basic rate established in the federal WD, whichever is greater.

So how is the rate determined?

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$16.37

$31.92* .70 = $22.34

Carpenter

Are apprentices entitled to fringe benefits?

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EVERYONE!Assume that all workers involved in the processing,manufacturing and deliveryof materials or products to aproject ARE subject to PW.

Who’s NOTSubject To PW

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Minnesota Statute 177.44, Subdivision 2

This truck is depositing material substantially in place.

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Classification

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Wages &TRR

Reporting

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PW = Basic Wage Rate + Fringe Benefit Rate

To demonstrate compliancea contractor must compensate a worker at a minimum, a combination of cash and fringe benefits that meets or exceeds the total PW rate required for a specific labor classification.

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A contractor assigns a worker a “Common Laborer” classification; the WD incorporated into a contract requires the following

Basic Hourly Rate $20.00Fringe Benefits $10.00TOTAL Prevailing Wage $30.00

A contractor may comply by paying the following hourly rates:

$20.00 as a wage plus $10.00 in fringe benefits,$22.00 as a wage plus $ 8.00 in fringe benefits,$30.00 as a wage with NO fringe benefits,$18.00 as a wage plus $12.00 in fringe benefits.

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Funded fringe benefit plans◦ allows a contractor to make an irrevocable contribution on

behalf of an employee, without prior approval from the USDOL, to a financially responsible trustee, third person, fund, plan or program.

◦ Types of funded plans may include Pension plans Health insurance Life insurance

Contributions must be made regularly, not less often than quarterly.

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Unfunded fringe benefit plans◦ allow a contractor to furnish an in-house benefit on

behalf of an employee; the cost to provide the benefit is funded from the contractor’s general assets rather than contributions made to a financially responsible trustee, third person, fund, plan or program.

◦ Typical unfunded plans that don’t require approval from the USDOL include

Vacation pay Holiday pay Sick or PTO pay

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To determine an hourly fringe benefit credit the contractor shall

◦ determine an hourly credit for eachindividual employee, which is

◦ based on total annual amount of the fringe benefit contribution divided by all hours worked (government & non-government).

This is considered ANNUALIZATION

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If the value of the fringe benefit provided is lessthan the fringe rate specified in the federal and/or state WD, the contractor must compensate the employee the difference as a wage, unless the basic rate offsets the fringe.

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Other costs not considered fringe benefits include◦ Workers Compensation◦ Unemployment Compensation◦ Social Security Contributions

◦ Per Diem/Meals◦ Lodging◦ Fuel or Company Vehicle ◦ Clothing/Uniform ◦ Cell Phone

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Governmental Requirements

Reimbursable Expenses“Cost of Doing Business”

Weeks Marine Decision

Pursuant with state overtime (OT) regulations, a contractor shall not

Permit or require a workerto work longer than the prevailing hours of labor, unless the worker is paid for all hours in excess of the prevailing hours of labor at a rate of at least 1-1/2 times the basic hourly rate of pay plus fringe benefits.

Prevailing hours of labor is defined asnot more than 8 hours per day ormore than 40 hours per week.

At a minimum, the contractor must use the MnDLI’sbase rate of pay to determine overtime, unless the employee’s normal rate of pay is higher.

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Pursuant with federal overtime (OT) regulations, a contractor shall not◦ Permit or require a worker to work in excess of 40 hours per week

on the project, unless the worker is paid at a rate not less

than 1-1/2 times the basic hourly rate plus fringe benefits.

Violations could result in◦ Liquidated damages at a rate of $10 per day for each

laborer or mechanic not paid proper overtime.

At a minimum, the contractor must use the Secretary of Labor’s base rate of pay to determine overtime, unless the employee’s normal rate of pay is higher.

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Minimum PW OT Calculation Formula

◦ Wages paid in lieu of fringe benefits are not subject to the half time premium. Regarding the last example the contractor would be required to pay a straight time hourly rate of $26.00 not $24.00.

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Wages are reflected in a state and/or federal WD, which are incorporated into a contract.

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Highway & Heavy Commercial

Wage Decision DiscrepanciesState

examine the state wage decision to identify any missing wage rates and,

inform the contractor to contact the LCU for instructions on how to request one or more wage rates from the Minnesota Department of Labor and Industry.

multiple dates explanation

+ or - $1,000,000 explanationcarpenters/laborers = project costelectrician = cost of electrical work

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HighwayBuilding

Heavy

Wage Decision DiscrepanciesFederal

examine the federal wage decision to identify any missing classifications of labor and,

once the contract is awarded, inform the contractor to complete the Standard Form 1444 and submit it to the LCU for processing.

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If multiple wage decisions of the same type are incorporated into a contract, the contractor shall◦ examine all wage decisions and apply the total rate that is

greater.

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If multiple wage decisions of different types are incorporated into a contract, the contractor shall◦ determine which decision is applicable to the worker, and

◦ apply the total rate for the appropriate classification of labor.

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Building/Commercial WD

Highway and/or Heavy WD

The truck rental rate is comprised of◦ Labor Cost + Operating Cost

Labor Cost◦ Prevailing wage established by

MnDLI via a survey process.

Operating Cost◦ Average statewide costs of

operating a truck.

TRR Discrepancy (+2 years old)◦ The prevailing wage component of the TRR does not

match the contract wage decision.54

Wages and operating costs are reflected in a state TRR decision, which is incorporated into a contract.

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Classification

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Wages& TRR

Reporting

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A certified payroll report (CPR) is comprised of twocomponents, a payroll report and a statement of compliance SOC report.

◦ The payroll report component can be submitted in any form including computerized formats, as long as all required information is provided.

◦ The contractor must utilize the MnDOT SOC report. Other SOCs will not be accepted.

All contractors performing covered work must submit a CPR. Exceptions may include suppliers, ITOs and other “technical” contractors.

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A month-end trucking report (METR) is comprised of two components, a truck report and a statement of compliance SOC report.

◦ The METR report component can be submitted in any form including computerized formats, as long as all required information is provided. ◦ The contractor must utilize the MnDOT

SOC report. Other SOCs will not be accepted.

All contractors that hire a trucking entity (ITO or MTO) to perform covered work must submit a METR.

MTOs must submit a CPR and possibly a METR.60

A CPR and METR Elearningweb application is now available to provide contractors with an understanding of the regulations and reporting requirements.

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All CPRs shall be submitted by the prime contractor to the Project Engineer (PE)

weekly (federal funds)bi-weekly (state funds only)

All METRs shall be submitted by the prime contractor to the PE monthly.

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As per audit requirementsCPRs and METRs should be tracked and secured.

Retention requirements mandate thatCPRs be kept for at least three years after final contract voucher has been issued.

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CRL (Civil Rights Labor) Electronic, web based civil

rights and prevailing wage reporting system.

Manual or electronic submission of CPRs, which satisfies the PW and Civil Rights reporting requirements.

Effective on all MnDOT administered projects let after 7-1-2013. Eventually will be implemented on all construction projects funded through MnDOT.

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review the poster board,

interview workers,truck drivers, andoff-site operators if applicable.

Date WageName BenefitsEmployer OTClassification

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document daily construction activities.

datecontractortype of work# employeesstart and stop timeequipment

Discrepancies should be noted.

Data collected will be used to verify the accuracy of the information provided by a contractor on a CPR.

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Before conducting an examination of the CPR or METR the PP shall

Make sure all contractors/trucking entities are in MnDOT’sVendor System.

Make sure that the CPR/METR is specific to the project in question, it’s numbered, the dates are correct and that it’s signed. If incomplete, return it to the prime contractor.

If complete, analyze the employee interviews, daily inspection reports, and compare that information to the CPR/METR.

The LCU suggests that the PP thoroughly examine the first two CPR/METR from each contractor and randomly thereafter.

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Why should project personnel care about whether or not a worker receives PW or TRR?

employees/ITOs/MTOs underpaid,

employee lose benefits,

inequitable bidding,

potential litigation from contractors, labor unions and workers,

other governmental agency involvement, which may result in withholding and the finalization of a contract,

loss of federal and/or state funding.69

The LCU doesn’t expect you to be an expert, do the best you can with the resources you have, and ask questions.

Investigation Request Letter

Before finalizing a contract that’s funded through MnDOT contact me at:

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Clancy Finnegan651-366-4204clancy.finnegan@state.mn.us

Which word in the dictionary

is spelled incorrectly?

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Incorrectly.

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