52.222-16 Approval of Wage Rates
Source: FAR 52.222-16 on acquisition.gov
Contractors must obtain written agency approval before paying laborers or mechanics wage rates above the contract’s wage determination, or risk non-reimbursement for excess wages and unauthorized overtime.
Overview
FAR 52.222-16, Approval of Wage Rates, requires contractors to obtain written approval from the contracting agency before paying laborers or mechanics straight time wage rates that exceed those specified in the contract’s applicable Construction Wage Rate Requirements (formerly Davis-Bacon Act) wage determination. If a contractor pays more than the agency-approved wage rate, the excess is not reimbursable by the Government and is solely the contractor’s responsibility. Additionally, if the Government does not approve overtime, contractors must still pay required overtime rates for any overtime worked, but will not be reimbursed for unauthorized overtime.
Key Rules
- Submission and Approval of Wage Rates
- Contractors must submit proposed straight time wage rates (and related overtime rates) for approval if they exceed the contract’s wage determination rates.
- Non-Reimbursement of Excess Wages
- Any amount paid above the agency-approved wage rate is at the contractor’s expense and will not be reimbursed by the Government.
- Obligation to Pay Overtime
- Contractors must pay required overtime rates for actual overtime worked, even if the Government does not authorize or reimburse the overtime.
Responsibilities
- Contracting Officers: Review and approve or deny wage rate submissions; ensure compliance with wage determinations.
- Contractors: Submit wage rates for approval when exceeding wage determinations; pay excess wages at their own expense; pay required overtime regardless of Government authorization.
- Agencies: Designate representatives for wage rate approvals and monitor compliance.
Practical Implications
- Ensures wage rates above minimums are scrutinized and controlled.
- Protects the Government from unapproved labor cost increases.
- Contractors risk non-reimbursement if they pay higher wages without approval or unauthorized overtime. Careful wage planning and timely submissions are critical to avoid financial loss.
As prescribed in 22.407(b), insert the following clause:
Approval of Wage Rates (May 2014)
All straight time wage rates, and overtime rates based thereon, for laborers and mechanics engaged in work under this contract must be submitted for approval in writing by the head of the contracting activity or a representative expressly designated for this purpose, if the straight time wages exceed the rates for corresponding classifications contained in the applicable Construction Wage Rate Requirements minimum wage determination included in the contract. Any amount paid by the Contractor to any laborer or mechanic in excess of the agency approved wage rate shall be at the expense of the Contractor and shall not be reimbursed by the Government. If the Government refuses to authorize the use of the overtime, the Contractor is not released from the obligation to pay employees at the required overtime rates for any overtime actually worked.
(End of clause)