Wage and Hour: Prevailing Wage
Which Projects Are Covered by the PWR Law?
To be subject to the PWR law, a project must meet the definition of the term "public works."
ORS 279C.800(6)(a) and OAR 839-025 0004(20)
Definition of “Public Works”
The term “public works” includes, but is not limited to, roads, highways, buildings, structures and improvements of all types, the construction, reconstruction, major renovation or painting of which is carried on or contracted for by a public agency to serve the public interest. ORS 279C.800(6)(a)(A)
The term also includes:
• Projects for the construction, reconstruction, major renovation or painting of a road, highway, building, structure or improvement of any type that uses $750,000 or more of funds of a public agency. ORS 279C.800(6)(a)(B)
• Projects for the construction of a privately owned road, highway, building, structure or improvement of any type that uses funds of a private entity and in which 25 percent or more of the square footage of the completed project will be occupied or used by a public agency. ORS 279C.800(6)(a)(C)
• The construction or installation on public property of any device, structure or mechanism that uses solar energy, regardless of the total project cost or whether the project uses funds of a public agency. ORS 279C.800(6)(a)(D)
• The construction, reconstruction, major renovation or painting of a road, highway, building, structure or improvement of any type that occurs, with or without using funds of a public agency, on real property that a public university listed in ORS 352.002 owns. ORS 279C.800(6)(a)(E)
The public universities listed in ORS 352.002 are the University of Oregon, Oregon State University, Portland State University, Oregon Institute of Technology, Western Oregon University, Southern Oregon University, and Eastern Oregon University.
The PWR law does not regulate the reconstruction or renovation of privately owned property that a public agency leases. However, if the project includes new construction on such property, such as adding square footage or constructing something outside the framework or footprint of the existing structure, such a project, including both the reconstruction/renovation and the new construction, may be subject to the PWR regulations under ORS 279C.800(6)(a)(A), (B) or (C). ORS 279C.800(6)(b); OAR 839-025-0004(20), (23)
PWR coverage is determined by the type of work performed on the project, not by what a contract is called. For example, if a project includes covered activities, such as rewiring a major portion of a building, and meets the other jurisdictional requirements of the PWR law, the entire project is covered. Any person employed on a public works project whose duties are manual or physical in nature is a worker required to be paid the applicable prevailing wage rate. OAR 839-025-0004(32)
Types of work included in the definition of “public works” that are subject to the PWR law:
Construction includes the initial construction of, or the addition to, buildings, structures, and roads. OAR 839-025-0004(5)
Reconstruction includes the restoration of existing buildings and the restoration, rebuilding or resurfacing of existing roads. OAR 839-025-0004(22)
Major renovation includes any remodeling or alteration of existing structures or roads that costs more than $50,000. OAR 839-025-0004(11)
If a painting project meets the other jurisdictional requirements of the PWR law, the project will be subject to the law.
Other types of work or contracts that may be subject to the PWR law:
The PWR law covers demolition work if it is to prepare for planned construction or renovation. Additionally, if the demolition includes other work activities that constitute construction, reconstruction, renovation or painting, the demolition will be covered under the law.
Hazardous Materials Spills
The PWR law covers the clean up of hazardous materials spills if the project includes construction, reconstruction, renovation or painting. The PWR law does not cover projects that only include picking up and hauling away hazardous materials.
General maintenance work, such as sweeping, cleaning, and landscaping, is not covered unless it is done as part of a construction, reconstruction, major renovation, or painting project. For example, the PWR law does not apply if maintenance landscaping work such as mowing or pruning is performed on the grounds of an existing building where no other work is being performed. If the same landscaping is part of a major building renovation, however, then it is covered work.
Maintenance work such as repairing or replacing a roof or recarpeting part of a building is considered to be reconstruction work. If a project involving this type of work meets the other jurisdictional requirements of the PWR law, the project will be subject to the law.
When moving takes place before, during or after a construction, reconstruction, major renovation, or painting project that is subject to the PWR law, the moving contract will also be subject to the PWR law, and the workers must be paid the prevailing rate of pay for the type of duties being performed on the project site. For example, if a new building is constructed and the project is subject to the PWR law, the work to move furniture and materials into the new building will be subject to the PWR law, as well. This work is necessary to complete the building, and must be considered part of the overall construction project.
Public agencies often enter into retainer agreements, sometimes called “on-call contracts,” that span one or more years for the performance of maintenance and repair activities that may include construction, reconstruction, major renovation, or painting. Frequently these services are to be provided at multiple agency-owned facilities or locations. Even if none of the individual work orders or “on-call” work events performed under the contract exceeds the $50,000 threshold, the contract is subject to the PWR law if the total contract price exceeds the threshold. Whenever a public agency enters into a contract that exceeds $50,000 and includes a covered activity (i.e., construction, reconstruction, major renovation or painting), the entire contract is subject to the PWR law.
For example, a county may enter into a retainer agreement for highway maintenance wherein the scope of work includes activities such as sealing cracks in the pavement, filling potholes, repairing culverts, fixing fences, repainting traffic lanes, etc., which have been determined to be covered activities as defined in OAR 839-025-0004. If these maintenance duties are contracted out and the contract value is over $50,000, the contract would be subject to the PWR law. Additionally, any other work done in support of that contract would also be covered.
Employees are due prevailing wages for travel time when they are traveling between the work site and a dedicated pit, tool yard or another covered site. If employees are otherwise entitled to travel time (traveling from job site to job site during the workday, for example), then the employer must pay that time at an agreed-upon rate which is at least minimum wage.
If travel time is compensable time, and if the travel time is related to a public contract, the hours of travel time will count toward daily overtime. For more information, see the Overtime Requirements under the Contractor Responsibilities section of this book.
If work done on a project subject to the PWR law is covered by a warranty, all work done under that warranty will also be subject to the PWR law. This is the case even if the warranty is contracted separately from the construction contract.
Exemptions from the PWR Law
A project may meet the definition of the term “public works,” but if one of the following exemptions applies to the project, the project will not be subject to the PWR law.
Projects Costing $50,000 or Less
Except for the construction or installation on public property of any device, structure or mechanism that uses solar energy, the PWR law does not apply to projects costing $50,000 or less. This amount is based on the cost of the entire project, not individual contracts. The total project cost includes the value of work performed by every person paid by a contractor or subcontractor for the person’s work on the project. The price of a project also includes all materials and supplies, if purchased specifically for the project.
The total project cost does not include the value of donated materials or work performed on the project by individuals volunteering to the public agency without pay. ORS 279C.810(2)(a); OAR 839-025-0100(1)(a)
If a project begins with a total project cost under $50,000, but change orders increase the project cost to more than $50,000, the entire project will be subject to the PWR law, including all work already performed on the project. OAR 839-025-0100(1)(a)
Projects That Do Not Use Funds of a Public Agency
Generally, the PWR law does not apply to projects for which no funds of a public agency are directly or indirectly used. The exceptions to this are for the construction or installation on public property of any device, structure or mechanism that uses solar energy, and for the construction, reconstruction, renovation or painting of an improvement by a private entity on real property owned by a public university with a governing board or by a not-for-profit organization or other entity that a public university with a governing board owns or controls exclusively. ORS 279C.810(2)(b); ORS 279C.800(6)(a)(D); ORS 352.138(4)(b); OAR 839-025-0100(1)(c)
“Directly used” funds of a public agency include:
• Revenue, money or that which can be valued in money collected for or in the custody and control of a public agency;
• Money loaned by a public agency, including the loan of proceeds from the sale of conduit or pass-through revenue bonds, for the specific purpose of financing a project; and
• Public property or other assets used as payment for all or part of a project. OAR 839-025-0004(9)(a)(A)
“Indirectly used” funds of a public agency means the public agency ultimately bears the cost of all or part of the project; such indirectly used funds include:
• Amortizing the cost of construction over the life of a lease and paying these costs with funds of a public agency during the course of the lease;
• The public agency subsidizing the costs of construction that would normally be borne by the contractor;
• Using insurance proceeds that belong to a public agency to pay for construction; and
• Using or creating a private entity as a conduit for funding a project when the private entity is in fact an alter ego of the public agency. OAR 839-025-0004(9)(a)(B)
“Funds of a public agency” does not include:
• Funds provided in the form of a government grant to a nonprofit organization, unless the government grant is issued for the purpose of construction, reconstruction, major renovation or painting;
• Building and development permit fees paid or waived by the public agency;
• Staff resources of the public agency used to manage a project or to provide a principal source of supervision, coordination or oversight of a project;
• Staff resources of the public agency used to design or inspect one or more components of a project;
• Tax credits or tax abatements;
• Land that a public agency sells to a private entity at fair market value;
• The difference between the fair market value of land and the value of that land after taking into account any requirements, restrictions or other limitations, exclusive of zoning or land use regulations, the public agency imposes on the development or use of the land;
• The value added to land as a result of a public agency’s site preparation, demolition or remediation, except for the value added in excess of the expenses the public agency incurred in doing such work;
• Money derived from the sale of bonds that are loaned by a state agency to a private entity, unless the money will be used for a public improvement;
• Bonds or loans from the proceeds of bonds issued in accordance with ORS chapter 289 or ORS 441.525, unless the bonds or loans will be used for a public improvement. ORS 279C.810(1)(a); OAR 839-025-0004(9)(b)
Privately Owned Projects That Use Less Than $750,000 in Funds of a Public Agency and for Which Less Than 25% of the Square Footage Will Be Occupied by a Public Agency
The PWR law does not apply to projects that are privately owned, that use funds of a private entity, in which less than 25 percent of the square footage of the completed project will be occupied or used by a public agency, and for which less than $750,000 of funds of a public agency are used. ORS 279C.810(2)(c); OAR 839-025-0100(1)(d)
Privately Owned Residential Projects That Provide Affordable Housing
The PWR law does not apply to privately-owned residential construction projects that predominately provide affordable housing. Generally, “residential construction” projects are projects for the construction, reconstruction, major renovation or painting of a single family house or an apartment building of no more than four stories in height. “Affordable housing” means the occupants’ incomes are no greater than 60 percent of the area median income; or no greater than 80 percent if the occupants are owners. “Predominately” for affordable housing means at least 60 percent of the project is designated for affordable housing. Affordable housing can be considered “privately owned” even if it is owned by a public agency, as long as it is leased to a private entity for 50 years or more, or if the affordable housing is owned by a partnership, as long as the public agency is not a majority owner in the partnership. ORS 279C.810(2)(d); OAR 839-025-0100(1)(e)
Excluded Agencies and Workers
The PWR law does not apply to contracts with certain public agencies, although other wage-related regulations often apply. In most cases, the exemption from the law is found in the contracting agency’s statutes or in ORS 279A.025, rather than the Prevailing Wage Rate statutes. It is important to note that the PWR exemption applies only if the contract is with the agency itself; the exemption does not apply to funds of the exempt public agency when used to fund other projects. For example, while the Oregon State Lottery Commission is exempt, a project is not exempt merely because it is funded with lottery money.
While Oregon Health Sciences University (OHSU) is generally exempt from ORS Chapter 279, OHSU must ensure that prevailing wages are paid to workers. Additionally, construction, reconstruction, major renovation or painting that OHSU performs or contracts to perform in connection with the OHSU Cancer Institute Project is subject to the PWR laws. OL Ch. 121, Sec. 27, 2014
It is not necessary to pay prevailing wages to inmates of the Oregon Department of Corrections assigned to a work release program when working on covered projects, or to inmates working for Oregon Corrections Enterprises on PWR projects. It is also not necessary to pay prevailing wages to Oregon Youth Conservation Corps members when working on covered projects. OAR 839-025-0100(2)
When a public works project is subject to the federal Davis-Bacon Act, Oregon’s prevailing wage rate law does not apply to workers enrolled in skill training programs that are certified by the United States Secretary of Transportation under the Federal-Aid Highway Act (23 U.S.C. 113(c)). ORS 279C.838(5)
Joint Jurisdiction with Federal Government on Some Projects
When a project is subject to regulation under the state PWR law and uses federal funds that require compliance with the federal Davis-Bacon Act, the project will be subject to both the state PWR law and the federal Davis-Bacon Act at the same time. This is the case even if the project is funded solely with federal funds, because once federal funds are in the custody and/or control of a public agency, they become “funds of a public agency” as defined in the PWR law.
On non-residential projects subject to both state and federal prevailing wage laws, contractors must pay the higher of the state or federal prevailing wage rates to workers. ORS 279C.838; OAR 839-025-0035(2)
On “residential construction” projects subject to both state and federal prevailing wage laws, contractors may generally pay the federal residential rates, unless there is no published wage rate for a specific classification. OAR 839-025-0037
While most requirements of the state PWR law apply to projects subject to both state and federal prevailing wage laws, there are a few areas in which the federal requirements take precedence. For projects subject to both state and federal prevailing wage rate laws, BOLI will follow federal guidelines for the term “site of work” and for when prevailing wages are due to delivery personnel. ORS 279C.838(2) and (3)
BOLI will also apply the federal standard to workers enrolled in skill training programs that are certified by the United States Secretary of Transportation under the Federal-Aid Highway Act. ORS 279C.838(5)
Coverage Determination Requests
When requested to do so by a public agency or other interested party, the Commissioner of the Bureau of Labor and Industries will issue a coverage determination about whether a project or proposed project is or would be a public works project. The requests must be submitted to BOLI in writing, must describe all the relevant details of the project or proposed project, and must be accompanied by all documents, records or other information necessary for the commissioner to make the determination. In addition, if the coverage determination request is not submitted by a public agency, the party submitting the request to BOLI must also submit a copy of the request to any public agency associated with the project.
Once BOLI has issued the determination, the requestor or anyone adversely affected by the determination may request reconsideration of the determination or a hearing.
More information about how to submit a coverage determination request, as well as previous coverage determinations issued, can be found on BOLI’s website at www.oregon.gov/boli. ORS 279C.817; OAR 839-025-0005
Multiple Wage Rate Determinations
Some public works projects may involve more than a single construction type. For example, one project may consist of the construction of one building of residential units and one building of commercial space. On such a project, the commissioner may authorize residential wage rates to be paid for work performed in connection with the construction of the residential building, and non-residential prevailing wage rates to be paid for work performed in connection with the construction of the commercial building.
Requests for authorization to use multiple wage determinations on a project must be submitted to BOLI in writing, and must include all relevant details of the project or proposed project.
If the commissioner authorizes multiple wage rate determinations to be used on a project, continued use of the determinations is contingent upon compliance with all of the following:
• The project/contract specifications must clearly delineate the portions of the project subject to each applicable wage rate determination;
• All applicable wage rate determinations must be posted in a conspicuous and accessible location at the site of work, with an explanation of the portions of the project to which each wage rate determination applies;
• The developer or prime contractor must establish adequate controls to ensure that all workers on the project are paid in accordance with the applicable wage rates; and
• Each and every contractor employing workers on the project must prepare, submit and maintain accurate time and payroll records to demonstrate compliance with all wage rate determinations applicable to the project. OAR 839-025-0315