B-165382, NOVEMBER 1, 1968, 48 COMP. GEN. 278

B-165382, NOVEMBER 1, 1968, 48 COMP. GEN. 278

COMPENSATION - WAGE BOARD EMPLOYEES - FRINGE BENEFITS WHEN UPON A WAGE SURVEY IN CONNECTION WITH THE PAY OF TEMPORARY FEDERAL CONSTRUCTION WORKERS IN A PARTICULAR AREA UNDER 5 U.S.C. 5341, IT IS FOUND THAT THE PREVAILING WAGE RATE FOR EMPLOYEES OF PRIVATE CONSTRUCTION CONTRACTORS ENGAGED IN SIMILAR NON-GOVERNMENT WORK OR FOR DAVIS-BACON EMPLOYEES INCLUDES THE COSTS OF CERTAIN FRINGE BENEFITS AND IT IS DETERMINED TO BE IN THE PUBLIC INTEREST NOT TO DESTROY THE AREA RATE AND ALSO TO REMAIN COMPETITIVE IN THE LABOR MARKET, FRINGE BENEFITS MAY BE INCLUDED AS WAGE INCREMENTS ALONG WITH THE BASIC HOURLY RATE AS PART OF THE OVERALL PREVAILING RATE.

TO THE SECRETARY OF THE INTERIOR, NOVEMBER 1, 1968:

THIS IS WITH REFERENCE TO THE LETTER DATED OCTOBER 15, 1968, OF YOUR ASSISTANT SECRETARY FOR ADMINISTRATION, REQUESTING A DECISIONS OF OUR OFFICE AS TO WHETHER THE "PREVAILING RATE" PRINCIPLE WOULD AUTHORIZE THE DEPARTMENT TO PAY ITS TEMPORARY CONSTRUCTION WORKERS A BASIC HOURLY RATE OF PAY PLUS AN ADDITIONAL HOURLY WAGE INCREMENT REFLECTING FRINGE BENEFITS.

IN PRESENTING THE MATTER THE FOLLOWING INFORMATION WAS SET FORTH: IN THE INTEREST OF EQUITABLE WAGE TREATMENT OF TEMPORARY CONSTRUCTION WORKERS EMPLOYED BY THE VARIOUS BUREAUS OF THIS DEPARTMENT, IT IS OUR INTENTION TO ESTABLISH POLICY WHICH WOULD AUTHORIZE PAYMENT OF BASIC HOURLY WAGE RATES PLUS ADDITIONAL HOURLY WAGE INCREMENTS FOR CERTAIN FRINGE BENEFITS IN ACCORDANCE WITH THOSE PREVAILING IN PRIVATE CONSTRUCTION WORK OR UNDER FEDERAL CONSTRUCTION CONTRACTS FOR TRADES AND CRAFT OCCUPATIONS IN VARIOUS GEOGRAPHICAL AREAS.

IN REQUESTING OUR VIEWS YOU ASKED THE FOLLOWING QUESTION: * * * SPECIFICALLY, IS AUTHORITY VESTED IN THIS DEPARTMENT TO COMPENSATE TEMPORARY FEDERAL CONSTRUCTION WORKERS, UNDER THE ,PREVAILING RATE" PRINCIPLE, ON THE BASIS OF (A) THE BASIC HOURLY RATE OF PAY FOR SIMILAR PRIVATE CONSTRUCTION WORK IN PARTICULAR AREAS AND (B) THE ADDITIONAL HOURLY FRINGE BENEFIT WAGE INCREMENTS (E.G., HEALTH AND WELFARE, PENSIONS, VACATIONS, ETC.) IN THE SAME AMOUNTS AND UNDER THE SAME STANDARDS APPLIED TO PRIVATE CONTRACTORS' EMPLOYEES EITHER ON FEDERAL CONTRACT CONSTRUCTION WORK UNDER THE DAVIS-BACON ACT, AS AMENDED, OR OTHERWISE DETERMINED TO BE PREVAILING CONSTRUCTION INDUSTRY PRACTICES AMONG PRIVATE CONTRACTORS BY INDEPENDENT AREA SURVEYS BY BUREAUS OF THIS DEPARTMENT?

UNDER THE PROVISIONS OF 5 U.S.C. 5102 (7) EMPLOYEES IN RECOGNIZED TRADES OR CRAFTS, OR OTHER SKILLED MECHANICAL CRAFTS, OR IN UNSKILLED, SEMI- SKILLED, OR SKILLED MANUAL-LABOR OCCUPATIONS ARE EXCLUDED FROM THE GENERAL SCHEDULE OF COMPENSATION FOR CLASSIFIED EMPLOYEES. THE METHOD OF SETTING THE PAY OF THESE EMPLOYEES IS PROVIDED IN 5 U.S.C. 5341 AS FOLLOWS:

(A) THE PAY OF EMPLOYEES EXCEPTED FROM CHAPTER 51 OF THIS TITLE BY SECTION 5102 (C) (7) OF THIS TITLE SHALL BE FIXED AND ADJUSTED FROM TIME TO TIME AS NEARLY AS IS CONSISTENT WITH THE PUBLIC INTEREST IN ACCORDANCE WITH PREVAILING RATES. SUBJECT TO SECTION 213 (F) OF TITLE 29, THE RATES MAY NOT BE LESS THAN THE APPROPRIATE RATES PROVIDED FOR BY SECTION 206 (A) (1) OF TITLE 29. IT IS NOTED THAT THE SECOND SENTENCE OF THE ABOVE SUBSECTION PROVIDES FOR PAYMENT OF MINIMUM WAGE RATES UNDER SECTION 206 (A) (1) TITLE 29, U.S. CODE, OF THE FAIR LABOR STANDARDS ACT WHICH IS AN INDICATION OF CONGRESSIONAL RECOGNITION THAT COMPENSATION RATES APPLICABLE TO PRIVATE INDUSTRY EMPLOYEES ARE APPROPRIATELY FOR CONSIDERATION IN SETTING WAGE RATES OF GOVERNMENT WAGE BOARD EMPLOYEES.

IN 1964 CONGRESS AMENDED (PUBLIC LAW 88-349) SECTION 1 OF THE DAVIS BACON ACT (40 U.S.C. 276A) TO PROVIDE THAT THE TERMS "WAGES," "WAGE RATES," AND "PREVAILING WAGES" WOULD INCLUDE THE BASIC HOURLY RATE OF PAY AND ALSO THE COSTS OF CERTAIN FRINGE BENEFITS, SUCH AS, MEDICAL AND HOSPITAL CARE, LIFE INSURANCE AND VACATION, AND HOLIDAY PAY FOR LABORERS AND MECHANICS EMPLOYED BY CONTRACTORS ON PUBLIC BUILDINGS.

THE REPORT OF THE HOUSE COMMITTEE ON EDUCATION AND LABOR (H.R. REPT. NO. 308, 88TH CONG., 1ST SESS. 2) ON THE BILL TO AMEND THE DAVIS-BACON ACT (H.R. 6041) STATES THE NEED FOR THE LEGISLATION AS FOLLOWS:

THE AMENDMENTS TO THE DAVIS-BACON ACT PROPOSED BY H.R. 6041 WOULD BRING UP-TO-DATE THE DAVIS-BACON ACT BY INCLUDING FRINGE BENEFITS IN PREVAILING WAGE DETERMINATIONS. THERE HAS BEEN A TREMENDOUS CHANGE IN THE CONCEPT OF EARNINGS SINCE CONGRESS ENACTED THE DAVIS-BACON ACT. GROUP HOSPITALIZATION, DISABILITY BENEFITS, AND OTHER FRINGE BENEFITS WERE THE RARE EXCEPTION IN THE 1930-S. TODAY MORE THAN 85 MILLION PERSONS IN THE UNITED STATES DEPEND UPON THE BENEFITS THEY PROVIDE. REGARDLESS OF THE FORM THEY TAKE, THE EMPLOYER'S SHARE OF THE COSTS OF THESE PLANS OR THE BENEFITS THE EMPLOYERS PROVIDE ARE A FORM OF COMPENSATION.

IT HAS BECOME INCREASINGLY APPARENT THAT IF THE DAVIS-BACON ACT IS TO CONTINUE TO ACCOMPLISH ITS PURPOSE, PREVAILING WAGE DETERMINATIONS ISSUED PURSUANT TO THE ACT MUST BE ENLARGED TO INCLUDED FRINGE BENEFITS. THE ACT WAS FOUNDED ON THE SOUND PRINCIPLE OF PUBLIC POLICY THAT THE FEDERAL GOVERNMENT SHOULD NOT BE A PARTY TO THE DESTRUCTION OF THE PREVAILING WAGE PRACTICES AND CUSTOMS IN A LOCALITY. UNLESS THE LAW IS AMENDED TO PROVIDE FOR THE INCLUSION OF FRINGE BENEFITS TO WAGE DETERMINATIONS, PREVAILING WAGE PRACTICES AND CUSTOMS WILL NOT BE REFLECTED IN THESE DETERMINATIONS.

OUR REVIEW OF THE LEGISLATIVE HISTORY OF THE 1964 AMENDMENTS TO THE DAVIS -BACON ACT DOES NOT INDICATE THAT THE AMENDMENT WAS TO HAVE ANY EFFECT ON THE PAY OF EMPLOYEES OF THE FEDERAL GOVERNMENT WHOSE WAGES ARE FIXED AND ADJUSTED FROM TIME TO TIME IN ACCORDANCE WITH PREVAILING RATES. EMPLOYEES OF THE FEDERAL GOVERNMENT ENGAGED IN CONSTRUCTION ARE NOT MENTIONED IN THE HEARING, DEBATES, OR THE COMMITTEE REPORTS.

UNDER REGULATIONS IMPLEMENTING THE DAVIS-BACON AMENDMENTS, CONTAINED IN 29 CFR SEC. 5.23 AND 5.24, THE SECRETARY OF LABOR IS REQUIRED TO MAKE SEPARATE FINDINGS AS TO WHAT PORTION OF THE WAGE CONSTITUTES "THE BASIC HOURLY RATE OF PAY" AS EXISTED PRIOR TO THE 1964 AMENDMENTS AND WHAT PORTION IS ATTRIBUTABLE TO THE COST OF THE FRINGE BENEFITS.

IT IS RECOGNIZED THAT TEMPORARY FEDERAL CONSTRUCTION WORKERS, UNLIKE PERMANENT WORKERS IN THAT CATEGORY, DO NOT RECEIVE MANY OF THE BENEFITS PROVIDED BY STATUTE EITHER BY REASON OF SPECIFIC STATUTORY EXCLUSIONS OR BY VIRTUE OF REGULATIONS OF THE CIVIL SERVICE COMMISSION ISSUED PURSUANT TO STATUTE, FOR EXAMPLE, ANNUAL AND SICK LEAVE (5 U.S.C. 6301 (2) (B) (III) (, RETIREMENT (5 CFR SEC. 831.201 (A) (1) (, HEALTH BENEFITS (5 CFR SEC. 890.102 (C) (1) (, AND INSURANCE (5 CFR SEC. 870.202 (A) (1) ). HOWEVER, THEY ARE ENTITLED TO DISABILITY COMPENSATION FOR INJURIES UNDER THE BROAD DEFINITION IN 5 U.S.C. 8101 (1) (A) WHICH INCLUDES ALL CIVIL OFFICERS AND EMPLOYEES OF THE GOVERNMENT.

THE FINDINGS OF THE CONGRESS IN ITS HEARINGS ON THE DAVIS-BACON AMENDMENTS AND THE INDICATION FROM YOUR ASSISTANT SECRETARY'S LETTER OF OCTOBER 15, 1968, ARE TO THE EFFECT THAT PREVAILING WAGE RATES FOR EMPLOYEES IN THE CONSTRUCTION INDUSTRY INCLUDE INCREMENTS FOR FRINGE BENEFITS AS WELL AS A BASIC HOURLY RATE OF PAY. AS INDICATED ABOVE, CONGRESS REQUIRED AS A MATTER OF LAW THAT THE HOURLY COST OF SUCH BENEFITS FOR CONSTRUCTION WORKERS UNDER GOVERNMENT CONTRACTS BE INCLUDED WITHIN THE TERM "WAGES" IN ORDER THAT THE GOVERNMENT WOULD NOT BE A PARTY TO THE DESTRUCTION OF PREVAILING WAGE PRACTICES IN A LOCALITY.

IN B-53383, NOVEMBER 29, 1945, WE POINTED OUT THAT A WAGE FIXING AUTHORITY IN THE EXERCISE OF ITS NORMAL FUNCTION MAY AUTHORIZE NIGHT DIFFERENTIAL OR OTHER ELEMENTS OF A WAGE PROGRAM--- NOT OTHERWISE IN CONTRAVENTION OF LAW OR ESTABLISHED RULE APPLICABLE TO FEDERAL EMPLOYEES-- - TO CONFORM WITH COMMERCIAL PRACTICES GENERALLY WITHOUT OBTAINING SPECIAL AUTHORIZATION THEREFOR.

WHEN CONFRONTED BY A SEEMING CONFLICT BETWEEN THE PREVAILING RATE PRINCIPLE AND THE PUBLIC INTEREST REQUIREMENT IN GRANTING SAVED PAY TO UNGRADED EMPLOYEES WE STATED IN OUR DECISION 44 COMP. GEN. 476, FEBRUARY 15, 1965:

WE RECOGNIZE A DISCRETIONARY AUTHORITY IN THE HEADS OF DEPARTMENTS AND AGENCIES TO MAKE REASONABLE DEVIATIONS FROM THE PREVAILING RATE CRITERIA WHEN THE PUBLIC INTEREST REQUIRES AN EXCEPTION TO THE RULE, PARTICULARLY WHEN A BASIS FOR SUCH DEVIATIONS IS TO BE FOUND IN COMMERCIAL OR INDUSTRIAL PRACTICE OR MAY BE DERIVED FROM ACTS OF THE CONGRESS IN ANALOGOUS SITUATIONS. HOWEVER, WE ADHERE TO THE VIEW THAT THE PREVAILING RATE IS THE PRIMARY FACTOR FOR ADMINISTRATIVE CONSIDERATION WHEN IT IS NOT INCONSISTENT WITH THE PUBLIC INTEREST. IN 34 COMP. GEN. 563 WE POINTED OUT THAT THE ACTION ON THE PART OF CONGRESS IN ENACTING SALARY SAVING BENEFITS IN PARTICULAR SITUATIONS IS A CONGRESSIONAL RECOGNITION THAT THE SAVING OF PAY TO EMPLOYEES IN EQUITABLE SITUATIONS IS NOT PER SE CONTRARY TO THE PUBLIC INTEREST. SINCE THE DATE OF THAT DECISION LEGISLATION OF GENERAL APPLICATION HAS BEEN ENACTED WHICH REQUIRES THE SAVING OF PAY FOR EMPLOYEES SUBJECT TO THE CLASSIFICATION ACT OF 1949, AS AMENDED, AS WELL AS FOR EMPLOYEES IN THE POSTAL SERVICE WHO ARE DOWNGRADED UNDER CERTAIN CIRCUMSTANCES. SEE 5 U.S.C. 1107 AND 39 U.S.C. 3560, RESPECTIVELY. SUCH LEGISLATION SETS FORTH THE CONDITIONS UNDER WHICH AND THE LIMITATIONS UPON THE GRANTING OF SAVED PAY TO EMPLOYEES TO WHOM IT APPLIES. WHILE THE STATUTORY BENEFITS TOGETHER WITH THE CONDITIONS AND LIMITATIONS PLACED THEREON DO NOT APPLY TO PREVAILING RATE EMPLOYEES, THE PRESCRIBING OF SUCH CONDITIONS AND LIMITATIONS CLEARLY REFLECT THE POLICY OF CONGRESS CONCERNING THE CONDITIONS UNDER WHICH THE CONGRESS CONSIDERS IT TO BE IN THE PUBLIC INTEREST TO PRESERVE THE COMPENSATION OF THE EMPLOYEES AFFECTED BY SUCH ENACTMENTS.

IN EXAMINING THE AUTHORITY OF THE SECRETARY OF THE AIR FORCE TO ISSUE REGULATIONS REGARDING COMPENSATION FOR UNGRADED EMPLOYEES FOR TRAVEL PERFORMED ON REGULAR WORKDAYS AFTER COMPLETION OF THE USUAL TOUR OF DUTY WE HELD IN OUR DECISION OF FEBRUARY 9, 1962, B-147849, AS FOLLOWS:

UNDER AIR FORCE REGULATIONS, THE DEPARTMENT'S WAGE BOARD, WITHIN THE SCOPE OF AUTHORITY REPOSED IN IT BY THE SECRETARY, IS RESPONSIBLE FOR THE DETERMINATION OF SALARIES, WAGES, AND SUCH FRINGE WAGE BENEFITS AS ARE APPROPRIATE FOR THE DEPARTMENT'S UNGRADED CIVILIAN EMPLOYEES. CONSONANCE WITH THAT RESPONSIBILITY AND WITH SECTION 202 (7) OF THE CLASSIFICATION ACT OF 1949, AS AMENDED, 5 U.S.C. 1082 (7), EXEMPTING THE POSITIONS OF THE EMPLOYEES CONCERNED FROM THE CLASSIFICATION ACT, IT WOULD APPEAR TO BE AN ESSENTIAL FUNCTION OF THE WAGE BOARD TO DETERMINE THAT THE PROPOSED FRINGE WAGE BENEFITS ARE SUPPORTED BY PREVAILING COMMERCIAL OR INDUSTRIAL PRACTICES. WHEN BASED UPON SUCH DETERMINATIONS, SUPPLEMENTED BY FINDINGS OF COMPETENT AUTHORITY THAT THE PROPOSED WAGE BENEFITS ARE CONSISTENT WITH THE GOVERNING STATUTES AND THE PUBLIC INTEREST, NO VALID OBJECTION COULD BE INTERPOSED TO THE PROMULGATION OF REGULATIONS AUTHORIZING PAYMENT OF SUCH BENEFITS.

IF, UPON A WAGE SURVEY IN CONNECTION WITH THE PAY OF TEMPORARY FEDERAL CONSTRUCTION WORKERS IN A PARTICULAR AREA UNDER 5 U.S.C. 5341, IT IS FOUND THAT THE PREVAILING WAGE RATE FOR EMPLOYEES OF PRIVATE CONSTRUCTION CONTRACTORS ENGAGED IN SIMILAR NON-GOVERNMENT WORK OR FOR DAVIS-BACON EMPLOYEES INCLUDES THE COSTS OF CERTAIN FRINGE BENEFITS AND IT IS DETERMINED TO BE IN THE PUBLIC INTEREST NOT TO DESTROY SUCH AN AREA RATE AND ALSO TO REMAIN COMPETITIVE IN THE LABOR MARKET, OUR OFFICE WOULD HAVE NO OBJECTION TO THE INCLUSION OF NOT OTHERWISE PROVIDED FRINGE BENEFITS AS WAGE INCREMENTS ALONG WITH THE BASIC HOURLY RATE AS PART OF THE OVERALL PREVAILING RATE.