The Davis-Bacon Act affects virtually every federal construction contract. Understanding and maintaining compliance is essential for contractors working on public projects. Non-compliance can result in severe penalties including contract termination, debarment, and criminal prosecution.
What Is the Davis-Bacon Act?
The Davis-Bacon Act of 1931 requires contractors and subcontractors on federal construction contracts exceeding $2,000 to pay workers no less than the locally prevailing wages and fringe benefits.
Key Requirements
| Requirement | Description | |-------------|-------------| | Prevailing wages | Pay at least DOL-determined wage rates | | Fringe benefits | Pay required benefits or cash equivalent | | Certified payroll | Submit weekly certified payroll reports | | Posting | Display wage determinations at job site | | Records | Maintain payroll records for 3 years |
Covered Projects
Davis-Bacon applies to:
- Federal building construction
- Federal repair and renovation
- Federally assisted projects (depending on program)
- Public works on federal land
Threshold: Contracts exceeding $2,000 in value
Understanding Prevailing Wages
Prevailing wages are determined by the Department of Labor based on local area surveys.
Wage Determination Components
1. Basic Hourly Rate The minimum hourly wage for each classification.
2. Fringe Benefits Required contributions for:
- Health insurance
- Pension/retirement
- Vacation/holiday pay
- Training funds
- Other bona fide benefits
3. Total Prevailing Wage Basic rate + fringe benefits = total compensation required
Finding Wage Determinations
Wage determinations are available at:
- SAM.gov (System for Award Management)
- Contract documents
- Contracting officer
Types of Wage Determinations:
- General (Area) - Most common, by county/locality
- Project - For specific projects
- Residential - For residential construction
Reading Wage Determinations
Example wage determination entry:
Classification: Carpenter
Basic Rate: $45.32
Fringe Benefits: $22.15
Total: $67.47
Worker Classification
Proper classification is critical for compliance.
Common Classifications
| Trade | Typical Classifications | |-------|------------------------| | Carpenters | Carpenter, Form Carpenter, Millwright | | Laborers | Common Laborer, Skilled Laborer | | Operating Engineers | Crane Operator, Loader Operator | | Electricians | Journeyman, Apprentice | | Ironworkers | Structural, Reinforcing, Ornamental |
Classification Challenges
Multiple Classifications: Workers performing multiple classifications should be:
- Paid highest applicable rate for all hours, OR
- Tracked by hours in each classification and paid accordingly
Helpers vs. Journeymen:
- Helpers may only perform clearly defined helper duties
- Cannot replace journeymen for classified work
- Must be allowed by wage determination
Apprentices:
- Must be registered in approved program
- Ratios must comply with program requirements
- Pay reduced rate per approved schedule
Requesting Additional Classifications
If needed classification not on wage determination:
- Submit SF-1444 to contracting officer
- DOL reviews and approves/denies
- Approved classifications added to project
Certified Payroll Requirements
Certified payrolls are the primary compliance documentation.
Submission Requirements
Frequency: Weekly (within 7 days after pay period)
Required Information:
- Employee name, address, SSN (last 4)
- Work classification
- Hours worked each day
- Total hours
- Rate of pay
- Deductions
- Net pay
- Fringe benefit payment method
Form WH-347
The standard certified payroll form includes:
- Payroll number and week ending date
- Contractor/subcontractor information
- Project information
- Employee pay details
- Compliance certification
Certification Statement: The contractor certifies that:
- Payroll is correct and complete
- Classifications are accurate
- Workers are paid required rates
- No unauthorized deductions made
- Apprentice requirements met
Common Certified Payroll Errors
| Error | Problem | Solution | |-------|---------|----------| | Wrong classification | Underpayment | Reclassify and back pay | | Missing fringe breakdown | Can't verify compliance | Document benefit payments | | Late submission | Compliance violation | Implement tracking system | | Incomplete data | Rejection | Train staff on requirements |
Fringe Benefit Compliance
Fringe benefits require careful tracking and documentation.
Payment Options
Option 1: Bona Fide Benefit Plans
- Health insurance
- Pension contributions
- Training fund contributions
- Vacation/holiday funds
Option 2: Cash Payments
- Pay fringe amount directly to worker
- Added to hourly wage
- Subject to payroll taxes
Option 3: Combination
- Some benefits through plans
- Remainder as cash
Bona Fide Benefit Requirements
Benefits must be:
- Irrevocably made for worker's benefit
- Not conditional on employment continuation
- Actually provided (not just promised)
- Documented and verifiable
Fringe Benefit Credits
Employer contributions may be credited toward fringe requirements if:
- Contributions are made irrevocably
- Worker is vested in benefits
- Plans are bona fide
- Contributions are properly documented
Enforcement and Penalties
DOL and contracting agencies enforce Davis-Bacon vigorously.
Enforcement Mechanisms
Investigations:
- Complaint-triggered investigations
- Random compliance reviews
- Agency oversight
Interview Rights:
- DOL may interview workers
- Must provide payroll access
- Cooperation required
Penalty Structure
| Violation | Potential Penalties | |-----------|---------------------| | Wage underpayment | Back wages + liquidated damages | | Falsified payrolls | Contract termination + debarment | | Intentional violations | Criminal prosecution | | Repeated violations | Debarment (up to 3 years) |
Withholding Authority
Contracting officers may withhold contract funds:
- To cover back wages owed
- To protect worker interests
- As enforcement mechanism
Debarment Consequences
Debarment means:
- Cannot receive federal contracts
- Cannot subcontract on federal projects
- Listed in SAM.gov exclusions
- Typically 3-year period
Compliance Best Practices
Pre-Construction
- Obtain wage determination - Get applicable rates before bidding
- Review classifications - Ensure all trades are covered
- Train staff - Educate timekeepers and payroll personnel
- Set up systems - Prepare certified payroll processes
- Notify subcontractors - Flow down requirements
During Construction
- Post wage determination - Display at job site
- Track time accurately - Use proper classification codes
- Submit payrolls weekly - Don't fall behind
- Monitor subcontractors - Verify their compliance
- Document everything - Maintain complete records
Record Keeping
Maintain for 3 years after project completion:
- All certified payrolls
- Timesheets and records
- Fringe benefit documentation
- Classification determinations
- Correspondence with DOL/agency
Subcontractor Compliance
Prime contractors are responsible for subcontractor compliance.
Flow-Down Requirements
Subcontracts must include:
- Davis-Bacon wage clause
- Applicable wage determination
- Certified payroll requirements
- Records retention requirements
Monitoring Obligations
Prime contractors should:
- Collect subcontractor certified payrolls
- Review for completeness and accuracy
- Submit to contracting officer
- Address compliance issues
Liability Issues
Prime contractors may be liable for:
- Subcontractor wage violations
- Failure to properly flow down requirements
- Inadequate monitoring
Related Laws
Contract Work Hours and Safety Standards Act
Requirements:
- Overtime pay (1.5x) for hours over 40/week
- Safe working conditions
- Record keeping requirements
Penalties:
- Back wages for overtime violations
- Liquidated damages ($10/day per violation)
- Withholding from contract payments
Copeland Anti-Kickback Act
Prohibits:
- Kickbacks of any wages
- Deductions not permitted by regulations
- Coercion regarding compensation
Penalties:
- Criminal prosecution
- Contract termination
- Fines and imprisonment
State Prevailing Wage Laws
Many states have their own prevailing wage laws.
State vs. Federal Requirements
| Scenario | Requirement | |----------|-------------| | Federal funds, federal land | Davis-Bacon applies | | State/local funds only | State law applies (if any) | | Federal assistance, state/local project | May apply both | | Private project | Neither (unless labor agreements) |
States with Strong Laws
States with prevailing wage laws include:
- California
- New York
- Massachusetts
- Illinois
- Pennsylvania
- New Jersey
Check applicable state requirements for each project
Technology Solutions
Certified Payroll Software
Features to look for:
- Wage determination import
- Classification tracking
- Automatic calculations
- WH-347 generation
- Electronic submission
- Audit trail
Time Tracking Systems
Essential capabilities:
- Classification-based tracking
- Multi-job recording
- Overtime calculation
- Mobile access
- Integration with payroll
Common Compliance Questions
Classification Disputes
Q: Worker disagrees with classification. What do I do? A: Document the actual work performed. If classification seems incorrect, request DOL determination.
Overtime Calculation
Q: How are overtime wages calculated? A: Base rate + fringe x 1.5 for hours over 40/week. Note: fringe portion may not need to be increased.
Apprentice Ratios
Q: Can I use unlimited apprentices? A: No. Apprentice ratios must comply with registered program requirements.
Multi-State Projects
Q: Which wage determination applies for multi-state work? A: Use wage determination for each location where work is performed.
Next Steps
Ready to ensure Davis-Bacon compliance?
- Review requirements - Understand applicable obligations
- Train your team - Educate payroll and field staff
- Implement systems - Set up compliant processes
- Monitor continuously - Regular compliance reviews
- Stay current - Track regulation changes
Related Articles
- Subcontractor Management in Government Bids
- Pre-Qualification Requirements for Government Contracts
- Prevailing Wage Requirements by State
Frequently Asked Questions
What triggers Davis-Bacon requirements? Federal construction contracts exceeding $2,000, or federally assisted projects as specified by funding program requirements.
Can I pay workers more than prevailing wage? Yes. Prevailing wage is the minimum. You may pay higher rates but never less.
What if a worker performs multiple classifications? Either pay the highest applicable rate for all hours, or track hours by classification and pay appropriate rate for each.
How do I handle fringe benefits for part-time workers? Fringe benefits accrue hourly. Part-time workers receive proportional fringe benefits based on hours worked.
What if DOL investigates my project? Cooperate fully. Provide requested records promptly. Consider consulting legal counsel, especially if violations are alleged.
