AB632: Bill Text

LRB-3723/2

GMM:skg:mkd

1995 - 1996 LEGISLATURE

1995 Assembly BILL 632

October 26, 1995 - Introduced by Committee on Labor and Employment, by request of Departmet of Industry, Labor and Human Relations. Referred to Committee on Labor and Employment.

AB632,2,2 An Act to repeal 66.293 (2), 66.293 (3) (b) and 103.49 (4); to renumber and amend 66.293 (3) (intro.), 66.293 (3) (a), 66.293 (3) (c), 66.293 (3) (d), 66.293 (3) (e), 66.293 (3) (f), 66.293 (3) (g), 66.293 (3) (h), 66.293 (3) (i), 66.293 (3) (j), 66.293 (3) (k), 66.293 (3) (m), 66.293 (3) (n), 103.49 (1) (c), 103.49 (3), 103.49 (5) and 103.49 (6); to amend 103.49 (1) (a), 103.49 (1) (b), 103.49 (1) (d), 103.49 (2), 103.49 (7) (a), 103.49 (7) (b), 103.49 (7) (d), 103.50 (1) (a), 103.50 (1) (b), 103.50 (1) (c), 103.50 (1) (d), 103.50 (2), 103.50 (3) (a), 103.50 (4), 103.50 (5), 103.50 (6), 103.50 (7) (a), 103.50 (7) (b), 103.50 (7) (c), 103.50 (8), 227.01 (13) (t), 946.15 (1) and 946.15 (2); to repeal and recreate 66.293 (1), 66.293 (5), 103.49 (3g) and 103.50 (3) (b); and to create 66.293 (3) (title), 66.293 (3) (br), 66.293 (3) (cm), 66.293 (4), 66.293 (7), 66.293 (9) (title), 66.293 (10) (title), 66.293 (11) (title), 66.293 (11) (b), 103.49 (1) (title), 103.49 (1) (c) 1. to 8., 103.49 (1) (e), 103.49 (1) (f), 103.49 (2m), 103.49 (3) (title), 103.49 (3) (b), 103.49 (3) (c), 103.49 (3) (d), 103.49 (3r), 103.49 (4r), 103.49 (5) (title), 103.49 (5) (a), 103.49 (5) (c), 103.49 (6m), 103.49 (7) (title), 103.50 (1) (e), 103.50 (2m), 103.50 (3) (c), 103.50 (3g), 103.50 (7) (d) and (e), 946.15 (3) and 946.15 (4) of the statutes; relating to: prevailing wage rates and hours of labor for workers employed on state or local public works projects and providing penalties.

Analysis by the Legislative Reference Bureau

Under current law, contracts to perform construction work on state or local public works projects, that is, state or local building projects, local street projects or state highway projects, are governed by provisions regarding prevailing wage rates and hours of labor. In general, those provisions require contractors and subcontractors performing work on a project to pay their employes working on the project the prevailing wage rate in the area from which labor for the project would normally be secured for the employe's trade or occupation and to pay those employes overtime pay, that is, 1.5 times the employe's usual hourly basic rate of pay, for all hours worked in excess of the prevailing hours of labor. This bill makes various changes to the prevailing wage and hours law as follows:

Determination of prevailing wages and hours

Under current law, a state agency or local governmental unit, before entering into a contract for a project of public works, other than a local street project, and the department of transportation (DOT), before entering into a contract for a state highway project, must request the department of industry, labor and human relations (DILHR) to determine the prevailing wage rate and prevailing hours of labor for each trade or occupation in the area from which labor for the project would normally be secured, except that DILHR may exempt a local governmental unit from requesting a determination if the local governmental unit adopts standards that are at least as high as those under the prevailing wage and hours law. Currently, a local governmental unit determines the prevailing wage rates for a local street project. This bill eliminates the responsibility of a local governmental unit to determine the prevailing wage rates for a local street project and instead requires a local government unit to request DILHR to determine the prevailing wage rates and hours of labor in the area of the proposed project for those trades or occupations that are commonly employed in the highway construction industry.

Under current law, the prevailing wage rate for a trade or occupation that is employed on a state or local building project is the wage, plus fringe benefits, paid to the majority of the persons working in that trade or occupation in the area from which labor for the project is normally secured or, if there is no rate at which a majority of the persons working in that trade or occupation in the area are paid, the prevailing wage rate is the rate paid to the largest number of individuals working in that trade or occupation in the area. Currently, the prevailing wage rate for a trade or occupation that is employed on a state highway project is the wage, plus fringe benefits, paid to the largest number of persons engaged in the same class of labor in the area from which labor for the project is secured. Currently, DILHR also determines truck rental rates for persons who own and operate their own trucks when working on a state highway project.

This bill eliminates truck rental rates and provides instead that a truck driver, including the owner-operator of a truck, must be paid at a prevailing wage rate that is determined by DILHR in the same manner as prevailing wage rates are determined for workers in other trades or occupations. The bill also provides one uniform method of determining prevailing wage rates for persons employed on all state and local public works projects. Under the bill, the prevailing wage rate for a trade or occupation that is employed on a state or local building project is the wage, plus fringe benefits, paid for a majority of the hours worked in that trade or occupation on building projects in the county in which the proposed project is located and in the counties contiguous to that county that are not subject to the prevailing wage law (private sector projects) or, if there is no rate at which a majority of the hours worked in the trade or occupation on private sector projects in those counties is paid, the prevailing wage rate is the average hourly wage, weighted by the number of hours worked, plus the average hourly fringe benefits, weighted by the number of hours worked, paid to all persons employed in the trade or occupation on private sector projects in those counties. For local street projects and state highway projects, the bill provides that wages, plus fringe benefits, paid for hours worked on public sector projects, as well as private sector projects, are also considered in determining the prevailing wage rate.

Under current law, the prevailing hours of labor for a trade or occupation in an area are the hours per day and per week worked within the area from which labor for a project would normally be secured by a larger number of persons than are employed in the trade or occupation for any other number of hours per day and per week, except that the prevailing hours of labor for any trade or occupation may not exceed 8 hours per day and 40 hours per week. This bill eliminates the prevailing hours of labor per day, but retains the prevailing hours of labor per week and specifies that the prevailing hours of labor may not include any hours worked on a Sunday or holiday so that, for example, if a person's normal work week consists of 4 10-hour days, the person need not be paid overtime pay for the 9th and 10th hours worked each day. Instead the person must be paid overtime pay only for the hours worked in excess of 40 in a week and any hours worked on a Sunday or holiday.

Under current law, when a local governmental unit or state agency requests DILHR to determine the prevailing wage rates and prevailing hours of labor for a proposed public works project, DILHR must make that determination within 30 days after the request. Current law also provides a procedure for local building projects under which any person may request a review of DILHR's determination if the person submits evidence showing that DILHR's determination does not represent the actual prevailing wage rate or prevailing hours of labor for a trade or occupation in the area of the proposed project. Current law, however, does not provide a similar review procedure for state building projects. This bill permits any person to request a review of a determination by DILHR of the prevailing wage rates or hours of labor for a state building project along the same lines that a person may request such a review under current law for a local building project. The bill also permits a local governmental unit or state agency to request a review of a determination by DILHR of the prevailing wage rates or hours of labor for a proposed public works project if the local governmental unit or state agency submits evidence, including wage rate or hours of labor information on at least 3 similar projects located in the city, village or town in which the proposed project is located, showing that DILHR's determination does not represent the prevailing wage rate or hours of labor in that city, village or town. If DILHR modifies its determination, then the prevailing wage rate or prevailing hours of labor is the prevailing wage rate or prevailing hours of labor in the city, village or town, rather than in the county and contiguous counties.

Under current law, DOT may appeal to the governor if it considers any portion of DILHR's determination of the prevailing wage rates or hours of labor for a state highway project to be incorrect. This bill permits a local governmental unit or a state agency other than DOT that believes that payment of any prevailing wage rate determined by DILHR for a project would pose a dire financial hardship to the local governmental unit or state agency to petition the secretary of industry, labor and human relations to reduce that prevailing wage rate for the project. If the secretary finds that payment of that prevailing wage rate would pose a dire financial hardship, the secretary may reduce that rate by not more than 20%.

Finally, with respect to the determination of prevailing wage rates and hours of labor, under current law, information relating to wages and hours submitted to DILHR by contractors, subcontractors and agents for the purpose of assisting DILHR in determining prevailing wage rates and hours of labor for a project are subject to inspection and copying by the public under the open records law. This bill requires DILHR to withhold from inspection and copying under the open records law all personally identifiable information submitted to DILHR by contractors, subcontractors and agents for the purpose of assisting DILHR in determining prevailing wage rates and hours of labor.

Employes and projects covered

Under current law, contractors, subcontractors and agents performing work on a state or local public works project must pay to employes working on the site of the project the prevailing wage rate plus overtime pay for all hours worked in excess of the prevailing hours of labor. Currently, employes engaged in the processing, manufacture or delivery of materials or products by or for commercial establishments that have a fixed place of business from which they regularly supply those materials or products are not covered under the prevailing wage and hours law, except that employes who deliver mineral aggregate, such as sand, gravel and stone, to the site of the project and deposit the mineral aggregate substantially in place are covered under the prevailing wage and hours law.

This bill further clarifies which employes are covered under the prevailing wage and hours law. Under the bill, in addition to the employes specifically covered under current law, employes are also covered for all time spent in transporting material or spoil from the site of a project and returning to the project and employes who are engaged in manufacturing or furnishing materials, articles, supplies or equipment on the site of a project or from a facility dedicated exclusively, or nearly so, to a project are covered under the prevailing wage and hours of labor law.

The bill also specifies that a volunteer working on a state or local building project or on a local highway project is not covered under the prevailing wage and hours of labor law.

Current law provides a threshold below which the prevailing wage and hours law does not apply to a state or local building project. Currently, the prevailing wage and hours law does not apply to a project involving a single trade if the estimated cost of completion of the project is below $11,000 or to a project involving multiple trades if the estimated cost of completion of the project is below $110,000. Those figures are adjusted by DILHR every 2 years in proportion to changes in the cost of construction. This bill eliminates the single-trade threshold and raises the multiple-trade threshold to $150,000 effective on the publication of the bill and to $200,000 effective on January 1, 1999, with DILHR to begin adjusting that amount every 2 years, but no sooner than January 1, 2001.

Under current law, state and local public works projects that receive $2,000 or more in federal funding are subject to a federal prevailing wage and hours law known as the Davis-Bacon act. This bill exempts from coverage under the state prevailing wage and hours law projects that are covered under the Davis-Bacon act.

Finally, with respect to coverage of employes and projects, contracts currently made by a state agency for the erection, construction, remodeling or repairing of a public building are subject to the prevailing wage and hours law. This bill specifies that contracts made by state agencies for the demolition of a public building are also covered by that law.

Administration and enforcement

Under current law, the prevailing wage rates and prevailing hours of labor determined by a local governmental unit or DILHR for a local public works project must be incorporated into and made a part of any contract for that project. Currently, the prevailing wage rates and prevailing hours of labor determined by DILHR for a state public works project must be specifically set forth in the proposal and contract for that project. This bill requires the prevailing wage rates and hours of labor for all state and local public works projects to be physically incorporated into and made a part of any proposal, contract and subcontract for that project.

Under current law, DILHR, on the request of any person, must inspect the payroll records of a contractor, subcontractor or agent performing work on a local building project to ensure compliance with the prevailing wage and hours law. If the contractor, subcontractor or agent who is subject to the inspection is found to be in compliance, the person requesting the inspection must pay for the cost of the inspection. Current law, however, does not require DILHR to make a similar inspection of the payroll records of a contractor, subcontractor or agent performing work on a state building project. This bill requires DILHR, on the request of any person, to inspect the payroll records of a contractor, subcontractor or agent performing work on a state building project to ensure compliance with the prevailing wage and hours law. Under the bill, if the contractor, subcontractor or agent who is subject to the inspection is found to be in compliance and if the person making the request is a covered employe, DILHR must charge that person the actual cost of the inspection. If the contractor, subcontractor or agent who is subject to the inspection is found to be in compliance and if the person making the request is not a covered employe, DILHR must charge that person $250 or the actual cost of the inspection, whichever is greater.

Under current law, before a local governmental unit may authorize final payment for a public works project, each contractor performing work on the project must file with the local governmental unit an affidavit stating that the contractor has complied with the prevailing wage and hour law and that the contractor has received evidence of compliance from each of the contractor's agents and subcontractors. Current law, however, does not require a contractor performing work on a state building project to file a similar affidavit before the state agency contracting for the work may authorize final payment. This bill requires agents and subcontractors who have performed work on a state or local public works project to file with the contractor an affidavit stating that the agent or subcontractor has complied with the prevailing wage and hours law before the contractor may authorize final payment to the agent or subcontractor. The bill also requires a contractor who has performed work on a state or local public works project to file with the local governmental unit or state agency contracting for the work an affidavit stating that the contractor has complied with the prevailing wage and hours law and has received affidavits of compliance from each of his or her agents and subcontractors. The local governmental unit or state agency may not authorize final payment until the contractor's affidavit has been filed in proper form and order. If a local governmental unit or state agency authorizes final payment before the contractor's affidavit has been filed in proper form and order or if DILHR determines that any employe covered by the prevailing wage and hours law has not or may not have been paid the prevailing wage rate or overtime pay for all hours worked in excess of the prevailing hours of labor, the local governmental unit or state agency is liable for all back wages owed to the employe up to the amount of the final payment.

Penalties

Current law provides for a variety of penalties that may be imposed for a violation of the prevailing wage and hours law. Currently, a contractor who does not pay the wage scale set by a local governmental unit for a local street project may be fined not more than $500 per offense. Currently, a contractor who does not pay the prevailing wage rate or overtime pay for all hours worked in excess of the prevailing hours of labor on a local building project is liable for the amount of back wages owed plus an equal amount as liquidated damages. Currently, a state officer or employe who executes a contract for a state building project without complying with the prevailing wage and hours law, and a contractor, subcontractor or agent who does not pay the prevailing wage rate or overtime pay for all hours worked in excess of the prevailing hours of labor on a state building project, may be fined not more than $200 or imprisoned for not more than 6 months, or both, with each day counting as a separate offense. Currently, a contractor, subcontractor or agent performing work on a state highway project who violates the prevailing wage and hours law may be fined not less than $50 nor more than $200 or imprisoned for not more than 18 months, or both, with each day counting as a separate offense. This bill eliminates the liability of a state employe or officer who executes a contract for a state building project without complying with the prevailing wage and hours law. The bill also standardizes the penalties for a contractor, subcontractor or agent performing work on a state or local public works project who violates the prevailing wage and hours law at a fine of not more than $200 or imprisonment for not more than 6 months, or both, with each day counting as a separate offense.

Finally, in addition to penalties for failure to pay the prevailing wage or to pay overtime pay for all hours worked in excess of the prevailing hours of labor, current law also prohibits an employer from inducing an employe employed on a local public works project to give up, waive or return any part of the compensation to which the employe is entitled under DILHR's prevailing wage determine (commonly known as a "kickback"). Current law, however, does not prohibit employers performing work on state public works from inducing employes on those projects to pay kickbacks. This bill extends the coverage of the kickback prohibition to employers performing work on state public works projects. The bill also specifically prohibits 2 other types of kickbacks as follows: 1) reducing the hourly basic rate of pay normally paid to an employe for work done on a nonpublic works project during a week in which the employe works both on a public works project and a nonpublic works project; and 2) inducing an employe to permit any part of the wages to which the employe is entitled for work done on a project that is subject to the prevailing wage law to be deducted from his or her pay and deposited with a labor organization for the purpose of subsidizing bids on other projects (commonly referred to as "targeting").

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB632, s. 1 Section 1. 66.293 (1) of the statutes is repealed and recreated to read:

AB632,7,2 66.293 (1) Definitions. In this section:

AB632,7,6 (a) "Area" means the county in which a proposed project that is subject to this section is located and those counties that are contiguous to that county or, if the department modifies a wage determination under sub. (3) (br), "area" means the city, village or town in which a proposed project that is subject to this section is located.

AB632,7,8 (b) "Department" means the department of industry, labor and human relations.

AB632,7,9 (c) "Hourly basic rate of pay" has the meaning given in s. 103.49 (1) (b).

AB632,8,4 (d) "Local governmental unit" means a political subdivision of this state, a special purpose district in this state, an instrumentality or corporation of such a political subdivision or special purpose district, a combination or subunit of any of the foregoing or an instrumentality of the state and any of the foregoing.

AB632,8,5 (e) "Prevailing hours of labor" has the meaning given in s. 103.49 (1) (c).

AB632,8,22 (f) 1. "Prevailing wage rate" for any trade or occupation engaged on any project of public works, except highway, street or bridge construction, in any area means the hourly basic rate of pay, plus the hourly contribution for health insurance benefits, vacation benefits, pension benefits and any other bona fide economic benefit, paid directly or indirectly, for a majority of the hours worked in the trade or occupation on projects, except highway, street or bridge construction, in the area that are not subject to this section, or if there is no rate at which a majority of the hours worked in the trade or occupation on projects, except highway, street or bridge construction, in the area that are not subject to this section is paid, then the prevailing wage rate for any trade or occupation engaged on any project of public works, except highway, street or bridge construction, in any area shall be the average hourly basic rate of pay, weighted by the number of hours worked, plus the average hourly contribution, weighted by the number of hours worked, for health insurance benefits, vacation benefits, pension benefits and any other bona fide economic benefit, paid directly or indirectly to all persons employed in that trade or occupation on projects, except highway, street or bridge construction, in that area that are not subject to this section.

AB632,9,10 2. "Prevailing wage rate" for any trade or occupation in any area engaged on any project of highway, street or bridge construction means the hourly basic rate of pay, plus the hourly contribution for health insurance benefits, vacation benefits, pension benefits and any other bona fide economic benefit, paid directly or indirectly, for a majority of the hours worked in the trade or occupation in the area, or if there is no rate at which a majority of the hours worked in the trade or occupation in the area is paid, then the prevailing wage rate for any trade or occupation engaged on any project of highway, street or bridge construction in any area shall be the average hourly basic rate of pay, weighted by the number of hours worked, plus the average hourly contribution, weighted by the number of hours worked, for health insurance benefits, vacation benefits, pension benefits and any other bona fide economic benefit, paid directly or indirectly to all persons employed in that trade or occupation in that area.

AB632,9,11 (g) "Secretary" means the secretary of industry, labor and human relations.

AB632,9,12 (h) "Truck driver" has the meaning given in s. 103.49 (1) (f).

AB632, s. 2 Section 2. 66.293 (2) of the statutes is repealed.

AB632, s. 3 Section 3. 66.293 (3) (title) of the statutes is created to read:

AB632,9,15 66.293 (3) (title) Prevailing wage rates and hours of labor.

AB632, s. 4 Section 4. 66.293 (3) (intro.) of the statutes is renumbered 66.293 (3) (am) and amended to read:

AB632,9,25 66.293 (3) (am) Every municipality local governmental unit, before making a contract by direct negotiation or soliciting bids on a contract, for any project of public works except, including highway, street or bridge construction, shall apply to the department of industry, labor and human relations to ascertain to determine the prevailing wage rate, and prevailing hours of labor and hourly basic pay rates in all trades and occupations for each trade or occupation required in the work contemplated. The department shall determine the prevailing wage rate, and prevailing hours of labor and hourly basic pay rates for each trade or occupation under s. 103.49, make its determination within 30 days after receiving the request and file the same with the municipality local governmental unit applying therefor.

AB632,10,15 (bm) A Any person may request for the a review of any portion of a wage determination may be made within 30 days from after the determination date if the person submits evidence is submitted with the request showing that the prevailing wage rate or prevailing hours of labor for any given trade or occupation included in the determination does not represent the prevailing wage rate or prevailing hours of labor for that trade or occupation in the area where the proposed project is located. Such evidence shall include wage rate and hours of labor information for the contested trade or occupation on at least one similar project located in the municipality area where the proposed project is located and on which some work has been performed during the current or any of within the previous 12 months. The department shall affirm or modify the original determination within 15 days from after the date on which the department receives the request for review. Reference to such