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Davis-Bacon Compliance

An Overview of Employer RequirementsWages

On all public works projects (state and federal), employers must pay workers the prevailing wage rate. Applicable prevailing wage rates are spelled out in the wage decision issued for each project. Prevailing wage rates are minimums; nothing prevents an employer from paying higher wages. When a project is financed with both state and federal funds, special rules apply.
Every worker must be paid at the journeyman rate unless he/she (1) is a laborer or (2) is enrolled in a qualified Apprenticeship program. There are no exceptions. The Davis-Bacon law does not provide for helpers.
The minimum wage paid to an Apprentice is based on the Apprentice's period of training. For example, the minimum wage for a first period Apprentice generally equals 50% of the prevailing wage established for journeymen.
If an employer falls out of ratio on a public works job (i.e., there is not one journeyman for every Apprentice on the job site), every Apprentice not paired with a journeyman must be paid at the journeyman rate.
Employees working on public works jobs must be paid weekly. Certified copies of these payroll records must be submitted to the proper government agency in a timely manner.

Fringe Benefits (e.g., paid vacations, holidays, pension, and medical and other insurance benefits)

  • In addition to paying the prevailing wage, employers are required to provide fringe benefits equal in value to the amount established in the wage decision issued for the project. Apprentices, as well as journeymen, must receive 100% of the fringe benefit package.
  • If an employer does not provide qualified benefits that equal the established fringe benefit allowance, the balance of the fringe benefit
  • allowance must be paid to the employee in cash. The key factor in determining whether an employer's benefit program is "qualified" is whether it is managed so the individual employee's benefits are protected (e.g., managed by a third party). If a benefit program is available to an employee and the employee elects not to participate, the value of the benefit (up to the amount of the allowance) must be paid to the employee in cash.
  • Paid holidays and vacations are considered a fringe benefit and the employer can deduct a per hour amount from the value of the fringe benefit package for them. The amount allocated for vacations and holidays generally range from 6 cents to 10 cents per hour. If an employee leaves the employer before using his/her accumulated vacation or holiday time, the value of that time (i.e., the amount deducted by the employer) must be paid to the employee in cash.
  • Worker's compensation insurance required by law is not an allowable fringe benefit deduction.

Per Diem (Subsistence) or Zone Pay

  • If a project is located in excess of a given amount of miles from an established landmark, employees may be entitled to per diem(subsistence) or zone pay. Per diem pay applies when employees stay overnight; zone pay applies when employees travel each day to the project. Applicable per diem and zone pay are identified in the wagerate decision.

    If an employer provides housing at a job site, it may deduct the fair market value of the housing from an employee's per diem pay. Accurately estimating "fair market value" is difficult and the applicable government regulations must be consulted.
  • In New Mexico at present, there are no state public works projects where per diem and zone pay apply. All the projects where per diem and zone pay apply are federal.

Incentive Pay

  • Employers may also be required to apply incentive pay on state or federal public works projects. Incentive pay reflects productivity-based wage enhancements and will be identified in the wage decision. By its nature, incentive pay is not generally paid on a weekly basis.

Training Funds

  • For every journeyman and Apprentice on state public works projects, employers must contribute an established cents per hour amount either to a qualified training program or to the Public Works Apprenticeship and Training Fund administered by the State Department of Labor (on federal jobs, no requirement for contributing training funds exists). The training contribution must be made even if the employer is not training Apprentices; it may not be made directly to employees. The amount of the contribution varies from one trade to the next and is identified in the wage decision.

    Contributions made to a qualified program (e.g., the ABC Carpentry, Electrical, Ironworking, Plumbing or Sheet Metal Program) are directly accessible to the employer for training Apprentices. ABC members may contribute to one of ABC's active Apprenticeship programs even if they are not training Apprentices in the program.

    Contributions made to Public Works Training Fund are placed in a pool. At the end of each fiscal year, the pooled fund is divided among qualified Apprenticeship programs in the State. A program's share of the fund is based on the number of Apprentices in the program that completed at least 90% of the program's required classroom training and 1,000 hours of on-the-job training.

    Training contributions should be accompanied by a form that meets requirements established by the Department of Labor. ABC has a form, tailored for making contributions to ABC's Apprenticeship Programs, available upon request. When an employer contributes its training funds to a qualified program, rather than to the State's Public Works Training Fund, it must send a copy of the contribution form to the NM Department of Labor as evidence that it is meeting its training requirements.*

Questions

  • Subcontractors with questions about how a wage rate decision applies to them should first consult the prime or general contractor, and then they should consult the administering agency.


For further information about New Mexico's Prevailing Wage Rate Law, contact:
Public Works Bureau, Labor and Industrial Division
New Mexico Department of Labor
1596 Pacheco Street
Santa Fe, NM 87505
505-827-6837

*According to John Minks, Manager of the Public Works Bureau at the New Mexico Department of Labor, many employers are not aware of their obligations to make training contributions as outlined above and the Bureau is instituting measures to ensure greater compliance.