Davis-Bacon Prevailing Wage: Complete 2025 Guide for Contractors
Master Davis-Bacon prevailing wage requirements. Understand when it applies, how to calculate wages, certified payroll requirements, and compliance strategies for federal construction.
The Davis-Bacon Act requires contractors on federal construction projects to pay workers prevailing wage rates determined by the Department of Labor. Understanding Davis-Bacon requirements is essential for any contractor pursuing federal work—non-compliance can result in contract termination, debarment, and significant financial penalties.
Why Davis-Bacon Matters
The law ensures federal construction spending supports local wage standards rather than depressing market rates through low-bid competition.
What is the Davis-Bacon Act?
The Davis-Bacon Act (1931) requires contractors and subcontractors on federally-funded construction projects exceeding $2,000 to pay workers the locally prevailing wage rates for their craft.
- Wage Rates: Pay at least prevailing rate per classification
- Fringe Benefits: Pay required fringe (or cash equivalent)
- Certified Payroll: Submit weekly certified reports
- Posting: Display wage determination at site
- Apprentices: Only registered at approved ratios
- • Federal building construction
- • Military facilities
- • Veterans Administration projects
- • Federal highway (FHWA) projects
- • Federal transit (FTA) projects
- • HUD and EPA funded projects
Threshold: Contracts exceeding $2,000
- • Contracts under $2,000
- • Supply contracts without construction
- • Most state/local work without federal funding
- • Private projects without federal involvement
- • Maintenance work (some circumstances)
- • Emergency repairs (limited exceptions)
Understanding Prevailing Wage Rates
Geographic Scope
By county or metropolitan area
Project Type
Building, residential, highway, heavy
Craft Classifications
Specific rates per trade
| Component | Amount |
|---|---|
| Classification: Electrician | — |
| Basic Hourly Rate | $45.50 |
| Fringe Benefits | $18.75 |
| Total Prevailing Rate | $64.25 |
Paying Fringe Benefits
Contractors can satisfy fringe requirements through: Bona fide benefits (health insurance, pension), Cash equivalent (subject to taxes), or a Combination of both.
Worker Classifications
- Journeyman: Skilled trade workers (electrician, plumber, carpenter)
- Laborer: General construction labor, various specialties
- Operator: Equipment operators by equipment type
- Helper: Where specified in wage determination
- • Classifying skilled workers as laborers
- • Using "helper" classifications not in determination
- • Misclassifying workers performing multiple tasks
- • Applying residential rates to commercial projects
Consequences: Back wage liability, liquidated damages, debarment risk
Certified Payroll Requirements
Required Information
- • Worker name, address, SSN (last 4)
- • Classification for each worker
- • Hours worked each day
- • Total hours for the week
Rate Information
- • Rate of pay (basic and fringe)
- • Gross wages, deductions, net pay
- • Fringe benefit contributions
- • Statement of Compliance signature
Record Retention
Maintain certified payroll records for 3 years after project completion: time cards, pay stubs, fringe benefit documentation, and classification documentation.
Compliance Best Practices
- • Verify correct wage determination
- • Calculate true labor costs
- • Check all classifications needed
- • Account for fringe in estimates
- • Classify workers correctly
- • Track time accurately
- • Pay at least prevailing rate
- • Submit payroll weekly
- • Post determination at site
- • Include requirements in subcontracts
- • Monitor sub certified payrolls
- • Train subs on requirements
- • Maintain sub documentation
Enforcement and Penalties
State Prevailing Wage Comparison
| State | Threshold | Scope |
|---|---|---|
| California | $1,000 | Very broad coverage |
| New York | $250,000 | Most public work |
| Illinois | $50,000 | State and local |
| Washington | All | Very comprehensive |
| Texas | None | No state prevailing wage |
| Florida | None | No state prevailing wage |
State requirements may be MORE restrictive than federal. Projects with both federal and state funding typically require whichever is higher.
Find Federal Construction Bids Automatically
ConstructionBids.ai aggregates federal opportunities from SAM.gov and agency portals—clearly identifying Davis-Bacon requirements, wage determinations, and compliance needs.
Frequently Asked Questions
How do I find the prevailing wage rate for my project?
The applicable wage determination is included in contract/bid documents. You can also search SAM.gov for wage determinations by location and project type. Always use the determination specified in the contract.
Can I pay workers above prevailing wage?
Yes. Prevailing wage is a minimum requirement. Paying above prevailing rates is always compliant. Many contractors pay above prevailing to attract quality workers.
How does overtime work with prevailing wage?
Overtime (hours over 40/week) must be paid at 1.5x the basic hourly rate plus the full fringe benefit amount (straight time). Example: If basic rate is $40 and fringe is $15, overtime is $60 + $15 = $75/hour.
What if my subcontractor violates Davis-Bacon?
Prime contractors are responsible for subcontractor compliance. Include compliance requirements in subcontracts, collect and review certified payrolls, and address violations immediately. You may be liable for subcontractor violations.
How long must I keep Davis-Bacon records?
Maintain all payroll records, including certified payrolls, time cards, and pay documentation, for 3 years after project completion.
Conclusion
Davis-Bacon compliance is essential for contractors pursuing federal construction opportunities. Understanding wage determinations, certified payroll requirements, and classification rules helps you bid accurately and execute projects without compliance risk.
While Davis-Bacon adds administrative requirements, federal projects offer stable funding, reliable payment, and consistent opportunity pipelines for qualified contractors.
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ConstructionBids.ai helps you find federal opportunities, assess compliance requirements, and prepare winning submissions.
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