Unlike many industries that pay employees the same rate of pay regardless of work performed, in the construction industry there are several factors that need to be evaluated to ensure the correct rate is used for each hour worked by an employee in order to avoid Department of Labor violations.
A wage determination is a wage decision made to assign the appropriate rate of pay to employees in order to comply with contract-mandated rates based on the project, union, job, or location where work is performed.
Example of a wage determination scenario:
On Monday an employee works 8 hours on Project A as a Welder. The contract rate for being a Welder is $32/hr. However the employee has been with the company for several years and their base rate is $35/hr. In this case the employee earns their base rate, which is higher than the contract required rate.
On Tuesday the employee works 8 hours on Project B as a Supervisor. The contract rate for a Supervisor on this project is $40/hr. For this day's work, the employee gets the contract rate which is higher than their base rate. These different rates are used at the end of the week to determine the weekly average rate for any overtime worked by the employee.
To add further complexity, wage determination may also include enforcing the highest wage rate policies of paying the employee the highest rate from a contract rate (like a prevailing wage rate), their base rate, or their union rate. The highest wage rate policy is designed to protect employees by ensuring they will get the most favorable rate of pay even if asked to perform a task that is below their normal rate of pay.
Most Time and Attendance Systems cannot handle the complexity of assigning wages based on multiple wage-decision factors.
IDI can help automate wage determinations.