Prevailing Wage Prevailing Wage Rate Law Enforcement

http://oregon.gov/BOLI/WHD/PWR/W_PWR_Lawenforce.shtml[3/9/2009 10:30:02 AM]

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Prevailing Wage Rate Law Enforcement

Wage and Hour: Prevailing Wage

Prevailing Wage Rate Law Enforcement BOLI’s enforcement goal is compliance. The bureau has a variety of enforcement toolsthat range from education and training to civil penalties, debarment and other sanctions.BOLI uses the appropriate sanction to fit the violation. For example, if a contractor,subcontractor or agency accidentally violates PWR law, BOLI considers the violatingparty’s willingness to cooperate and correct the problem when it determines anenforcement action. In such cases, BOLI may direct the agency, contractor orsubcontractor to attend a training course on PWR law, and ask for a commitment offuture compliance. For willful or repeated violations of the law, it is more likely that BOLIwill impose civil penalties or debar a violating contractor from working on public worksprojects for three years. ORS 279C.860 and 279C.865; OAR 839-025-0085 and 839-025-0520 Agency Liability A public agency must give adequate notice to the contractor that PWR law applies to theproject. Failure to treat the project as subject to PWR law may make the agency liablefor unpaid wages, civil penalties or orders to ensure compliance with the law. Unpaid Prevailing WagesThe public agency is jointly liable for any unpaid prevailing wages unless the contractdocuments contain a statement requiring the contractor and all subcontractors to complywith ORS 279C.840. If the contractor had notice that the project is covered by PWR law,the public agency’s liability is joint and several with any contractor or subcontractor thathad notice of the requirement to comply with ORS 279C.840, for any unpaid prevailingwages. ORS 279C.855(3); OAR 839-025-0080(4) If a public works project is subject to the Davis-Bacon Act but the public agency fails toinclude the state and federal prevailing rates of wage in the specifications, or fails toinclude in the specifications information showing which prevailing rate of wage is higher,and the workers on the project are paid the lower rather than the higher prevailing wagerate, the public agency is liable to the workers for the difference between the lower andthe higher rate, plus an equal amount as liquidated damages, for every hour worked. ORS 279C.855(4); OAR 839-025-0080(6) If a contract requires a payment bond or other security and the agency fails to obtain it,the agency and the officers authorizing the contract are jointly liable with the contractorfor any unpaid prevailing wages. ORS 279C.625; ORS 279C.380; ORS 279C.400 Civil Penalties for Public AgenciesBOLI may impose civil penalties of up to $5,000 per violation. ORS 279C.865; OAR 839-025-0500 et seq. Violations include:

Failing to include or reference the applicable prevailing wage rates in the contractspecifications.Failing to include in the contract specifications a provision that the contractor andevery subcontractor must file a public works bond with the CCB before startingwork on the project.Awarding a contract to a debarred contractor.Failing to include in the contract a provision that workers shall be paid prevailingwages.Failing to include in the contract a provision requiring the contractor to file a

Department

Prevailing Wage Prevailing Wage Rate Law Enforcement

http://oregon.gov/BOLI/WHD/PWR/W_PWR_Lawenforce.shtml[3/9/2009 10:30:02 AM]

public works bond with the CCB before starting work on the project.Failing to include in the contract a provision requiring the contractor to include inevery subcontract a provision requiring the contractor to file a public works bondwith the CCB before starting work on the project.Failing to pay a PWR fee to BOLI.Failing to notify BOLI when a contract is awarded.Failing to include a copy of the disclosure of first-tier subcontractors with theNotice of Award.Failing to retain 25 percent of the amount the contractor earned when thecontractor fails to submit certified payroll reports as required.Dividing a project to avoid paying the PWR.Circumventing PWR laws in any way.

Compelling ComplianceBOLI may issue an order compelling an agency to comply with the PWR law. ORS279C.827(1)(b) Contractor Liability If a contractor or subcontractor does not fulfill obligations under the PWR law, there are anumber of possible consequences. Unpaid Prevailing WagesAny contractor or subcontractor failing to pay prevailing wages as required is liable forthe amount of underpayment. ORS 279C.855(1); OAR 839-025-0080(1) Liquidated DamagesContractors and subcontractors may also be liable for liquidated damages equal to theamount of unpaid wages. For example, if a contractor or subcontractor underpaid anemployee by $1,500, the contractor, subcontractor or surety thereof is responsible for theunpaid wages plus an equal amount in liquidated damages for a total of $3,000. Theliquidated damages are twice the amount of unpaid overtime wages if payroll recordshave been falsified. ORS 279C.855(1), ORS 279C.540(9), OAR 839-025-0080(2) and (3) Prime Contractor Liability for the Violations of a SubcontractorIf a subcontractor fails to pay prevailing wages, any employee may file a claim againstthe prime contractor’s bond. The prime contractor may be responsible for anyunderpayment of the subcontractor’s employees. ORS 279C.855(2) Civil PenaltiesBOLI may impose civil penalties against contractors and subcontractors for any violationof the prevailing wage statutes or administrative rules, even if there was nounderpayment of wages. Such violations include failing to respond to a wage survey,failing to file a public works bond with the CCB, failing to post required information at thejob site or failing to file certified payroll reports. BOLI may impose penalties up to$5,000 per violation. If violations are ongoing, each day counts as a separate violation. ORS 279C.865; OAR 839-025-0500 et seq. BOLI considers many factors when imposing civil penalties, including:

Previous or repeated violations.The severity of the violations.Whether the contractor or subcontractor knew, or should have known, about theviolations.How difficult it would have been for the contractor or subcontractor to comply.The contractor’s/subcontractor’s response to the violations.

It is important for contractors and subcontractors to cooperate with investigations andcorrect any violations as quickly as possible to reduce any civil penalties that the bureaumay impose. Warning LettersBOLI may send warning letters to contractors and subcontractors who have violated thePWR law. BOLI imposes significantly higher penalties against contractors andsubcontractors who commit violations after receiving a warning letter, up to and includingassessing maximum civil penalties and debarment. DebarmentFor willfully violating the PWR law, BOLI may debar a contractor or subcontractor fromreceiving public contracts (except for federal contracts) in Oregon for up to three years.The bureau may also personally debar the officers of a debarred corporation. BOLI maydebar a subcontractor, even if the violation was not willful, if the subcontractor did not

Prevailing Wage Prevailing Wage Rate Law Enforcement

http://oregon.gov/BOLI/WHD/PWR/W_PWR_Lawenforce.shtml[3/9/2009 10:30:02 AM]

pay prevailing wages to workers and the prime contractor had to pay them. BOLImaintains a list of debarred contractors, referred to as the “List of Ineligibles.” This listis included in each published rate book and is available on the BOLI website at: IneligibleContractors. ORS 279C.860; OAR 839-025-0085 et seq. Prohibited Practices PWR law prohibits anyone from trying to circumvent the law. Such activity includeshiring contractors or subcontractors who are on the ineligible list or falsifying certifiedpayroll records. ORS 279C.840(7); OAR 839-025-0300; OAR 839-025-0340 Dividing ProjectsPublic contracting agencies must not divide a public works project into more than oneproject for the purpose of avoiding compliance with the PWR law. ORS 279C.827; OAR839-025-0310 BOLI considers the following factors when deciding if separate contracts actually constitutea single project:

The physical separation of project structures;Whether a single public works project includes several types of improvements orstructures;The anticipated outcome of the particular improvements or structures the agencyplans to fund;Whether the structures or improvements are similar to one another and combineto form a single, logical entity having an overall purpose or function;Whether the work on the project is performed in one time period or in severalphases as components of a larger entity;Whether a contractor or subcontractor and their employees are the same orsubstantially the same throughout the particular project;The manner in which the public agency and the contractors administer andimplement the project;Other relevant matters as may arise in any particular case.

Payment of Prevailing Wage by Persons Other than Contractors orSubcontractorsThe law forbids any third party to pay any portion of the prevailing wages owed. Thismost often occurs in “market targeting” plans. Exception: Government agencies may paya portion of the prevailing wages pursuant to a bona fide worker training or retrainingprogram. ORS 279C.840(6); OAR 839-025-0320 Wage AveragingThe PWR law also bans wage averaging. Wage averaging is lowering workers’ wages onnon-PWR jobs to compensate for higher rates contractors or subcontractors pay oncovered jobs. ORS 279C.840(7); OAR 839-025-0330

Page updated: February 05, 2009

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