Under a Labor Department final rule published in the December 19, 2008 Federal Register, federal construction contractors and subcontractors are no longer required to include workers’ home addresses or full social security numbers on weekly certified payroll statements submitted to the contracting federal agency under the Davis-Bacon and Copeland Anti-Kickback acts. Citing worker privacy interests and the government’s need to reduce opportunities for identity theft, the DOL’s Employment Standards Administration made final, with some changes, a proposed rule it had issued for public comment in October. The final rule, which took effect January 18, 2009, revises DOL Wage and Hour Division regulations codified at 29 C.F.R. parts 3 and 5.

Partial Identifier Required.

The new rule will require the weekly payroll reports to include individual employee identification numbers, “which in virtually all cases, should be the final four digits of the worker’s social security number.” In a preamble to the final rule, DOL said use of truncated employee identifiers would balance worker privacy interests with Davis-Bacon and Copeland Act enforcement needs.

The Davis-Bacon Act, which applies to most construction contracts entered into by the United States or the District of Columbia, requires contractors and subcontractors to pay workers no less than the locally prevailing wages and benefits for similar projects. The Copeland Act requires contractors and subcontractors on most federally funded construction projects to furnish the contracting federal agency with a weekly statement reporting the wages paid to each worker.

The DOL emphasized, however, that covered contractors and subcontractors must continue “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.” The DOL also said the final rule makes “more explicit” the obligation of prime contractors to “assist the government in auditing or investigating compliance, including assisting the government in obtaining records from subcontractors if necessary.”

“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,” DOL said. “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.”

As support for its position, DOL cited “recent efforts to limit the use of personally identifying information in government generally.” On Nov. 18, President Bush issued a revised executive order (E.O. 9397) amending a 1930s-era directive to use Social Security numbers in interactions with the government, making use of the SSN “permissible instead of mandatory,” DOL said. An OMB memorandum issued in 2007 (OMB M-07-16) said federal agencies should reduce “the volume of collected and retained [personal identifying] information to the minimum necessary,” DOL said. The Social Security Administration, Congress, and federal courts also have focused recently on protecting workers’ privacy interests because of the “very real dangers of identity theft,” DOL said.

D.C. Circuit Ruling Discussed.

In opposing the proposed rule, the AFL-CIO’s Building and Construction Trades Department contended that deleting individual employee information from weekly wage statements would violate the Copeland Act, as interpreted by the U.S. Court of Appeals for the District of Columbia Circuit in Building & Construction Trades Department, AFL-CIO v. Donovan, 712 F.2d 611 (D.C. Cir. 1983).

The DOL responded, however, that the court had also said “there was no specific requirement for what individualized wage information for each covered worker was necessary.”

Further, the DOL stated that “there is any statutory requirement that the Department require social security numbers or addresses on certified payroll [statements] and a clear reading of the statutory law and the [D.C. Circuit] decision is that the Department has discretion for [setting] the specific requirements of weekly disclosures as long as the disclosures provide an appropriate amount of information.”

On January 9, 2009, the federal government postponed the January 15, 2009 deadline by which federal contractors and subcontractors were required to use E-Verify. Under the law, federal contractors and subcontractors were to verify the work authorization of all new hires and existing personnel assigned to perform work on future federal contracts. Because of a pending lawsuit challenging E-Verify, the deadline has been postponed until February 20, 2009.

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