Prevailing Wage Weekly Requirements in Hawaii

Weekly filing of certified payrolls required on public works construction projects
Hawaii's prevailing wage law, Wages and Hours of Employees on Public Works, Chapter 104, Hawaii Revised Statutes (HRS), sometimes referred to as "Little Davis-Bacon" is similar to the federal Davis-Bacon law but different in some regards as well.    Both Hawaii Chapter 104, HRS and the Davis Bacon law  require certified payrolls to be submitted to the contracting agency on a weekly basis.  See Section 104-3(a), HRS, 29 CFR 5.5(a)(3)(ii)(A).  Certified payrolls must report the actual amount paid to the laborers and mechanics for the hours worked.

 Weekly payment required to laborers and mechanics on public works construction projects
All labors and mechanics working on the construction subject to Chapter 104, HRS, must be paid weekly. The law goes on to require the payment be within five working days of the end of the work week.  See Section 104-2(d) , HRS, 40 USC 3142(c)(1).     The pay period of one work week is determined by the employer and can be any set seven consecutive days.  Working days are considered Monday through Friday, so when counting five days from the end of the pay period, Saturdays, Sundays and State holidays are not counted. See Hawaii Administrative Rule 12-22-13.

Example how certified payrolls should be filed to be timely
An employer sets the work week from Sunday to Saturday, payment is due to laborers and mechanics the following Friday.  Certified payrolls should be filed on the same Friday as the payments are due to the employees. In essence it is a public pay statement.

If an employer has a work week from Monday to Sunday, payment is still due on Friday, five working days after the end of the weekly pay period.

If an employer has a work week from Tuesday to Monday, payment is due the following Monday, five working days after the end of the work week.  Certified payrolls should be submitted by the following Monday as well.

General contractor accommodations
For enforcement purposes general contractors may submit certified payrolls to the contracting agency seven days after the weekly paydate to allow the general to collect and review certified payrolls of the subcontractors, this type of weekly schedule will look like this:

Week Ending:	Pay Date	Remarks
April 2		Work begins on the project during this week.
April 9	Friday, April 8	(1)   Pay date for work performed in the previous week ending April 2. (2)  Subs submit certified payrolls to General for work performed week ending April 2 (3)  Work is also performed during this week.
April 16	Friday, April 15	(1)   Pay date for work performed in the previous week ending April 9. (2a)  Due date for all certified payrolls to be submitted to contracting  agency  from the prime with all subcontractors for work performed during the week ending April 2. (2b)  Subs submit certified payrolls to General for work performed week ending April 9 (3)   Work is also performed during this week.
April 23	Friday, April 22	(1)   Pay date for work performed in the previous week ending April 16. (2) a  Due date for all certified payrolls to be submitted to contracting agency from the prime with all subcontractors for work performed during the week ending April 9. (2) b  Subs submit certified payrolls to General for work performed week ending April 16

Different requirements then general rule.
Note that the general rule for payment to employees is at least twice a month.  See Section 388-2. HRS.

For more information
See Wage Standards Division Prevailing Wages on Public Works page.
See  Fact sheet 66 provides general information for the Davis-Bacon law.

 

Recent Updates on Tip Pooling and Paid Leave

This week there were two important events that happened for the Wage Standards Division (WSD).  1. A 9th Circuit decision sided with the United States Dept. of Labor (USDOL) in their tip pooling appeal (see Oregon Restaurant v Perez; Cesarz v Wynn Las Vegas, February 23, 2016), and 2. The USDOL opened a comment period on a proposed rule for federal contractors that are now required to provide 7 days of sick leave to employees.

 9th Circuit restores tips to employees
The 9th Circuit issued their opinion in the appeal of two cases with similar issues, the appeal by the USDOL in the Oregon Restaurant v Perez, Secretary of Labor, and the Cesarz v Wynn Las Vegas.  The appellee in the Oregon case was the USDOL and the appellees in the Wynn Resort case were the employee casino dealers represented by Joseph Cesarz  for the class of employees similarly situated.

 The Oregon Restaurant and Lodging Association had sued the USDOL objecting to a rule (29 CFR5 31.52)  stating that only employees who are regularly tipped could participate in a tip pool.  The U.S. District Court of Oregon had sided with the Oregon Restaurant and Lodging Association, stating that tips belonged to the employer.  The 9th Circuit disagreed with the District Court of Oregon, and restored the practice of requiring tip pools to be legal only if shared with regularly tipped employees by declaring the USDOL's rule valid.

The casino dealers and servers at the Wynn Las Vegas had sued their employer in U.S. District Court of Nevada to keep their tips and not share their tips with other employees who were not regularly tipped, for example cooks and supervisors.  The District Court of Nevada sided with the employer allowing the tips to be parceled out as the employer saw fit.  The 9th Circuit disagreed with the District Court of Nevada and reversed the lower decision restoring the tips to the employee casino dealers and servers that earned the gratuities.


Notice of proposed rule for paid leave.
President Obama may be in his lame duck period, but he is continuing to advocate for employees in areas where he can still exercise control.  Through Executive Order 13706, issued September 15, 2015, President Obama has required companies that contract or subcontract with the federal government to provide at least 7 days of paid sick leave for the employee's illness, or for the care of sick family member, or for addressing certain concerns caused by domestic violence. An overview of the proposed rule can be found on the USDOL website.

 The proposed rule comment period opened yesterday, February 25, 2016, and will close March 28, 2016.  The proposed rule and the procedure to comment can be found on the USDOL website.

Why should Hawaii care about these two events?
Regarding the 9th Circuit case on tip pooling, Hawaii has to care because the federal rules are applied when there is no specific Hawaii law provided.  There are no specific statutes or rules that direct who can participate in a tip pooling arrangement, only rules about how a tip pooling arrangement can apply to a tip credit situation, (See Hawaii Administrative Rule 12-20-11).  For a period of time the WSD has had to modify responses to claims by employees of shared tip pools and based on this 9th Circuit case we will be following the federal standard that only regularly tipped employees may participate in a tipped pool arrangement.

The proposed rule will implement Executive Order 13706, and all federal contractors, including those working on federal projects in Hawaii will have to comply.  Hawaii has required Temporary Disability Insurance, Chapter 392, Hawaii Revised Statutes.  The TDI law is commonly referred to as Hawaii's sick leave law because it provides partial wage replacement for employees who become ill or are injured outside of the job and not covered under workers' compensation.  Federal contractors would be wise to comment on the proposed rule and how the TDI contractors provide their employees in Hawaii will be accommodated under the Executive Order.  As the order requires 7 days of sick leave, and the TDI law has a waiting period with only a partial wage replacement, will this suffice? 

What's next?
The 9th Circuit decision in Oregon Restaurant was decided by a 3 member panel in a 2 to 1 decision with the dissenting judge writing that the majority decision was against precedent and to overturn circuit precedent a full en banc bench should hear the case (en banc means eleven 9th Circuit judges, not just three).  This suggests that maybe this case is not quite over.

The federal rule's treatment of TDI for federal contractors with Hawaii employees may be an insight into how proponents of paid leave issues that keep reappearing in legislative measures will be resolved.  At this writing SB 2961 SD1 Relating to Family Leave, is still alive in this 2016 session. While this measure does not invoke TDI for paid leave of an employee's illness as some of the past measures have, it proposes a new system to provide paid leave for the care of a sick family member as the Executive Order requires.  Federal contractors would be wise to consider how their TDI will stack up against the Executive Order. 

Will keep you posted if we hear anything.

Minimum Wage Increases January 1, 2016 to $8.50

Minimum wage increases   
Back in 2014, the legislature passed   Act 82 Session Laws of Hawaii 2014,  that raised Hawaii's minimum wage incrementally to $10.10 per hour by January 1, 2018.  As of January 1, 2016, the minimum wage is raised to $8.50 per hour.  January 1, 2017, the minimum wage goes up to $9.25 per hour.


Tip credit increases
As part of the minimum wage increase, the tip credit was also increased.  As of January 1, 2016, the tip credit is 75 cents.  The tip credit remains at 75 cents even when minimum wage increases to $9.25 and $10.10.

Employers with regularly tipped employees who make at least $20 per month in tips ( See Hawaii Administrative Rule 12-20-11), may be eligible to take the tip credit of 75 cents if the employee's tips plus the wage paid equal $15.50.  This means that with minimum wage of $8.50, an employer can pay wages of $7.75 if the tips of the employee are equal to $7.75 per hour. Additional records are required to be kept to take this credit, see Hawaii Administrative Rule 12-20-12).

If employees earn less than $7.75 per hour in tips, the employer may be eligible to take a tip credit less than 75 cents.  A tip credit guideline published on the Wage Standards Division website provides the details and calculations of these scenarios.  See Exhibit 3, ( page 4) for 2016, Exhibit 4 (page 5) for 2017 and Exhibit 5 (page 6) starting January 1, 2018.

Other Resources
Minimum wage poster
Wage and Hour Law, Chapter 387, Hawaii Revised Statutes
Wage Standards Division Website:  labor.hawaii.gov/wsd

Painting and Road Striping Classifications on Hawaii State and County Projects

    

Painter - Thermoplastic striping

    There was a workshop last week on the Wages and Hours of Employees on Public Works Law, Chapter 104, Hawaii Revised Statutes (HRS).   A question that came up during the course of the session was very similar to questions we have received in the recent months.  It may be related to all the resurfacing of the roadwork going on  in the City and County of Honolulu.  The query asks what classification are the workers who are putting the lines on the road?

     Generally, if someone is painting, they are painters.  And this situation follows the general rule.  An excerpt from a recent decision letter we issued in August 2015 is below.

           "This is in response to your . . .letter . . . regarding the classification for placing pavement markings on highways, parking lots, play courts, airport runways and taxiways, on projects subject to Chapter 104, HRS.

           The proper classification for striping and/or pavement markings on roads, highways, airport runways and taxiways, is Painter. This also includes sweeping the pavement, hand casting glass beads onto pavement markings, carrying paint cans, and other related work to the striping and/or pavement markings.

          The proper classification for installing permanent raised pavement markings (reflectors) on any surface is Laborer II.

           The proper classification for thermoplastic striping and/or pavement markings on parking lots, play courts, and driveways is Painter. Pavement striping using a method other than thermoplastic striping may be performed by a Laborer II."

          Note that thermoplastic striping is always done by Painters no matter where the painting or road striping is.  Some painting i.e. by brush or spray painting of areas like parking lots or play courts or driveways may be done by Laborer II.

Wage Rate Schedule and Act 165, Regular Session of 2015

        New wage rate schedule #486 is available and effective Monday, September 21, 2016, as required under Hawaii's prevailing wage law, Wages and Hours of Employees on Public Works, Chapter 104, Hawaii Revised Statutes.  Act 165, Regular Session of 2015, amended the law to provide for overtime rates of "not less than" one and one-half times the regular rate.  It further required the overtime compensation to be at the rate set by the prevailing collective bargaining agreement.  Upon review of the prevailing collective bargaining agreements the Director has adjusted the overtime in certain classifications.  Classifications with an overtime rate adjustment are listed in the Wage Rate Schedule with a reference to footnote 13.
    
       Act 165 does not expand the availability of overtime, it simply increased the rates for designated overtime by law.  Overtime is still due after 8 hours in a day, and all day on Saturday, Sunday, and State holidays.  Act 65 has now authorized an overtime rate at 2 times the basic hourly rate plus fringe benefits for work in 15 classifications on certain weekend or State holiday days.

      The wage rate schedule also provides 3 times the basic hourly rate plus fringe benefits for work on Labor Day in 12 classifications.

Kuhio Day is an OT Day on State and County projects

Prince Kuhio Day
As a reminder to contractors working on State or County construction projects, Prince Kuhio Day is State Holiday and therefore all hours worked on Thursday March 26, 2015, need to be paid at the overtime rate. 

Calculating the correct OT rate
To calculate the overtime rate under Hawaii's prevailing wage law, Hawaii Revised Statutes Chapter 104, Hours and Wages of Employees on Public Works, take the basic hourly rate and multiply by 1.5*  then add the fringe benefit hourly rate amount to get the overtime prevailing wage rate.  For example, looking at the current applicable wage rate schedule, #485 for the prevailing wage rate of Carpenter the schedule shows $62.96.  Broken down it is a $42.25 basic hourly rate and $20.71 fringe benefit hourly rate.

Carpenter basic hourly rate $42.25 x 1.5 = 63.375 now add the hourly fringe benefit rate of $20.71 and get $84.08 for the overtime rate for carpenters on March 26, 2015.

How can the overtime prevailing rate be paid?
For contractors with a collective bargaining agreement in place, the certified payroll will show the carpenter being paid at least $63.38 per hour and show at least $20.71 per hour paid to the union trust fund for fringe benefits.  Other contractors who pay benefits on an hourly basis, the amount of basic hourly rate and the amount of fringe benefits paid to a third party trustee will be determined by the contractors own agreement with employees, the two amounts must add up to $84.08 per hour for all work done on March 26, 2015.

For contractors who are not parties to a collective bargaining agreement  or do not pay their fringe benefits on an hourly basis, the certified payroll must show a basic hourly rate of $84.08 for overtime work, because no credit for fringe benefits can be taken in overtime when paying fringe benefits on a monthly basis.  

Fringe benefit credit applies only for straight time.
For contractors that pay their workers benefits on a monthly basis, there is a formula that can be used to calculate an hourly credit, but the credit only applies to straight time hours.  The formula can be found in Hawaii Administrative Rule 12-22-4.  To calculate the hourly fringe benefit credit for straight time hours, take the amount paid by the employer and divide it by 173 and that quotient is the hourly credit amount that can be taken for straight time hours.

*Act 165, Regular Session 2015 modified the law to provide higher overtime rates than 1.5 where collective bargaining rates prevail in classifications.  Wage Rate Schedule 486 is the first schedule to direct overtime on Sunday at 2 x the basic hourly rate for some classifications, and 3 x the basic hourly rate on Labor Day.  See Note 13 on WRS 486. 

2015 Legislative Update

Administrative Measures
This week marks an important threshold in the legislative process of moving a bill out of one body over to the other, commonly referred to as crossover.  Wage Standards is still watching several bills that made this progress.  Both administrative measures, HB 952, HD2, Relating to Wages and Hours on Public Works Law, and its companion SB 1121, SD 1 (limited the time to file a complaint with the DLIR under the prevailing wage law to one year from the time the wages were due have been modified to allow complaints within 3 years in the current version of SB1121, and complainant confidentiality still remains in both) and SB 1122, Relating to Wage and Hour Law, which adjusts the guaranteed salary exemption to track the increases in minimum wage.

Paid Sick and Family Leave Bills
Two leave bills made the crossover.  Both perspectives initially analyzed previously in this blog under Paid Leave, are still alive.  In one, the employer pays and provides up to 40 hours of sick leave a year, (SB 129, SD2 Relating to Labor), in the other, the employee contributes one-half of one percent (.5%) of their wages into a newly created fund administered by the DLIR under the family leave law.  (HB 496, HD1 Relating to Employment). There seems to be strong support for the idea.  Twenty-one different representatives (Aquino, Brower, Cachola, Choy, Creagan, Hashem, Ichiyama, Ito,  Keohokalole, Kobayashi, Luke, Lopresti, McKelvey, Mizuno, Morikawa, Onishi, Say, Saiki, Takayama, and Woodson) and five senators  (Baker, Chun-Oakland, Espero, Galuteria, and Ihara) introduced some form of an employee-funded leave system, while  six senators (Chun-Oakland, Espero, Gabbard,  Ihara, Keith-Agarin, and Shimabukura) and one representative (Takumi) introduced some form of an employer paid leave system. Notice that three of the senators (Chun-Oakland, Espero, and Ihara) introduced both employer and employee funded measures. Legislators have made it clear that the idea of paid leave is important, but deciding how to implement it promises to be an interesting conversation.

Other Matters of Interest
Under the Wages and Hours of Employees on Public Works Law, SB216 SD2, and it's companion HB391, HD1, allow the payment of overtime on public works to follow the prevailing union negotiated private contract provisions, which would authorize overtime rates to exceed the current time and one-half, on Saturdays, Sundays, State holidays and regular work days in excess of 8 hours.  A similar provision stalled in Conference Committee last legislative session. 

The bullying bill, HB 819, HD2, Relating to Bullying , being followed on the Division's Facebook Page Hawaii Teens at Work ,applies to all agencies that provide services to youth.  This includes the Wage Standards Division in the administration and enforcement of work permits for minors, under the Child Labor Law, Chapter 390, Hawaii Revised Statutes.

In the unemployment area, SB1219 SD2, Relating to Employment Security, is addressing the independent contractor determination under the Employment Security Law, Chapter 383, Hawaii Revised Statutes.  A court case on Maui where the Department was overturned in its determination of the employer-employee relationship and ruled the individual an independent contractor appears to be the motivation for this measure.  (See Maui News February 6, 2015, Chamber View).  The independent contractor classification has long been an avenue of abuse of workers in Hawaii as a method of relieving employers from their legal obligations to provide, workers compensation, health benefits, and unemployment benefits that protect employees. This is a nationwide issue and the labor departments across America struggle with finding the balance without leaving employees at risk.

Budget
HB 500 HD 1, Relating to the State Budget, has no surprises for the Division good or bad.  Our staffing and expenses are the same as last biennium, with all adjustments attributed to collective bargaining items.  (See page 419 of the Feb. 23 budget worksheets)  No restoration of the 7 positions lost since 2008, but no more reductions either.  We are in active recruitment for 3 Labor Law Enforcement Specialist positions. For the details on the positions see a former blog Open Recruitment for Labor Law Enforcement Specialists.