Montana Administrative Register Notice 24-17-269 No. 2   01/31/2013    
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In the matter of the amendment of  ARM 24.17.127, pertaining to prevailing wage rates for public works








TO:  All Concerned Persons


            1.  On November 8, 2012, the Department of Labor and Industry published MAR Notice No. 24-17-269 regarding the public hearing on the amendment of the above-stated rule on page 2254 of the 2012 Montana Administrative Register, issue no. 21.


            2.  On November 30, 2012, a public hearing was held at which time members of the public made oral and written comments and submitted documents.  Additional 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:  Kim Rickard, Business Manager, Labors International Union of North America ("LIUNA") local #1686, stated that the rates for Laborers Group 2, especially the benefit rate, were "substandard" in all districts compared to Groups 1, 3, and 4, and that the rates in Group 1 are higher than Group 2 even though some of the occupations within Group 2 require state licensure and extensive training on a yearly basis.  She stated the rates for Group 2 are diluted by contractors that pay below standard wages and requested that the department adopt the rates submitted by LIUNA local #1686.


RESPONSE 1:  Pursuant to ARM 24.17.121(3), if there are five or more workers reported for an occupation in a district, the rates are set by survey data.  When there are not five workers reported for an occupation in a district, the highest collective bargaining agreement submitted to the department for that occupation becomes the prevailing wage rate.  The data compiled to set the preliminary rates provided 3 workers (0 with benefits for the Group 1 classification) and 553 workers (381 with benefits, for the Group 2 classification).  Therefore, the Group 1 classification was set using a collective bargaining agreement in all districts and the Group 2 classification was set using data provided by contractors (union and nonunion) in all districts, which causes the rates for Group 2 laborers being lower than those of Group 1.  The original data the department received from the Laborers' Union was not accurate and the Laborers resubmitted the data and also submitted additional data.  The department has recalculated the rates for all groups of laborers.  The revised rates are listed below in paragraph 5.


COMMENT 2:  Jim Ryan Jr., Business Manager, Sheet Metal and Air Conditioning Contractors National Association #103 questioned the wage and fringes for Sheet Metal Workers and Heating and Air Conditioning in districts 1 and 4, and the wage in districts 9 and 10.


RESPONSE 2:  The department has reviewed the rates for Sheet Metal Workers and Heating and Air Conditioning and has found no errors in the rates as set.  The rates in districts 1 and 4 were set pursuant to ARM 24.17.121(3)(b).  The wage rate in district 9 was set using the "50% rule" pursuant to ARM 24.17.121(3)(a).  The wage rate in district 10 was set using the collective bargaining rates provided to the department pursuant to ARM 24.17.121(3)(c).


COMMENT 3:  Kim Rickard, Business Manager, LIUNA #1686, John Johnson, International Union of Operating Engineers #400, Roy Levine, International Brotherhood of Electrical Workers ("IBEW") #768, Keith Allen, Business Manager, IBEW #233 and John Roeber, President, Montana Building Trades Association, all spoke in favor of the state surveying for heavy construction services wage rates in upcoming years.


RESPONSE 3Based upon the comments submitted by interested persons, the department has decided it will survey for heavy construction services wage rates this year at the same time it surveys for building construction services rates.


COMMENT 4:  Cary Hegreberg, representing the Montana Contractors Association,

complimented the department's improved uniformity among worker classifications and geographic regions, but pointed out apparent discrepancies in wage rates and fringe benefits in the proposed building rate schedule among certain classifications between the various prevailing wage districts.  The commenter stated his belief that some of the proposed wage rates and benefits cannot be reconciled with the wages and benefits being paid by members of the Montana Contractors Association and contractors that are signatory to collective bargaining agreements, as well as wage and benefit pressure caused by the economic "boom" conditions in eastern Montana.  The commenter stated his belief there must be some differential disparity in the survey process, in order to account for what he called "outlier" wage and benefit rates.  The commenter reminded the department that the department had the discretion to publish wage rates for "up to" ten prevailing wage districts intimating that fewer districts would help level or average out obvious wage and benefit discrepancies.


RESPONSE 4:  The department acknowledges that certain wage and benefits rates may appear to be intuitively inconsistent given various market considerations in the construction industry.  However, the department concludes that the rate setting process is clearly delineated in statute.  The department distributes hundreds of surveys to contractors each year.  Since completing and returning the survey is voluntary, a relatively small percentage of surveys are returned.  The data contained in the returned surveys is accurately compiled and a weighted average is used for each craft, classification, or type of work, unless 50% of the skilled workers are receiving the same wage.  If 50% are receiving the same wage, then that wage is the prevailing wage.  The department believes the answer to issues raised by the commenter, under the current statutory method, is for all parties to obtain a fuller response to the department's survey.  To accomplish this, the department educates contractors and unions of the importance of responding to the survey on an individual basis and in group presentations.  The department explains the process numerous times throughout the year in response to phone inquiries and the department has implemented "online" surveying in addition to the traditional mailed surveys.  Additionally, the department calls survey respondents to confirm the work that is reported actually falls within the commercial building domain and rejects surveys that do not. 


            The department agrees that reducing the number of districts would have a leveling effect on prevailing wage rates.  The department notes that if there was one statewide district, the established wage and fringe benefits would be the same throughout the state.  The department also notes that historically Montana has experienced a wage rate discrepancy between various geographical regions of the state, and that rates that prevail in one area of the state are not necessarily the same as rates that prevail in other areas of the state.  In addition to geographical differences, the department notes that there are historically differences between wage rates paid in more urban areas and areas that are less densely populated.  Previous efforts by the department to reach a consensus on the make-up of revised districts have not been successful; however, the department remains open to working with stakeholder groups to reach such a consensus.


COMMENT 5:  Mary Alice McMurray, Business Representative, Carpenters local #82, requested that the department not adopt the current federal heavy construction services rates, but asked that the department to update the existing 2011 heavy construction services rates to reflect their new wage and benefit rates.


RESPONSE 5:  Pursuant to 18-2-414, MCA, the department concludes it has the option to either adopt by reference federal heavy construction rates and federal highway construction rates, or to survey employers in Montana for those rates.  Because the department adopted by reference the federal 2011 heavy construction services rates, the department determines that statute does not allow the department to "update" previously adopted rates by adjusting some of those rates, when the federal rates incorporated by reference do not include those changes.  Accordingly, the department declines the request.


COMMENT 6:  In a letter to the department Mario Martinez, Business Representative, Carpenters #82, and Joe Baca, Contract Administrator, Carpenters #82, shared the above commenter's request.


RESPONSE 6:  Please see response 5, above.


COMMENT 7:  In letters sent to the department, Sean Smith, Business Manager/Financial Secretary, Plumbers and Pipefitters #41, and Charles Cashell, Business Manager, IUOE #400, support surveying for heavy construction rates.


RESPONSE 7:  The department will survey for heavy construction services rates this year at the same time it surveys for building construction services rates.


COMMENT 8:  Cary Hegreberg, Executive Director, MCA, submitted a letter from Pavlik Electric commenting on the need for the Electrician categories in the highway rates to be updated.


RESPONSE 8:  The department notes that the Montana Department of Transportation gathers petitions from contractors, unions, and other trade organizations, in order to submit those petitions to the federal government to update the federal highway construction rates for Montana.  The department respectfully suggests that the commenter contact MDT to determine the status of that process.


COMMENT 9:  Bill Bentley, Executive Manager, Montana Chapter of the National Electrical Contractors Association, submitted a letter to the department outlining the same concerns of the above commenter, and concerning the scope of what the definition of "highway construction" covers.


RESPONSE 9:  Please see response 8, above.


COMMENT 10:  Various individuals and entities submitted additional data or documents for inclusion in the rate setting process during the comment period.


RESPONSE 10:  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 5 and 6, below.


            4.  After considering the comments submitted, the department amends ARM 24.27.127 exactly as proposed.


            5.  The following rates in the "Montana Prevailing Wage Rates for Building Construction Services 2013" publication, incorporated by reference in the rule, has been amended as follows, stricken matter interlined, new matter underlined:


Construction Laborers Group 1

District            Wage                          Benefit

3                      $15.91  15.22            $6.85  7.55

4                      $16.30  13.62            $6.87

8                      $16.30  14.70            $6.87  6.98


Construction Laborers Group 2

District            Wage                          Benefit

1                      $16.39  16.54            $3.94  5.12

2                      $18.33  18.20            $6.06  5.91

3                      $16.66  17.45            $6.32  6.73

4                      $16.19  16.49            $3.67  4.88

5                      $15.88  16.19            $5.77  6.33

6                      $16.02  16.58            $5.42  6.09

7                      $17.58  17.72            $7.55

8                      $16.07                        $4.55  4.79

9                      $12.41  14.46            $6.87

10                    $14.75  17.25            $6.87



Construction Laborers Group 3

District            Wage                          Benefit


1                      $18.14  17.71            $7.55


Construction Laborers Group 4

District            Wage                          Benefit

1                      $16.35  18.04            $7.01  6.91

2                      $22.48  17.80            $7.32  6.47

3                      $18.16  18.86            $6.60  7.02

4                      $17.35  17.87            $6.87  6.70

6                      $18.86  17.80            $6.75  6.47

7                      $18.86  18.26            $7.55



District            Wage                          Benefit

1                      $30.00                        $21.76  25.61

4                      $30.00                        $21.76  25.61

8                      $30.00                        $22.61  25.61

10                    $30.00                        $22.61  25.61



District            Wage                          Benefit

1                      $26.67                        $11.47  11.31

2                      $26.67                        $10.99  11.31


Plumbers, Pipefitters, and Steamfitters

District            Wage                          Benefit

7                      $28.31                        $15.54  14.51

8                      $28.31                        $15.54  14.51

9                      $28.31                        $15.54  14.51

10                    $28.31                        $15.54  14.51



District            Wage                          Benefit

2                      $19.73  20.90            $10.47 


            6.  The following rates in the "Montana Prevailing Wage Rates for Non Construction Services 2013" publication, incorporated by reference in the rule, has been amended as follows, stricken matter interlined, new matter underlined:


Correction and Detention Officers

District            Wage                          Benefit

4                      $12.83  14.67            $3.74  4.87


Licensed Practical Nurse

District            Wage                          Benefit

4                      $17.95                        $5.09  4.88


Mail Sorters and Processors

District            Wage                          Benefit

1                      $10.84  11.06            $4.84  5.70

2                      $10.66  10.85            $5.02  5.63

3                      $10.66  11.03            $5.02  4.84

4                      $10.69  10.89            $4.78  5.50

5                      $10.71                        $4.84  5.70

6                      $10.66                        $5.84  5.63

7                      $10.66  10.85            $5.02  5.63

8                      $10.64  10.81            $5.19  5.73

9                      $10.61  11.02            $4.53  5.40

10                    $10.66  10.85            $5.02  5.63


Registered Nurses

District            Wage                          Benefit

4                      $23.74                        $5.21  4.90





/s/ MARK CADWALLADER            /s/ PAM BUCY

Mark Cadwallader                            Pam Bucy, Commissioner

Alternate Rule Reviewer                   DEPARTMENT OF LABOR AND INDUSTRY


Submitted to the Secretary of State January 22, 2013.



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