Explanation of agency authority. The Department of Workforce Development administers the statutory requirements that the prevailing wage rate must be paid for covered employees in a trade or occupation engaged in erection, construction, remodeling, repairing, or demolition on a state or local public works project.
Sections
66.0903 (1) (g) and
103.49 (1) (d), Stats., delineate how the Department determines the prevailing wage rate for a trade or occupation on a public works project. First, a survey is done to collect data on the hourly wage rates and hourly fringe equivalent rates for a trade or occupation in that area. If there is a majority of hours worked at a particular wage rate plus fringe equivalent rate, those rates become the prevailing wage rate for that trade. If there is no rate at which a majority of the hours worked in that trade is paid, a weighted average methodology applies based on the pay of the highest-paid 51% of hours worked in that trade or occupation on projects in that area.
Summary of the proposed changes. The statutory language on determining prevailing wage rates was enacted in
1995 Wisconsin Act 215. Since that time, the Department has had an informal policy of looking at the hourly wage rate and hourly fringe equivalent rate as separate figures and requiring an exact match of both the hourly rate of pay and the hourly fringe equivalent rate in determining whether there is a majority of hours worked in a trade or occupation at a particular rate.
The Department's policy of requiring an exact match of both the hourly wage rate and the hourly fringe equivalent rate has resulted in situations that do not seem to comply with the intent of the prevailing wage law. For example, if a collective bargaining agreement is renegotiated and the hourly wage rate is reduced to cover the increased cost of health insurance in the fringe equivalent, the hours worked under the two different agreements will be considered as hours worked at different rates even though the total economic benefit and liability is the same. Counting the rates under the original and renegotiated collective bargaining agreements with the same total economic benefit and liability as different rates means that the union rates may not be selected as the prevailing wage rates even if a majority of hours worked in a trade were by union workers.
Section
DWD 290.015 (3) provides that if the rates in a collective bargaining agreement are found to prevail for a particular trade in a particular area, any future increases or decreases in the collective bargaining agreement are to be included in the prevailing wage rate determinations. The proposed rule will make it less likely that a renegotiated collective bargaining agreement with the same total economic benefit and liability will negatively affect whether future increases or decreases under the collective bargaining agreement are incorporated in prevailing wage determinations. If the majority of hours worked in that trade in that area are by union workers, the future increases or decreases in the union contract will be reflected in the prevailing wage rates for that trade.
Under the proposed rule, the Department would determine whether there is a majority of hours reported that receive a total economic benefit that is the sum of the hourly rate of pay and hourly fringe equivalent. If there is a majority of hours worked at the rate that is that sum and there is more than one combination of hourly rates of pay plus hourly fringe equivalent rates that equal that sum, the prevailing wage rate will be the most commonly reported hourly basic rate of pay and corresponding hourly fringe equivalent rate that resulted in that sum.
Summary of analytical methodology used to develop the proposed rule. The statutory language that directs the Department to consider the “hourly basic rate of pay, plus the hourly contribution for health insurance benefits, vacation benefits, pension benefits and any other bona fide economic benefits paid directly or indirectly, for a majority of the hours worked in the trade" could be interpreted to require either an exact match of the hourly wage rate and the hourly fringe equivalent rate as separate figures or a match of the hourly wage rate and fringe equivalent rate as a combined rate that is the sum of the two rates. The Department has determined that the method of using the sum of the hourly wage rate and the hourly fringe equivalent more closely complies with statutory intent.
Federal law. There are no federal prevailing wage rate regulations that apply to state or local public works projects. The federal prevailing wage regulations that apply to federally-funded public works projects determine the prevailing hourly rate of pay and the prevailing fringe equivalent as completely separate inquiries. Under the federal system, the resulting combination of the hourly rate of pay and fringe equivalent issued by the U.S. Department of Labor may result in a combination of hourly pay and fringe equivalent that is not the most commonly paid total economic benefit on private projects.
Comparison with rules in adjacent states. Iowa. No prevailing wage law.
Minnesota. The prevailing hourly wage rate is set at the most commonly paid hourly wage rate. The fringe equivalent rate is set at the most commonly paid rate at that hourly wage rate.
Michigan. The prevailing wage rates are the collective bargaining agreement rates.
Illinois. Only employers who do work on public works projects are surveyed. The prevailing rates are the most commonly paid wage rates and the corresponding fringe equivalent rates.
Anticipated costs incurred by private sector. There will be no significant fiscal effect on the private sector.
Effect on small business.
The proposed rule will affect small business as defined in s.
227.114 (1), Stats., but the rule will not have a significant economic impact on a substantial number of small businesses.
Analysis and supporting documentation used to determine effect on small business. Small businesses will have increased flexibility to offer “cafeteria-style" benefit plans to their employees and have their wage rates selected as the prevailing wage.
The proposed rules are available at the web site
http://adminrules.wisconsin.gov by typing “prevailing wage" in the search engine. This site allows you to view documents associated with this rule's promulgation, register to receive email notification whenever the Department posts new information about this rulemaking order, and submit comments and view comments by others during the public comment period. You may receive a paper copy of the rule by contacting:
Elaine Pridgen
Office of Legal Counsel
Dept. of Workforce Development
201 E. Washington Avenue
P.O. Box 7946
Madison, WI 53707-7946
(608) 267-9403
Written Comments
Written comments on the proposed rules received at the above address or through the
http://adminrules.wisconsin.gov web site no later than August 18, 2004, will be given the same consideration as testimony presented at the hearing.
Small Business Regulatory Coordinator
Hal Bergan
(608) 266-8533
