YouthBuild projects and Davis-Bacon wages

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION               YouthBuild
               ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                      OWI-DYS
             Washington, D.C. 20210                     DATE
                                                        December 20, 2016


ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 11-16

TO:             STATE WORKFORCE AGENCIES
                STATE WORKFORCE LIAISONS
                STATE WORKFORCE ADMINISTRATORS
                STATE AND LOCAL WORKFORCE DEVELOPMENT BOARDS
                ALL YOUTHBUILD GRANTEES

FROM:           PORTIA WU /s/
                Assistant Secretary

SUBJECT:        YouthBuild Compliance with Davis-Bacon and Related Acts (DBRA)

1. Purpose. This Training and Employment Guidance Letter (TEGL) clarifies compliance with
   Davis-Bacon and Related Acts requirements for YouthBuild programs.

2. References.
    Workforce Innovation and Opportunity Act (Pub. L. 113-128 July 2014)
      https://www.gpo.gov/fdsys/pkg/PLAW-113publ128/pdf/PLAW-113publ128.pdf
    Workforce Innovation and Opportunity Act Final Rule, 20 CFR Part 688
      (https://www.gpo.gov/fdsys/pkg/FR-2016-08-19/pdf/2016-15975.pdf)
    Davis-Bacon and Related Acts Provisions and Procedures, 29 CFR Part 5
      http://www.ecfr.gov/cgi-bin/text-idx?rgn=div5&node=29:1.1.1.1.6
    TEGL 06-15: Qualifying Work Sites and Construction Projects for YouthBuild Grantees
      and Their Role in Training https://wdr.doleta.gov/directives/corr_doc.cfm?docn=6610
    U.S. Department of Labor’s Wage and Hour Division
      https://www.dol.gov/whd/govcontracts/dbra.htm
    U.S. Department of Housing and Urban Development (HUD) Davis-Bacon Labor
      Standards http://portal.hud.gov/hudportal/documents/huddoc?id=4812-LRguide.pdf
    HUD Davis-Bacon and Related Acts HOME Investment Partnerships (HOME) and
      Community Development Block Grant (CDBG) Policies Manual
      https://www.hudexchange.info/resources/documents/Davis-
      BaconandHOME_TrainingManual.pdf
    HUD Labor Standards and Enforcement Regional Staff Contacts
      http://portal.hud.gov/hudportal/HUD?src=/program_offices/labor_standards_enforcement
      /laborrelstf

3. Background.
   Department of Labor-funded YouthBuild programs must provide hands-on construction
   experience for participants receiving industry-recognized construction training. These
 RESCISSIONS                                            EXPIRATION DATE
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   programs must provide qualifying work sites, per TEGL 06-15, at which participants learn
   construction skills through the renovation, rehabilitation or new construction of low-income
   housing projects. Many grantees partner with local Public Housing Authorities to access
   such work sites, as well as with other developers or builders (partially or wholly Federally-
   funded) to construct or rehabilitate public housing. In such cases, the Davis-Bacon labor
   standards may apply.

   Davis-Bacon Act requirements apply to federal contracts for construction of public buildings
   and public works. In addition, many federal laws authorize federal assistance for
   construction through grants, loans, loan guarantees, and insurance and require the application
   of Davis-Bacon labor standards, including prevailing wage requirements, to such
   construction. These laws are referred to as Davis-Bacon “related Acts” or DBRA. Several
   major HUD-administered laws that include Davis-Bacon requirements also set thresholds on
   coverage. In such cases, the DBRA requirements do not apply unless a specific coverage
   threshold is met. Two major examples are discussed below.

   When DBRA applies, contractors and subcontractors must pay their covered laborers and
   mechanics employed under the contract no less than the locally prevailing wage rate
   (including fringe benefits) for corresponding work on similar projects in the area. DBRA
   directs the Department of Labor (hereafter, the Department) to determine such locally
   prevailing wage rates.

4. Determining DBRA Prevailing Wage Rate Applicability.
   YouthBuild participants are not exempt from prevailing wage requirements determinations
   for any project to which DBRA labor standards apply. Therefore, YouthBuild participants
   must be paid prevailing wages on DBRA-covered construction. This is generally the
   equivalent to journeyworker’s level wages. This requirement necessitates planning by
   YouthBuild programs that see federally-assisted construction projects as valuable training
   sites for their youth, since YouthBuild programs do not generally budget for the prevailing
   wage rate. Many grantees struggle with finding suitable construction work sites that meet the
   minimum requirements to qualify for training purposes, and some of those that would qualify
   are, in whole or in part, federally-funded projects subject to DBRA.

   As DBRA prevailing wage rate rules apply under a number of different HUD-administered
   statutes, determining when the Davis-Bacon requirements apply is important. For example,
   under some of these statutes, there are coverage thresholds below which prevailing wage
   rates do not apply. Two examples are in the “8 unit rule” under Community Development
   Block Grants (CDBG) and the “12 unit rule” under the HOME Investment Partnership
   Program (HOME):

      The Community Development Block Grant (CDBG) program provides communities
       with resources in order to address widely varying and locally identified community
       development needs. DBRA labor standards apply to construction work financed in whole
       or in part by CDBG funds. “Financed” includes both paying for construction work
       directly and also, for example, using CDBG assistance to reduce the interest rate on a
       construction loan. The CDBG “8-unit rule” is a threshold for DBRA labor standards


    coverage, meaning that such standards only apply to construction on residential
    properties that contain 8 or more housing units. Typically, single family homeowner
    properties do not fall under DBRA prevailing wage requirements when funded by
    CDBG. However, “property” is not limited to a specific building; CDBG defines
    “property” as one or more buildings on an undivided lot or on contiguous lots or parcels
    that are commonly-owned and operated as one rental, cooperative, or condominium
    project. Examples of 8 or more unit properties which meet the threshold and trigger
    DBRA prevailing wage requirements may include: 4 townhouse buildings side-by-side
    which consist of 2 units each; 3 apartment buildings each consisting of 3 units and
    located on one tract of land; or 8 single-family (not homeowner) houses located on
    contiguous lots and operated as a single rental property. Properties below the threshold
    (i.e., with fewer than 8 total units) would not trigger DBRA prevailing wage requirements
    as a result of CDBG financing.

   The HOME Investment Partnership Program (HOME) provides formula grants to
    states and localities to fund a wide range of activities in local communities, including
    building, buying, and/or rehabilitating affordable to low-income housing. DBRA labor
    standards apply to contracts for construction covering 12 or more HOME-assisted units.
    Unlike CDBG, the standard for coverage is “assisted,” not “financed” – which provides
    for much broader application. This means that DBRA standards may be applicable
    without regard to whether the HOME funds are used for construction or non-construction
    activities, such as real property acquisition, engineering or architectural fees, or down
    payment assistance. HOME projects can contain units that are not assisted by HOME.
    The DBRA coverage threshold (12 or more units) applies only to the number of units
    assisted by HOME. However, once the threshold is met and DBRA requirements are
    triggered, the labor standards apply to construction of the entire project, including the
    portions of the project that are not assisted with HOME funds. Thus, DBRA prevailing
    wage requirements do not apply to HOME projects where there are only 11 or fewer
    HOME-assisted units.

These are not the only DBRAs that include coverage thresholds but they present examples
where DBRA prevailing wage requirements may not apply due to coverage thresholds set
forth in the statutory language in specific DBRAs. It is not possible to describe here every
such threshold. The above examples are meant to indicate how important it is to determine
where DBRA prevailing wage requirements apply.

If there are any questions as to the applicability of DBRA, YouthBuild grantees are directed
to work with their HUD Labor Standards and Enforcement Regional/Field staff for assistance
in determining whether DBRA applies to specific projects and to ensure YouthBuild
programs are adhering to the federal wage requirements under DBRA where applicable. The
HUD labor relations staff are regional experts who can help YouthBuild programs determine
where DBRA prevailing wage rates apply, specify the applicable Davis-Bacon wage
determination(s), and when YouthBuild participants may be allowed to work on federally-
assisted construction projects without a requirement of prevailing wage rates. Contact
information for HUD Labor Standards and Enforcement Regional staff can be located at


   http://portal.hud.gov/hudportal/HUD?src=/program_offices/labor_standards_enforcement/lab
   orrelstf .

5. DBRA, Apprentices, and Certified Training Programs.
   Per DBRA, apprentices and trainees may be paid less than the applicable DBRA prevailing
   wage rates only if they meet specific conditions (see 29 CFR 5.5(a)(4)). The conditions can
   be met for apprentices individually registered in a bona fide apprenticeship program
   registered either with the National Office of Apprenticeship or a State Apprenticeship
   Agency recognized by the Office of Apprenticeship, or trainees individually registered in
   specific training programs that are certified by the Department’s Employment and Training
   Administration (ETA). Being funded by a Department program (i.e., YouthBuild) is not
   equivalent to having a registered or certified training program as described above.
   Previously, ETA certified the YouthBuild-Trainee Apprenticeship Preparation (YB-TAP)
   standards as such a training program. During this time, YouthBuild programs that were
   registered under the YB-TAP standards were not required to pay prevailing wage rates on
   DBRA applicable construction sites but instead based pay on the rate related to the trainee’s
   level of progress, as specified by the program documents. In 2012, the Employment and
   Training Administration de-certified YB-TAP as a training program and stopped offering
   these standards. Thus, YouthBuild participants may not be paid less than the prevailing wage
   rates listed in the applicable Davis-Bacon wage determination for the classification(s) of
   work they perform when they are engaged in DBRA-covered construction.

   Additional information about the Davis-Bacon and Related Acts is available at
   https://www.dol.gov/whd/govcontracts/dbra.htm. For DBRA-specific questions, go to
   https://www.dol.gov/whd/contact_us.htm or call the Department’s Wage and Hour
   Division’s toll-free help line Monday-Friday, 8 a.m. to 5 p.m. Eastern time at
       1-866-4USWAGE (1-866-487-9243)
       TTY: 1-877-889-5627

6. Inquiries. Questions on this TEGL may be addressed to the appropriate ETA regional
   office.