Minnesota Prevailing Wage

Contractors – today is the last day to fill out your annual prevailing wage survey! The Minnesota Department of Labor and Industry (MnDOLI) uses information collected from the survey to determine the prevailing wage rates on commercial, highway/heavy and residential construction projects in Minnesota. Thus, this is non-union contractors’ chance to have a say in setting the wages. To complete the survey log on to https://secure.doli.state.mn.us/lspwratesurvey/LoginVerify.aspx, with your personal identification number (PIN) and KEY. If you did not receive this information via mail, call the Minnesota Department of Labor and Industry at (651) 284-5091.

paperwork2In the second of my spring cleaning series, I wanted to provide some thoughts for those Minnesota government contractors who must maintain certain documents in order to continue to enter into contracts for State projects.  Below are some frequent violations/issues found by the MDHR when auditing contractors.  This is by no means an exhaustive list, however, these are issues I see time and time again…

  • Have an affirmative action plan for each year.
    • A four (4) year Minnesota compliance certificate does not mean you need an affirmative action plan every four (4) years.  Your affirmative action plan must be updated annually.
  • You should also have an annual training on the results of your affirmative action plan (both in the changes from year to year, and goals for following year).
    • Provide management training and have the hiring managers (and up) sign off that they were there.
  • Have a document retention policy.
    • The MDHR continues to insist (though I can find no legal support for it) that an employer must have a document retention policy, and that the policy should state that all documents related to administrative charges be retained until final disposition of the charge. That being said, it would be best practices to have such a policy, since you need to retain documents for specified periods of time in any event.
  • Review your employment application – especially if you’ve been using the same one for a long time.
    • The MDHR has objected to questions such as how a person was discharged from the military, whether the applicant knows anyone in the business, and any relation. Review your application and ask whether a question would elicit a response which would provide information that may screen out minority or other protected class applicants. If you are still asking for dates of birth, social security numbers, or date of graduation from schools, you should update your application.
  • Be sure to send – and save – the required letter to the Minnesota Department of Employment and Economic Development for each job posting.
    • The MDHR will require a copy of “all correspondence that the company has sent to the Minnesota Department of Employment and Economic Development during the last 12-month period requesting referrals for qualified individuals with disabilities.” Thus, for every job posted, a letter must be sent to DEED regarding the position and asking for such referrals. If you are not doing this, start.
  • Keep (or put in writing) training materials concerning the hiring process.
    • Since all individuals must be trained who are “involved in the recruiting, screening, selecting, promotion, disciplinary and related processes” to “ensure elimination of bias in all personnel action”, you should maintain proof of such training. This goes further than human resources! The MDHR will require documentation for managers. Management training with sign-off sheets would accomplish this.
  • Retain documents related to the use of referral sources for minority or female applicants (such as secondary schools, colleges and trade groups). Often clients do this, but don’t think the documentation is significant. For example, keep your emails to recruiters and schools, proof of sponsorship and career fairs.
  • Retain documents related to internship and apprenticeship programs. If you “promote from within”, they will want to see “good faith efforts” to develop and maintain “on-the-job training opportunities for females and minorities.”
  • Finally, an issue I just handled this morning…if you are a construction contractor, make sure your contractor registration is current (which is not the same thing as your licence). You can do that online here.

Of course, this list could go on and on. The key is to not become complacent. Review your policies, practices, and records at least yearly.

HighwayToday the State of Minnesota Department of Labor and Industry (MnDOLI) issued a Notice of Correction to Highway Heavy Prevailing Wage Rates. If you’re on their email list you should have gotten the notice. If not, you can sign up here. Here’s the notice in its entirety that I received from the email list (funny enough, but not surprising, it’s hard to find this notice on MnDOLI’s website):

Continue Reading MN Highway Heavy Contractors – Prevailing Wage Rates Corrected

clickAs a result of President Obama’s White House Summit on Worker Voice, on October 28, 2016, the U.S. Department of Labor’s Wage and Hour Blog announced its new beta website – Worker.gov. This website is, according to the DOL, designed to provide “easy-to-access” solutions for employees who need answers “fast”. The DOL admits that “Even the best government websites can be difficult to navigate” – true, true. That being said, it makes it only about 4 clicks for a worker to file a claim electronically.

In short, the website, which is in beta and therefore undergoing constant changes, is designed to provide employees with an easy way to determine whether their rights are being violated, then provides them with a simple click to file a claim against an employer. Partnering with the NLRB, EEOC, and DOJ, the DOL wants the website to provide “critical information” to employees about their rights, who may not know whether they have a “FLSA” or “FMLA” problem, but an “unfairness-on-the job problem”. Employees answer a “few simple questions” and voila! The website will supposedly provide the relevant information, expanding in the weeks and months to come, and “learning” from the workers that use it about what kind of information is being sought – and the site will supposedly begin to feature that information prominently for similar workers.

The beta site provides a drop down, under which five job titles are currently available – day laborer; office worker; nail salon worker; restaurant worker; and construction worker. From there, it takes to you a “Tell Us what happened. We can help.” screen with several options such as – “You have the right to be treated equally.”, “You have the right to engage with others to improve wages and working conditions”, “You have the right to a safe and healthy work environment”, and “You have the right to be paid.”  From there, the employee can chose what happened (i.e. suggestions – all are in the negative – such as “I was not paid for work I performed”) , and then be taken to a “File a Claim” screen.

What does this mean for employers? I have to believe we will see an increase in filed complaints, as that is the whole purpose of the website – to make it easy for employees to complain about unfair work treatment – and provide a simple click to do so.

ConstructionEach month I receive in my inbox the City of Minneapolis’ Compliance Monthly – a newsletter that the Minnesota Department of Civil Rights Contract Compliance Divisions publishes. Often, as it does in the September 2016 edition, it toots its own horn about how many contractors they have “held accountable”, and how much they have collected and disbursed in restitution (17 and $53,995 for 2016 Q2 if you are curious). But this month they also provided in their compliance tips something I thought may actually be of interest – a simple “how to” obtain the most current prevailing wage decision under the Davis-Bacon Act (DBA). So, here it is, with a few of my thoughts.

Step 1 – go to http://www.wdol.gov  (this is the federal Wage Determinations OnLine)

Step 2 – Choose “Selecting DBA WDs” (if you want to search old ones, click on “Archived WDs”; if you know the number you can put that in there instead)

Step 3 – Choose the State, County, and Construction Type – then click “search”

Step 4 – The wage decision will populate – click “printer friendly version” to print

Step 5 – (Optional) – Select “Sign Up for Alert Service”

Assuming you checked the right boxes/selections, this will provide the most current wage decision. Note, you can sign up for the Alert Service which will alert you when that determination has changed. While a DBA project will use the same rates throughout the project, keep in mind that some cities or other municipalities may adopt the published DBA rates, but also require that the pay be updated during the course of a project. This means the contractor is responsible for updating prevailing wages during the course of a contract. Also, if more than 90 days lag between the bid and the contract, the new rates may apply. Accordingly, I would suggest selecting signing up for the alert if this is the case with your project. Of course, we all know finding the list of rates isn’t the hard part, but selecting the one that you think is right based on the job duties performed that the government will actually agree on, when the job title doesn’t line up with those offered. But that is a whole other topic…

In its June 21, 2016, Compliance Tips, the City of Minneapolis Department of Civil Rights Contract Compliance Division offered some tips for how a contractor can demonstrate good faith efforts at meeting the City’s workforce goals.  Given the recent notice of on-site “reviews” that I blogged about earlier, this is no surprise. Contractors should expect the City will also be auditing compliance with the workforce goals, and should be prepared to make this showing. Here’s what advice the City has to offer:

“The City’s workforce goals are 6% female and 32% minority workers on all city construction projects. A contractor must demonstrate a good faith effort to meet these goals. A good faith effort means that a contractor took reasonable steps to employ female and minority workers and cure existing underutilizations in its workforce through Affirmative Action and Equal Employment Opportunity.

A contractor can demonstrate its workforce good faith efforts in the following ways:

  • Provide documentation that it has alerted its subcontractors, unions, and trade organizations of the City’s workforce goals.
  • Use its current Affirmative Action Plan, or create a new one, to develop a female and minority worker recruitment plan
  • Advertise opportunities for employment in minority and women trade publications and at job and recruitment fairs
  • Be diligent in documenting and communicating any and all efforts to CCD so that we are aware of its efforts and can help it meet its goals and are aware of its efforts.

Contractors must be truthful when submitting utilization percentages to CCD.”

Contractors doing business in Minneapolis should be aware that the City will be conducting on-site “reviews” of the general contractor for City projects. Don’t get fooled that this is a friendly visit just because you are called in advance to schedule a time to meet. This “review” is an audit or investigation or whatever you want to call it. It is the City’s way to determine whether you are in compliance with your contract. A violation is a violation. Be sure you have the proper postings, records, and are paying the appropriate prevailing wages. Keep in mind that just because the City’s contractor compliance officers are knocking politely, doesn’t mean they don’t communicate with MnOSHA and other agencies.  Be sure your job site is in compliance with not only City regulations and ordinances, but state and federal as well. Here is the notice that I received from the City on June 21, 2016:

“Contract Compliance Officers (CCOs) will be conducting onsite reviews on construction projects. Developers and Contractors can expect that a CCO will schedule the onsite with the general contractor in advance. During the review, the CCO will tour the job trailer and job site looking for relevant postings (i.e. wage decision and City’s Non-Discrimination Notice).  Then the CCO will interview employees and subcontractors. Specifically, the CCO will be reviewing whether:

  • Women and minority businesses are providing a commercially useful function.
  • Female and minority workers are being utilized and are not experiencing any discriminatory treatment.
  • Employees are being paid prevailing wage
  • Apprentices working on site are utilized within ratio and paid according to their pay scale.

The review will vary in length depending on the size of the project and number of employees interviewed. Afterward, the CCO will produce and share an onsite report with the project contacts.  Then the CCO will work with the general contractor and/or developer to remedy any noncompliance issues. Any questions regarding upcoming onsites can be directed to the CCO assigned to the project or via email at contractcompliance@minneapolismn.gov.”

Note, even the City has acknowledged that you may be found in noncompliance as a result of the “review” – and if that is the case, you will need to “remedy” the “issue”.  This is simply a workplace investigation without a complaint, in order to determine whether you are in compliance with the terms of the contract with the City.  Contractors are highly encouraged to review your practices now and get into compliance if you are not already!

Construction progress of the U.S. Bank Stadium (new Minnesota Vikings stadium), as seen from the Haaf Ramp in Downtown East, Minneapolis, Minnesota, on 3 December 2015.

The Minneapolis City Council significantly amended its Prevailing Wage Ordinance today.  The revised ordinance will go into effect following publication (generally 8 days after the approval of the revisions).  Accordingly, the revisions will likely be finalized before July 1, 2016. The revisions provide individuals with a private right of action for violations (they can sue their employer); add certification requirements; requires certified payrolls be provided to the City, and add penalties, among other things. Following are the key changes:

  • Clarification of the City’s current practice to enforce contracts of at least $50,000.  Any contracts less than $50,000 will be reviewed on a complaint-made basis only, unless subject to the DBA.
  • Mandating that all contracts requiring prevailing wages to be paid must contain a provision stating that the contractor must comply with the City of Minneapolis Prevailing Wage Ordinance. This onus is on the City – though certainly if they forget to put it in a contract, the contractors will still have to comply with the ordinance as they will argue it was clear in pre-bid meetings…yes, I’ve heard that before.
  • Determining that any laborer, mechanic, or employee employed by a contractor (or sub) is intended to be a third-party beneficiary of the contract.  This is actually a very big deal – currently, contractors are able to argue that third-parties (such as employees) are not beneficiaries of a contract between the city and a contractor, and thus, the lawsuit is improper. Accordingly, when a contractor allegedly breaches the contract by failing to pay prevailing wages, the employee has no private right of action to sue the employer because the employee was not a party to the supposedly breached contract.  This change will allow anyone to sue the contractor for breaching the agreement with the City.  This will bring the ordinance in line with the Minnesota Prevailing Wage Act. The Federal Davis-Bacon Act does not allow a private right of action.
  • Adding certification requirements after bid opening and prior to the contract award.  The contractor will have to submit to the Minneapolis Director of Civil Rights, a wage compliance certificate guarantying payment of prevailing wages and confirming identity of subs and suppliers and their benefits agents, job classifications that will be used (including each sub), anticipated number of hours to be worked for each class of labor, the prevailing wages and benefits for each class, and proof that all subs are independent contractors.
  • Requiring that all laborers and mechanics working on the project are paid at least every two weeks (bi-weekly).  Minnesota law mandates that wages must be paid at least monthly, so this will reduce that by half.  However, rarely are contractors paying monthly, so this is likely to be a non-issue.
  • Requiring that the contractor provide the Director a bi-weekly certified payroll. Failure to do so may result in withholding of payments and audit of books and records. Certified payrolls must be retained for 1 year after completion of the work.
  • Confirming the Department will monitor compliance, including review of certified payrolls and job site visits.  The Department must participate in the pre-award conference and the review of the certified payroll reports.
  • Adding penalties for failing to comply with the ordinance. Such penalties may include withholding payment for that project or other projects with the City, a 5% penalty on contract price as liquidated damages, and suspension or debarment. The rules for this exact process will have to be created (i.e. due process).
  • Adding a section requiring subcontractors and independent contractors to provide the Department of Civil Rights with certain proof regarding their status.  Specifically, that they are a “bona fide” independent contractor including business filing with the Secretary of State (be sure it is right too – I’ve seen them confused over a “Co.” and “Inc.” error!).  Also need to provide proof of workers’ compensation and unemployment insurance.

So, what’s next? Expect these changes to roll out in pre-bid documents starting in July. Contractors bidding prevailing wage jobs in Minneapolis should be familiar with the revised ordinance, and be prepare to follow the new requirements, lest you find yourself in a sticky situation with the Department.

MinneapolisMinneapolis recently “reaffirmed” its commitment to the 2015 Minnesota Responsible Contractor Act, Minn. Stat. 16C.285, and enacted additional factors and implementation procedures when determining whether a contractor is “responsible” for purposes of being awarded public construction projects.  Are you a responsible contractor?  If you are a contractor doing business with the State of Minnesota pursuant to a contract of over $50,000, you must be, or you may be prohibited from doing business with the State.  For more information on the actual Act, click here for the Minneapolis PowerPoint presentation.  In any event, the Act states that a contracting authority (such as a city), may establish “additional factors for defining contractor responsibility.”  Of course, Minneapolis has done just that.

On April 21, 2016, Minneapolis passed Resolution No. 2016R-127, stating that, in order to be “responsible”, a contractor must verify that, for the past 3 years, it has not violated the requirements for payment of wages for construction work as provided by any Minneapolis ordinance, resolution, policy or contract.  Specifically, the contractor must not have had to pay back wages or penalties in excess of $10,000 on one or more projects during this 3 year period.  Further, the contractor must not have made any false statements in a verification of compliance submitted to Minneapolis during the 3 year period.

How is this implemented? Contractors should see these additional factors in solicitation documents for all covered projects. Keep in mind, nobody is excluded; it applies to the general and subcontractors alike. Failure to comply with these new procedural requirements will render the contractor ineligible to be awarded the bid.

 

Minneapolis panoramaOn January 15, 2016, the Minneapolis City Council first introduced proposed revisions to the Minneapolis Prevailing Wage Ordinance.  The initial draft was revised on April 13, 2016, and on May 27, 2016, the City Council referred the proposed ordinance to the Ways and Means Committee.  So, what’s in store for Minnesota public works contractors? Not surprisingly, not much good.  The proposed amendments are:

  • Clarification of the City’s current practice to enforce contracts of at least $50,000.  Anything below that will be reviewed on a complaint-made basis only, unless subject to the DBA.
  • Mandating that all contracts requiring prevailing wages to be paid must contain a provision stating that the contractor must comply with the City of Minneapolis Prevailing Wage Ordinance. This onus is on the City – though certainly if they forget to put it in a contract, the contractors will still have to comply with the ordinance as they will argue it was clear in pre-bid meetings…yes, I’ve heard that before.
  • Determining that any laborer, mechanic, or employee employed by a contractor (or sub) is intended to be a third-party beneficiary of the contract.  This is actually a very big deal – currently, we are able to argue that third-parties (such as employees) are not beneficiaries of the contract between the city and a contractor and thus the lawsuit is improper. Accordingly, when a contractor allegedly breaches the contract by failing to pay prevailing wages, the employee has no private right of action to sue the employer because the employee was not a party to the supposedly breached contract.  This change will allow anyone to sue the contractor for breaching the agreement with the City.  This will bring the ordinance in line with the Minnesota Prevailing Wage Act.  Recall, the DBA still does not allow a private right of action.
  • Adding certification requirements after bid opening and prior to the contract award.  The contractor will have to submit to the Minneapolis Director of Civil Rights, a wage compliance certificate guarantying payment of prevailing wages and confirming identity of subs and suppliers and their benefits agents, job classifications that will be used (including each sub), anticipated number of hours to be worked for each class of labor, the prevailing wages and benefits for each class, and proof that all subs are independent contractors.
  • Requiring that all laborers and mechanics working on the project are paid at least every two weeks (bi-weekly).  Minnesota law mandates that wages must be paid at least monthly, so this will reduce that by half.  However, rarely are contractors paying monthly, so this is likely to be a non-issue.
  • Requiring that the contractor provide the Director a bi-weekly certified payroll. Failure to do so may result in withholding of payments and audit of books and records.  Certified payrolls must be retained for 1 year after completion of the work.
  • Confirming the Department will monitor compliance, including review of certified payrolls and job site visits.  The Department must participate in the pre-award conference and the review of the certified payroll reports.
  • Adding penalties for failing to comply with the ordinance.  Such penalties may include withholding payment for that project or other projects with the City, a 5% penalty on contract price as liquidated damages, and suspension or debarment. The rules for this exact process will have to be created (i.e. due process).
  • Adding a section requiring subcontractors and independent contractors to provide the Department of Civil Rights with certain proof regarding their status.  Specifically, that they are a “bona fide” independent contractor including business filing with the Secretary of State (be sure it is right too – I’ve seen them confused over a “Co.” and “Inc.” error!), proof of workers’ compensation and unemployment insurance.

Since this is still in the works, we can’t say for sure how it is going to shake out in the end.  However, it is likely we will see many of these changes in the near future, so stay tuned…