Labor Compliance Newsletter - July 2009

This is the fifth issue of the Labor Compliance newsletter.  This quarterly newsletter is intended to achieve greater compliance and consistency throughout the State in our Federal Aid requirements, primarily with respect to payroll and payroll reporting issues.  Florida Department of Transportation (FDOT) Secretary Kopelousos has established a goal of "One FDOT - We are one agency, united. Central Office and Districts, including Turnpike, we are one DOT working together."  To help make this happen, operational consistency between Districts is essential.  This newsletter was established as a common communication tool to all of the stakeholders striving to comply with our Federal Aid requirements - those within FDOT, the consultant community and our contracting partners.  It is our common goal to fully comply with applicable Federal Aid requirements and to do so in a manner that is consistent in application, effective in achieving compliance, and efficient in administration.  Hopefully, this newsletter will promote these ideals.





Working Foremen                                                                                                                                Back to Top

A frequently encountered issue in the classification and reporting of employees involves the "working foreman."  Generally, a foreman is not covered by the Davis-Bacon and Copeland Acts because they do not perform the duties of a laborer or mechanic.  However, there are instances where a foreman will join in with the employees under his or her direction and operate equipment or perform other duties of a manual or physical nature. 


The guidance from the US Department of Labor states:

Non-exempt working foremen who devote more than 20 percent of their time during a workweek to mechanic or laborer duties, and who do not meet the exemption criteria of 29 CFR 541, are laborers and mechanics for the time so spent. The working foreman is due the rate listed in the contract wage determination for the hours spent as a laborer or mechanic.


Otherwise stated, a non-exempt working foreman may work up to 20% of their time performing a craft, operating equipment or otherwise working as a laborer or mechanic without triggering the reporting requirements of the Davis-Bacon Act.  If the employee does not qualify as "exempt", and spends more than 20% of their time performing the duties of a laborer or mechanic, then they must be reported on the certified payroll and they must meet the wage and payment criteria of Davis-Bacon and Copeland for the time spent as a laborer or mechanic (payment of specified prevailing wage, overtime pay, weekly payroll, deductions only as allowed/authorized).


In a 2008 USDOL Prevailing Wage training document, the Wage and Hour Division expressed their opinion that working foremen are generally non-exempt.  "Non-exempt" in this guidance means that the employee does not meet the exemption criteria of 29 CFR 541.  These are the stated exemption criteria for the Fair Labor Standards Act and the categories of exemptions include executive, administrative, professional, computer and outside sales employees.  If the employee qualifies as exempt, they may work part or all of their time as a laborer or mechanic and are not required to be reported (though they should be shown on the payroll as "Section 541 Exempt" to avoid the inevitable question of who is operating a piece of equipment or performing some other duty).  Under a special rule for business owners, an employee who owns at least a bona fide 20-percent equity interest in the enterprise in which employed, regardless of the type of business organization (e.g., corporation, partnership, or other), and who is actively engaged in its management, is considered a bona fide exempt executive.  However, for a non-owner to establish an exemption as an executive requires that the employee meet all of the following criteria:

  • The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week;

  • The employee's primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;

  • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

  • The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

While a working foreman might easily qualify under three of these four criteria, the second one presents a more difficult hurtle.  The US Department of Labor has issued guidance in the form of a "Fact Sheet" regarding the executive exemption ( Fact Sheet 17b).

For the employee to qualify as an executive, their primary duty must be the managing of the enterprise (the company) or a customarily recognized department or subdivision thereof.  The Fact Sheet describes the terms, "primary duty", "management", and "department or subdivision."  The sticking point in a working foreman qualifying as an executive would be the requirement that their primary duty is managing a customarily recognized department or subdivision of the enterprise.  The Fact Sheet describes these terms as follows:

"Primary duty" means the principal, main, major or most important duty that the employee performs. Determination of an employee's primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee's job as a whole. The phrase "a customarily recognized department or subdivision" is intended to distinguish between a mere collection of employees assigned from time to time to a specific job or series of jobs and a unit with permanent status and function.

Employers should exercise care in establishing and documenting the exempt/non-exempt status of their employees and in observing the 20% threshold for the non-exempt working foreman.  The following are examples of reporting and compliance scenarios:

Nonexempt working foreman works a 50-hour week with 20 hours as a Grader Operator

The employee must be reported on the certified payroll since 40% of their time was spent performing the duties of a laborer or mechanic.  They must be reported as a Grader Operator for 20 hours and paid at least the required rate for that classification.  As a nonexempt employee, they should be paid overtime at 1 1/2 their regular rate of pay (governed by the Fair Labor Standards Act as enforced by the US Department of Labor).


Nonexempt working foreman works a 50-hour week with 20 hours as a Grader Operator and 25 hours as a Roller Operator  The employee must be reported on the certified payroll as a Grader Operator for 20 hours and a Roller Operator for 25 hours (or for 45 hours at the "higher" classification).  Overtime pay at 1 1/2 times the regular rate of pay is required by the Contract Work Hours and Safety Standards Act and will be enforced by the FDOT.


Nonexempt working foreman works a 50-hour week with 10 hours as a Grader Operator
The employee need not be reported on the certified payroll as the 10 hours worked as a laborer or mechanic did not exceed the 20% threshold (it was exactly 20%).



Payment by Piecework                                                                                                                      Back to Top

There are certain trades where employee pay is sometimes based on piecework rates.  Payment by piecework is allowed under Davis-Bacon so long as the effective rate of pay for the employee is at least the prevailing rate specified in the applicable Wage Decision.  The employer must maintain records of employee time and report those hours in the certified payrolls.  The effective rate of pay is imputed based on the employee's gross pay and their hours worked.


We have been informed by USDOL that when piecework employees work overtime (more than 40 hours in a workweek), then the piecework rate must be increased by 50% for the work performed during the hours in excess of 40.  The employer may not impute an hourly regular/overtime rate based on the standard piecework rate.  Overtime pay is required to be 1 1/2 times the regular rate of pay or 1 1/2 times the regular piecework rate.


Multiple Wage Tables (General Decisions)                                                                                           Back to Top

Some contracts specify more than one wage table as governing for the wages to be paid.  This can result from the contract work being located in two counties governed by different wage tables.  More frequently, however, it results from the work under the contract falling into more than one category (character of work).  The USDOL publishes wage tables for Residential Building (less than 4 stories), Building (other than the first category), Highway, and Heavy Construction.  While most FDOT contracts are governed by the Highway tables, some projects include significant work under the Heavy or Building tables.  Generally, the multiple tables are required when work under these alternative work types exceeds $1 million or 20% of the project cost.  Guidance on the application of multiple tables can be found on the Construction Office web site or by clicking on the following link:


Newly revised guidance is intended to result in greater detail provided in the contract Special Provision regarding the application of the "alternate table" where multiple tables are included.  Also, bidders will be directed to submit questions or requests for clarification in accordance with Special Provision 2-4 (rather than calling the Prevailing Wage Rate Coordinator).  This will result in the questions and answers being posted on the web site for all to see.


Payroll Deductions - Use of Employer Credit Cards                                                                           Back to Top

A recent request for USDOL guidance regarding payroll deductions resulted in a response saying that USDOL approval is required for deductions relating to the use of employer credit cards.  Accordingly, if it the policy of the employer to allow limited employee use of the company credit card for personal expenses, and to use payroll deductions for repayment, then USDOL approval should be requested for the payroll deduction.  If the employer has no such policy, and must seek repayment from an employee for unauthorized use of the credit card, the payroll deduction may not be the best solution as it requires USDOL approval before the deduction can be made.  In such circumstances, it's probably preferable to obtain repayment with a check from the employee.


 Enforcement                                                                                                                                               Back to Top

The following comes from the USDOT Inspector General web site and pertains to all Federal aid contracts.  While it applies to prevailing wage and EEO programs, it also applies to all other aspects of contractor operations and contract administration.  Accordingly, all contractors holding Federal aid contracts should be aware of and comply with the requirements.


Contractor Disclosures Of Certain Violations of Criminal Law
and the Civil False Claims Act

Effective December 12, 2008, the Federal Acquisition Regulation (FAR) was amended to, in part, require that contractors timely notify the relevant Office of Inspector General (OIG) whenever there is credible evidence to believe that a violation(s) of criminal law and/or the civil False Claims Act have occurred in connection with a Federal contract.

Specifically, contractors must disclose, in writing, to the OIG whenever they have credible evidence that a principal, employee, agent, or subcontractor of the contractor has committed a violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations (found in Title 18 of the United States Code) or a violation of the civil False Claims Act (31 U.S.C. 3729-3733), in connection with the award, performance, or closeout of a Government contract or a subcontract awarded thereunder. Disclosures must be made by a senior officer or manager authorized to speak for the contractor.

Disclosure regarding conduct that occurred before December 12, 2008, is also required under this new FAR rule. Penalties for knowing failure to timely disclose include suspension and/or debarment. For additional details see: Contractor Business Ethics Compliance Program and Disclosure Requirements, 73 Fed. Reg. 219, 67064 (Nov. 12, 2008) (to be codified at 48 C.F.R. pts. 2, 3, 9, 42, 52).

Equipment                                                                                                                                                       Back to Top

An increasingly popular piece of equipment on FDOT job sites is the directional boring machine.  This machine installs underground pipes, conduits and cables by drilling a horizontal hole and threading the pipe, conduit or cable though the hole.  Advantages of this method over trenching and backfill include: less traffic disruption, lower cost, no access pit, and shorter completion times.  Florida soils are generally suitable for directional boring and the process is more environmentally benign than trenching.  The operation of the equipment generally requires two skilled positions: the Directional Bore Operator and the Directional Bore Locator.  The locator positions a surface receiver over the boring head and assists the operator in determining the longitudinal and lateral position, as well as the depth, of the boring head.


None of the Florida General Decisions (or wage tables) include the classifications of Directional Bore Operator or Directional Bore Locator.  These classifications should be added by submitting the Additional Classification Request when directional boring is to be used on the contract.  Below are images of typical directional boring machines.

Boring machines