Prevailing Wage Law Summary
Prevailing wage law is generally contained in Ohio Revised Code (ORC) Chapter 4115. Toledo Municipal Code Ch. 187 also requires payment of prevailing wages.
REQUIREMENT TO PAY PREVAILING WAGE
ORC 4115.05 provides that:
- “every contract for a public work shall contain a provision that each laborer, worker or mechanic, employed by such contractor, subcontractor, or other person about or upon such public work, shall be paid the prevailing rate of wages …”
- “Where contracts are not awarded or construction undertaken within 90 days from the date of the establishment of the prevailing rate of wages, there shall be a redetermination of the prevailing rate of wages before the contract is awarded.”
TMC 187.12(b) requires payment of Prevailing Wage:
- For every contract involving personal services or labor for $10,000 or more
- Does not apply when federal funds are utilized to pay (fully or partially) the contract (see note 1 on Davis Bacon Act)
- Prevailing wage rates are deemed to be those rates filed for the Toledo area with the Ohio Department of Commerce
- Compliance with Prevailing Wage procedures under the ORC is not mandated in the TMC
PREVAILING WAGE THRESHOLDS
Prevailing wages must be paid for any “public improvement” with total costs at or above the “prevailing wage threshold”. There are different prevailing wage thresholds for public improvements generally and public improvements that involve roads, streets, alleys, sewers, ditches and other works connected to road or bridge construction, as well as different thresholds for new construction versus alteration and repair.
General prevailing wage thresholds for new construction:
- $250,000 (as of January 1, 2018, adjusts Jan. 1 of even-numbered years)
Prevailing wage thresholds for new construction that involves roads, streets, alleys, sewers, ditches and other works connected to road or bridge construction:
- $91,150 (as of January 1, 2018, adjusts Jan. 1 of even-numbered years)
General prevailing wage thresholds for any reconstruction, enlargement, alteration, repair, remodeling, renovation, or painting of a public improvement:
- $75,000 (as of January 1, 2018, adjusts Jan. 1 of even-numbered years)
Prevailing wage thresholds for any reconstruction, enlargement, alteration, repair, remodeling, renovation, or painting of a public improvement that involves roads, streets, alleys, sewers, ditches and other works connected to road or bridge construction:
- $27,309 (as of January 1, 2018, adjusts Jan. 1 of even-numbered years)
DEFINITION OF PUBLIC IMPROVEMENT
Public improvement includes all buildings, roads, streets, alleys, sewers, ditches, sewage disposal plants, water works, and all other structures or works constructed by a public authority or by any person pursuant to a contract with a public authority.
Public improvement also includes: all work performed on a newly constructed structure to suit it for occupancy by a public authority renting or leasing the structure within six months after completion of construction.
Exceptions from public improvement:
- Improvement authorized by ORC 1515.08 and constructed pursuant to a contract with a soil and water conservation district.
- Improvement performed as a result of a petition filed pursuant to ORC 6131 (county ditch improvements), 6133 (joint county ditches), 6135 (interstate county ditches) where no less than 75% of the project is located on private land and no less than 75% of the improvement is paid for by private property owners.
Prohibition Against Subdividing Project to Avoid Prevailing Wage
ORC 4115.033 provides that “no public authority shall subdivide a public improvement project into component parts or projects, the cost of which is fairly estimated to be less than” the prevailing wage thresholds, “unless the projects are conceptually separate and unrelated to each other, or encompass independent and unrelated needs of the public authority”.
Exceptions from Prevailing Wage requirements
- Public improvements involving federal government grant or loan dollars, provided that the federal government proscribes predetermined minimum wages (see Note 1)
- Direct use of labor under ORC 5107 (Ohio works first program) to construct a public improvement
- Public improvements contracted by a board of education
- Improvement undertaken by a county or municipal hospital, if improvements are not paid for by bonds secured by full, faith and credit of the state, county, municipality or township or from funds generated by a tax levy
- Housing advisory boards – prevailed wages determined by ORC 176.05
- Public improvements undertaken by or under contract for a Port Authority
- Portion of public improvement completed solely with donated labor
Contract requirement (OAC 4101:9-4-14)
Every contract for a public improvement project shall contain provisions requiring the successful bidder to be responsible for payment of the prevailing wages to each individual who worked on the project.
Duties of Contractor (under OAC 4101:9-4-13)
- Supply the prevailing wage coordinator with all documentation required pursuant to ORC 4115.03 to 4115.16 and OAC 4101:9, including list of all subcontractors
- As soon as it begins performance under its contract, supply the prevailing wage coordinator with a schedule of the dates during the life of its contract on which it is required to pay wages to employees. Schedule of pay dates must not be greater than the time periods required for reporting of payrolls
- Post in a prominent and accessible place on the site of work a legible statement of the schedule of wage rates specified in the contract for the various occupations of laborers, workman, and mechanics employed. Notice to remain posted for the life of the contract and must state the name, address and phone number of the prevailing wage coordinator
- On the first pay date under a contract, issue to each employee not covered by a collective bargaining agreement, an individual written notification stating their job classification, prevailing wage rate, fringe benefit contribution amounts and identity of the prevailing wage coordinator
- Pay the proper and appropriate prevailing wages, and
- Ensure compliance by all subcontractors
- Keep full and accurate payroll records
- Submit Certified Payroll reports within 2 weeks after the initial pay period
- Initial and all supplemental payroll reports shall contain information required in ORC 4115.07 and an accurate description of the nature of the deductions withheld from each employee’s wages
- Falsification of information required is a violation of ORC 4115.071 and a criminal violation pursuant to ORC 2921.13
- No contractor or subcontractor under a contract for a public work shall sublet any of the work covered by the contract unless specifically authorized to do so
1) The Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the local prevailing wages and fringe benefits for corresponding work on similar projects in the area. The Davis-Bacon Act directs the Department of Labor to determine such locally prevailing wage rates. The Davis-Bacon Act prevailing wage provisions apply to the “Related Acts,” under which federal agencies assist construction projects through grants, loans, loan guarantees, and insurance.
ENSURING COMPLIANCE WITH PREVAILING WAGE
City of Toledo Responsibilities
- Before advertising for bids, contracting or undertaking construction with its own forces, to construct a public improvement, have Ohio Department of Commerce determine the prevailing rates of wages for workers employed on the public improvement. (ORC 315.04)
- Schedule of wages shall be shall be attached to the specifications for the work and printed on the bidding blanks
- Copy of the bidding blank is to be filed with the Director of Commerce before the contract is awarded.
- Prior to awarding contract check debarred contractors list (www.com.ohio.gov) to ensure contractors and subcontractors are not debarred (prohibited from working on public improvement project in Ohio).
- Include provision in contract that each laborer, worker, or mechanic employed by the contractor or subcontractors shall be paid the prevailing rate of wages. (ORC 4115.06)
- No member of a public authority shall vote for the award of any contract or vote for the disbursement of funds unless the public authority has first had the director of commerce determine the prevailing rates of wages for the class of work called for by the public improvement. (ORC 4115.09)
Duties of the Prevailing Wage Coordinator
- Obtain determination of prevailing wage rates
- Attend Pre-Construction meetings
- Obtain list from prime contractor a containing the name and addresses and telephone numbers of all subcontractors.
- At the beginning of performance under the contract obtain from all contractors and subcontractors payroll dates
- Obtain each contractor’s bonding and/or surety company’s name
- Where contracts are not awarded or undertaken within 90 days from the establishment of the prevailing rate of wages, rates must be re-determined.
- Supply contractors with any and all wage rate changes within 7 days of notification of change.
- Obtain out-of-state contractors Ohio Statutory Agent name and address.
- Set and maintain files of all contractors and subcontractors’ certified payroll reports, and affidavits; and make files available for public inspection.
- Reports must be submitted by contractor to PW Coordinator within two weeks of the initial pays date, and supplemental reports for each month thereafter.
- If contract is to be completed in four months or less, supplemental reports are due weekly.
- Establish and follow procedures to monitor and ensure compliance (4115.571(A))
- Upon completion and prior to final payment require an affidavit if compliance from each contractor and subcontractor (4115.071(C)).
- Compare wage rate and fringe benefit payments reported to the prevailing wage schedule.
- Report any noncompliance to the Ohio Department of Commerce and to the Mayor (4115.071(6))
Certified Payroll Requirements (ORC 4115.071(3))
- Name, current address, and social security number of each worker
- Each workers classification specific to the work they are performing
- Hours worked each day during the pay period on the project and the total hours for the week
- Hourly rate of pay
- Fringe benefit contributions
- Gross wages, all deductions and net pay issued
Public Authority Potential Liability
If the Commerce director determines that a contractor or subcontractor has violated the prevailing wage requirements because the City has not notified the contractor or subcontractor as required by ORC 4115.05, the City is liable for any back wages, fines damages, court costs, and attorney’s fees associated with the enforcement by the director for the period of time running until the public authority give the required notice to the contractor of subcontractor.