What is Ordinary Maintenance and is it a Public Work?

What is Ordinary Maintenance and is it a Public Work?

This is one of the most frequently asked questions by those dealing with public works in the State of Washington.

Public Works Definition:  RCW 39.04.010 defines a public work, in part, as follows:

"Public work" means all work, construction, alteration, repair, or improvement other than ordinary maintenance...

What is not a Public Work:  Based on this definition of a public work, "ordinary maintenance" is not a public work.

Ordinary Maintenance Definition:  So, if ordinary maintenance is not a public work, what is it?  WAC 296-127-010 notes that ordinary maintenance is not a public work and defines ordinary maintenance as follows:

Ordinary maintenance...is defined as work not performed by contract and that is performed on a regularly scheduled basis (e.g., daily, weekly, monthly, seasonally, semiannually, but not less frequently than once per year), to service, check, or replace items that are not broken; or work not performed by contract that is not regularly scheduled but is required to maintain the asset so that repair does not become necessary. 

Work performed by agency personnel  While the definition of ordinary maintenance in WAC 296-127-010 is somewhat long and detailed, the key thing to note in the definition is that ordinary maintenance "is defined as work not performed by contract."  The only work that would not be performed by contract is work that is performed with a public agency's own personnel.  All other work is done by a contract with a contractor or service provider.  Thus, work performed by an agency's own personnel, whether it is regularly scheduled or not regularly scheduled, is ordinary maintenance, and such work is not a public work.

Is Maintenance the same as Ordinary Maintenance?  The short answer is that maintenance and ordinary maintenance are different, but that is the subject of another blog posting later. 

Summary:  Ordinary maintenance is work performed by an agency's personnel and is not a public work.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

New Apprenticeship Compliance Regulations Adopted

The Washington State Department of Labor and Industries adopted new regulations at the end of 2011 establishing a process for investigating contractor violations of apprenticeship program standards relating to the ratio, supervision, or approved work processes.

Applicability:  The new regulations in WAC 296-05-015 were adopted on December 31, 2011.  They apply to the compliance requirements of RCW 39.04.350 (for bidder responsibility) and RCW 39.12.055 (for debarment).

Bidder Responsibility:  One of the mandatory bidder responsibility criteria of RCW 39.04.350 for public works projects applies only to the following agencies who are subject to the apprenticeship requirements of RCW 39.04.320 on public works projects:

• State Department of Enterprise Services (formerly General Administration or GA)
• Washington State Department of Transportation (WSDOT)
• Institutions of higher education
• All school districts

RCW 39.04.350 (1)(e) states that a bidder on a project for one of the above-named agencies will be found to not be a responsible bidder if they been 

"...found out of compliance by the Washington state apprenticeship and training council for working apprentices out of ratio, without appropriate supervision, or outside their approved work processes as outlined in their standards of apprenticeship under chapter 49.04 RCW for the one-year period immediately preceding the date of the bid solicitation."

Debarment:  Separate from the mandatory bidder responsibility requirement above, RCW 39.12.055, which is part of the prevailing wage law, states the conditions under which a contractor may be debarred for a one year period of time.  One of the three violations that may subject a contractor to debarment relates to a determination by the Washington State Apprenticeship and Training Council that the contractor is out of compliance

"...for working apprentices out of ratio, without appropriate supervision, or outside their approved work processes as outlined in their standards of apprenticeship under chapter 49.04 RCW."

Nature of Apprenticeship Violations:  Under both the bidder responsibility and debarment laws noted above, the violations of apprenticeship standards relate to:

• Working apprentices out of ratio: Each separate apprenticeship program approved by the Department of Labor and Industries has an approved ratio of how many apprentices may work at any given time on a project based on the number of journey-level workers present.  For example, if the program standards require that there be no more than one apprentice for every two journey-level workers, but the contractor has two or more apprentices working with a crew of two journey-level workers, the contractor would be out of compliance with the ratio.

• Working without appropriate supervision:  Program standards for each apprenticeship program require certain levels of supervision for apprentices.  At its extreme, for example, if an apprentice was working alone on a project without any supervision, that would be a violation of the supervisory standards, and probably the ratio standards as well.

• Working outside approved work processes:  Apprentices for a particular trade may perform duties related to that particular trade as defined in the program standards of the Department of Labor and Industries and the prevailing wage work classifications.  Performing work outside of what an apprentice is authorized to work on would be a violation of the apprenticeship standards.

Due Process:  The new regulations in WAC 296-05-015 describe the due process requirements of the Washington State Apprenticeship and Training Council in investigating allegations and making findings that a contractor is out of compliance with apprenticeship standards.

Public Notice:  The new WAC states that a list of those found out of compliance will be made "available to the public upon request."  Presumably, and hopefully this means that the Department of Labor and Industries will, for debarment purposes, include such violations on their existing online debarment list for violations of prevailing wage, workers compensation, and contractor registration requirements.  The new WAC, however, is not clear on this point.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

New Draft Washington State Policy on Prevailing Wages

The Washington State Department of Labor and Industries has issued a draft policy statement to address prevailing wage filing requirements for on-call public works contracts.  Comments are due to L&I by April 2, 2012.

Note:  This is a long blog posting, but it is a very important issue for public agencies who use on-call public works contracts.

The draft policy identifies different requirements for what L&I characterizes as two different types of on-call public works projects: “Hybrid" on-call maintenance/repair contracts, and all other on-call maintenance/repair contracts.

1.  "Hybrid" on-call maintenance/repair contracts:   According to L&I, these contracts are for a specific type of work and are performed on a recurring basis at a specific and identifiable location.  L&I's proposed requirements for these contracts include the following:

• Effective date of prevailing wages:  The prevailing wages in effect on the bid submission deadline would be the wages in effect for the first year of such contracts.  If the contract is a multi-year contract, the draft policy would require that the prevailing wages be changed to reflect the current prevailing wages when the contract was renewed or extended for an additional year.

• Filing Intent and Affidavit:  The prime contractor on these contracts would be required to file a "Statement of Intent to Pay Prevailing Wages" and an "Affidavit of Wages Paid" form annually.  But subcontractors performing work on these contracts would be required to file an Intent and Affidavit for each work authorization under the contract.

Analysis of proposed hybrid requirements:  The following are my comments on the proposed hybrid requirements:

• Effective date of prevailing wages:  Under L&I's current regulations, the effective date of prevailing wages for a public works project is the required bid submission date, regardless of the length of the contract.  Hybrid on-call contracts are public works also.  L&I is arguing that RCW 39.12.040 requires Intents for each "contract" but Affidavits for each "project," and that each work authorization under a hybrid on-call contract is a "project."  Personally, I think it's a stretch to make such an argument.  “Contract” is defined in state law (RCW 39.04.010), but "project" is not defined.  In my opinion, the two terms are meant to be used interchangeably. When RCW 39.12 was adopted, I don't think there was ever any intent to distinguish between "contract" and "project" as it might relate to on-call public works projects - which aren't even addressed. L&I's proposal to require higher wages in subsequent years of a public works contract is at variance with their own regulations in WAC 296-127-011. Unless the WAC is formally changed, it is questionable whether L&I can modify that practice by a policy statement:

 "For all public works contracts, except janitorial or building service maintenance contracts, the applicable prevailing wage rates shall be the rates that are in effect on the date when bids by prime contractors are due for submission to contract awarding agencies. These rates shall remain in effect for the duration of the contract." [emphasis added]

Contractors should be required to submit bids based on the current prevailing wages (and any wage increases necessary to retain a qualified work force or comply with the terms of a collective bargaining agreement), and not transfer that risk and cost to public agencies that would be required to pay for the increased wages in subsequent years of a multi-year hybrid on-call contract.  In addition, if the hybrid on-call contract is bid and the award evaluation is based on anything other than hourly rates (and it is problematic, in my opinion, to bid these contracts based on hourly rates), it will be very difficult for public agencies to determine the increased amount in prevailing wages that must be reimbursed to the contractor to pay their workers.

• Filing Intent and Affidavit:  It is unclear to me why L&I is distinguishing between prime contractors and subcontractors when both may end up performing work on an individual work order under the hybrid on-call contract.  To require an Intent and Affidavit for each subcontractor performing work on an individual work authorization is unreasonable, inefficient, and costly to the public.  Many work orders are very small.  For example, on a $150 work order, if the work was performed by a subcontractor, an additional $80 would need to be paid by the public agency as part of the work order to cover the cost of the Intent and Affidavit.  It seems to me that L&I should establish a minimum dollar threshold below which the Intents and Affidavits would not be required.  This may require a change in the law, and the law should address the lower risk and higher administrative cost associated with small public works projects.  Short of a legislative change, L&I can resolve this issue by eliminating the artificial distinction between a “contract” and “project” and simply require an Intent and Affidavit for each public works contract, regardless of the length of the contract (to be consistent with current regulations in WAC 296-127-011).

2.  Other on-call maintenance/repair contracts:  L&I’s draft policy states that these contracts do not meet the criteria for being a “hybrid” contract (for a specific type of work and are performed on a recurring basis at a specific and identifiable location).  The proposed requirements for these contracts are as follows:

• Effective date of prevailing wages:  The prevailing wages in effect on “the award date for each ‘call-out' must be used.”  In other words, even though there is no “award” for each work order, I think L&I is intending to require that the wages in effect on the date when a work order is executed will be the prevailing wages in effect for that work order.  

• Intents and Affidavits:  L&I’s draft policy states that “An Intent must be filed at the beginning of the contract period and [an] Affidavit must be filed following completion of each individual project or ‘call-out.’” 

Analysis of proposed requirements for other on-call contracts:  The following are my comments on these proposed requirements:

• Effective date of prevailing wages:  One of the main problems with requiring that the effective date for prevailing wages for these on-call contracts be the date of the work order is that it eliminates any basis for competitive selection of the on-call contractor during the bidding process.  If the prevailing wages in effect as of the bid submission deadline mean nothing, why would there still be a requirement to notify contractors of the applicable prevailing wages?  Essentially, under the proposed policy, all work orders would be negotiated without relying on prices bid as part of the selection process for the on-call contractor.  It is unclear why L&I is applying such a different standard for these on-call contracts than they are proposing for the hybrid contracts.

• Intents and Affidavits:  My comments above relating to Intents and Affidavits being required for each work order apply here as well.  

Other Features of L&I’s Draft Policy:  L&I’s draft policy also addresses Job Order Contracting, Building Service Maintenance (Janitorial) Contracts, and regular Public Works contracts.

More Information:  L&I has published both the draft policy and an explanatory memo.  Click below to view these documents:

• Prevailing Wage Filing and Wage Rate Determination Requirements by Contract Type

• March 13, 2012 memorandum

Comments:  Comments are due to L&I by April 2, 2012.  If you have any comments, observations, or questions for me, please contact me.

Mike Purdy's Public Contracting Blog 

© 2012 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Is a Sole Proprietor Exempt from Prevailing Wage Requirements?

Under Washington state regulations (WAC 296-127-026), a sole proprietor who performs work on a public works project, or a project subject to prevailing wage requirements, is not required to pay themselves the prevailing wage rate.

Prevailing Wage Forms Still Required:  However, according to the Department of  Labor and Industries, they must nevertheless submit a "Statement of Intent to Pay Prevailing Wages" form (prior to the first payment being made by the public agency), and an "Affidavit of Wages Paid" form (prior to the public agency releasing retainage).

Are Other Owners Exempt?  In addition to a sole proprietor (and their spouse), the following other owners are exempt from paying themselves prevailing wages on a public works project.  They must, however, fill out the "Intent" and "Affidavit."

• Any partner who owns at least 30% of a partnership
• The president, vice-president, and treasurer of a corporation if each one owns at least 30% of the corporation

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

OSHA or State Safety and Health Standards?

Many states have adopted their own version of the federal OSHA (Occupational Safety and Health Administration) requirements.  

The Question:  In developing specification standards for public contracts, do OSHA standards apply or should individual state safety and health standards apply?

Washington State Regulations:  In Washington State, where the legislature has adopted WISHA (Washington Industrial Safety and Health Act), there is a regulation that clearly addresses the relationship between OSHA and WISHA, noting that for most types of work, WISHA applies.

WAC 296-800-100 states the following:

The U.S. Congress created the Occupational Safety and Health Administration (OSHA) in 1971 to develop and enforce workplace safety and health rules throughout the country. States may choose to run their own safety and health programs as long as they are at least as effective as OSHA. Washington state has chosen to run its own program and most employers in the state, therefore, are subject to enforcement by L&I and not by federal OSHA.

In Washington state, OSHA covers workplaces with federal employees, nonfederal employees working on federal reservations and military bases, employees working on floating worksites (floating dry docks, fishing boats, construction barges), and employees working for tribal employers on tribal lands.

Tip:  Check the regulations in your state as to how they relate to OSHA, and then make sure that your specifications accurately reflect which regulations are applicable.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Prevailing Wages Scopes of Work Proposed for 3 Classifications

The Washington State Department of Labor and Industries is proposing to adopt scope of work descriptions for three classifications of labor for which prevailing wages exist, but not descriptions.

Public Hearing:  A public hearing will be held on December 9, 2010 at 2:00 p.m. at L&I's headquarters in Tumwater, Washington to consider testimony on the proposed scope of work descriptions for the following three classifications:

• Dredge workers
• Truck drivers
• Ready mix truck drivers.  

Written Comments:  Written comments may also be submitted to L&I by e-mail at yous235@lni.wa.gov or by mail to Sally Elliott, Specialty Compliance Services Division, PO Box 44400, Olympia, WA 98504-4400.

Schedule for Adoption:  The changes, if adopted, would be added to the Washington Administrative Code (WAC).  L&I hopes to adopt the new regulations on January 18, 2011 with a tentative effective date of March 1, 2011.

Read the Proposal:  Click here to read the proposed scope of work descriptions for dredge workers, truck drivers, and ready mix truck drivers.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates) 

http://PublicContracting.blogspot.com

When Do Prevailing Wages Apply to Landscape Construction Work?

On May 19, 2010, the Washington State Department of Labor and Industries (L&I) issued a policy statement on when Landscape Construction prevailing wages may not be used.

Policy Offers Guidance Only:  L&I noted that the policy does not change the requirements of state law or of the Washington Administrative Code (WAC).  According to L&I, the "policy is intended as a guide in the interpretation and application of the relevant statutes, regulations, and policies, and may not be applicable to all situations."  L&I periodically issues policy statements on a variety of prevailing wage issues that are all available online.

Classification Descriptions:  Under the Washington Administrative Code, L&I has adopted descriptions of most prevailing wage classifications to help guide contractors and public agencies in determining what work is subject to particular classifications.  Landscape Construction is described in WAC 296-127-01346.  

Work Not Permitted Under Landscape Construction:  L&I's new policy outlines certain tasks that may not be performed under the Landscape Construction prevailing wage rate classification.  Rather than attempt to summarize the specifics of the policy, I suggest that you read the actual May 19, 2010 policy.

Questions:  If you have any questions about the policy, you may contact L&I at (360) 902-5335 or by e-mail at PW1@LNI.WA.GOV.

No Descriptions for Federal Prevailing Wages:  As a side note, the U.S. Department of Labor which administers enforcement of the federal Davis-Bacon prevailing wage requirements, does not have similar descriptions of work for each classification, but tends to rely on the prevailing practices as described in labor union collective bargaining agreements to determine what classification is appropriate for a specific situation.

Comments on Proposed Revisions to Prevailing Wage WACs

The Washington State Department of Labor and Industries has proposed revisions to the Washington Administrative Code (WAC) addressing prevailing wage regulations.  See my previous blog posting for a summary of the changes and the dates for public hearings.

On June 22, 2010, I sent L&I a letter with my comments and suggestions on the WACs.  Contact me if you would like me to e-mail you a copy of my letter.

In summary, my comments include the following:

• Effective Date of Prevailing Wages for GC/CM Projects:  Add language addressing the effective date of prevailing wages for GC/CM projects.

• Prevailing Wage Rates for Supervisors:  Increase from 10% to 20% of hours worked in a day as the threshold for when supervisors must be paid prevailing wages.

• Combined Intent/Affidavit:  Clarify what is meant by "agreement" with respect to a combined Statement of Intent to Pay Prevailing Wages and Affidavit of Wages Paid form.

• Splitting Projects:  Delete language about splitting projects to fall under the small works roster threshold.  The WACs address prevailing wages, not bidding requirements, and the subject of splitting is already addressed in state law.

• Bonds:  Add in references to state law relating to payment bonds.

Effective Date for Prevailing Wages on GC/CM Projects

Washington State law and regulations do not address the effective date for prevailing wages on General Contractor/Construction Manager (GC/CM) projects, an alternative public works delivery method authorized by chapter 39.10 RCW.

The existing regulations only address traditional Design-Bid-Build projects, stating that the prevailing wages are those in effect on the bid submittal deadline. Of course, under GC/CM, there is no bid submittal deadline as the GC/CM is selected based on a combination of qualifications, interview, and prices for overhead and profit (Percent Fee) and Specified General Conditions costs.

I recently proposed language to the Department of Labor and Industries to amend the Washington Administrative Code to recognize GC/CM contracts and provide guidance on the effective date of prevailing wages for these contracts.

My suggestion, and my practice over the years, has been that the effective date of prevailing wages on GC/CM projects should be the bid submittal deadline for each of the subcontract bid packages.

Thus, for any one GC/CM projects, in theory, there could be multiple state prevailing wages, depending on when the subcontract bid package bids are due. The Department of Labor and Industries updates prevailing wage rates twice a year, in March and August.

I have developed language that I have included in Requests for Final Proposals from GC/CM firms that states the following: "As a matter of information, the Owner has included a copy of the most recent prevailing wage rates issued by the Washington State Department of Labor and Industries. The prevailing wages in effect on the bid submittal deadline for each subcontract bid package will be the wages applicable for that subcontract bid package."

Please contact me by e-mail or call me at (206) 295-1464 if you have any questions about how to apply prevailing wages on a GC/CM project.

Are Owners Exempt from Prevailing Wages?

Under Washington state laws, owners who meet certain criteria are exempt from being required to be paid prevailing wages, but must nevertheless comply with other reporting requirements.

According to the Washington Administrative Code (WAC 296-126-026), the prevailing wage requirements of state law (chapter 39.12 RCW) do not apply to:

1. Sole owners and their spouses
2. Any partner who owns at least 30% of a partnership
3. The president, vice-president and treasurer of a corporation if each one owns at least 30% of the corporation.
   

The purpose of this exemption is to not require the owner of a construction business to pay themselves prevailing wages on public projects. There are other provisions of chapter 39.12 RCW that deal with issues other than what wages must be paid to individuals.

For example, even owners who are exempt from paying themselves the prevailing wage rates must still file a "Statement of Intent to Pay Prevailing Wages" (before the public agency makes the first payment) and an "Affidavit of Wages Paid" (prior to release of retainage by the public agency). This is often not clearly understood by public agencies and contractors.

In addition to company owners being exempt from paying themselves the prevailing wage, the prevailing wage requirements of chapter 39.12 RCW do not apply to workers employed by public agencies in the State of Washington.

Changes Proposed to Prevailing Wage Regulations

The Washington State Department of Labor and Industries is proposing a variety of revisions to the prevailing wage regulations for the state. The changes would revise certain provisions of Washington Administrative Code chapter 296-127.

Some of the changes are housekeeping nature, and some are more substantive. Here is a quick list of a few of the subjects addressed:

• Adjustments of prevailing wages during a contract for maintenance and service contracts
• Changing the standard for applicability of prevailing wages for supervisors
• Adding limited liability companies as a category for owner exemption from prevailing wages
• Combined filing with public agency of Statement of Intent to Pay Prevailing Wages and Affidavit of Wages Paid for projects less than $2,500
  

If you would like a copy of the track changes version of the draft revisions, please contact me and I will e-mail it to you.

Labor and Industries is requesting comments by July 15, 2009.

Revised Prevailing Wage Scope of Work Description Adopted

A revised Washington Administrative Code (WAC) section adopted by the Washington State Department of Labor and Industries went into effect on January 2, 2009.

The WAC revises the scope of work description for the applicability of prevailing wages on public works projects for delivery of materials to a project site.

You can read WAC 296-127-018 by clicking on the link in this sentence.

The revised WAC applies to projects with a bid submittal deadline of January 2, 2009 or later.

Residential Prevailing Wages

In Washington State, the Department of Labor and Industries establishes separate prevailing wages for residential public works construction projects. Housing authorities, a separate type of governmental entity, along with other types of jurisdictions, frequently construct residential projects.

Residential prevailing wage rates are often significantly lower than prevailing wages for commercial prevailing wage rates. For example, the commercial prevailing wage rate for a carpenter in King County (as of August 31, 2008) is $46.16 per hour, while the residential carpenter rate is $23.47 per hour. The difference in wage rates is primarily due to the fact that residential construction as a whole is not as unionized as commercial construction. In conducting surveys to establish the rates therefore, lower rates end up prevailing for residential construction.

In order to qualify for the residential construction wage rates for various trade classifications, the project must meet certain criteria that are outlined in WAC 296-127-010 (9):

• Type of Work: The definition of residential construction establishes that the work must be "construction, alteration, repair, improvement, or maintenance."
  

• Type of Building: The definition of residential construction establishes that the work must be performed on "single family dwelllings, duplexes, apartments, condominiums, and other residential structures."
  

• Height of Building: The residential structure must "not exceed four stories in height, including basement." An apartment building with four stories of structure above grade and with a basement would not meet the definition for residential construction.
  

• Purpose of Building: The residential structures must be "used solely as permanent residences." Thus, a weekly or monthly apartment or hotel type arrangement would not qualify for residential construction prevailing wage rates. Neither would a single family home that was used on a rotating basis by different individuals to be housed in a location based on business needs.
  

New Prevailing Wage Scopes of Work Adopted

The Washington State Department of Labor and Industries has adopted new scope of work descriptions for three classifications of labor that are subject to payment of prevailing wages. The new scope of work descriptions will appear along with other scope of work descriptions in the Washington Administrative Code (WAC).

The new scope of work descriptions will become effective on January 1, 2009.

The following are the three newly adopted scope of work descriptions, along with the WAC number:

• Diver and Diver Tender (WAC 296-127-01316)
• Industrial Power Vacuum Cleaner (WAC 296-127-01334)
• Construction Site Surveyor (WAC 296-127-01396).
  

The actual scope of work descriptions are not yet available online under the WACs. If you would like a copy of the adopted scope of work descriptions, please contact me.

L&I Continues to Violate Their Own Regulations

The Washington State Department of Labor and Industries is still in violation of their own regulations that requires that any corrections to prevailing wage rates be published, but not effective until 30 days after publication.

On October 10, 2008, L&I announced corrections to the prevailing wage rates for truck drivers for the following counties: Adams, Asotin, Benton, Columbia, Ferry, Franklin, Garfield, Lincoln, Pend Oreille, Spokane, Stevens, and Whitman. The announcement noted that the wages were corrected as of October 10, 2008 and that the changes were effective August 31, 2008.

Making such changes effective retroactively not only is inconsistent with L&I's regulations in WAC 296-127-011, but it also creates an administrative and enforcement quagmire for both public agencies and contractors. For any public works project with a bid submittal deadline from August 31, 2008 through October 9, 2008, the public agency would have published wage rates effective as of August 31, 2008. By their "correction" L&I is now stating that the wage rates they originally published on August 1, 2008 and made effective on August 31, 2008, and that everyone relied upon, are not, in fact, the actual prevailing wage rates. The actual prevailing wage rates are those published on October 10, 2008 - rates that no one bidding from August 31st through October 9th would have had any idea existed.

L&I has recently added a note to their website that states the following: "During the period between August 1st, 2008 and August 31st, 2008 the wage rates for 8/31/08 are subject to correction and are valid on August 31st. If you have printed, viewed or relied upon the rates for 8/31/08 prior to the 31st, please reprint and review those rates."

While it's somewhat helpful for L&I to add this note, the practice of correcting wage rates even during August and still maintaining an August 31st effective date is inconsistent with WAC 296-127-011. In addition, what the note on their website doesn't say is that they plan to continue to correct wage rates even after August 31st but will still make those corrected wages effective as of August 31st.

From an administrative and enforcement effort, L&I's failure to follow their own regulations has made practical compliance with corrected prevailing wage rates next to impossible. In addition to being more careful in the future with publishing the correct prevailing wage rates in the first place, L&I should change their correction practice to be consistent with WAC 296-127-011.

New Prevailing Wage Scope of Work Descriptions to be Adopted

The Washington State Department of Labor and Industries will hold a public hearing on October 22, 2008 at 2:30 p.m. at the Department's headquarters in Tumwater, Washington (7273 Linderson Way Southwest, Room S117) to consider comments on three proposed new sections of the Washington Administrative Code.

The sections would add a prevailing wage scope of work description for three trades that currently do not have such scopes: construction site surveyors, industrial power vacuum cleaners, and divers/diver tenders.

Comments must be received by October 22, 2008 to the attention of Sally Elliott, Specialty Compliance Services Division, PO Box 44400, Olympia, WA 98504-4400.

If you would like a copy of the proposed revisions to WAC 296-127, please contact me and I will e-mail it to you.

Is Maintenance a Public Work?

There are a couple of critical questions surrounding the often confusing issues of public works, prevailing wages, maintenance, and ordinary maintenance.

1. Is "maintenance when performed by contract" (RCW 39.04.010) a public work and subject to prevailing wages, or is such work only subject to prevailing wages, but not a public work? The law states that "maintenance when performed by contract" is subject to prevailing wages. That shouldn't be in dispute. But is such maintenance a public work? These are two separate issues and it's important to make a distinction between them, not only because of what the law say, but because whether such maintenance is a public work affects more than just the wages required to be paid. It affects how public agencies bid and award such work. If "maintenance when performed by contract" is also a public work, then such work is subject to all of the bidding and other laws related to all other public works.

It seems to me that both the Washington State Department of Labor and Industries and the courts have inaccurately argued that "maintenance when performed by contract" is a public work. The reason I say they have been inaccurate is because when L&I adopted WAC 296-127-010 and when the Court of Appeals decided what is known as the Wheelabrator case (City of Spokane & Wheelabrator v. Department of Labor and Industries), both of them were focusing on whether "maintenance when performed by contract" was subject to prevailing wages. Thus, L&I, in WAC 296-127-010 defined "public work" as including "maintenance when performed by contract" when what they were trying to make a point of is what work was subject to prevailing wages. The purpose of this WAC is to deal with prevailing wages, not with bidding requirements. They were not focusing on, nor do they necessarily have the expertise on, or jurisdiction over, what the bidding laws should be for maintenance work.

Likewise, the Wheelabrator case dealt with whether a private contractor's employees, performing annual maintenance on a City of Spokane facility run by the contractor, should be subject to prevailing wages even the City paid for the maintenance. In my mind, the Wheelabrator case blurs the issue by stating that the maintenance work in question is a public work and therefore subject to prevailing wages. It seems that the court was only trying to make the case that the work was subject to prevailing wages. In the interest of enforcing what work is subject to prevailing wages, L&I and the courts have not recognized the impact on bidding statutes of making maintenance a public work.

I think L&I and the Wheelabrator case both took this approach because they saw the only way to make maintenance work subject to prevailing wages was to declare it a public work. I disagree as I think the language of RCW 39.04.010 speaks for itself. Not only is the language of RCW 39.04.010 clear in stating that there are two bodies of work subject to prevailing wages ("public works" and "maintenance when performed by contract"), but there is also the provision of RCW 39.12.020 that requires the payment of prevailing wages to building service maintenance employees (janitors) that no one argues is a public work. So it is possible to have work subject to prevailing wages that is not a public work. "Maintenance when performed by contract" falls into this category just like building service maintenance employees.

RCW 39.04.010 doesn't make a lot of sense if you argue that maintenance of any kind is a public work. RCW 39.04.010 defines a public work (in part) as follows: "'Public work' means all work, construction, alteration, repair, or improvement other than ordinary maintenance...All public works, including maintenance when performed by contract shall comply with chapter 39.12 RCW."

Note that in the listing of what is a public work, it doesn't mention that maintenance is a public work. It only states that "ordinary maintenance" isn't a public work. If the Legislature had intended that maintenance was to be a public work, they would have included maintenance in the listing of activities that were public works. The only mention of maintenance is that a certain kind of maintenance ("maintenance when performed by contract") is subject to prevailing wages, just as public works are subject to prevailing wage. The Legislature is silent on maintenance being a public work, only affirming that "maintenance when performed by contract" is subject to prevailing wages.

So how should public agencies respond to this confusing set of facts? Until the Legislature clarifies that "maintenance when performed by contract" is not a public work, but is subject to prevailing wages, I think public agencies should take the conservative approach (following WAC 296-127-010 and the Wheelabrator case) and treat "maintenance when performed by contract" as a public work, from a bidding perspective and recognize that such work is subject to prevailing wages.

2. The second big issue that needs discusssion, but not nearly as much as the first issue above is the distinction between maintenance and ordinary maintenance. This actually seems like an easier question to me. RCW 39.04.010 is clear that "ordinary maintenance" is not a public work. The law, however, doesn't define "ordinary maintenance." WAC 296-127-010 and the Wheelabrator case both seem fairly clear that ordinary maintenance is that work which is performed by public agency employees, and therefore not subject to prevailing wages.

Hearing on New Prevailing Wage Rules

The Washington State Department of Labor and Industries has announced a series of three public hearings across the State to consider modifications to regulations affecting the applicability of prevailing wages for the incorporation and delivery of material on public works projects.

The hearings will consider amendments to WAC 296-127-018 (Coverage and exemptions of workers involved in the production and delivery of gravel, concrete, asphalt, or similar materials). The hearings will be held as follows:

• October 22, 2008 (1:00 p.m.) in Tumwater, WA
• October 23,2008 (10:00 a.m.) in Spokane, WA
• October 29, 2008 (1:00 p.m.) in Tukwila, WA

L&I will receive both written and oral comments on the proposed modifications to the WAC. For more detailed information about the hearings and a copy of the proposed change, please contact me and I will forward to you the relevant information.

Changes and Corrections to Prevailing Wages

The Washington State Department of Labor and Industries publishes prevailing wage rates twice a year and makes changes in the rates based on changing survey data for specific classifications.

Washington Administrative Code (WAC) 296-127-011, Time for Determining Prevailing Wages, states the following:

"Prevailing wage rates for all public work contracts will be determined by the industrial statistician and published on the first business day of February and the first business day of August of each year. These rates shall become effective thirty days after the date of publication. However, the industrial statistician may revise an established prevailing wage rate in response to an administrative or judicial finding overturning the established rate, or at any time necessary to correct an error, with such revision becoming effective thirty days after the date of publication. However, in the event of an emergency as determined by the director of the department, such revised rates shall take effect upon publication."

Key concepts included in this provision of WAC 296-127-011, include the following:

Publication: The WAC requires that the Industrial Statistician of the Department of Labor and Industries publish new prevailing wages for each county twice a year, "on the first business day of February and the first business day of August of each year." The purpose of the publication requirement before the effective date of the new prevailing wages, is to provide public agencies with time to include the new prevailing wages into bidding documents for projects that will be advertised. In addition, publication of the prevailing wage rates prior to the effective date, provides an opportunity for interested parties to provide feedback to L&I on any errors or corrections that may need to be made in the prevailing wage rates prior to the wages going into effect.

Effective Date: According to the WAC, the prevailing wages that are published "on the first business day of February and the first business day of August" become effective 30 days after publication. Thus, a public agency may generally expect that the date of the prevailing wages will be in early March and the end of August of each year.

Changes and Corrections: Establishing prevailing wages is a complex undertaking for L&I, and despite the care that is taken in establishing correct prevailing wage rates, errors do occur. WAC 296-127-011 provides for this. There are two different situations that may result in a change to the established prevailing wage rates: 1) an administrative or judicial finding that overturns the established rate, or 2) the correction of an error. In the event that either of these circumstances occurs, L&I is required to publish the corrected prevailing wage rate and the corrected rate then becomes effective 30 days after such publication.

In practice, it appears that L&I does not distinguish between publication and effective date for changes in prevailing wages. My observation has been that when an error is noted by the Department, they will send a notice to those on their e-mail notification list informing them of the change, but the change has already been incorporated into the published prevailing wages online on L&I's website without waiting the required 30 days.

This practice of L&I makes it difficult for public agencies to be able to distinguish between printed versions of prevailing wage rates without conducting a classification by classification and wage by wage comparison to determine where any changes may have been made. Changes made by L&I based on errors or other findings are not separately identified in the published wage rates and do not include separate effective dates for the changed prevailing wage rates, as the WAC suggests should occur.

Emergencies: WAC 296-127-011 does authorize the director of the Department of Labor and Industries to determine that a changed prevailing wage rate is an emergency that must become effective immediately. Thus, given the practice of L&I to make corrections effective immediately, it appears that they are determining that each of these changes constitutes an emergency. However, there is never an accompanying determination by the director of the Department. Furthermore, it seems unlikely that all of the corrections could be emergencies, especially when they correct a wage rate under a listing of prevailing wages that is more than six months old and that has been superseded by the new wage rates.

Such a practice by L&I, whether an emergency or not, is problematic for public agencies. For example, let's say that a public agency includes the prevailing wages effective August 31, 2008 in the bidding documents for a project. The bidding documents are published on November 5, 2008, using the prevailing wage rates obtained from the Department's website. On November 19, 2008, the dame day as the deadline for bid submittal, the Department issues a corrected prevailing wage rate for a classification of labor. The public agency either isn't aware of the change or doesn't have time to respond to the change by issuing an addendum to the bidding documents. Bids are opened and the contractor would have based its bid on the prevailing wages included in the bidding documents, believing that those were the ones effective for the project, since they were effective on August 31, 2008. The contract is awarded to the contractor who proceeds to pay the workers the prevailing wages as published in the bidding doucments. One of the workers then files a claim, asserting that the prevailing wage rate in effect as of the bid opeing date was different that what was published in the bidding documents, based on the correction made by L&I. What are the correct prevailing wages? What party is liable for any back wages that may be due?

Without proper publication and notification, changing prevailing wages at various times during the year, other than the beginning of March and the end of August may be problematic for both contractors and public agencies.