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Human Resources Sidesteps Prevailing Wage Stagnation Issues

Published on August 05, 2021

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DENVER – Denver’s Office of Human Resources failed to assess the best way to ensure some city workers are paid competitive wages on city projects, according to one of two follow-up reports this month from Denver Auditor Timothy M. O’Brien, CPA.

“I’m disappointed in the lack of action Human Resources took following our examination of their management of Denver’s prevailing wage rate setting process,” Auditor O’Brien said.

In the 2020 report, auditors found the city’s existing Prevailing Wage Ordinance does not allow any opportunity for workers to appeal wage rates set according to the federal Davis-Bacon Act. They also found examples of workers who hadn’t received a pay increase in years. Human Resources disagreed that it should work with the appropriate parties to evaluate an expanded oversight Board to review stagnant wages that prevail under the Davis-Bacon Act.

Not only did the Office of Human Resources disagree with our recommendation to consider opportunities for an appeal process, they also failed to follow-through on their agreement to clarify parts of the ordinance and evaluate the appropriateness of third-party pay surveys.

Without clarifying the ordinance and without reviewing the methodologies of the surveys, the question remains whether the surveys are appropriate for meeting the city’s needs and ensuring prevailing wages not covered by the Davis-Bacon Act are accurately calculated.

“Human Resources continues to sidestep responsibility on this issue, and it’s leaving some workers without recourse or assurance when it comes to making sure they are making market wages for their expertise,” Auditor O’Brien said.

The Davis-Bacon Act was created in 1931 to establish requirements for paying local prevailing wage rates using area surveys of similar work. Prevailing wage is the minimum amount workers should be paid for different types of work on Denver city projects for construction, improvement, repair, maintenance, demolition, or janitorial work.

The Denver Labor division of the Auditor’s Office is responsible for enforcing Denver’s wage rates, but the prevailing wages are set by the Office of Human Resources. Denver Labor is separate from the Audit Services Division of the Auditor’s Office.

The second follow-up report from the Auditor’s Office this month looked at the progress the city made since our 2019 audit of the Denver Public Trustee.

We found the Controller’s Office — with the help of the Public Trustee — implemented all of its recommendations. The office now reports gross additions and deductions to the Denver Public Trustee Fund, which accurately reflects the actual amount of money flowing through the Public Trustee’s Office. This makes the activity in this fund more transparent.

However, the Denver Public Trustee still has work to do to address nine of the 15 recommendations made to its managers. Specifically, the office needs to complete integration between its system of record and the city’s accounting system. The office also needs to finish separating different duties, and it needs to finish developing policies and procedures to address risks related to permissions and user access.

“I can see the Denver Public Trustee is making progress with its small team and I’m sure the COVID-19 pandemic caused some unexpected delays, but I would have still liked to have seen more progress in the past two and half years,” Auditor O’Brien said.