Overtime Pay on Government Contracts

CONTRACT WORK HOURS AND SAFETY STANDARDS ACT (CWHSSA)/OVERTIME PAY ON GOVERNMENT CONTRACTS

Application of CWHSSA

• CWHSSA applies to laborers and mechanics, including guards and watchpersons, for the time spent on covered contract work on federal or federally assisted contracts. CWHSSA applies to federal DBA and SCA contracts in excess of $150,000 that are subject to Federal Acquisition Regulation (FAR) procurement. CWHSSA also applies to SCA and DBA contracts that are not subject to FAR procurement and contracts assisted under a Related Act when such contracts are in excess of $100,000.
  • Total up all time each worker spent working on covered contracts – off-site as well as on-site on DBRA projects
  • Exclude all commercial, non-governmental work
• CWHSSA requires the payment of at least one and one-half times the basic rate of pay for all hours worked over 40 in a workweek on covered contracts.
• CWHSSA does not have a “site of the work” limitation on coverage. All hours worked on covered contracts (even at a tool yard or job headquarters away from the site of the work on DBRA contracts) are combined for determining CWHSSA compliance. (For example: if a worker starts the day performing work related to a DBRA contract at the fabrication shop and then travels to the DBRA work site, the time at the fabrication shop and the travel time between the fabrication shop and the work site as well as the hours worked on the Davis-Bacon site of the work are all subject to CWHSSA.)
• Both CWHSSA and Fair Labor Standards Act requirements apply only to hours worked. Non-work hours such as paid holidays and paid leave do not have to be counted in computing overtime pay. Rules concerning “Hours Worked” are at 29 CFR 785.
• CWHSSA and FLSA do not require premium pay or overtime compensation for work performed on holidays, weekends, or days of rest. 29 CFR 778.102.

Basic Rate of Pay

• The basic rate of pay under CWHSSA is the straight time hourly rate – generally the amount listed in the “RATE” column on the applicable wage determination, apart from the fringe benefit amount (if any) listed for a classification. The basic rate cannot be less than the basic hourly rate required in an applicable wage determination. See 29 CFR 5.24.
• Under DBRA, amounts paid to fulfill the fringe benefit portion of the prevailing wages listed in the wage determination – including both contractor contributions to bona fide benefit plans and cash payments made to comply with the fringe benefit portion of the prevailing wage requirement – are excluded in computing overtime obligations under CWHSSA. Similarly, the contractor may exclude contributions to bona fide fringe benefit plans and/or cash payments made to meet fringe benefit requirements in an applicable SCA wage determination. 29 CFR 4.177(c) and 778.7.
• If in a single workweek a worker works in more than one classification for which different non-overtime rates of pay have been established, the overtime pay may be computed based on the weighted average rate (or “regular rate”) – the total straight time pay for work (at all such rates) during the week, divided by the total number of hours worked in all classifications worked in the workweek. (A worker who performs work in two or more classifications for which different straight time hourly rates are established may agree with their employer, in advance of performing the work, to be paid during overtime hours at a rate not less than one and one-half times the hourly non-overtime rate established for the type of work they are performing during such overtime hours. This is known as the “rate in effect” or the “established rate.”) 29 CFR 778.6, 778.115, and 778.415 – 778.419.

EXAMPLES OF CWHSSA OVERTIME PAY COMPUTATIONS ON DBRA CONTRACTS

• The following examples reflect the correct computations under DBRA and CWHSSA for an individual who worked 44 hours on a covered contract as an electrician, where the wage determination rate for an electrician is $35.00 (basic hourly rate) plus $15.00 in fringe benefits (total prevailing wage rate is $35.00 + $15.00 = $50.00).
  • If the contractor paid $35.00 in cash wages and paid $15.00 for fringe benefits, the electrician would receive:

    44 hours x $35.00 = $1,540.00 in cash wages
    44 hours x $15.00 = $660.00 in fringe benefits
    4 hours x .5 x $35.00 = $70.00 in CWHSSA OT earnings
    $2,270.00

  • If the contractor paid $30.00 in cash wages and $20.00 for fringe benefits:

    44 hours x $30.00 = $1,320.00 in cash wages
    44 hours x $20.00 = $880.00 in fringe benefits
    4 hours x .5 x $35.00 = $70.00 in CWHSSA OT earnings
    $2,270.00

  • If the contractor paid $35.00 in cash wages, $5.00 cash in lieu of fringe benefits, and $10.00 in fringe benefit contributions per hour:

    44 hours x $35.00 = $1,540.00 in cash wages
    44 hours x $5.00 = $220.00 cash in lieu of fringe benefits 44 hours x $10.00 = $440.00 in fringe benefits
    4 hours x .5 x $35.00 = $70.00 in CWHSSA OT earnings
    $2,270.00

    Note: In some cases, a question arises over whether a cash payment made to a laborer or mechanic is paid instead of a fringe benefit contribution or whether it is simply part of the individual’s normal basic hourly rate. If the payment is part of the basic hourly rate, the cash payment must be included in computing the overtime pay obligation. Thus, in the third example above if the contractor normally or previously was paying the individual $40.00 an hour with no fringe benefits on other projects (not subject to the same prevailing wage requirements), the contractor would not get CWHSSA credit for $5.00 cash in lieu of fringe benefits. Instead, the worker’s regular or basic rate would be $40.00 per hour and the correct CWHSSA overtime premium pay rate would be one and one-half times $40.00 (i.e., $40.00 + $20.00 = $60.00 per hour for hours worked over 40 in a workweek). See 29 CFR 5.32(c)(1) through (3).

• The following examples provide two methods for the computation of overtime premium pay required under CWHSSA and/or FLSA for an individual who worked in different job classifications and at different rates of pay in the same workweek.

  A worker is hired to perform work on a DBRA covered construction contract in two job classifications: painter and electrician. The wage determination rate for an electrician is $35.00 (basic hourly rate) plus $15.00 in fringe benefits. The wage determination rate for a painter is $33.00 (basic hourly rate) plus $17.00 in fringe benefits. The payroll shows that the worker performed painting and electrical duties as follows:

  S M T W TH F S
  Painter hours 0 10 10 10 0 0 0
  Electrician hours 0 0 0 0 0 10 8

  Method 1: Computation of the overtime premium based on the weighted average “regular rate” for the work week.

  Step 1: Determine the straight time wages due – excluding fringe benefits

  30 hours at the painter’s rate of $33.00 = $990.00
  18 hours at the electrician’s rate of $35.00 = $630.00
  Total straight time wages (48 hours) = $1,620.00

  Step 2: Calculate the “regular rate”

  ($1,620.00 / 48 hours worked) = $33.75 “regular rate”

  Step 3: Compute the overtime premium due

  $33.75 x .5 = $16.88 x 8 overtime hours worked = $135.04

  Note: It is important to note that if a worker’s regular rate of pay exceeds the basic hourly rate listed in the applicable Davis-Bacon wage determination, then the worker’s regular rate of pay must be used in computing the overtime pay premium for CWHSSA and FLSA purposes. See 29 CFR 778.107 – 778.109.

  Method 2: Computation of the overtime premium based on the “rate in effect” (or “established rate”) when the overtime hours were worked.

  In this example, the worker and the contractor agreed in advance that overtime compensation would be based on the “rate in effect.” The 8 overtime hours occurred on a Saturday, when the worker was performing duties as an electrician. Therefore, the “rate in effect” is $35.00 (excluding fringe benefits).

  The overtime premium could be computed as follows:

  $35.00 (rate in effect) x .5 = $17.50 x 8 hours = $140.00

• The following example reflects the correct computation of total hours worked under DBRA and CWHSSA for an individual who worked both on and off the site of the work on a Davis-Bacon covered contract in the same workweek.
  • The contractor requires the worker to report to the contractor’s home office each day to gather necessary tools and load them in the truck before traveling to the Davis-Bacon site of the work. Gathering and loading the tools, and then driving to the site of the work, takes 1 hour each day. The worker then performs electrical work on the site of the work for 8 hours per day, five days per week.
  • The time spent at the contractor’s home office each week, including drive time to the work site, totals 5 hours. Time spent on the site of the work as an electrician totals 40 hours per week. Under CWHSSA, since all of the time spent was on the contract work, the worker’s hours are combined, for a grand total of 45 hours per week. Thus, the worker is due overtime compensation for 5 hours.

EXAMPLES OF CWHSSA OVERTIME COMPUTATIONS ON SCA CONTRACTS

• The following example reflects the correct computations under SCA and CWHSSA for an individual who worked 44 hours on a covered contract as a janitor, where the applicable wage determination has a prevailing wage rate for a janitor is $25.00 (basic hourly rate) plus a $4.57 per hour required health and welfare fringe benefit per employee.
  • The correct computations under the SCA and CWHSSA would be as follows:

    40 hours x $4.57 = $182.80 in fringe benefits
    44 hours x $25.00 = $1,100.00 for prevailing wages
    4 hours x $12.50 = $50.00 for overtime premium
    $1,332.80

  • Note that for a wage determination including the “average cost” benefits, the health and welfare fringe benefits would instead be computed for all hours worked.

APPLICATION OF FLSA OVERTIME PAY REQUIREMENTS TO WORKERS ON GOVERNMENT CONTRACTS

• On contracts to which CWHSSA does not apply (for example, on a Related Act prime contract of $100,000 or less), overtime pay requirements may apply to a contractor under other laws, including the FLSA. On contracts to which CWHSSA applies, FLSA may also apply.
• As a general standard, Section 207(a) of the FLSA, as amended, provides that an employer shall not employ any employee to work in excess of 40 hours in a workweek unless such employee receives compensation for their employment in excess of 40 hours per workweek at a rate not less than one and one-half times the regular rate at which they are employed. 29 CFR 778.101.
• Unless specifically exempted from FLSA overtime pay requirements, an employee who performs work on both federal/federally assisted projects and commercial work in the same workweek must receive an overtime premium for hours worked in excess of 40 in the workweek. See 29 CFR part 778.
• Under the FLSA, if an employee is found to be due back wage compensation under either Section 206 or 207 of the FLSA, the FLSA also requires an assessment of liquidated damages in an amount equal to the back wages, unless certain conditions are met establishing a good faith defense on the part of the employer. 29 USC 216(b) and 260. (Note: 29 CFR 5.32 and 778.6 discuss dual application of Davis-Bacon and FLSA overtime requirements.)

STATE AND LOCAL WAGE AND HOUR LAWS

• In some instances, state and local wage and hour laws apply similar or more worker protective wage and overtime pay requirements and can apply concurrently. Where questions arise regarding wage and overtime pay requirements under state (or local) law on DBRA projects, the appropriate state (or local) government agency should be consulted regarding compliance with the non-federal requirements.