Grant Administration: Section 8.3 Assess the Applicability of Labor Standards Provisions

Federal Requirements
Most construction projects including alteration, repair or demolition, funded in whole or in part with federal dollars, must comply with federal Labor Standards Provisions. Attachment 8-1: Making Davis Bacon Work. Applicable laws include the following:

  • The Davis-Bacon Act requires that workers receive no less than the prevailing wages being paid for similar work in the same locality. The CDBG regulations apply this Act to construction, alteration, or repair work of more than $2,000 that is financed in whole or in part with CDBG or other federal funds, regardless of the CDBG amount. See (Section 8.10 of this chapter for clarification regarding construction versus installation in determining wage rate requirements.)  Davis-Bacon Act: 40 USC, Chapter 3, Section 276a-276a-5
  • The Copeland Anti-Kickback Act requires that workers be paid weekly, that deductions from their pay be permissible, and that contractors keep and submit weekly payrolls and Statements of Compliance.See Copeland Anti-Kickback Act: 40 USC, Chapter 3, Section 276c and 18 USC, Part 1, Chapter 41, Section 874.
  • The Contract Work Hours and Safety Standards Act requires that workers receive overtime compensation for hours they have worked in excess of 40 hours in one week. This Act applies to all CDBG-assisted construction contracts of $100,000 or more. The Act also imposes a financial penalty for failure to pay such overtime wages and requires overtime for traditionally exempt salaried construction workers. (NOTE: Overtime is required for ALL workers via the Fair Labor Standards Act including projects without federal funds.) See Contract Work Hours and Safety Standards Act: 40 USC Section 3701-3707 and 24 CFR Part 5

Tip: HUD has two guides and a handbook that are available for downloading on labor standards requirements. These documents are “Making Davis Bacon Work: A Practical Guide for States, Indian Tribes and Local Agencies” and “Davis Bacon Labor Standards: A Contractor’s Guide to Prevailing Wage Requirements for Federally-Assisted Construction Projects.” HUD Handbook 1344.1 also provides detailed guidance on labor standards requirements. HUD also provides links on its website to many forms and instructions used in labor standards administration. See Attachment 8-2: Davis Bacon Labor Standards: Contractor’s GuideHUD’s Davis-Bacon Forms and Instructions and HUD Handbook 1344.1.

There are certain exceptions to the Davis-Bacon and Copeland Anti-Kickback Acts. These acts do not apply to:

  • Construction contracts at or below $2,000. Note that arbitrarily separating a project into contracts below $2,000 in order to circumvent the requirements is not permitted.
  • Rehabilitation or new construction of residential properties containing less than eight units with CDBG funds. (NOTE: The HOME Program exempts projects of less than 12 units.)
  • Non-construction related activities will not cause Davis-Bacon to apply to the whole project. These are activities such as real property acquisition, procurement of furnishings, architectural and engineering fees, procurement of modular (industrialized) and manufactured housing components, and certain pieces of equipment that would not become permanently affixed to the real property. See Installation Work in Section 8.10 below.
  • Contracts solely for demolition, when no construction is anticipated on the site.
  • Force account labor (construction carried out by municipal employees or, in certain instances, a sub-recipient’s employees).
  • Volunteers. However, volunteering for part of the project and working part of the project is prohibited.

CDFA should be contacted if there is any situation where Davis-Bacon applicability is in question.

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