Published date: 06/21/2023

Welcome to Part 2 of a series of blogs covering common mistakes contractors make on prevailing wage projects. Yes, you heard that right – Part 2. If you missed the first installment, you can check it out here.

Let’s face it – public works can be tricky to navigate. But adhering to the guidelines set forth in the Davis-Bacon Act (DBA) can set up guard rails to help you avoid costly penalties and keep you more prepared for audits, investigations, and even project site visits.

Let’s jump in. Below are some additional common mistakes that can trip up contractors with their Davis-Bacon labor compliance.

Not Fully Understanding the Requirements Before Taking on a Project

By and far, one of the worst ways to begin any construction project is to be blindsided by the requirements set forth in the contract after you have already broke ground. How could this happen, you say? Wouldn’t a contract be read in full prior to work be started on a project?

Unfortunately, this is not quite as uncommon as it might sound. When it comes to Davis-Bacon or even state-specific requirements, far too many contractors that are hungry for work will take on a project before scrutinizing (and actually understanding) the contract specifications. And what can possibly be less fun than finding out you are on the hook for something that you were not prepared for?

Here are just a few of the questions contractors should have answers to before bidding on that next project:

1. Is it publicly funded? This one might not always seem immediately obvious, because some projects have multiple funding sources. And even if only a small portion of the project uses some sort of public funds, Davis-Bacon (or any of its related acts) might be triggered.
2. Is there a designated certified payroll solution mandated project-wide that must be used by all contractors?
3. Are there apprenticeship requirements that must be followed?
4. Is there a Project Labor Agreement (PLA)  included in the contract that mandates additional reporting or hiring requirements?

Each of these items should be touched upon at pre-bid conferences so that there are no surprises. And if they are not, then a contractor should take it upon themselves to ask the awarding body and or prime contractor to get these answers beforehand.

Failing to Post Required Notices

Contractors must post certain notices in visible locations at the worksite. This includes those pertaining to employee labor rights, overtime rules, and prevailing wage rates. These notices are required and inform their employees of their rights and the contractor’s obligations under applicable laws and regulations.

The three most common instances of violations related to notice posting are:

1. Posting notices in a location that is not visible or accessible to employees,
2. Failing to post any required notices entirely, or
3. Posting a stapled wage determination that isn’t shown page by page

One might think something like this is unlikely to get noticed, but these violations are usually spotted when agencies visit a project site – something that Davis-Bacon requires awarding bodies to do periodically (along with employee interviews ). Failing to post these notices in a visible location at the worksite can result in penalties and fines.

Not Retaining Accurate Payroll Records

Contractors must maintain accurate and thorough payroll records for their employees, including hours worked, deductions taken, wages paid, etc. And when we say “maintain”, we don’t mean just keeping them for a single year or for the duration of a project. Davis-Bacon mandates that records must be kept accessible for at least three years after the completion of a project.

In addition, contractors must also comply with various reporting requirements. The main component of this for any public works projects is retaining certified payroll reports. Some public agencies will require other documentation or reporting as well. Daily logs can often be part of this as they may be requested during audits to be checked against payroll data. 

Accurate employee and payroll records are essential for ensuring that workers are paid correctly and that the contractor is in compliance with applicable laws and regulations. Without accurate payroll records, contractors may not be able to demonstrate compliance in the event of an audit or investigation. Failure to maintain accurate payroll records can result in compliance violations and fines.

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Curious about other common aspects of labor compliance that contractors typically struggle with? Stay tuned for our next blog in the series covering common prevailing wage mistakes…

And if you are looking to take an even deeper dive to learn the ‘ins’ and ‘outs’ of Davis-Bacon and prevailing wage compliance, check out our online courses at https://lcptracker.com/academy/.

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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.