What is the Davis-Bacon Act and when does it apply to subcontractors?

The Davis-Bacon Act (40 U.S.C. § 3141 et seq.) requires contractors and subcontractors on federally funded construction contracts over $2,000 to pay workers the locally prevailing wage and fringe benefit rates as determined by the U.S. Department of Labor. As a subcontractor, Davis-Bacon applies to you even if your contract is with a prime contractor — the prime's contract with the federal agency flows down to your subcontract. Always request the applicable wage determination from your prime before pricing a bid.

Where do I find the wage determination for my project?

Wage determinations are available on SAM.gov at sam.gov/content/wage-determinations. Search by state and county — most general construction projects use a 'General Decision' which covers the county where work is performed. Some projects have project-specific wage determinations, which override the general decision and will be referenced in the solicitation. The WD number appears in the contract specifications; verify you are using the version incorporated into your specific contract.

What is the difference between the basic hourly rate and the fringe benefit rate on a wage determination?

The basic hourly rate (sometimes called the 'straight-time rate') is the minimum cash wage you must pay per hour worked. The fringe benefit rate represents the employer's required contribution to health insurance, pension, vacation, or other bona fide fringe benefits. You must pay the total package (basic + fringe), but you can satisfy the fringe portion through qualifying benefits plans rather than cash. If you do not provide qualifying benefits, you must pay the full fringe amount as additional cash wages.

How often do I need to submit WH-347 certified payroll reports?

Certified payroll reports are required weekly for all weeks during which work is performed on the project. Reports must be submitted to the contracting agency (or to the prime contractor, who submits to the agency) within 7 days of the regular payment date for the pay period covered. A 'No Work Performed' statement is acceptable for weeks where no Davis-Bacon work was performed. Most agencies now accept electronic submission via email or a project management portal.

What happens if I misclassify a worker under Davis-Bacon?

Misclassification — paying a worker at a lower wage classification than the work they actually perform — is the most common Davis-Bacon violation. Penalties include back wage restitution to affected workers (back pay to the applicable WD rate for all hours affected), potential debarment from federal contracting for up to 3 years for willful or repeated violations, and withholding of contract payments by the contracting agency until violations are corrected. The DOL Wage and Hour Division audits payroll records and conducts site investigations.

Does California have its own prevailing wage law separate from Davis-Bacon?

Yes. California Labor Code § 1771 requires payment of prevailing wages on all public works contracts of $1,000 or more (the state threshold is much lower than the federal $2,000 threshold). California prevailing wage rates are determined by the Department of Industrial Relations (DIR) and are generally higher than federal Davis-Bacon rates in most trades. Contractors on California public works must also register with the DIR Public Works Contractor Registration program and use eCPR (electronic Certified Payroll Reporting) on the DIR portal.

Can I use payroll software instead of the paper WH-347 form?

Yes — the DOL accepts any format that contains all required information, provided a Statement of Compliance (the certification on the back of the WH-347) is signed and attached. Many payroll systems (Sage 300 CRE, QuickBooks with construction add-ons, Foundation, Procore Financials) have Davis-Bacon certified payroll report modules. California requires electronic submission through the DIR's eCPR system specifically — check your agency's requirements before assuming your format is acceptable.

Prevailing Wage and Certified Payroll for Subcontractors (2026)

Key Takeaways

•Davis-Bacon flows down to every subcontractor on the project — not just the prime.
•Total prevailing wage = basic hourly rate + fringe benefit rate. Both must be paid; fringe can be provided as benefits.
•WH-347 reports are due weekly, within 7 days of payroll. Late or missing reports hold up your progress payments.
•Misclassifying a laborer as a carpenter (or vice versa) is the most common Davis-Bacon violation — understand which classification governs each task.
•California's prevailing wage threshold is $1,000 (vs. $2,000 federal) and DIR registration is mandatory.

Davis-Bacon Act: What Subcontractors Need to Know

The Davis-Bacon Act of 1931 (40 U.S.C. §§ 3141–3148) and the Davis-Bacon Related Acts (DBRA) — which extend coverage to federally assisted construction in transportation, housing, and other sectors — require that workers on covered contracts be paid at least the locally prevailing wages and benefits.

Coverage Threshold

Federal contracts for construction, alteration, or repair of public buildings or public works exceeding $2,000. The Related Acts lower this threshold to $2,000 for federally assisted transportation and housing projects. State prevailing wage laws often have lower thresholds (California: $1,000).

Who Is Covered

All laborers and mechanics — including those employed by subcontractors at any tier — who perform work on the project site. Foremen who spend more than 20% of their time performing physical work are covered. Supervisors who spend less than 20% doing physical work may be excluded, but keep documentation.

Flow-Down Obligation

Davis-Bacon requirements are incorporated into prime contracts and must be flowed down to all subcontracts, regardless of tier. Your subcontract should explicitly include the applicable wage determination by reference. Request the WD from your prime before you sign.

How to Read a Wage Determination

Wage determinations (WDs) are published by the DOL and incorporated into contracts. Here is how to parse one:

WD Number Format

A typical WD number looks like: TX20230089 — state abbreviation, year, and sequential number. Some WDs have a modification suffix (e.g., TX20230089 Mod 3) indicating a revision. Always use the version incorporated into your specific contract, not the most recent revision posted on SAM.gov.

General Decision vs. Project-Specific

General Decisions cover a state and county for a construction type (building, heavy, highway, or residential). Project-specific WDs are issued for individual projects when the DOL determines general rates are not representative. Project-specific WDs supersede general decisions and are higher specificity.

Rate Table Structure

The WD lists classifications (e.g., "CARPENTER," "ELECTRICIAN," "LABORER") with two columns: basic hourly rate and fringe benefits. Example: Electrician — Basic: $42.00/hr, Fringe: $18.50/hr, Total: $60.50/hr. You must pay at least the basic in cash wages, and at least the fringe either as qualifying benefits or additional cash.

Common Wage Classification Pitfalls

Misclassification generates the majority of Davis-Bacon violations and back-pay orders. These are the most common errors:

Wrong Classification	Actual Work Being Done	Correct Classification
Laborer	Installing concrete forms	Carpenter (Form)
Laborer	Running conduit or pulling wire	Electrician
Laborer	Operating an excavator or loader	Power Equipment Operator
Helper (lower rate)	Actually performing journey-level work	Journeyman rate applies
Painter	Applying spray fireproofing	Ironworker or Plasterer (varies by WD)

Rule of thumb: Classify by the work being performed, not by the worker's job title on your payroll. A "laborer" who installs formwork must be paid at the Carpenter rate for those hours.

WH-347 Step-by-Step Walkthrough

Form WH-347 is the DOL's standard certified payroll form. Most agencies accept this format; California requires electronic submission via DIR eCPR. Here is each section:

Box 1

Company Name and Address

Your subcontracting firm's legal name and address. Use the same name as on your SAM.gov registration and subcontract.

Box 2

Payroll Number

Sequential number starting at 1 for the first week of work on the project. Each subsequent week increments by 1. Do not restart the sequence; it creates audit confusion.

Box 3

Project Name and Number

The official project name and contract/project number as shown in your subcontract. Use the same format the prime uses — this links your reports to the project record.

Box 4

Contract Number

The prime contract number (e.g., W912HQ-24-C-0012 for Army Corps). Your sub number may also be added.

Boxes 5–7

Employee Info, Classification, Hours

List each employee by name, last four of SSN, work classification (from WD), and hours worked — separate columns for straight time and overtime (>40 hrs/week).

Box 8

Rate of Pay (Basic + Fringe)

Enter the basic hourly rate and fringe benefit rate separately. Example: Basic $32.50, Fringe $12.00, Total $44.50/hr.

Box 9

Total Deductions

All deductions from gross wages: federal/state income tax withholding, FICA (6.2% SS + 1.45% Medicare), voluntary deductions (health premiums, 401k contributions).

Box 10

Net Wages

Gross wages minus total deductions. This is the take-home amount. Verify net wages match your actual payroll disbursement records.

Signature Block

Statement of Compliance

The officer, partner, or authorized representative must sign and date. The statement certifies that payroll records are correct and complete, and that prevailing wages have been paid. False certification is a federal crime under 18 U.S.C. § 1001.

Fringe Benefit Calculation Example

Sample: Carpenter in a midsize metro, general building WD:

WD Basic Rate	$32.50/hr
WD Fringe Rate	$12.00/hr
Total Prevailing Wage (Minimum)	$44.50/hr
Fringe paid as qualifying benefits (health + pension)	$12.00/hr — OK
Fringe paid as cash add-on (no benefit plan)	$12.00/hr added to paycheck — OK
Partial benefit ($6.00/hr) — cash remainder required	$6.00/hr cash still owed

Fringe benefits must be bona fide and irrevocable (e.g., paid to a third-party trust fund). Benefits that revert to the employer or are paid as part of the employee's regular compensation do not satisfy the fringe requirement.

California Prevailing Wage: Section 1771 Compliance

California Labor Code § 1771 imposes prevailing wage requirements on all public works contracts of $1,000 or more — far below the federal $2,000 threshold. California rates are set by the Department of Industrial Relations (DIR) and are typically higher than federal Davis-Bacon rates. Key differences:

•

DIR Registration Required: All contractors and subcontractors performing public works in California must register with the DIR Public Works Contractor Registration program annually (fee: $400/year for most contractors). Unregistered firms cannot be awarded subcontracts on public works.

•

eCPR Submission: Certified payroll reports must be submitted electronically through the DIR's eCPR (electronic Certified Payroll Reporting) portal. Paper WH-347 forms are not accepted for California public works. Submit within seven days of payroll date.

•

Apprenticeship Requirements: California requires use of state-approved apprentices at specified ratios (typically 1 apprentice per 5 journeymen) and contributions to approved apprenticeship training funds, even if you are not party to a collective bargaining agreement.

•

Penalty Exposure: California penalties for prevailing wage violations include $200/day per worker for each calendar day of violation, plus back wages and interest. Criminal penalties apply for willful violations. The DIR enforces aggressively through its Bureau of Labor Compliance programs.

Related Tools

Wage Determination Finder

Look up Davis-Bacon prevailing wage rates by state, county, and trade classification.

WH-347 Certified Payroll Generator

Fill in project and worker details to generate a printable WH-347 certified payroll report.

Prevailing Wage Classifier Helper

Describe the work being performed to find the most likely Davis-Bacon wage classification.

Frequently Asked Questions

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