Prevailing Wage and Davis-Bacon Compliance in Minnesota

Minnesota's Public Works Regulations

Minnesota has state and federal regulations governing prevailing wages for public works projects.

• State Law: Minnesota's prevailing wage law applies to public works projects that receive state funding. The Minnesota Prevailing Wage Act (Minn. Stat. § 177.41-177.44) mandates that contractors and subcontractors working on these state-funded projects must pay workers the prevailing wage rates set by the Minnesota Department of Labor and Industry (DLI). These rates are determined for specific job classifications based on local wage data and collective bargaining agreements.
• Federal Law: For public works projects that are federally funded or federally assisted, contractors in Minnesota must comply with the federal Davis-Bacon Act, which requires the payment of prevailing wages established by the U.S. Department of Labor.

Definition of "Public Works" in Minnesota:

In Minnesota, "public works" refers to construction, reconstruction, or improvement projects financed wholly or partially by state or local government funds. These projects include:

• Roads, highways, and bridges
• Public buildings and infrastructure
• Water and sewer systems
• Public schools and other state-funded facilities

Key Points:

• The Minnesota Prevailing Wage Act applies to state-funded projects.
• For federally funded projects, adherence to the Davis-Bacon Act is required.

Minnesota Prevailing Wage Determinations: State and Federal Requirements

Minnesota Prevailing Wage Act:

• For state-funded projects, the Minnesota Department of Labor and Industry (DLI) determines prevailing wage rates for various job classifications across specific state regions.
• These rates are based on collective bargaining agreements and wage data collected from local contractors.
• Contractors involved in state-funded projects must pay these prevailing wages.

Federal Davis-Bacon Act (DBA):

• The Davis-Bacon Act mandates that contractors and subcontractors pay workers at least the prevailing wages established by the U.S. Department of Labor.
• These rates are based on local wage surveys and include a basic hourly wage and fringe benefits.

Components of Wage Determinations:

Both state and federal wage determinations in Minnesota include:

• Basic Hourly Rate: The minimum amount that workers must receive for their job classification, excluding fringe benefits.
• Fringe Benefits: Non-cash benefits, such as health insurance, retirement plans, and vacation pay.
• Total Hourly Rate: The sum of the basic hourly rate and fringe benefits. For example, if the basic hourly wage is $30 and fringe benefits total $10, the hourly rate would be $40. The contractor must pay the full $40 if no fringe benefits are provided.

Compliance for Contractors and Subcontractors

To ensure compliance with prevailing wage laws in Minnesota, contractors and subcontractors must follow these guidelines:

1. Determine Applicable Wage Rates:

• Use the U.S. Department of Labor's Wage Determinations Online (WDOL) portal via SAM.gov for federal projects.
• For state projects, the Minnesota DLI provides prevailing wage rates.

2. Submit Certified Payroll Reports:

• For federal projects, reports are typically submitted weekly using Form WH-347 from the U.S. Department of Labor.
• Payroll reports must be submitted to the public awarding authority for state projects.

3. Handle Fringe Benefits:

• Ensure that workers are paid at least the applicable prevailing wage for their job classification, including the basic hourly rate and fringe benefits.

4. Post Wage Rates On-Site:

• Contractors must prominently post the prevailing wage determinations at the job site where workers can easily see them.

5. Maintain Accurate Records:

• Contractors must keep accurate payroll records, including hours worked, wages paid, and any fringe benefits provided. These records should be available for inspection by the Minnesota DLI or the U.S. Department of Labor.

Penalties for Non-Compliance

Failure to comply with prevailing wage laws in Minnesota can result in:

• Fines
• Back pay for underpaid workers.
• Disqualification from bidding on future public works projects

Unique Aspects of Minnesota's Prevailing Wage System

• No Local Workforce Preference: Unlike many states, Minnesota prohibits local government units from implementing preferential hiring policies for local residents on public works projects.
• Innovative Infrastructure Financing: Minnesota employs a unique municipal infrastructure bonding program that allows counties and cities to issue specialized infrastructure improvement bonds with more flexible repayment terms.
• Comprehensive Green Infrastructure Standards: Minnesota mandates stringent environmental sustainability requirements for public works projects, including mandatory stormwater management, energy efficiency metrics, and sustainable materials usage that exceed federal guidelines.

Relevant Resources

• U.S. Department of Labor: Wage Determinations Online (WDOL): SAM.gov - Wage Determinations
• Minnesota Department of Labor and Industry (DLI) - Prevailing Wage Information: Minnesota Prevailing Wage Information
• Certified Payroll Form WH-347: U.S. Department of Labor Certified Payroll Form