Prevailing Wage Classifications

April 1, 2010
By: FitzGerald & Mulé LLP

Are you about to bid on a prevailing wage project? Are you in the middle of one? What rates should you pay your workers? Is it just a matter of looking up classifications on a chart on the Internet and then paying your workers according to their trade - as carpenters, masons or laborers?

No! Beware of the hidden rules about worker classifications!

DLSE Classifications for Prevailing Wages

The Division of Labor Standards Enforcement (DLSE) establishes worker classifications, crafts and types that correspond to prevailing wage rates. The DLSE posts schedules that list classifications and rates behind its "Statistics and Research" tab at the link for "Prevailing Wages". Many human resource directors or secretaries go to the website, look up the typical label for the work their employees will do generally on a prevailing wage project, and then input the applicable rate on the schedules into the computer for payroll. It seems quite simple.

However, problems arise when the workers perform certain tasks as part of the workday, or upon request by the superintendent or foreman, that do not fall within their assigned classification.

Are those infrequent tasks irrelevant or overlooked? Not by the DLSE. If only one worker on your job files a claim with the DLSE, the Labor Commissioner will investigate your handling of every worker and classification for the entire project. The employer must produce payroll and time records upon demand, and often the Labor Commissioner will find not only prevailing wage discrepancies but also wage and hour violations, such as missed meal breaks or unpaid overtime. In our experience, employees classified by an employer as unskilled "laborers" - the lowest prevailing wage - who perform some tasks of a skilled worker have been reclassified in Labor Commissioner Audits at a higher classification. The higher classification triggers much higher prevailing wage rates. As an example, a Laborer who, for a few days out of a week, uses wood, a hammer and a few nails to create a frame for a concrete pour or as a safety rail on a platform has performed "carpentry" work for those hours. As another example, a Laborer who simply pours concrete but then helps a cement mason spread out that concrete may be performing the work of a "cement mason" for that period of time.

How can you be sure that your classification is correct? In other words, when is a "laborer" a "carpenter" or "cement mason" or "plumber"? More research is required. The tasks of most classifications are listed or described in the "Scope of Work Provisions" for each trade, located on the DLSE website. However, where there is ambiguity in the Scope of Work or your task on your particular job does not match a Scope of Work Provision, you may need to clarify with unions or committees that lobby for the scope of the work of a trade. As one example, the Scope of Work Provisions for "Carpenter and Related Trades" is actually a Master Labor Agreement negotiated and entered into by a number of unions and other entities that represent carpenters' interests. These entities may have documents available to clarify a particular scope of work for your project. If no clarification for your project is available, the contractor may request an advisory opinion of the DLSE.

Timing of the Investigation and Compliance

The unfortunate result of DLSE action on a project is that, during an investigation, the Labor Commissioner frequently reclassifies the worker for the entire job - not only for the select hours during which the skilled laborer work was performed. Also, by the time the overburdened Labor Commissioner completes an investigation and issues a Notice of Noncompliance to the employer, often the construction project has been ongoing for several months or has been completed. The employer may have already issued numerous payroll checks based upon one classification and may need to pay all employees retroactively, contribute late payments to the Apprentice Fund (the "Fund," discussed below) and, if the employer wishes to contest the Audit, locate witnesses such as superintendents or forepersons that have moved on to other jobs or other geographical areas.

Preventative Measures

How can you avoid such scrutiny by the Labor Commissioner? Well, you may not be able to prevent the investigation, but you can be prepared in advance. The key is in your research and record-keeping.

First, classify your workers carefully. Don't just look at the schedules and make a quick decision. Consider, and discuss with the supervisory employees for the project, what components of the construction project might require an overlapping of classifications.

Second, train the superintendents and forepersons to keep copious notes as to exactly which hours your laborers were performing "carpentry," "cement masonry," laying tile, or performing any other skilled labor that could trigger a second classification for those hours. Then update the employee's time records so that you pay the prevailing wage rates and contribute Fund payments for the skilled labor tasks during those recorded hours.

Third, if you are in the midst of a construction project, promptly interview your supervisory employees to determine whether some workers have performed tasks outside their classifications, even for short periods. If you find any discrepancy, amend the records and issue the appropriate payments to the workers and the Fund, to avoid penalties that could arise in a subsequent investigation.

The Apprentice Fund

You will note from the DLSE schedules for the particular classifications that some amount of the wages is assigned to be paid into the Fund. The Fund is maintained by the DLSE for training purposes. However, the DLSE website does not clarify on the schedules that an employer must make the Fund payments separately to the DLSE. Instead, the Fund allotment is shown on the website as included in the total hourly rate to be paid to the worker. Therefore, even if an employer has dutifully included the minor Fund amounts in its payroll checks to employees, it may receive a Notice of Noncompliance from the Labor Commissioner that assesses penalties for failing to contribute directly to the Fund! There is strict liability, i.e., no defense, for an employer's failure to pay the Fund.

The DLSE's Hidden Information

Have you ever researched the "Important Notices" link on the Prevailing Wages page? These Notices, which affect prevailing wage classifications, are issued by the DLSE and posted by date. Notice Titles are provided only for the most recent Notices, but the Labor Commissioner applies decisions issued in Notices from past years to its investigations and Audits.

Coverage opinions issued by the DLSE also affect classifications, and are stored behind the "Statistics and Research" tab.

The unwary employer who does not research these Notices and opinions may assign a classification he or she has used for employees in the past, that no longer exists. For example, do you know whether equipment operators for landscape projects are laborers, tenders, or some other classification? The answer is that such an employee was within the Landscape/Irrigation Laborer/Tender classification prior to November 2007. However, the DLSE issued a Notice during that month stating that the sub-classifications of equipment operators and truck drivers within the Landscape/Irrigation Laborer/Tender classification were, as of the Notice date, unrecognized in Southern California (although they may be recognized in other areas of California). Only a detailed search through prior years' Notices, buried in the DLSE website, would reveal this information that is critical to a landscape contractor.

We at FitzGerald & Mulé LLP are prepared to assist you with prevailing wage issues and other Labor Commissioner claims. Contact us should the need arise.

This article is intended for informational purposes only. Nothing herein should be construed to constitute legal advice. It is recommended that you seek legal counsel before making decisions regarding labor and employment matters.

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