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The Top 10 Mistakes Contractors Make on Public Works Projects and How to Steer Clear of Them

Updated: Jun 20

Public works projects play a role in enhancing and expanding community infrastructure, including roads, bridges, schools, and other vital public amenities. Managing these projects however can present challenges with contractors encountering pitfalls that may result in setbacks, legal entanglements, and penalties. This article dives into the common errors contractors make on public works projects and offers tips for avoiding them.

1. Lack of Understanding Regarding Prevailing Wage Laws

A common mistake among contractors is their failure to grasp and adhere to prevailing wage laws. In California, these regulations require that workers engaged in public works projects must receive a predetermined wage rate encompassing both wages and fringe benefits. Understanding how to pull the correct wage determination applicable to your project (yes, there are different wage determinations to choose from), and how to read and calculate these rates is extremely important. Underpayments and misclassification penalties are not cheap.

How to Steer Clear of This Issue:

Contractors should play it safe by obtaining the correct wage determination by contacting their prime contractor or awarding body. Conducting training sessions on wage laws and seeking guidance from professionals can aid in ensuring compliance.

2. Inaccurate Record Keeping

Maintaining organized payroll records, training contributions, apprentice forms, and all labor compliance documents is another important part contractors working on public works projects should be aware of. Record requests are due within 10 days or late turnover penalties apply so having your documents ready and organized streamlines any requests that may arise. Insufficient maintenance of records can result in issues such as not meeting state requirements, difficulty in settling disputes, and complications during audits.

Tips to Prevent This:

Establish a project file to keep your project document's seperate. Each time a labor compliance document is produced, save it in the project file with an easy to understand file name. Conduct audits of records to verify accuracy and completeness. Create a weekly and monthly checklist to help increase your attention to detail and never miss a beat.

3. Ignoring Apprenticeship Requirements

California Labor Code 1777.5 requires contractors to meet a 1:5 apprentice to journeyman ratio on their public works projects. Apprentice forms such as the DAS 140 form and DAS 143 form are time senstive documents needing to be sent to all DIR applicable apprentice halls. Failure to comply with these regulations can lead to penalties, delays in projects and payment, as well as exclusion from future public works projects.

How to Avoid This:

Research and be aware of the apprenticeship requirements for each project. Make sure an adequate number of apprentices are employed and at very lease, requests for apprentices are being made. Be sure to save proof of submission when submitting these apprentice forms to prove you have tried to obtain an apprentice. These will also come in handy if your project goes under investigation and you were under the 20% ratio requirement. This can be a time consuming process, companies such as ours helps contractors by producing and submitting these documents for you as well as keeping track of your ratio.

4. Misclassification of Workers

Incorrectly classifying workers can lead to penalties as well as restitution payment. Proper classification guarantees that workers receive wages and benefits for the proper scope of work to which your employee is performing on the project. There are so many classifications and subcrafts to choose from on both state and federal prevailing wages. It's important to choose the correct one.

How to Prevent Missclassification:

Get familiar with the scope of work your employee's will be performing on the job site. This includes what type of tools they are using, machinery, and skilled labor. Read the scope of work on your best guess of classification under the applicable prevailing wage determination for your project to ensure it's the best fit.

5. Incorrect Production of Certified Payroll Reports

Mistakes in production of certified payroll reports can result in underpaid wages leading to payment withholds and penalties. Precise weekly reporting is a crucial requirement in the public works industry.

Ways to Prevent It:

Provide training to payroll staff on reporting requirements and perform checks to confirm the correctness of payroll submissions. Utilize a labor compliance consulting company such as Prevailing Wisdom for production or review of your CPR to quality control. Produce a Statement of Non Performance on weeks where no work was performed. Keep track of your CPR numbering and week end dates to ensure consistency. Take your time entering the data and do a second run through to locate any typos or discrepancies.

6. Not Reviewing Travel Provisions

Each state classification has a different travel provision located in the prevailing wage rate determination. If travel provisions apply and you failed to pay your employees accorfingly, penalties and resituttion can apply.

Tips to Avoid This:

Before starting your project, locate the correct prevailing wage rate determination and locate the classifications you will be using. Click the "TRAVEL" link to open the travel provisions. Now, these are often not written in easy to understand language... There could be addresses you need to look up to see how many miles it is from the job site address, there could be cordinates to look up, different scenerios to review to see if they apply to your company, ect... Always, always, always check the travel provisions to see if there is an additional fee outside of the hourly prevailing wage rate that you need to pay your employees.

7. Inadequate Project Scheduling

Poor planning and scheduling can result in late document submission, project delays, and of course, penalties. Effective project management is key for keeping projects on course and compliant. Documents such as the DAS 142 form require a date and time in the future (at least 72 hours in advace) and has a journeyman working on site. If the job is cancelled last minute and an apprentice is dispatched, you will be required to pay showup pay at the journeyman hourly rate. Another situation could be you ultimatley never get compliant DAS 142 forms on file and are penalized $100 per day for non submission.

Helpful tips to avoid this:

Stay in communication with your team. Choose a point person who is required to be notified before you start the project and each time employees will be working on the project. Create a shared scheduling spreadsheet for easy and time saving updates.

8. Not Reading the Project Contract and Identifying Labor Compliance Requirements BEFORE Signing or Starting a Public Works Projects

There are a variety of different project types and submission requirements. Each project will be different. It's important to know the special project types such as PLA (Project Labor Agreements), which require even non-union contractors to become signatory to an apprenticeship program for the life of the project. Some projects might require you to send wet signed monthly packets to a designated office or upload labor comliance documents to a shared digital system or folder. Set your company up for success by reviewing these before signing a new project contract so you know what you are getting into and be ready to comply with all outlined requirements.

How to Steer Clear of This Issue:

Research different project types and the requirements that they entail. Make yourself or your team a cheatsheet of key words to look out for. Make a project information form with key columns for the person reviewing the contract to input the answers to such as funding, submission requirements, special project type, CPR system requirements, ect...

Have an experienced professional help identify project requirements.

9. Paying Straight Time Prevailing Wages on Holidays

Each classification has observed holidays where employees are to be paid holiday pay. While there are some standard holidays, there could also be random dates that are observed such as the second Friday of August, the first Monday of February, ect... It's important to know that employees are required to be paid doubletime for all hours worked on the classifcation's observed holidays. Noncompliance can result in underpayment penalties and restitution.

Tips to Avoid This:

Check the holidays that are observed by your classifications when pulling the prevailing wage rates and log them in a spreadsheet or in your project's file to reference when doing payroll.

10. Not Cross-Referencing Prevailing Wage Rates on Mixed Funded Projects

When working on a mixed funded project where there is both state and federal funding, you are required to cross reference the rates to determine which is higher. Choosing the wrong entity's hourly rate could result in underpayment penalties and restitution.

Helpful Tips to Avoid This:

Circling back around to that project information sheet mentioned previously, if mixed funded is indicated then this should be the first step in your process. Pull the federal wage decision and state prevailing wage determination, locate your classification on both, calculate the prevailing wage rates. Next, check for any increases and update the rates accordingly. Since federal rates do not include a training rate, add the state training rate to determine which entities rate is higher.

In Summary

Avoiding errors in public works projects demands planning, strict adherence and understanding of regulations, effective communication, and efficient internal processes. By recognizing pitfalls and implementing strategies contractors can improve their project management practices, mitigate risks and achieve successful project outcomes.

At Prevailing Wisdom we specialize in assisting contractors in navigating labor compliance complexities in public works projects. Our consulting services and document support aim to streamline the labor compliance process. Contact us today to collaborate on your next public works project.

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