The Department of Labor announced late last year that it had recovered nearly $2 million in back wages and fringe benefits from a subcontractor that provided constructions services at the federally funded Crescent Dunes Solar Energy Project in the Nevada desert. This was not a failure to pay Davis Bacon wages, but a failure to properly classify laborers on the project. The DOL determined that the laborers should have been paid as skilled trade steelworkers, not general laborers. As the subcontractor found out, this proved very costly.
The subcontractor submitted its bid, classifying its laborers as general laborers and designating their wage at $30.00. The laborers were to assemble billboard sized mirrors on the project. There is some indication that the Department of Energy agreed with the classification, even though the Department of Labor has the final say on classifications. The Department of Labor’s investigation revealed that the laborers routinely performed duties in skilled trades, such as ironworking, electrical work, painting or bridge crane operation. Based on these activities, the Department of Labor concluded that the laborers should have been paid $60.00 per hour plus fringe benefits.
Some might ask why the subcontractor couldn’t rely on the Department of Energy’s approval of the wages. Aside from the Department of Labor having the final say on these matters, perhaps the subcontractor or general contractor should have sought guidance from the Department of Labor on this issue. The Department of Labor’s Frequently Asked Questions section addresses this very issue. The general contractor could have submitted a Request for Wage Determination, Form 308, before the bids were opened. After bids were opened, the contractor should have requested a wage determination. In situations where the contract wage determination does not contain a class of workers needed to complete the construction:
a contractor shall submit to the contracting officer a request for the addition of the needed classification(s) of laborers or mechanics not listed in the wage determination, together with proposed wage rates and fringe benefits conformable to the wage determination.
Take Away: The subcontractor was forced to pay nearly twice the wages it budgeted on this project. Proactive measures with the Department of Labor could have clarified the wages laborers should be paid on this project and may have allowed the subcontractor to increase its bid to cover the additional cost.