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A Guide to Prevailing Wage Laws in Connecticut
IV. How to Calculate Prevailing Wage Payments

 

Prevailing Wage Components

 

The term "prevailing wage" means the total base hourly rate of  pay and bona fide fringe benefits customary or prevailing for the same work in the same trade or occupation in the town where the project is to be constructed. The prevailing wage rate schedules developed by the U.S. Department of Labor (and used by the Connecticut Department of Labor) indicate specific amounts for both components of the rate.

 

Title 29, Part 5, Subpart B of the Code of Federal Regulations provides detailed information about the types of payments that can be used to meet prevailing wage requirements under the Davis-Bacon Act. These interpretations are also used by the Connecticut Department of Labor in its enforcement of the state's prevailing wage law.

 

Bona fide fringe benefits can include the contractor’s expenditures for medical or hospital care, compensation for occupational injuries or illnesses, life insurance, disability and sickness insurance, pensions, vacation and holiday pay. However, these items only apply toward prevailing wage requirements if the contractor is not required by federal, state, or local law to provide the benefit.

 

 

 

If a contractor selected for a prevailing wage project does not typically provide benefits equal to the mandated level, cash payments (paid as taxable wages) can be made to employees in amounts sufficient to meet the required total wage rate (base hourly pay and fringe benefits). A worker would then have the option of using the additional money to purchase the type of benefit not provided (e.g., medical or life insurance), if feasible given the cost and availability of the commodity. Federal regulations also allow a contractor to pay less than the specified hourly pay component as long as the value of the fringe benefit component is high enough to produce a combined total equal to the required wage.  In this instance, however, the worker must be paid at least their regular contractual hourly rate.

 

 

 


 

Certified Payroll Requirements

 

Blank certified payroll forms WWS-CP1-2 and sample copies are included in this guidebook. 

 

The state certified payroll forms may be downloaded from the Department of Labor, Wage & Workplace Standards Division Website: www.ctdol.state.ct.us/wgwkstnd/forms/payrollcert.htm. (this form is in an adobe "fillable" format)

 

Federal certified payroll forms or out of state certified payroll forms do not meet the requirements of Connecticut General Statutes, Section 31-53(f) and cannot be used on projects covered under C.G.S. Section 31-53.

 

Computerized forms are acceptable provided they contain ALL the information requested on the Connecticut form.  We recommend that you submit your computerized form to this department for approval prior to use. 

Effective October 1, 1997, Public Act 97-263 requires weekly certified payrolls and compliance statements to be filed on a monthly basis with the contracting agency.  

Effective: October 1, 2009, Public Act 09-25 mandates that certified payrolls must now be completed weekly and filed monthly “by mail, first class postage prepaid” to the contracting agency.  The certified payrolls can still be processed through the existing format:

  1. Mailed with their requisition to whom ever that contractor has a contract with.

  2. Then each contractor level continues to submit the certified payrolls up the contractor chain until they arrive at the contracting agency.

  3. Each contractor level should retain the envelope the certified payrolls were submitted in by stapling it to the applicable certified payroll as verification of compliance.

Certified Payrolls must be filed for Each Week, once work has been started on the project, even when NO Work is performed.  If NO Work is performed for the entire month, this department will accept the filing of one certified payroll for entire month.

 

finger Please note that contractors do not list a worker’s social security number on the state certified payroll forms. These certified payrolls shall be considered a public record, and every person shall have the right to inspect and copy such records in accordance with the provisions of Connecticut General Statutes, Section 1-15.

The Certified Statement of Compliance must be signed by the “owner”.

  1. The owner is either: individual owner, major or equal officer of corporation, equal partner, or LLC managing or equal members only.

  2. A stamp, photocopy, or electronic signature is not acceptable.

  3. No employee can be authorized to sign on the owner’s behalf.

What are you required to submit when the project is covered by both State prevailing wage and Federal Davis-Bacon prevailing wage requirements?

  1. A Department of Transportation project that is also covered under the Federal Davis-Bacon Act requires you to submit both the State of Connecticut Certified Payroll form WWS-CP1 and the U.S. Department of Labor Form WH-347.
     

  2. Federal Stimulus Money for ARRA work that is being performed on any state or municipal project, which exceeds the state’s monetary thresholds, requires you to submit both the State of Connecticut Certified Payroll form WWS-CP1 and the U.S. Department of Labor Form WH-347.
     

    1. To eliminate the necessity of completing two (2) separate certified payroll forms for each week, you may complete the front page of the State WWS-CP1 certified payroll form to report the time and wage information.

    2. Submit both state and federal compliance certification statements (signing 2 separate compliance statements)

    3. Include a separate detached sheet listing the worker’s names and the last four digits of the worker’s social security number.

On Connecticut Department of Transportation (CONNDOT) projects only, contractors are required to report ALL WORKERS under Section B who perform work on site but ARE NOT covered under the prevailing wage requirements.  Example: Engineer, architect, project manager, surveyor, balancing technician, security guard, fire watchman, etc.

Note: The time and wage information needs to be reported for Section B workers, but is not required to be paid at prevailing wage if the work they are performing is not covered under any laborer or mechanic classification listed on the prevailing wage rate schedule.

Any questions regarding the use of this form may be directed to the Wage & Workplace Standards Division at (860) 263-6543.

 


Discharging Fringe Benefit Obligations

DISCHARGING FRINGE BENEFIT OBLIGATIONS UNDER THE FEDERAL DAVIS BACON ACT, PART 5

  • Discharging Fringe Benefit Obligations = FB
     

    1. Paid in cash.

    2. Incurring cost for "bona fide" fringe benefits.

    3. By a combination of the above.
       

  • Contractor/Subcontractor can pay less than the required minimum hourly wages as long as hourly rate plus fringe benefit equals the total required.
     

  • Crediting of FB Payments: (Reg. 5.5(a)(1)(I)) Contributions to FB plans must be made not less often than - quarterly.
     

  • Payments or cost incurred must be made in the hourly rate specified for each individual performing covered contract work.
     

  • FB's must be "bona fide"; those common to the construction industry. No credit can be taken for any benefit required by law (social security contributions or workers compensation, etc.)
     

  • If under payments have been determined, contractor/subcontractor can be allowed to make payments to a bona fide FB plan on behalf of the underpaid employees (15f10).
     

  • Cash Equivalent Credit for FB payments: Period of time to be used is the period covered by the contribution.  Contractor/subcontractor may offset annual cost by converting costs to an hourly cash equivalent Cost of FB divided by total number of working hours (both covered and noncovered hours since  contractor/subcontractor’ s cannot use contributions made for non-government work to discharge or offset their obligations on covered work) (15f1 1). If the amount of contribution varies per worker, credit must be determined separately for the amount contributed on behalf of each worker(e.g. Single insurance coverage versus family coverage).  contractor/subcontractor can use "previous" year's experience for total hours worked for a benefit paid for in advance (or for one that he/she anticipates to pay) as long as comparison or period chosen is reasonable.
     

  • Workers excluded from a plan for whom contractor/subcontractor makes no contribution or incurs no cost must be paid in cash or furnished other bona fide FB's equal in monetary value. If plan requires contributions to be made during eligibility waiting period, credit may be taken, but no credit is allowed for contributions for workers who by definition are not eligible to participate (due to age or part-time employment) (15f12).
     

  • Pension profit Sharing Plans = PSPs (15f13).
     

  • Contributions must be irrevocably made to a trustee or a third party.
     

  • PSPs are not usually creditable towards meeting  contractor/subcontractor 's prevailing wage obligation.
     

    1. Uncertainty.

    2. Discretionary nature.

    3. If contributions made annually they would not meet quarterly requirement (or contractor/subcontractor must contribute irrevocably to an escrow account) (15f13(c))
       

  • Vesting provisions are allowed if they meet the requirements of the Employee Retirement Income Act.
     

  • Contractor may not use forfeitures (FB monies contributed on behalf of terminated, non-vested participants) as credit toward meeting FB obligation.
     

  • Defined Contribution Pension Plan: Contributions are fully credited if plan provides for immediate participation & immediate vesting (= 100% vesting if 500 hours or less is worked).  When there is no immediate vesting, credit is allowed based on the effective annual rate of contributions for all hours worked during the year. (e.g. $2,000.00 contribution made on behalf of particular worker who worked a total of 2000 hours (covered and non-covered hours) would result in a credit of $1.00/hour).
     

  • Vacation, holiday, & sick leave plans: Generally "unfunded plans"  if paid by a contractor "out of pocket", credit must be given for such payments.
     

  • If worker is terminated before the benefit is received and  contractor/subcontractor has taken a credit toward the prevailing wage FB obligation, the worker must be paid at termination.
     

  • Costs incurred by an contractor/subcontractor for a bona fide apprenticeship program are creditable toward FB obligation (cost must be incurred for classification in which the individuals are working); 15f16© uses the following example:

$450.00 fee to enroll an employee in an apprentice training program for carpenters; 45,000 hours is total (covered and non-covered) worked by carpenters and carpenter's apprentices (contractor's cost may not be offset cover a period longer than the training period the cost was intended to cover); E entitled to a credit of .0 1 /hour against prevailing wage FB obligation for all carpenters and carpenters' apprentices working on the project. Full credit could probably be taken on behalf of individual enrolled
  • $450.00 divided by 2000 total hours worked equals .23/hour credit.
  • Benefit portion of the wage must be paid for hours worked on a covered project, but it would not be included in the calculation of the overtime premium ...
     

  • contractor/subcontractor who is self-insured: can use previous year's experience (if it is reasonable)

    Total Cost = Average cost/employee =
    Total # of employees covered
     
      Total hours worked
     
    • Credit/hour ... or use actual cost incurred for each individual employee.

    • No credit during waiting period if no cost incurred.

  • Administrative Costs:

  1. Absolutely, no third party administering costs are allowed.

     

 


Fringe Benefit Credits Recognized by the STATE

For the purposes of prevailing wage, Bona Fide Fringe benefits are health and welfare benefits only irrevocably paid by the contractor/subcontractor.  Any payments required by state or federal law are not considered benefits. 

If the benefits provided do not equal or exceed the published fringe benefit rate, the contractor must pay the balance as a “cash” payment combined to the worker’s base rate and reported as a taxable wage.

Bona Fide prevailing wage Fringe Benefits include:

  • Medical or Hospital coverage

  • Life Insurance, Disability Insurance  (not worker’s compensation)

  • Pension/Profit Sharing (paid no less frequently than quarterly)

  • Administrative Fees of a 3rd party administrator

  • 401K matching contributions (paid no less frequently than quarterly)

  • Holiday, Sick, Vacation, Paid Time Off (policy must be non-forfeitable)

  • Supplemental Unemployment Benefit Plan (must be annualized)

  • Apprentice Program Fees

  • Costs incurred for OSHA-10 training (if paid by the contractor)

Fringe Benefits that cannot be credited towards prevailing wage:

  • Travel Pay

  • Gas cards

  • Cell Phones

  • Expense or Hotel reimbursements

  • Meal allowance

  • Discretionary Bonuses

  • Gifts

  • Overtime pay in excess of required by law

Payments not considered Fringe Benefits because they are required by State or Federal law:

  • Court ordered garnishments

  • Social security and Medicare contributions

  • Worker’s Compensation premium

  • State income tax deduction

  • Federal withholding

  • Unemployment Quarterly contributions

 


 

Overtime at “Blended Rate” and “Rate In Effect”

 

Method #1: Blended Rate

 

Premium overtime is required to be paid at one and one-half times the worker’s average hourly rate of pay for all hours physically worked that exceed 40 hours in a workweek.  The contractor must establish a standard 7-day workweek.

 

Under the blended rate computation, an employer must first pay all straight-time wages by multiplying each straight-time rate by the physical hours worked at that rate, however few or many rates there may be.  Then, divide the total earnings by the total hours worked to obtain the blended hourly rate.  Next, multiply the hours in excess of 40 by ½ times the blended hourly rate. The worker’s total earnings equals a combination of all straight-time pay and the ½ time overtime pay calculated. This same formula is used regardless of the number of jobs, rates, and nature of payments in any given week. 

 

When computing the blended rate, each week is a separate calculation based on the varying number of hours worked at each rate of pay.

 

Method #2: Rate in Effect

 

In addition to the formula outlined above, a contractor can establish a policy, in writing, and compute premium overtime wages on the basis of the rate in effect for the job the worker is physically performing after the 40th hour physically worked.  However, for an employer to be permitted to use this method of calculation, the worker’s hours must truly fluctuate from job to job and from week to week among the different classifications.  The employer must provide the worker with a written hiring agreement or a written contractual agreement, in accordance with C.G.S. Section 31-71f, stating the worker’s rates of pay and formula for computing overtime.  *** This formula CANNOT be used where the worker is removed from the prevailing wage job during overtime hours.

 

Rate in Effect allows the contractor to clearly establish all straight-time rates of pay and all overtime rates of pay in their payroll for purposes of calculating wages due. ****** The contractor must establish the use of either method #1 or method #2 for the entire period of employment and cannot switch back and forth between the two methods.

 

For instance, a machine operator paid $18.00 per hour sometimes works as a laborer in the warehouse for $15.00 per hour, overtime (work after the fortieth hour in the workweek) can be paid at $18.00 X 1.5 = $27.00 per hour when working as a machine operator, and 15.00 X 1.5 = $22.50 when working as a laborer.

 

 


Occupational Classifications

On any construction project, an assortment of workers are needed to carry out all of the required tasks. Workers include various skilled crafts people, machine operators, general laborers, and apprentices. Prevailing wage rate schedules identify the classes of workers likely to perform work on each of the four types of construction projects. (If a contractor wants to use a class of worker not listed in a wage determination, he must request the Department of Labor to issue a conformance rate specific to said project. This Division will look for conformity with existing classifications and again look at prevailing practice. A registered apprentice is not a separate prevailing wage job classification. A bonafide apprentice, registered with the Connecticut Department of Labor, can be paid a percentage of the base rate received by the craft that they are training to become and the full fringe rate. This percentage increases in steps, as the apprentice advances through the stages of the apprenticeship program.

The laborer and mechanic classification are not statutorily defined. However, supervisory personnel and individuals who work in an Executive, Administrative, or Professional classification are excluded from prevailing wage coverage. Certain other workers, such as truck drivers, are only covered by the law, when they spend a certain portion of the workday physically on-site at the project. Thus, only some of the workers on projects covered by the prevailing wage law must be paid at rates specified under the law.

The Connecticut Department of Labor has the responsibility to properly determine job classification. If you have any questions regarding proper classification, contact the Wage and Workplace Standards Division. The following definitions are being provided for guidance purposes only and represent only a small sampling of occupations and job duties commonly found in the construction industry.  It is not an all-inclusive list of each occupation’s duties.  This list is being provided only to highlight some areas, where this department has found that contractors have been unclear regarding the proper classification.

 

 

Sample Calculations for:

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