[Federal Register: December 19, 2008 (Volume 73, Number 245)]
[Rules and Regulations]
[Page 77504-77512]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19de08-6]
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DEPARTMENT OF LABOR
Wage and Hour Division
29 CFR Parts 3 and 5
RIN 1215-AB67
Protecting the Privacy of Workers: Labor Standards Provisions
Applicable to Contracts Covering Federally Financed and Assisted
Construction
AGENCY: Wage and Hour Division, Employment Standards Administration,
Department of Labor.
ACTION: Final rule.
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SUMMARY: In this final rule, the Department of Labor (Department or
DOL) revises regulations issued pursuant to the Davis-Bacon and Related
Acts and the Copeland Anti-Kickback Act to better protect the personal
privacy of laborers and mechanics employed on covered construction
contracts.
DATES: Effective Date: January 18, 2009, except Sec. 5.5(a)(3)(ii)(A)
and (a)(3)(ii)(B)(1), which contain information collection requirements
that have not been approved by OMB. The Wage and Hour Division will
publish a document in the Federal Register announcing the effective
date. See Supplementary Information for dates of applicability.
FOR FURTHER INFORMATION CONTACT: Richard M. Brennan, Director, Office
of Interpretations and Regulatory Analysis, Wage and Hour Division,
Employment Standards Administration, U.S. Department of Labor, Room S-
3506, 200 Constitution Avenue, NW., Washington, DC 20210; telephone:
(202) 693-0051 (this is not a toll-free number). Copies of this notice
may be obtained in alternative formats (Large Print, Braille, Audio
Tape or Disc), upon request, by calling (202) 693-0023 (not a toll-free
number). TTY/TDD callers may dial toll-free (877) 889-5627 to obtain
information or request materials in alternative formats.
Questions of interpretation and/or enforcement of regulations
issued by this agency or referenced in this notice may be directed to
the nearest Wage and Hour Division (WHD) District Office. Locate the
nearest office by calling our toll-free help line at (866) 4USWAGE
((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or
log onto the WHD's Web site for a nationwide listing of WHD District
and Area Offices at: http://www.dol.gov/esa/whd/america2.htm.
SUPPLEMENTARY INFORMATION:
I. Background
The Department published a Notice of Proposed Rulemaking in the
Federal Register on October 20, 2008 (73 FR 62229), inviting comments
until November 19, 2008, on revisions to update certain regulatory
standards to better protect worker privacy for contracts covering
federally financed and assisted construction.
II. Summary of Comments
The Department received 37 total comments on the NPRM from a
variety of individuals (7), trade and professional associations (6),
labor unions (12), governmental entities (5), Members of Congress (3
letters signed by a total of 16 members), law firms (2), and others
(2).
Four commenters generally supported the proposed rule. Of the four,
three cited protecting the employee's privacy as the major factor for
their support. The fourth comment expressed support for the
Department's goals of increased privacy and decreased burden through
electronic reporting but noted that the commenter had business
interests coextensive with such an initiative. One of these commenters,
a state government entity, believed the employer is in a better
position to protect an employee's personal information than government
agencies enforcing prevailing wage requirements.
The agency also received from several trade associations and a
government agency more specific comments in support of protecting
worker privacy and/or reducing unnecessary burdens, but suggesting
alternatives to the proposal. One commenter from a trade association
supported the Department's efforts to protect workers' privacy under
the proposed rule. The commenter, however, raised concerns that the
proposed rule could be read to prohibit subcontractors from providing
addresses and social security numbers in submissions to the prime
contractors, even though prime contractors continue to have
responsibility for compliance of subcontractors under the regulations.
As a result, the commenter recommended that the Department proceed with
the proposed rule, but clarify that ``prime contractors may continue to
require subcontractors to provide such information to the prime
contractors for its own records, without submission to the
government.'' The commenter also recommended the government expand
efforts allowing electronic payroll submission systems, to ensure the
systems are cost-efficient, reliable, and user-friendly.
One commenter from a federal government agency (United States
Department of Defense--Department of the Navy) suggested that if
address and social security information are totally unavailable to
contracting agencies, there could be an impediment for enforcement. The
commenter generally endorsed requiring contractors and subcontractors
to maintain and provide addresses and social security numbers to the
government upon request and/or that the prime contractor be required to
compile social security numbers and up-to-date addresses from
subcontractors even if they are not included in the currently-required
weekly certified payrolls. The commenter suggested adding explicit
language to the regulations to make it clear that ``failure to provide
such information on a timely basis would carry the same regulatory
consequences as failure to provide timely certified payroll reports.''
The commenter also strongly supported the submission of certified
payroll by electronic means to reduce burden.
A number of other commenters agreed that there were privacy issues
with certified payroll requirements, particularly with regard to the
use of social security numbers, but raised concerns that lack of access
to addresses and social security numbers might work as a hardship for
those monitoring compliance. For example, some noted that removing
addresses from certified payrolls may impact the ability of agencies to
locate and interview workers for the purposes of auditing prevailing
wage compliance on contracts or disbursing back wages to employees
following a finding of their employer's non-compliance. Four of these
commenters supported the continued need for some level of an individual
worker identification number and recommended the Department of Labor
consider alternatives--three suggested using the last four digits of
the social security number and one suggested creating a unique employee
identification instead.
A majority of the comments raised concerns that the proposed
changes could result in difficulties in enforcing the applicable
prevailing wage laws because weekly submissions of certified payrolls
containing social security numbers and addresses for individual workers
are useful to government investigators and auditors in ensuring
compliance with the Davis-Bacon and Related Acts and/or Copeland Act.
Some commenters also noted that contractors and subcontractors do not
always cooperate with government agencies in prevailing wage compliance
[[Page 77505]]
audits or investigations. Additional concerns raised by the commenters
include: Prevailing wage enforcement at the state and federal level
could become more costly; the change could result in increased
opportunities for fraud by contractors and subcontractors; the rule is
unnecessary because there are already safeguards in place to protect
worker privacy; and/or a superior solution would be to require better
protection (e.g., encryption of data) of the certified payrolls by
government agencies and the regulated community.
Most comments in opposition (19) were simply blanket criticisms of
the proposed changes with little to no analysis. Twelve of these
comments also argued that, because federal law generally prohibits the
release of addresses and social security numbers, the proposed rule is
not needed. Several of these commenters were members of Congress who
requested that the Department extend the comment period. Notably,
however, no other stakeholders in the regulated community requested an
extension of the comment period. A number of other commenters in this
group, and others below, criticized the length of the comment period,
but still provided timely comments.
Several commenters expressed concerns that lack of individual
identifying information could increase the time and effort necessary
for government agencies to conduct prevailing wage investigations or
audits. With regard to the privacy of workers, several commenters
suggested the alternative of requiring the government and contractors
to restrict the information to only those who need access. Several
commenters suggested that government agencies and stakeholders should
consider increasing electronic submission of certified payroll records
to improve efficiency, but did not believe that the current process was
a public burden or endangered worker privacy.
One commenter referenced the Department of Labor's Office of
Apprenticeship and the need to have individual information to verify
apprenticeship status for workers. The commenter was concerned that
with only a name to compare, and not an address and social security
number, there could be difficulties in verifying the identity of
individual workers in apprenticeship programs. The commenter also
suggested that reducing reporting requirements in general, even to
protect privacy, may increase the chance unscrupulous contractors and
subcontractors will be able to hide violations of prevailing wage
requirements to the detriment of honest contractors and subcontractors.
Several other commenters also suggested that without the current weekly
reporting requirements, some contractors and subcontractors could find
it easier to intentionally not comply with the prevailing wage laws.
One commenter stated that the proposed change erroneously places
too much value on personal privacy over the government duty to enforce
the Davis-Bacon Act. This commenter and others recommended that the
Department focus on requiring government agencies to better protect
personal identifying information rather than reduce reporting
requirements. Several commenters also questioned the Department's
assertion that this change will reduce public ``reporting burdens.''
One commenter (International Union of Operating Engineers) opposed
the proposed rule because of concerns that the change could somehow
result in ``misclassification of workers, underpayment of wages, fringe
benefit abuses and illegal kickbacks on federal construction
projects.'' This commenter also questioned the Department's statement
that contractors will continue to be required to maintain employee
addresses and social security numbers, the Department's reliance on
Building & Construction Trades Department v. Donovan, 712 F.2d 611
(D.C. Cir, 1983), and whether there was any evidence that government
agencies and contractors are unable to appropriately protect personal
information currently.
One state government agency (Illinois Department of Labor) raised
concerns that the changes could hinder efforts to enforce applicable
laws as well as its own use of home addresses and social security
numbers in state investigations. The agency also recommended the
Department consider requiring additional privacy protections from
government agencies on releasing personal identifying information
rather than reduce weekly reporting requirements.
One commenter from a state Construction Trades Council noted a
specific situation in which certified payrolls could have helped to
verify appropriate payment of prevailing wages, but the payrolls turned
out to be unhelpful because of contractor errors. In addition, the
commenter was concerned that the proposed changes could cause budget
issues as state agencies could have greater difficulty and costs in
monitoring prevailing wage compliance and conducting investigations.
Other commenters also suggested that any reduction in reporting burden
as a result of the proposed rule could be offset by the potential for
an increase in time spent by contractors and subcontractors in
responding to subsequent investigations.
One commenter, on behalf of its building and construction trade
clients, opposed the proposed rule because of concerns that the comment
period was too short, questioned whether there was any need to better
protect worker's privacy, and disagreed that there would be any actual
reduction in burden. The commenter suggested that the 30-day comment
period did not provide enough time under the Administrative Procedure
Act. Finally, the commenter noted the specific characteristics of the
construction industry could make it more likely workers will not
receive prevailing wages and/or fringe benefits without government
having access to personally identifying information on weekly certified
payrolls.
The Building and Construction Trade Department, AFL-CIO or ``BCTD''
submitted comments on behalf of 13 national and international
organizations, and more than 300 State and Local Building and
Construction Trades Councils. In addition to making a number of points
similar to those discussed above, BCTD suggested that the proposed rule
did not meet the requirements of a memorandum advising federal agencies
that significant final regulatory changes should generally be
implemented before November 2008. BCTD also: (1) Echoed concerns of
other commenters that the Department misread the Building &
Construction Trades Department v. Donovan, 712 F.2d 611 (D.C. Cir,
1983) opinion; (2) stated it did not believe the current requirements
were ``unnecessarily intrusive and clearly outweigh the privacy
concerns cited by DOL''; (3) noted the Office of Management and Budget
did not mandate reductions in the collection of social security numbers
and home addresses on certified weekly payrolls; (4) suggested the
changes could ``embolden unscrupulous contractors and subcontractors to
disregard their obligations;'' and (5) stated it did not believe the
reasons offered by the Department ``individually or collectively''
supported the proposal.
III. Summary of Pertinent Laws
Section 1 of the Davis-Bacon Act (DBA), as amended, 40 U.S.C. 3141
requires that each contract over $2,000 to which the United States or
the District of Columbia is a party for the construction, alteration,
or repair of public buildings or public works shall contain a clause
setting forth the minimum wages to be paid to various
[[Page 77506]]
classes of laborers and mechanics employed under the contract. The DBA
requires contractors or their subcontractors to pay workers employed
directly upon the site of the work no less than the locally prevailing
wages and fringe benefits paid on projects of a similar character as
determined by the Secretary of Labor. Regulations in 29 CFR part 5
contain the Davis-Bacon and Related Acts required contract clauses, and
descriptions and interpretations of the labor standards requirements.
The Copeland Anti-Kickback Act, 40 U.S.C. 3145, requires, among
other things, that contractors and subcontractors performing work on
most federally financed or assisted construction contracts furnish
weekly a statement with respect to the wages paid each worker during
the preceding week. See 29 CFR 3.3(b), 3.4. Under the regulations,
contractors must submit weekly a copy of all payrolls to the federal
agency contracting for or financing the construction project, if the
agency is a party to the contract, but if the agency is not such a
party, the contractor will submit the payrolls to the applicant,
sponsor, or owner, as the case may be, for transmission to the
contracting agency. 29 CFR 5.5(a)(3)(ii)(A). A signed ``Statement of
Compliance'' indicating the payrolls are correct and complete and that
each laborer or mechanic has been paid not less than the proper Davis-
Bacon and Related Act prevailing wage rate for the work performed must
accompany the payroll. Id. 3.3(b), 5.5(a)(3)(ii)(B). Regulations
implementing the Copeland Act are contained in 29 CFR parts 3 and 5.
The current regulations for the Davis-Bacon and Related Acts
(DBRA), 29 CFR part 5, require that certified payrolls be provided to
the contracting government office for each week of work: ``The payrolls
submitted shall set out accurately and completely all of the
information required, including `name, address, and Social Security
number of each such worker * * *.' '' 29 CFR 5.5(a)(3)(i), (ii). These
requirements flow down to subcontractors as well. Id. 5.5(a)(6).
In addition to the statutory authorities above, Reorganization Plan
No. 14 of 1950 conferred upon the Secretary of Labor the authority to
coordinate the administration and enforcement of the labor standards
provisions of the above laws by the federal agencies providing the
federal funding or assistance for the covered construction activities.
See 5 U.S.C. Appendix.
The Secretary delegated her authority under the Davis-Bacon Act, 40
U.S.C. 3141; the Copeland Act, 40 U.S.C. 3145; Reorganization Plan No.
14 of 1950; the Tennessee Valley Authority Act, 16 U.S.C. 831; and the
Contract Work Hours and Safety Standards Act, as amended, 40 U.S.C.
3701, et seq. to the Assistant Secretary for Employment Standards
Administration. See Secretary's Order 01-2008, issued May 30, 2008, and
published in the Federal Register on June 6, 2008 (73 FR 32424).
IV. Response to Comments and Discussion of Final Rule
The Department appreciates the many constructive suggestions and
criticisms of the proposal, and it has carefully considered all of the
comments, analyses, and arguments made for and against the proposed
changes.
The Department has determined that its experience in enforcing the
requirements of the Davis-Bacon and Related Acts and Copeland Act do
not require weekly submissions to the government (in the form of
certified payroll statements) to include complete social security
numbers and home addresses for individual workers (alongside the
workers' specific weekly income and benefits amounts as currently
required). The Department finds that this information is personal to
the worker and that any unnecessary disclosures and submittal to
contractors, other entities, and/or the government creates an exposure
to identity theft and the invasion of privacy for workers. The
Department believes workers in the construction industry performing
work on a covered project under the Davis-Bacon and Related Acts are
entitled to have their personal addresses and social security numbers
kept as private as possible.
In fact, the requirements for including complete social security
numbers and home addresses on certified payrolls does not comport with
recent efforts to limit the use of personally identifying information
in government generally. For example, the President recently issued
revised Executive Order No. 9397 on November 18, 2008, which amended a
1930s directive mandating the use social security numbers in
interactions with government to make it permissible instead of
mandatory: ``It is the policy of the United States that Federal
agencies should conduct agency activity that involve personal
identifiers in a manner consistent with protection of such identifiers
against unlawful use.''
Moreover, reducing the collection of information on certified
payrolls is in accord with Office of Management and Budget guidelines.
As noted in the NPRM, the Office of Management and Budget issued a
Memorandum in 2007 directing government agencies to reduce ``the volume
of collected and retained [personal identifying] information to the
minimum necessary; [and limit] access to only those individuals who
must have such access.'' OMB Memorandum M-07-16 at 2. Although several
commenters disagreed, the Department reads the Memorandum as clearly
both a directive to safeguard information and to reduce collection of
such information where possible.
Indeed, other government agencies have adopted privacy protection
policies and noted the very real dangers of identity theft. As stated
by the U.S. Social Security Administration: ``Identity theft is one of
the fastest growing crimes in America. A dishonest person who has your
Social Security number can use it to get other personal information
about you. Identity thieves can use your number and your good credit to
apply for more credit in your name. Then, they use the credit cards and
do not pay the bills. You may not find out that someone is using your
number until you are turned down for credit or you begin to get calls
from unknown creditors demanding payment for items you never bought.
Someone illegally using your Social Security number and assuming your
identity can cause a lot of problems.'' See http://www.ssa.gov/pubs/
10064.html.
As noted in more detail in the NPRM, Congress has also focused on
protecting the privacy interests of workers (see, e.g., the Privacy
Act, the Health Insurance Portability and Accountability Act (HIPAA))
and courts have specifically noted the privacy issues regarding public
disclosures of certified payrolls under the Freedom of Information Act.
See, e.g., Sheet Metal Workers Int'l Ass'n, Local No. 19 v. U.S.
Veterans Affairs, 135 F.3d 891 (3d Cir. 1998) (disclosure of names,
social security numbers, or addresses on certified payrolls would
constitute unwarranted invasion of privacy); Painting Indus. Of Haw.
Mkt. Recovery Fund v. United States Dep't of Air Force, 26 F.3d 1479
(9th Cir. 1994) (names and addresses).
The Department believes that the final rule strikes the appropriate
balance between the ability to enforce the law and the need to protect
the privacy interests of workers. Some commenters expressed concern
that the proposed change may impact enforcement or increase costs. The
Department, however, did not find the comments submitted compelling nor
does the Department's enforcement experience suggest that continued
effective enforcement and protecting the privacy interests of workers
are mutually exclusive goals. The Department also
[[Page 77507]]
has determined that the added benefits of reducing burdens to the
regulated community and government agencies and providing appropriate
flexibility to Federal agencies, State agencies, and covered
contractors and subcontractors argue in favor of the change.
In reviewing the comments, however, the Department has decided to
make several modifications to the proposal. In order to address the
concern that eliminating access to social security numbers could work
as a hardship for those monitoring compliance in circumstances where
there are multiple employees with the same names, the Department will
continue to require an individual identifying number on certified
payrolls. The Department will require that, in accord with suggestions
received from the public, that certified payrolls continue to include a
line item for contractors and subcontractors to include an individual
identifying number for tracking purposes, which in virtually all cases,
should be the last four digits of the workers' social security number.
This will substantially limit the possibility of identity theft while
still ensuring workers can be separately identified effectively by
auditors and investigators.
In addition, contractors and subcontractors will be required to
maintain and provide data to investigators demonstrating the
appropriate payment of prevailing wages, including complete social
security numbers and current home addresses for laborers and mechanics
employed on covered contracts. This obligation is identified in the
current regulations and will remain unchanged. Thus, government
agencies and the Department of Labor remain entitled to request or
review all relevant payroll information, including the addresses and
social security numbers of individual workers, from contractors or
subcontractors. In addition, prime contractors will continue to have an
obligation to assist the government in auditing or investigating
compliance, including assisting the government in obtaining records
from subcontractors if necessary. In order to better delineate the
obligations and responsibilities of contractors and subcontractors to
cooperate and assist in audits or investigations regarding prevailing
wage requirements, the Department has adopted the suggestion of one of
the commenters to make this more explicit in the regulations as part of
the final rule.
With regard to the suggestion that the Department instead require
better safeguards of the information, the Department believes
contractors, subcontractors and government agencies (as well as
applicants, sponsors, and owners where they are involved in a covered
project) have a general obligation to safeguard the personally
identifying information of workers. The Department, however, does not
believe it would be appropriate to require that certified payrolls be
subject to some sort of one-size-fits-all protection such as encryption
or restriction to use or review by specific persons only. Each
government agency, contractor, and subcontractor may have different
methods of safeguarding information, and the Department does not
believe it is in a position to mandate any particular method that will
be appropriate to all situations. In general, the Department believes
the best way to prevent the misuse or loss of personally identifying
information is not to require contractors, applicants, sponsors,
owners, or government agencies to disseminate it unless necessary for a
compelling government interest. To the extent information must be
gathered to ensure prevailing wage law compliance, the individual
government agencies and regulated community are in the best position to
decide how to manage the information received and request additional
information so personally identifying information is not lost or
misused. As such, the Department has declined to add or substitute
language mandating any particular type of security for certified
payrolls.
With regard to concerns that any reduction in reporting will lead
to fraud or less compliance or added costs, the Department does not
believe the comments provide any concrete basis to support this
allegation. Certified payrolls will continue to include all required
wage and hour data, names and a personal identification number. Under
the revised regulations, contractors and subcontractors will certify
that they are maintaining the remaining information. The revised
regulations require contractors and subcontractors to provide such
information on request. Thus, the revised regulations do not limit the
ability of investigators or auditors to get the appropriate
information; rather, the revised regulations simply prevent the
indiscriminate free-flow of personally identifiable information when
the government has no need for it. In addition, most contractors and
subcontractors on DBRA-covered projects make good faith efforts to
abide by the law; violations often derive from a misunderstanding
rather than intent. The Department does not believe this will change
simply because the regulated community is no longer required to report
their employees' home addresses and full social security numbers every
week on certified payrolls. Moreover, contractors and subcontractors
that falsify certify required certifications will continue to be
subject to possible civil and criminal prosecution. See 29 CFR
5.5(a)(ii)(D).
With regard to suggestions that there is no evidence this change is
necessary, the Department disagrees. Although the Department is unaware
of any organized identity theft activity utilizing certified payrolls,
there are daily examples of accidental disclosures of personally
identifying information or intentional theft of such information. For
example, on December 5, 2008, the Wall Street Journal reported that a
state-level agency accidentally put the Social Security numbers of
about 250,000 job seekers on the Internet for 19 days before a separate
state agency noticed the security breach. The federal government has
also lost computers or data containing significant amounts of
personally identifying information (PII), including social security
numbers and personal addresses. See, e.g., http://www.usa.gov/
veteransinfo.shtml (discussing 2006 PII data breaches/ computer
thefts). Similarly, cities and labor unions have had identity theft
occur in circumstances where personally identifying information is
required to be disclosed to labor unions by the government. See, e.g.,
Bell v. Michigan Council 25, No. 246684, 2005 WL 356306 (Mich. App.
Feb. 15, 2005) (City of Detroit employees and members of AFSCME Local
1023 sued union local and union treasurer for negligence when they
suffered identity theft at hands of union treasurer's daughter). While
it is unquestionable that government uses PII for legitimate purposes
in many instances, there is certainly an interest in reducing the
gathering and storing of PII to prevent the opportunity for identity
theft and invasion of privacy. Moreover, the burden reduction
identified below for the regulated community suggests there are added
benefits that outweigh any alleged costs.
Several commenters questioned the Department's interpretation of
Building & Const. Trades' Dept., AFL-CIO v. Donovan, 712 F.2d 611 (D.C.
Cir. 1983). The court in that case held that the Copeland Act required
covered contractors and subcontractors performing work on most
federally financed or assisted construction contracts to furnish weekly
a statement with respect to the wages paid each worker during the
preceding week. Importantly, however, the court noted that there was no
specific requirement
[[Page 77508]]
for what individualized wage information for each covered worker was
necessary on the certified payroll submissions. See id. at 633. As
noted in the NPRM, the Department does not believe there is any
statutory requirement that the Department require social security
numbers or addresses on certified payroll and a clear reading of the
statutory law and the decision is that the Department has discretion
for the specific requirements of weekly disclosures as long as the
disclosures provide an appropriate amount of information. The
Department therefore disagrees with the commenters' alternative
characterization of the court's decision.
Similarly, one commenter's suggestion that there is some
impropriety to the proposal based on the 30-day comment period under
the Administrative Procedure Act is mistaken. The APA does not specify
a particular comment period. For the very minor nature of the proposal
in this case, 30 days is not overly short. Moreover, only a few
commenters (all of whom were members of Congress) requested an
extension at all, so there is no evidence the short period limited the
public in their attempts to provide meaningful comments.
The Department also does not find that a May 2008 Memorandum from
the White House Chief of Staff limits its right to finalize this rule
as commenters suggested. The Memorandum specifically states that it was
not intended to alter or impede government agencies in performing their
responsibilities and that part of its purpose is to ensure agencies
design regulations to minimize costs and maximize benefits. Therefore,
the Department notes the May 2008 Memorandum does not preempt the 2007
OMB Memorandum M-07-16 discussed above nor the President's revised
Executive Order No. 9397 of November 18, 2008--both of which promote
agency compliance with limiting the collection and use generally of
personally identifying information.
With regard to addresses of covered construction workers, it should
be noted that this is not a substantial change to the current certified
payroll requirements. The instructions to WHD's optional Form WH-347,
which is a model for certified payroll submissions, currently specifies
that addresses are only required for the first time the laborer or
mechanic performs work on the contract and whenever there is a change
of address. The final rule further limits that disclosure slightly by
bringing the regulatory provisions in line with information collection
needs--requiring contractors and subcontractors to make addresses and/
or social security numbers of covered workers available to DOL or other
government agency investigators and auditors upon request but not in
weekly reports that are disseminated to a wider audience.
Accordingly, after a detailed review of the comments provided and
consideration of the regulation in accordance with statutory
requirements, the Department has determined that the requirement to
furnish weekly a detailed payroll with respect to the wages paid each
employee during the preceding week can be satisfied by a weekly
submission of a payroll without home addresses and complete social
security numbers. The regulatory changes merely remove the requirement
to include a complete social security number and home address of each
individual worker from documents that are provided weekly to the
workers' non-employing government agencies, contractors,
subcontractors, applicants, sponsors, and/or owners.
This change is in keeping with the Administration's overall
objective of protecting the privacy interests of this nation's workers
and reducing reporting burdens imposed on the public. Also, the
Department believes the current requirement creates a burden on
contractors and the government to safeguard copies of certified
payrolls containing this type of personally identifying information
regarding each week of every covered project. For example, one
commenter noted a frequent need to redact just this sort of information
in response to Freedom of Information Act (FOIA) requests. By removing
this information from certified payrolls, the government will have less
information to redact in responding to entities requesting copies of
certified payrolls under the FOIA, which will save the government time
and costs as well as improve speed in responding to such requests from
the public.
Importantly, the final regulation does not change the requirement
that the addresses and social security numbers of covered workers be
maintained and made available to government agencies upon request to
permit government agencies to investigate compliance with the
requirements of the Davis-Bacon and Related Acts and/or Copeland Act,
29 CFR 5.5(a)(3)(i), (iii). In response to commenters noting some
difficulty with retrieving this type of information upon occasion,
however, the Department is providing explicitly in the revised text of
the regulatory provisions (which is incorporated into covered
construction contracts) that contractors and subcontractors must
maintain this information and make it available upon request to
government investigators and auditors.
Two implementing changes are needed to other aspects of the
regulations to bring them in line with the final rule. WHD's optional
Form WH-347, which is a model for certified payroll submissions, is to
be amended to reflect these requirements and was the subject of a
Paperwork Reduction Act notice as discussed more fully below. A
conforming change to the certification required for certified payrolls
is also included in the final rule regulatory text (changing the
certification to that required to be provided by the final rule).
The Department received no comments on two issues noted in the
proposal and so is implementing the two ministerial changes to reflect
current practices. The first of these eliminates references in the
regulations to Form WH-348, as the agency no longer sponsors the form.
See 29 CFR 3.3(b). The information previously presented on Form WH-348
appears on Form WH-347 and was duplicative. In addition, the rule
revises how interested parties may obtain Form WH-347, as the form is
no longer available for purchase through the Government Printing
Office. See 29 CFR 3.3(b) and 5.5(a)(3)(ii)(A).
Also, because the changes being made are minor and result in a net
reduction in burden, the Department has determined that a 30-day
effective date is appropriate. See section XVI below.
V. Paperwork Reduction Act
The Office of Management and Budget (OMB) has assigned control
number 1215-0149 to the Davis-Bacon Certified Payroll information
collection. In accordance with the Paperwork Reduction Act of 1995
(PRA), the October 20, 2008, NPRM solicited comments on the proposed
revisions to this information collection. 44 U.S.C. 3506(c)(2). The
Department also submitted a contemporaneous request for OMB review of
the proposed revisions, in accordance with 44 U.S.C. 3507(d). On
October 28, 2008, the OMB issued a notice that continued the current
authority for existing information collection requirements. The OMB
also asked the Department to resubmit the information collection
request upon promulgation of a final rule and after considering public
comments on the NPRM. While the Department received comments regarding
substantive aspects of the information collection, no comments directly
addressed the methodology for
[[Page 77509]]
estimating the public burden under the PRA.
Under the final rule, the contractor's staff must still perform a
search/research function to pull each employee's social security number
from its records to encode the last four digits as an identifier, and
the burden computation for the final rule must include all the time
involved in searching for and compiling the required data. Thus, there
will be less of a reduction in burden for omitting portions of the
Social Security numbers that are not put onto the weekly certified
payroll report forms. DOL therefore is amending the burden reduction in
the estimate from the original two minutes to a one minute reduction
(per response). Accordingly, the Department has revised its estimate
that each response to this information collection takes approximately
54 minutes to 55 minutes. In order to facilitate a full understanding
of all the issues involved and avoid unnecessary duplicative
statements, public comments addressing the information collection
requirements imposed by this final rule are discussed in the comment
summary portion of this preamble.
Interested parties may obtain a prototype Davis-Bacon Certified
Payroll, Form WH-347, via the Wage and Hour Division's Forms Web site
at http://www.dol.gov/esa/whd/forms/wh347instr.htm, by contacting the
Wage and Hour Division at 1-866-4US-WAGE (1-866-487-9243), or by
visiting a Wage and Hour Division District Office. A list of District
Office addresses is available on the Internet at http://www.dol.gov/
esa/whd/america2.htm. Form WH-347 is also available through the
forms.gov Web site. While use of Form WH-347 is optional, it is
mandatory for contractors performing on covered projects to provide the
information specified in 29 CFR 3.3, 5.5(a)(3). Responses are not
confidential; however, FOIA exemptions may allow for the redaction of
certain information that respondents submit. In addition, the
Department as well as contracting agencies use the information provided
in administering the labor standards provisions of covered Federally
financed or assisted construction projects. The information also may be
used in administrative and legal proceedings.
Generally, an agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid OMB control number. 5 CFR 1320.8(b)(3)(vi).
The Department has resubmitted the revised Davis-Bacon Certified
Payroll information collection to the OMB for approval, and the
Department intends to publish a notice announcing the OMB's decision
regarding this information collection request. A copy of the
information collection request can be obtained at http://
www.RegInfo.gov or by contacting the Wage and Hour Division as shown in
the FOR FURTHER INFORMATION CONTACT section of this preamble. The terms
of the existing information collection authorization will remain in
effect until the OMB finally approves the new information collection
request or this final rule takes effect on January 18, 2009, whichever
date is later.
Purpose and Use: The Copeland Act requires contractors and
subcontractors performing work on most federally financed or assisted
construction contracts to furnish weekly a statement with respect to
the wages paid each worker during the preceding week. See 40 U.S.C.
3145; 29 CFR 3.3(b), 3.4. Contractors must submit weekly a copy of all
payrolls to the federal agency contracting for or financing the
construction project, if the agency is a party to the contract, but if
the agency is not such a party, the contractor will submit the payrolls
to the applicant, sponsor, or owner, as the case may be, for
transmission to the contracting agency. 29 CFR 5.5(a)(3)(ii)(A). A
signed ``Statement of Compliance'' indicating the payrolls are correct
and complete and that each laborer or mechanic has been paid not less
than the proper Davis-Bacon Act prevailing wage rate for the work
performed must accompany the payroll. Id. 3.3(b), 5.5(a)(3)(ii)(B).
Contractors must also maintain these records for three years after
completion of the work. Id. 3.4(b), 5.5(a)(3)(i).
More specifically, the current regulations require contractors
performing work on projects subject to Davis-Bacon Act provisions to
retain the name, address, social security number, correct
classification, hourly rates of wages paid (including rates of
contributions or costs anticipated for bona fide fringe benefits or
cash equivalents thereof of the types described in Davis-Bacon Act
section 1(b)(2)(B)), daily and weekly number of hours worked,
deductions made, and actual wages paid to each worker on the contract.
Id. 5.5(a)(3)(i). Whenever the Secretary of Labor has found under 29
CFR 5.5(a)(1)(iv) that the wages of any laborer or mechanic include the
amount of any costs reasonably anticipated in providing benefits under
a plan or program described in Davis-Bacon Act section 1(b)(2)(B), the
contractor must maintain records showing that the commitment to provide
such benefits is enforceable, that the plan or program is financially
responsible, that the plan or program has been communicated in writing
to the laborers or mechanics affected, and the anticipated or actual
costs incurred in providing such benefits. Id. Contractors employing
apprentices or trainees under approved programs must maintain written
evidence of the registration of apprenticeship programs and
certification of trainee programs, the registration of the apprentices
and trainees, and the ratios and wage rates prescribed in the
applicable programs. Id.
Under this final rule, the Department is only removing the
regulatory requirement that the weekly payroll submitted to the
contracting agency contain each worker's entire social security number
and address. The proposal does not remove the requirement for worker
addresses and social security numbers to be retained in records
maintained by the contractor or subcontractor. Id. 5.5(a)(3)(i). See
also id. 5.5(a)(6). Government contracting officials and WHD staff may
use the records maintained by contractors and subcontractors as well as
the weekly certified payrolls to verify payment of the required wages
for the work performed.
The Department has developed optional use Form WH-347, Payroll
Form, which contractors may use to meet the payroll reporting
requirements. Id. 3.3(b), 5.5(a)(3)(ii)(A). The form contains the basic
payroll information that contractors must furnish each week they
perform any work subject to Davis-Bacon Act provisions. The contractor
also completes, dates, and signs a statement on the reverse side of the
form to meet the certification requirement. The contractor submits the
completed form weekly to the contracting agency. 29 CFR
5.5(a)(3)(ii)(A).
Information Technology: In accordance with the Government Paperwork
Elimination Act (GPEA), 44 U.S.C. 3504, the WHD has posted Form WH-347
on the Internet (http://www.dol.gov/esa/whd/forms/wh347.pdf) in a
printable and fillable format that automatically performs some
mathematical calculations. Individual contracting agencies determine
any electronic submission options, because contractors submit the
information directly to each contracting agency, not to the Department.
29 CFR 5.5(a)(3)(ii)(A).
In 2004, WHD issued a letter to the U.S. Army Corps of Engineers
and the Federal Highway Administration advising that the submission of
electronic signatures satisfied the
[[Page 77510]]
requirements of the Copeland Act and its regulations. Similarly, the
submission of photocopies or other automated duplication of the
contractor's regular payrolls containing all of the required
information pertinent to the government construction project(s) is
sufficient to satisfy the payroll data requirements. 29 CFR
5.5(a)(3)(ii)(A).
A number of commenters on the proposed rule noted that there were
additional applications and methods to improve efficiency in satisfying
regulatory requirements and all commenters who discussed the issue
endorsed additional use of technology, including electronic filing of
certified payrolls. It is the Department's understanding that Web-based
certified payroll compliance solutions exist and that some agencies and
contractors have set up systems to comply electronically already. While
a number of commenters suggested that the Department further study and
endorse these initiatives, the Department of Labor has determined that
specific methods of implementing cost savings and efficiencies through
more effective use of technology are best left to the contracting
community and individual government agencies. DOL encourages all
government agencies to review proposals to allow contractors to submit
information electronically or through allowing access to an appropriate
agency approved limited-access Web-based portal providing the required
information and certification. The Department believes these efforts,
if properly reviewed and implemented in accord with this final rule and
data privacy requirements, will decrease burden, increase the efficient
use of resources and better ensure timely submission of certified
payrolls to improve compliance. The Department therefore supports
agencies in exploring and implementing any additional methods to
improve efficient compliance with the certified payroll requirements.
Public Burden Estimates: This final rule introduces no new
information collection requirements nor proposes any substantive or
material changes to the existing information collection requirements
noted above. The Department, however, is removing the requirement to
report an employee's entire social security number and home address
weekly, which the Department estimates will reduce the average
reporting time from an average of 56 minutes per response to 55 minutes
per response.
The Department bases the following burden estimates for this
information collection on agency experience, except as otherwise noted.
F.W. Dodge Report data for the period June 1, 2007, through May 31,
2008, indicate there were 109,323 State and local construction projects
and 3032 federal construction projects. The Department estimates that
approximately 33 percent of State and local construction projects
utilize federal funds, resulting in an estimated 36,077 State and local
construction projects being subject to Davis-Bacon labor standards
(109,323 projects x 33 percent). Added to the 3032 federal projects,
this would be an estimated 39,109 annual projects subject to Davis-
Bacon labor standards.
The Department estimates these projects have an average of 8
contractors or subcontractors, resulting in 312,872 individual
contractor and subcontractor projects (39,109 projects x 8 contractors
and subcontractors per project = 312,872 individual projects).
To yield the estimated number of respondents, the Department
estimates that, on a per capita basis, each covered construction
contractor annually works on an average of four projects subject to
Davis-Bacon Act provisions. Thus, 312,872 individual projects divided
by 4 Davis-Bacon projects per contractor equals 78,218 respondents.
The Department also estimates that a typical contractor or
subcontractor on average submits 23 certified payrolls per individual
project. Thus, 312,872 individual projects multiplied by 23 weekly
responses equal 7,196,056 total annual responses.
The 7,196,056 responses multiplied by 55 minutes (estimated time to
complete Form WH-347 or its equivalent) equal 395,783,080 minutes or
6,596,385 hours (rounded).
An agency may not conduct an information collection unless it has a
currently valid OMB approval and the Department has submitted the
identified information collections contained in the rule to the OMB for
review under the PRA. See 44 U.S.C. 3507(d); 5 CFR 1320.11. Please note
that the current authorization for the Davis-Bacon Certified Payroll
information collection expires April 30, 2009. On December 1, 2008, the
Department's routine Paperwork Reduction Act notice for extension of
the existing Davis-Bacon information collection requirements that are
also the subject of this final rule closed. 73 FR 57153. No comments
were received.
VI. Executive Order 12866; Small Business Regulatory Enforcement
Fairness Act; Regulatory Flexibility
This rule is not economically significant within the meaning of
Executive Order 12866, or a ``major rule'' under the Unfunded Mandates
Reform Act or Section 801 of the Small Business Regulatory Enforcement
Fairness Act.
The Department believes that a reduction in the amount of
information required on certified payrolls provided weekly under Davis-
Bacon is a reduction in regulatory compliance costs. While some
contractors may have to slightly reconfigure their systems to produce
the revised version, most have access to computerized systems that can
easily be revised to remove data. Those contractors who currently use
the optional WH Form will actually have an overall decrease of total
administrative costs.
Conclusion: The Department concludes that incorporating these
changes into the Davis-Bacon regulations will not impose any measurable
costs on any private or public sector entity.
Furthermore, because the rule will not impose any measurable costs
on employers, the Department certifies that it would not have a
significant economic impact on a substantial number of small entities.
Accordingly, the Department need not prepare a regulatory flexibility
analysis under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
The Department has certified this conclusion to the Chief Counsel for
Advocacy of the Small Business Administration.
VII. Unfunded Mandates Reform Act
This rule has been reviewed in accordance with the Unfunded
Mandates Reform Act of 1995 (UMRA). 2 U.S.C. 1501 et seq. For the
purposes of the UMRA, the Department certifies that this rule does not
impose any federal mandate that may result in increased expenditures by
State, local, or tribal governments, or increased expenditures by the
private sector, of more than $100 million in any year.
VIII. Executive Order 13132 (Federalism)
The Department has reviewed this rule in accordance with the
Executive Order on Federalism (Executive Order 13132, 64 FR 43255, Aug.
10, 1999). This rule does not have federalism implications as outlined
in E.O. 13132. The rule does not have substantial direct effects on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government.
[[Page 77511]]
IX. Executive Order 13175, Indian Tribal Governments
The Department has reviewed this rule under the terms of Executive
Order 13175 and determined it did not have ``tribal implications.'' The
rule does not have ``substantial direct effects on one or more Indian
tribes, on the relationship between the Federal government and Indian
tribes, or on the distribution of power and responsibilities between
the federal government and Indian tribes.'' As a result, no tribal
summary impact statement has been prepared.
X. Effects on Families
The Department certifies that this rule will not adversely affect
the well-being of families, as discussed under section 654 of the
Treasury and General Government Appropriations Act, 1999.
XI. Executive Order 13045, Protection of Children
The Department has reviewed this rule under the terms of Executive
Order 13045 and determined this action is not subject to E.O. 13045
because it is not economically significant as defined in E.O. 12866 and
it does not impact the environmental health or safety risks of
children.
XII. Environmental Impact Assessment
The Department has reviewed this rule in accordance with the
requirements of the National Environmental Policy Act of 1969 (NEPA),
42 U.S.C. 4321 et seq., the regulations of the Council of Environmental
Quality, 40 CFR part 1500 et seq., and the Departmental NEPA
procedures, 29 CFR part 11, and determined that this rule will not have
a significant impact on the quality of the human environment. There is,
thus, no corresponding environmental assessment or an environmental
impact statement.
XIII. Executive Order 13211, Energy Supply
The Department has determined that this rule is not subject to
Executive Order 13211. It will not have a significant adverse effect on
the supply, distribution or use of energy.
XIV. Executive Order 12630, Constitutionally Protected Property Rights
The Department has determined that this rule is not subject to
Executive Order 12630 because it does not involve implementation of a
policy ``that has taking implications'' or that could impose
limitations on private property use.
XV. Executive Order 12988, Civil Justice Reform Analysis
The Department drafted and reviewed this final rule in accordance
with Executive Order 12988 and determined that the rule will not unduly
burden the federal court system. The rule was: (1) Reviewed to
eliminate drafting errors and ambiguities; (2) written to minimize
litigation; and (3) written to provide a clear legal standard for
affected conduct and to promote burden reduction.
XVI. Dates of Applicability
The revisions to Sec. 5.5(a)(3)(ii)(A) and (B)(1) of Part 5 shall
be applicable only as to contracts entered into pursuant to invitations
for bids issued or negotiations concluded on or after the effective
date of this rule, which is January 18, 2009.
List of Subjects
29 CFR Part 3
Government contracts, Labor, Paperwork, Law enforcement.
29 CFR Part 5
Government contracts, Labor, Paperwork, Law enforcement.
Signed at Washington, DC, this 11th day of December 2008.
Victoria A. Lipnic,
Assistant Secretary, Employment Standards Administration.
Alexander J. Passantino,
Acting Administrator, Wage and Hour Division.
0
For the reasons set forth above, Title 29, Subtitle A of the Code of
Federal Regulations is amended by amending parts 3 and 5 as follows:
PART 3--CONTRACTORS AND SUBCONTRACTORS ON PUBLIC BUILDING OR PUBLIC
WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE
UNITED STATES
0
1. The authority citation for Part 3 is revised to read as follows:
Authority: R.S. 161, sec. 2, 48 Stat. 848; Reorg. Plan No. 14 of
1950, 64 Stat. 1267; 5 U.S.C. 301; 40 U.S.C. 3145; Secretary's Order
01-2008; and Employment Standards Order No. 2001-01.
0
2. Amend Sec. 3.3 by revising paragraph (b) to read as follows:
Sec. 3.3 Weekly statement with respect to payment of wages.
* * * * *
(b) Each contractor or subcontractor engaged in the construction,
prosecution, completion, or repair of any public building or public
work, or building or work financed in whole or in part by loans or
grants from the United States, shall furnish each week a statement with
respect to the wages paid each of its employees engaged on work covered
by this part 3 and part 5 of this title during the preceding weekly
payroll period. This statement shall be executed by the contractor or
subcontractor or by an authorized officer or employee of the contractor
or subcontractor who supervises the payment of wages, and shall be on
the back of Form WH 347, ``Payroll (For Contractors Optional Use)'' or
on any form with identical wording. Copies of Form WH 347 may be
obtained from the Government contracting or sponsoring agency or from
the Wage and Hour Division Web site at http://www.dol.gov/esa/whd/
forms/wh347instr.htm or its successor site.
* * * * *
PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING
FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS
PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE
CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)
0
3. The authority citation for part 5 is revised to read as follows:
Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization
Plan No. 14 of 1950, 5 U.S.C. appendix; 40 U.S.C. 3141 et seq.; 40
U.S.C. 3145; 40 U.S.C. 3148; 40 U.S.C. 3701 et seq.; and the laws
listed in 5.1(a) of this part; Secretary's Order 01-2008; and
Employment Standards Order No. 2001-01.
0
4. Amend Sec. 5.5 paragraphs (a)(3)(ii)(A) and (a)(3)(ii)(B)(1 ) by
revising to read as follows:
Sec. 5.5 Contract provisions and related matters.
(a) * * *
(3) * * * (ii)(A) The contractor shall submit weekly for each week
in which any contract work is performed a copy of all payrolls to the
(write in name of appropriate federal agency) if the agency is a party
to the contract, but if the agency is not such a party, the contractor
will submit the payrolls to the applicant, sponsor, or owner, as the
case may be, for transmission to the (write in name of agency). The
payrolls submitted shall set out accurately and completely all of the
information required to be maintained under 29 CFR 5.5(a)(3)(i), except
that full social security numbers and home addresses shall not be
included on weekly transmittals. Instead the payrolls shall only need
to include an individually
[[Page 77512]]
identifying number for each employee (e.g., the last four digits of the
employee's social security number). The required weekly payroll
information may be submitted in any form desired. Optional Form WH-347
is available for this purpose from the Wage and Hour Division Web site
at http://www.dol.gov/esa/whd/forms/wh347instr.htm or its successor
site. The prime contractor is responsible for the submission of copies
of payrolls by all subcontractors. Contractors and subcontractors shall
maintain the full social security number and current address of each
covered worker, and shall provide them upon request to the (write in
name of appropriate federal agency) if the agency is a party to the
contract, but if the agency is not such a party, the contractor will
submit them to the applicant, sponsor, or owner, as the case may be,
for transmission to the (write in name of agency), the contractor, or
the Wage and Hour Division of the Department of Labor for purposes of
an investigation or audit of compliance with prevailing wage
requirements. It is not a violation of this section for a prime
contractor to require a subcontractor to provide addresses and social
security numbers to the prime contractor for its own records, without
weekly submission to the sponsoring government agency (or the
applicant, sponsor, or owner).
(B) * * *
(1) That the payroll for the payroll period contains the
information required to be provided under Sec. 5.5 (a)(3)(ii) of
Regulations, 29 CFR part 5, the appropriate information is being
maintained under Sec. 5.5 (a)(3)(i) of Regulations, 29 CFR part 5, and
that such information is correct and complete;
* * * * *
[FR Doc. E8-29886 Filed 12-18-08; 8:45 am]
BILLING CODE 4510-27-P