BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY
STATE OF MONTANA
In the matter of the amendment of ARM 24.17.107 and 24.17.121 and the adoption of NEW RULES I through III pertaining to prevailing wage rates and districts for public works projects
NOTICE OF AMENDMENT AND ADOPTION
TO: All Concerned Persons
1. On August 22, 2013, the Department of Labor and Industry published MAR Notice No. 24-17-277 pertaining to the public hearing on the proposed amendment and adoption of the above-stated rules on page 1479 of the 2013 Montana Administrative Register, Issue Number 16.
2. The department has amended ARM 24.17.121 as proposed.
3. The department has adopted the following new rules as proposed: NEW RULE I (24.17.119) and NEW RULE III (24.17.120).
4. The department has amended the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
24.17.107 PREVAILING WAGE DISTRICTS ESTABLISHED (1) remains as proposed.
(2) The districts are composed of the following counties:
(a) and (b) remain as proposed.
(c) District 3: Blaine,
Carbon, Cascade, Chouteau, Fergus, Gallatin, Golden Valley, Hill, Judith Basin, Meagher, Musselshell, Park, Petroleum, Phillips, Stillwater, Sweet Grass, and Wheatland;
(d) District 4: Big Horn, Carbon, Carter, Custer, Daniels, Dawson, Fallon, Garfield, McCone, Musselshell, Powder River, Prairie, Richland, Roosevelt, Rosebud, Sheridan, Stillwater, Treasure, Valley, Wibaux, and Yellowstone.
(3) remains as proposed.
AUTH: 18-2-431, MCA
IMP: 18-2-411, MCA
5. The department has adopted the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
NEW RULE II (24.17.122) ESTABLISHING THE STANDARD PREVAILING RATE OF WAGES AND FRINGE BENEFITS – NONCONSTRUCTION SERVICES (1) The commissioner shall establish the standard prevailing rate of wages and fringe benefits for the various occupations engaged in nonconstruction services in each district. Although the commissioner establishes wage rates and fringe benefit rates separately, an employer's obligation to pay the "prevailing rate of wages" includes paying the combined value of both wages and fringe benefits, including travel,
zone pay, and per-diem.
(2) remains as proposed.
(3) Based on survey data collected by the department for each district, the commissioner will compile wage rate information for a given occupation that reflects wage rates actually paid to workers engaged in public works or commercial projects. Wage rates calculated through the survey for each occupation will be established using the following procedure:
(a) If a minimum of 10 or more workers is reported for the occupation within the district and 50 percent or more of those workers receive the same wage,
then the higher of that wage or the highest applicable collectively bargained that rate is the prevailing wage rate for that occupation in that district.
(b) If 10 or more workers are reported for the occupation within the district but 50 percent of those workers are not paid the same wage,
then the higher of the weighted average wage rate , or the highest applicable collectively bargained rates is the prevailing wage rate for that occupation in that district.
(c) through (f) remain as proposed.
(4) Based on survey data collected by the department for each district, the commissioner will compile fringe benefit information for a given occupation that reflects fringe benefits actually paid to workers engaged in public works or commercial projects. A single fringe benefit rate calculated through the survey for each occupation will be established for bona fide benefits paid or contributed to approved plans, funds, or programs for health insurance, life insurance, pension or retirement, vacations, holidays, and sick leave using the following procedure:
(a) If a minimum of 10 or more workers is reported for the occupation within the district and 50 percent or more of those workers receive the same dollar value of fringe benefits,
then the higher of that rate or the highest applicable collectively bargained that rate is the prevailing fringe benefit rate for that occupation in that district.
(b) If 10 or more workers are reported for the occupation within the district but 50 percent of those workers are not paid the same fringe benefit rate,
then the higher of the weighted average fringe benefit rate or the highest applicable collectively bargained rate is the prevailing fringe benefit rate for that occupation in that district.
(c) through (7) remain as proposed.
AUTH: 18-2-431, MCA
IMP: 18-2-401, 18-2-402, 18-2-403, 18-2-415, 18-2-419, MCA
6. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:
COMMENT #1: Bill Bentley, Executive Manager, NECA; Marty Wollenburg, Business Manager, IBEW Local 532; and Henry Cellmar, Business Manager, UA Local 30, support the rule changes, but suggest moving Carbon, Musselshell, and Stillwater counties from district 3 to district 4.
RESPONSE #1: The department acknowledges that contractors based out of Billings typically perform the majority of the work in Carbon, Musselshell, and Stillwater counties. The department finds it is reasonable to pay travel/per diem or zone pay, whichever is applicable, from Billings to projects located in these counties rather than from other dispatch points. Therefore, the department determines it is appropriate to move Carbon, Musselshell, and Stillwater counties from district 3 to district 4 and amends ARM 24.17.107 to reflect this change.
COMMENT #2: Keith Allen, Business Manager, IBEW Local 233, supports the creation of five districts instead of four. He also suggests that Carbon, Musselshell, and Stillwater counties be moved to district 4.
RESPONSE #2: The department respects Mr. Allen's position, which favors five districts. However, at the June 13, 2013, meeting of stakeholders, a majority of interested parties in an informal poll voted in favor of four districts. The department determines it is appropriate to move forward with four districts at this time, while removing Carbon, Musselshell, and Stillwater counties from district 3 and designating them to district 4.
COMMENT #3: Mario Martinez, Service Representative, Carpenters Local 82, and Mickey Mulholland, Business Representative, LIUNA 1686 support the proposed rule amendments and new rules, as published.
RESPONSE #3: The department acknowledges the comments.
COMMENT #4: Amy Christensen, representing Boyd Andrew Services, comments that New Rule II implements 18-2-415, MCA, which authorizes the use of collective bargaining agreements to establish a prevailing wage in nonconstruction services only when insufficient data supports the establishment of a prevailing wage on the basis of actual wages paid and not as proposed in New Rule II (3)(a) and (b) and (4)(a) and (b).
RESPONSE #4: Section 18-2-415, MCA, directs how prevailing wages are to be established for nonconstruction services and specifically directs how the department must set the rate when 50% of the workers make the same wage or fringe. The commenter is correct that when the department survey of wages “shows that at least 50% of the workers are receiving the same wage, that wage is the standard prevailing rate of wages for that craft, classification, or type of work.” Consequently, the department amends New Rule II to eliminate reference to the wages established by collective bargaining agreements in such circumstances.
COMMENT 5: The McCone County Board of Commissioners ask why the commission was not asked for input on the proposed rule changes. The commissioners note that the prevailing wage rates are the same in McCone County and other outlying counties despite the disparity in wages and generated tax revenue in the different counties. The commissioners stated that the new rules place a financial burden on the taxpayers of McCone County. As an example of this burden, the commissioners point to the construction of a fire hall, which was funded by a community group not obligated to pay prevailing wages. As a result, the commissioners were unable to ensure that all applicable building codes were met during construction. The commissioners suggest having two prevailing wage districts: One district for counties with a taxable value greater than $20,000,000, and another district for counties with a taxable value less than $20,000,000.
RESPONSE 5: The department notes that HB 464 was drafted and sponsored by interested parties outside the department, although the department provided technical assistance with the bill. Legislators overwhelmingly supported the passage of HB 464. Because the bill amended statutes the department enforces, the department promulgated the rule changes necessary to implement the statutory changes relating to prevailing wages. The McCone County Commissioners, MACO, and The League of Cities and Towns are listed on the department's interested parties list and were all notified of the proposed rule changes. The department believes that the use of small, informal focus groups during the drafting of rule changes is a reasonably efficient way to help ensure that the changes formally proposed for public comment will probably not need major revision as the result of comments.
The department does not believe that it is consistent with legislative intent to create a "district" that does not have geographically contiguous county borders, as suggested by the commenter. The department believes that had the legislature intended to allow the department to establish rates for noncontiguous counties on the basis of population, taxable value, or some other factor, the legislation would not have spoken in terms of "districts." The department notes that during its informal meeting with interested parties, at least one of the participants proposed noncontiguous districts (based on population). The department expressed the same basic view at that time, and notes that the bill's primary sponsor (who was attending the meeting via telephone) did not voice any disagreement with the department's rejection of the suggestion.
The department also notes that the same counties which were previously in district 9 are still grouped together in new district 4, which the department believes demonstrates that no new inequalities have been created under the proposed rule change.
/s/ MARK CADWALLADER /s/ PAM BUCY
Mark Cadwallader Pam Bucy, Commissioner
Alternate Rule Reviewer DEPARTMENT OF LABOR AND INDUSTRY
Certified to the Secretary of State October 21, 2013.