Grant Administration: Section 8.7 Labor Standards Compliance Requirements

During construction, the grantee is responsible for monitoring the labor standards and equal opportunity requirements described in this chapter. This role for the Labor Standards Officer may be fulfilled by the architect/engineer or grant administrator, and if so, should be included in the scope of services for that professional services contract.

Labor Standards Requirements
Construction management requirements include conducting job site interviews with workers using Record of Employee Interview Form (HUD Form 11). HUD’s website provides links to many of HUD’s Davis-Bacon Forms. Attachment 8-12 is a direct link to HUD Form 11. HUD’s Davis-Bacon Forms

The grantee should use on-site interviews as a proactive enforcement tool rather than as a means to meet a “representative sampling” quota. Instead of conducting interviews randomly for the sake of assembling a sample, the Labor Standards Officer is encouraged to target interviews to groups of workers where violations are suspected or alleged, being especially attentive to Attachment 8-12: Record of Employee Interview (HUD Form 11). The targeting approach is a more efficient and effective means of utilizing on-site interview resources. The Labor Standards Officer must also ensure that a sufficient sampling of all trades included in the project are interviewed.

The grantee should ensure the following actions are performed:

  • CDFA requires that interviews be conducted periodically during each phase of construction on each project.
  • Payrolls should be used to verify data obtained during on-site interviews. Check to see that employees are being paid the amounts specified in the wage determination, the amount shown on the payrolls, and the hours shown on the payrolls. Include hours of the supervisor.
  • Identification and correction of any discrepancies between on-site interviews, payrolls, and wage rates.
  • A fully completed and signed Record of Employee Interview form is maintained in the contract file.

Interview Protocols
The following guidelines should be observed by persons conducting job site interviews:

  • The interview should take place on the job site if it can be conducted properly and privately (this is a one-on-one process). If there is reason to suspect falsification or intimidation, the employee interview can be conducted by mail.
  • The interviewer should see that the wage determination and other required posters are properly displayed.
  • The interviewer should observe the duties of workers before initiating interviews. Employees of both the prime and subcontractors should be interviewed.
  • This should be posted adjacent to the wage determination and other required posters on the job site at a location readily accessible to workers.

To initiate the interview, the authorized person shall:

  • Properly identify himself/herself;
  • Clearly state the purpose of interview; and
  • Advise the worker that information given is confidential, and his/her identity will be disclosed to the employer only with the employee’s written permission.

A grantee may need to seek language assistance to interview non-English speaking workers or may seek to gather information using the Labor Standards Questionnaire, HUD Form 4730, either in person or requesting it back by mail. (See Attachment 8-13: Labor Standards Questionnaire Form (HUD Form 4730). The results from the questionnaire must be transferred to a Record of Employee Interview, HUD Form 11. (See Attachment 8-12: Record of Employee Interview Form (HUD Form 11).) When conducting employee interviews, the interviewer should pay particular attention to:

  • The employee’s full name.
  • The employee’s permanent mailing address.
  • The last date the employee worked on that project and number of hours worked on that day.
  • The interviewer should make it clear that these questions relate solely to work on the project and no other work.
  • The employee’s hourly rate of pay. The aim is to determine if the worker is being paid at least the minimum required by the wage determination.

The interviewer should be sure the worker is not quoting their net hourly rate or “take-home” pay. If it appears the individual may be underpaid, the interviewer should closely question the worker:

  • Ask for any records.
  • Arrange to re-interview the employee.
  • Enter the worker’s statement of his/her classification.
  • Observe duties and tools used:
    – Enter any comments necessary.
    – Enter date interview took place.

If the interviewer senses that the employee is reluctant to offer honest answers or appears to be under pressure from the employer about answering questions on the job site, the interviewer can provide or mail a questionnaire to gather information needed. See Attachment 8-13: Labor Standards Questionnaire Form (HUD Form 4730).

The payroll examiner must compare information on the Record of Employee Interview form with the Certified Payroll Report submission: If no discrepancies appear, “None” should be written in the comment space of the Record of Employee Interview form. If discrepancies do appear, appropriate action should be initiated. When necessary action has been completed, the results must be noted on the interview form.

Taking Corrective Action and Wage Restitution
Where underpayments of wages have occurred, the employer will be required to pay wage restitution to the affected employees. Wage restitution must be paid promptly in the full amounts due, less permissible and authorized deductions. All wages paid to laborers and mechanics for work performed on the project including wage restitution, must be reported on a Certified Payroll Report. Whenever an employer is found to have underpaid its employees by $1,000 or more or committed willful falsification, grantees should contact CDFA staff for assistance.

Notification to the Prime Contractor
The Labor Standards Officer will notify the prime contractor in writing of any underpayments that are found during payroll or other reviews. The notice will describe the underpayments and provide instructions for computing and documenting the restitution to be paid. The prime contractor is allowed 30 days to correct the underpayments. If wage violations are not corrected within 30 days after notification to the prime contractor, the grantee may withhold payment due to the contractor of an amount necessary to ensure the full payment of restitution. Note that the prime contractor is responsible to the Labor Standards Officer for ensuring that restitution is paid. If the employer is a subcontractor, the subcontractor will usually make the computations and restitution payments and furnish the required documentation through the prime contractor.

Computing Wage Restitution
Wage restitution is simply the difference between the wage rate paid to each affected employee and the wage rate required on the wage determination for all hours worked where underpayments occurred. The difference in the wage rates is called the adjustment rate. The adjustment rate times the number of hours involved equals the gross amount of restitution due.

Correction Certified Payroll Reports
The employer will be required to report the restitution paid on a Correction Certified Payroll Report. The correction payroll will reflect the period of time for which restitution is due (for example, Payrolls #1 through #6, or payrolls for a specified beginning date through a specified ending date). The Correction Certified Payroll Report will list:

  • Each employee to whom restitution is due and their work classification,
  • The total number of work hours,
  • The adjustment wage rate (the difference between the required wage rate and the wage rate paid),
  • The gross amount of restitution due,
  • Deductions, and
  • The net amount to be paid.

A properly signed Statement of Compliance must be attached to the Correction Certified Payroll Report.

Pay and Document Restitution Wages
The employer should pay and document payment of restitution wages. Attachment 8-14: Restitution Wages & Affidavit contains instructions on paying restitution wages and an affidavit to be signed by workers receiving restitution wages.

Review of Correction Certified Payroll Report
The LSO or contractor administrator will review the Correction Certified Payroll Report to ensure that full restitution was paid. The prime contractor shall be notified in writing of any discrepancies and will be required to make additional payments, if needed. Additional payments must be documented on a supplemental Correction Certified Payroll Report within 30 days.

Unfound Workers
Sometimes, wage restitution cannot be paid to an affected employee because the employee has moved or otherwise cannot be located. After wage restitution has been paid to all of the workers who could be located, the employer must submit a list of any workers who could not be found and paid including name, employee identification number, last known address and the gross amount due. At the end of the project, the prime contractor will be required to establish a deposit or escrow account in an amount equal to the total amount of restitution that could not be paid. The grantee must continue to attempt to locate the unfound employee(s) for three years after completion of the project. After three years, any amount remaining in the account must be credited and/or forwarded to HUD.

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