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Montana Administrative Register Notice 24-17-215 No. 12   06/21/2007    
    Page No.: 851 -- 858
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BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY

STATE OF MONTANA

 

In the matter of the amendment                                  ) NOTICE OF AMENDMENT

of ARM 24.17.127, pertaining to prevailing              )

wage rates for public works projects -                       )

building construction services,                                    )

heavy and highway construction services,                 )

and nonconstruction services                                      )

 

TO: All Concerned Persons

 

1. On April 12, 2007, the Department of Labor and Industry published MAR Notice No. 24-17-215 regarding the public hearing on the proposed amendment of the above-stated rule at page 404 of the 2007 Montana Administrative Register, issue no. 7.

 

2. On May 8, 2007, a public hearing was held at which time members of the public made oral and written comments and submitted documents. Additional written comments were received during the comment period.

 

3. The department has thoroughly considered the comments and testimony received from the public. The following is a summary of the public comments received and the department's response to those comments:

 

Comment 1: Rick Toland, of Sprinklerfitters Local 669, questioned the wages and benefits set in Districts 1, 2, and 5 for sprinklerfitters. He stated that because the union has a statewide agreement all the rates should be equal to the union rate.

 

Response 1: The department received sufficient survey response to set rates in each district. A collectively bargained rate is used only if there is insufficient survey data upon which to set a rate. The department has reviewed the rates set in Districts 1, 2, and 5 and has determined that the rates were set according to the methodology provided by state law and the implementing administrative rules.

 

Comment 2: The same commenter also asked if the comment period could be extended to incorporate a collective bargaining agreement that was in the process of being finalized.

 

Response 2: No. The building construction services rates are based upon survey responses for wages paid through the end of 2006. A collective bargaining agreement executed in 2007 would not provide information relevant to the survey period.

 

Comment 3: Rion Miles of the Operating Engineers union noted that the Operating Engineers no longer use certain locations for dispatch points, but these locations are still listed in the prevailing wage publications. He asked whether the publications could be modified to reflect this change.

 

Response 3: Because the dispatch points listed are used by all trades and crafts for calculating travel pay, the department believes that the dispatch locations need to remain in the wage rate publications. For building construction services rate-setting purposes, the Commissioner of Labor has determined the ten prevailing wage districts in accordance with 18-2-411, MCA. Each district has a designated city for computing travel pay within that district. For heavy construction and highway construction purposes the department adopts federal Davis-Bacon determinations; therefore, the towns listed in those determinations for computing travel pay are the ones used by the state of Montana.

 

Comment 4: The Montana Contractors Association also questioned the wage rate for Painters shown in the proposed Highway Construction prevailing wage publication, noting that a recent modification to the federal rates had gone into effect.

 

Response 4: The department has reviewed the proposed rates and the wage and fringe benefit rates contained in Modification Number 1 to General Decision Number MT070002, dated February 23, 2007. The department notes that the federal government issues modifications to Davis-Bacon Act rates applicable in Montana from time to time throughout the year, and may even issue multiple determinations for Montana in the course of a single year. The federal government is not required to go through a formal rulemaking process to adopt or change those rates. The department, on the other hand, is required by state law to undertake formal rulemaking to change prevailing wage rates. In order to timely update rates for 2007, the department decided to incorporate by reference the federal Davis-Bacon Act rates that were in effect on December 31, 2006. (That date also coincides with the period covered for the survey of building construction and nonconstruction service wages.) The department concludes that it is reasonable to pick a cut-off date for the adoption by reference of federal Davis-Bacon Act rate, especially given that pursuant to ARM 24.17.121(5), the adoption is done annually. Accordingly, the department declines to change the Painters rates as requested.

 

Comment 5: Keith Allen of the International Brotherhood of Electrical Workers, Local 233, questioned the rates set for Electricians in building construction services for District 3 (wages), District 4 (fringe benefits), and District 7 (wages and fringe benefits). He also stated that the rates for Heavy Construction for Electricians are 2 or 3 years old.

 

Response 5: The department has reviewed the information received during the survey period and the public comment period and has recalculated certain wage rates and fringe benefit rates in the districts noted. The fringe benefit rate for District 7 will remain at $4.65 per hour pursuant to 18-2-401(13)(a)(ii), MCA, the "50% rule". The revised rates for building construction services are listed below in paragraph 4.

 

With respect to the comment on Heavy Construction rates for electricians, the commenter is correct, in that the federal Davis-Bacon Act rates appear to be based on rates originally established about 2 years ago. The department adopts the rates set by the U.S. Department of Labor under the provisions of the Davis-Bacon Act. Please also see Response 4.

 

Comment 6: Various individuals and entities submitted additional data or documents for inclusion in the rate setting process during the comment period.

 

Response 6: The department has reviewed the information submitted. The department has incorporated the data as appropriate and has revised certain rates in line with the rate-setting standards. Revised rates are identified below in paragraphs 4 and 5.

 

Comment 7: Kim Greco, of Laborers' Local 1686, questioned the rates set for Laborers Group 1 for fringe benefits in District 5 and 6; the rates set for Laborers Group 2 for the fringe benefit rate in all districts; the rates set in Laborers Group 3 for fringe benefits in Districts 6 and 8; and the rates set for Laborers Group 4 for the fringe benefit rate in District 8.

 

Response 7: The department has reviewed information received during the survey period and the public comment period in relation to Laborers Groups 1 through 4. For Laborers Group 1, the fringe benefit rates for District 5 are changed to $6.70 per hour and the fringe benefit rate for District 5 will remain at $3.95 per hour, as the rate for District 5 was set in accordance with existing methodology and administrative rules. Likewise, the department concludes that for Laborers Group 3, the fringe benefit rates for Districts 6 and 8, and for Laborers Group 4, the fringe benefit rate in District 8, will remain as set as these rates were set in accordance with existing methodology and administrative rules. For Laborers Group 2, the fringe benefit rates in Districts 4, 8, and 10 are revised as shown in paragraph 4.

 

Comment 8: Kim Greco of Laborers' Local 1686 also commented in regards to the proposed rates for Heavy Construction, and requested that the hourly rates and fringe benefit rates be increased to those reflected in the recently submitted collective bargaining agreement.

 

Response 8: The department adopts the rates set by the U.S. Department of Labor under the provisions of the Davis-Bacon Act. Please also see Response 4.

 

Comment 9: Jim Rickard of the Montana Labor-Management Alliance, letter signed by Jim Rickard requested that Hod Carriers (listed in Laborers Group 4, Building Construction) receive the same travel allowance rates as Bricklayers, and provided documentation supporting the request.

 

Response 9: The department has reviewed this request and the accompanying documentation. It notes that the "Special Work Rules and Risk Pay" section of the submitted collective bargaining agreement states that "Hod Carriers and Brick Tenders will receive the same amount of travel pay and/or subsistence as the Bricklayers when required to travel . . . . ." Therefore, a note in the appropriate section of the Building Construction publication will be added to reflect this provision.

 

Comment 10: Jerry Laughery of the Montana Contractors Association requested a review of the zone pay rates contained in the federal Davis-Bacon Act determination being adopted for Highway Construction rates.

 

Response 10: The department has reviewed the federal determination being considered for adoption and agrees that a discrepancy exists between the copy of the determination used to prepare the Montana rates and the copy of the determination maintained in the archives located on the Internet at http://www.dol.gov. Therefore, to bring the determination in line with the federal Davis-Bacon determination, the proposed publication is changed as shown in paragraph 6 with respect to travel pay for zones 2 and 3, and for the hourly rates for cement masons, millwrights, and power equipment operators in group 5.

 

Comment 11: Cary Hegeberg of the Montana Contractors Association requested that the department undertake formal rulemaking to revise the rate setting process for the building construction trades. He stated that prior to the 2007 legislative session, there was broad agreement that the rate making process should be changed.

 

Response 11: The department will, starting this summer, hold meetings with interested parties to discuss how the rate setting process could be revised. Whether or not those suggested revisions can be implemented by rule, or whether legislative changes would be needed, is unclear at this time. The department remains committed to being open to all reasonable suggestions for changes in the rate setting process. 

 

Comment 12: Bryon Cook of aBCc Erectors Inc., objected to the method used to calculate fringe benefit rates, specifically the exclusion of survey responses that list "$0" as the fringe benefit rate. The commenter stated that this exclusion leads to the setting of fringe benefit rates that are higher than the average for the industry.

 

Response 12: The department initially notes that prevailing wage rates (including benefit rates) do not necessarily represent the "average" [the arithmetic mean] wage paid within a given industry or occupation. Section 18-2-401(13)(a)(ii), MCA, provides for the primary method of determining prevailing wages rates, and ARM 24.17.121 specifies the alternative methods to be used if the criteria of the primary method cannot be met.

 

As noted in the department's response to a similar comment made in 2005 by the same commentor, the department has historically looked at the language of 18-2-412(2), MCA, which states "The fringe benefit fund, plan, or program described in subsection (1)(b) must provide benefits to workers or employees for health care, pensions or retirement or death, life insurance, disability and sickness insurance, or bona fide programs that meet the requirements of the Employee Retirement Income Security Act of 1974 or that are approved by the United States department of labor." It is the department's conclusion that a "zero" amount does not meet the criterion of plans that "provide benefits"; therefore, "zero" amounts or negative replies are excluded from figuring the average benefit amount on the survey.

 

Comment 13: The same commenter also objected that as a nonunion employer, it was a lopsided application of the rules to require the benefit package paid on a prevailing wage project in the form of an irrevocable contribution to nonunion employees, while union employees are subject to vesting (minimum number of hours worked) requirements.

 

Response 13: The department notes that the comment appears to go to the underlying provisions of law, rather than the proposed rule amendments and the prevailing wage and benefit rates being incorporated by reference. Section 18-2-412, MCA, specifies the ways in which a contractor on a public works project may fulfill the contractor's obligations to pay the standard prevailing rate of wages, including fringe benefit amounts. The department notes that a contractor may pay the fringe benefit amount directly to the worker (18-2-412(1)(a), MCA); the contractor may make an irrevocable contribution to a trustee of an approved benefit fund or plan (18-2-412(1)(b), MCA); or a combination of the two alternatives (18-2-412(1)(c), MCA). The department respectfully suggests that if the commenter believes that the statute should be changed, the commenter should raise that issue with the Legislature.

 

Comment 14: During the comment period, department staff received a telephone call alerting the department to an apparent error in the travel allowance rates for Carpenters in Districts 4 through 10 in the proposed Building Construction publication.

 

Response 14: The department has reviewed the rates for travel pay for Carpenters in Districts 4 through 10 and has determined that a typographical error is present. Therefore, the travel pay rate for 30-50 miles is corrected from "Base Pay + $2.50" to "Base Pay + $1.50". The correction is also noted in paragraph 4.

 

Comment 15: Several commentors complimented the department's survey process for the 2006 survey cycle.

 

Response 15: The department acknowledges the comments.

 

Comment 16: Several members of the public informally asked if the department could adopt Davis-Bacon Act determinations when they are published by the federal government, without going through the public hearing process.

 

Response 16: No, it cannot. Under current law, the department must follow the rulemaking provisions of the Montana Administrative Procedure Act (Title 2, chapter 4, MCA) to establish the prevailing wage and fringe benefit rates. Section 2-4-307, MCA, expressly prohibits (with a limited exception) state agencies from adopting any later amendments or editions of materials adopted by reference (including federal regulations) without going through the rulemaking process. As noted in Response 9, the federal government changes its rates without having to go through rulemaking, and typically there is no advance notice of a federal rate change, which goes into effect on the date the rate change is announced.

 

4. The rule has been amended exactly as proposed. The following rates in "The State of Montana Prevailing Wage Rates - Building Construction Services" publication incorporated by reference in the rule have been amended as follows, stricken matter interlined, new matter underlined:

 

Carpenters:

 

Travel

Districts 4 – 10:

0-15 miles          free zone

15-30 mi             Base pay + $1.00

30-50 mi             Base pay + $2.50 $1.50

Over 50 mi          Base pay + $2.00

 

Construction laborers, group 2:

 

                               Wage Rate                   Benefit Rate

District 4                $16.02                           $4.89 $6.00

District 8                $15.26                           $6.32 $4.74

District 10              $14.50                           $2.51 $2.97

 

Electrician:

 

                                Wage Rate                   Benefit Rate

District 3                $23.85 $24.85              $9.87

District 4                $24.96 $8.09                $9.72

District 7                $23.96 $22.57              $4.65 $8.01

 

 

5. The rule has been amended exactly as proposed. The following rates in "The State of Montana Prevailing Wage Rates - Nonconstruction Services" publication incorporated by reference in the rule have been amended as follows, stricken matter interlined, new matter underlined:

 

Boiler operator:

 

                                Wage Rate                    Benefit Rate

District 2                $13.88 $18.79              $3.92 $7.45

District 3                $14.47 $16.63              $3.89 $6.62

District 6                $13.88 $18.79              $3.92 $7.45

 

Bus driver (school):

 

                                Wage Rate                      Benefit Rate

District 2                 $13.17 $11.38                $4.58 $4.77

District 3                 $12.94 $11.10                $3.95 $4.98

District 4                 $ 9.00                               $5.28 $4.05

 

Bus and truck mechanic (diesel engine):

 

                                 Wage Rate                     Benefit Rate

District 4                  $16.10                            $2.94 $4.75

 

Cook, institution or cafeteria:

 

                                  Wage Rate                     Fringe Benefits

District 3                   $6.70 $8.28                   $2.79

District 4                   $9.40 $7.95                   $3.67 $2.52

 

Janitors and cleaners:

 

                                   Wage Rate                     Benefit Rate

District 1                   $11.65 $10.45                $3.88 $5.39

 

Licensed practical nurse:

 

                                   Wage Rate                      Benefit Rate

District 8                    $16.32 $13.79                $3.67

 

Nursing aides, orderlies, and attendants:

 

                                    Wage Rate                     Benefit Rate

District 4                     $ 9.00 $ 8.75                  $1.17

 

Refuse and recyclable collectors:

 

                                    Wage Rate                      Benefit Rate

District 4                     $12.92 $13.75                $6.45

 

Sanitary landfill operator/attendant:

 

                                     Wage Rate                      Benefit Rate

District 4                      $14.27 $13.75                $1.27 $6.96

 

6. The rule has been amended exactly as proposed. The following rates in "The State of Montana Prevailing Wage Rates - Heavy and Highway Construction Services" publication incorporated by reference in the rule have been amended as follows, stricken matter interlined, new matter underlined:

 

Highway construction services:

 

Carpenters, cement masons, iron workers, laborers, power equipment operators and truck drivers:

 

Zone 2: 30 to 60 miles - Base Pay + $2.20 $2.50

Zone 3: Over 60 miles - Base Pay + $3.20 $4.00

 

Highway construction services:

 

Occupation                                                       Base pay                   Fringe benefits

Cement mason                                                $19.39 $20.36           $8.50

Millwright                                                           $21.64 $23.64           $8.85

Power equipment operator, group 5              $25.29 $25.28           $8.00

 

 

 

 

/s/ MARK CADWALLADER                         /s/ DORE SCHWINDEN

Mark Cadwallader                                          Dore Schwinden, Deputy Commissioner

Alternate Rule Reviewer                                DEPARTMENT OF LABOR AND INDUSTRY

 

 

Certified by the Secretary of State June 11, 2007

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