The Davis-Bacon Act is a federal law that sets out minimum wage requirements for certain contractors, subcontractors, laborers and mechanics working on public buildings or public works projects receiving federal funds. Davis-Bacon requirements apply to contracts with the United States for over $2,000.00 for construction, alteration, or repair of public projects located in the States or Washington, D.C. The Secretary of Labor determines the wage requirements based on local prevailing wages for similar projects to which the federal government is not a party. A few exceptions apply to apprentices and trainees which means that they may be paid less than the predetermined rates, if they are in programs registered by the Department of Labor.
Although the Davis-Bacon Act is independent legislation, it is commonly referred to as the Davis-Bacon and Related Acts. These “related acts,” of which Congress has passed nearly 60, contain prevailing wage provisions which support construction projects by providing grants, loans and insurance. Therefore, if a project receives federal funds or assistance under federal statutes, those statutes may require Davis-Bacon wage determinations to be applied to the project. If a related act applies to a project outside of the States and Washington, D.C., it may trigger the Davis-Bacon wage requirements, even though they would not apply to the overseas construction contract by the terms of Davis-Bacon alone. It is important to note that other laws, such as the Fair Labor Standards Act and the Contract Work Hours and Safety Standards Act, may also regulate the appropriate wages on federally-funded projects. For example, prime contracts valued over $100,000.00 and covered by the Contract Work Hours and Safety Standards Act, contractors and subcontractors must (1) pay 1.5 times their rate of pay for any time over 40 hours in a workweek, (2) pay employees weekly, and (3) submit certified payroll to the contracting agency.
Complaints alleging Davis-Bacon violations should be reported to the Wage and Hour Division of the Department of Labor and to the federal contracting agency involved with the particular contract in question. Violators may be penalized by (1) contract termination, (2) disqualification from future contracts for up to three years, and (3) withholding of payments. Violators may appeal their sanctions before an Administrative Law Judge, then before an Administrative Review Board, and finally in federal court. Federal courts may also enforce Board findings. Certain violations, such as falsified payroll or required kickback wages, are punishable by civil or criminal prosecution resulting in fines or imprisonment.
At the heart of Davis-Bacon are wage determinations, referred to as WDs. WDs are numbered by year of issue, modification number and an identifier. As WDs are locality-specific, they are organized by county and type of construction. For example, “FL160023” applies to certain counties in Florida (“FL”), was issued in 2016 (“16”), and is identified as number 23 (“0023”). This WD would be commonly referred to as “FL23.”
However, be mindful that later modifications to a particular WD will have the same name so it is crucial that you are using the most recent modification (“mod”). In our actual example above, FL23 was first issued on 1/8/2016 – this is called “mod 0” and it is labelled “FL160023 01/08/2016.” Mod 0 was replaced by mod 1 on 7/8/2016, which is labelled “FL160023 07/08/2016.” Each modification provides the mod history, but it requires the most recent mod to have the full history and accurate wage requirements. Outdated mods are archived online and available at https://www.wdol.gov/archdba.aspx. A list of WDs to be revised may be found at https://www.wdol.gov/newdba.aspx. To determine which counties, you must view the WD or consult the General Decision County Index based on state, available at https://www.wdol.gov/states.aspx.
WDs, in addition being classified by county, are further organized by the type of construction projects to which they apply. There are four such categories of construction, referred to as “schedules,” for WDs: highway, residential, building and heavy construction. More than one schedule may apply to a single project depending on the nature of the project.
The highway schedule includes the construction, alternation and repair of roads, streets, highways, runways, taxiways, alleys, trails, paths, parking areas, and other similar projects not incidental to building or heavy construction.
The residential schedule applies to that of single-family houses, apartment buildings of no more than four stories in height, and all incidental items such as site work, parking areas, utilities, streets, and sidewalks.
Schedules for building construction apply to the construction of sheltered enclosures with walk-in access for the purpose of housing persons, machinery, equipment or supplies; all construction of such structures; the installation of utilities and of equipment; incidental grading, utilities and paving.
The final schedule, heavy construction, is a catch-all for construction projects not captures by the above schedules.
Record-keeping is another important element to the Act. Contractors covered by Davis-Bacon must maintain payroll and other records for all laborers and mechanics employed in the contract for three years. These records include the following:
- Name, address, and Social Security number of each employee
- Each employee’s work classifications
- Hourly rates of pay, including rates of contributions or costs anticipated for fringe benefits or their cash equivalents
- Daily and weekly numbers of hours worked
- Deductions made
- Actual wages paid
- If applicable, detailed information regarding various fringe benefit plans and programs, including records that show that the plan or program has been communicated in writing to the laborers and mechanics affected
- If applicable, detailed information regarding approved apprenticeship or trainee programs
For updated record-keeping requirements, see the Department of Labor’s Davis-Bacon website. These items must be reported weekly to the federal contracting agency for the preceding payroll week. In addition, a signed Statement of Compliance (form WH-347 “Payroll (For Contractors Optional Use)”) must accompany each payroll submission.
It is crucial that contractors and subcontracts subject to the Davis-Bacon Act understand and comply with its requirements. If you have any questions regarding the applicability of the Act, or your compliance, we strongly suggest discussing the matter with a qualified attorney.