Published date: 06/22/2023
Warning: Bad joke on the horizon. Buckle up.
Why did the carpenter insist on getting paid the prevailing wage?
Answer: Because he couldn’t “saw” himself working for anything less!
Okay… so it wasn’t just bad – it was really bad. Like ruin-your-morning-cup-of-coffee kind of bad. But – would you like to know what is neither bad nor a joke?
The real-world application of prevailing wage… So much so, in fact, that there’s not just one single federal law (the Davis-Bacon Act) governing its regulations, but several other “related acts” as well as state-specific prevailing wage laws. And that’s what we’re going to break down in this blog – the standards and basics of Davis-Bacon and its army of Related Acts.
The Basics of Prevailing Wage and the Davis-Bacon Act
Simply put, prevailing wages are minimum wage rates for skilled construction workers – or more specifically, labors or mechanics – on public projects (i.e., roads, bridges, schools, etc.). They are specific to the craft and classification (the type of work performed by the worker) and also vary depending the location of the project.
The Davis-Bacon Act (DBA) is a federal law that mandates prevailing rates (determined by the U.S. Department of Labor) on projects using federal funds. How did the law come about, you ask? Good question.
Initially, prevailing wage laws were implemented to prevent declining wages and the deterioration of skilled (emphasizing “skilled”) labor in the public works construction industry. Decades back, tax revenue that was meant for local infrastructure projects was increasingly going to companies that hired low-skilled, out-of-state workers, which ultimately contributed to project delays, poor workmanship, safety issues, and increased ancillary costs – not to mention negative implications on local job markets.
Prevailing wages were created to address these problems; DBA, specifically, was passed in 1931, and since then, many states – 28 at the time of this post and including the District of Columbia – have implemented their own prevailing wage laws (we’ll dive more into this later).
The Related Acts
The Davis-Bacon and Related Acts (DBRA) refer to both Davis-Bacon and a group of federal laws that supplement and extend the provisions of the DBA. While the DBA specifically applies to federal construction contracts, the DBRA expands the scope of prevailing wage requirements to include various other types of projects funded by the USDOL, the U.S. Department of Housing and Urban Development (HUD), and other federal agencies.
In addition to the DBA, the key legislation within the DBRA includes the Copeland Anti-Kickback Act, the Contract Work Hours and Safety Standards Act (CWHSSA), and the Walsh-Healey Public Contracts Act. These acts work in conjunction to uphold prevailing wage standards, prevent kickbacks, regulate work hours, and maintain safety standards on federally funded or assisted projects.
Together, these acts within the DBRA extend the prevailing wage requirements and worker protections beyond the scope of the DBA, ensuring that workers on a broader spectrum receive fair wages, have reasonable work hours, and are provided with safe working conditions.
So with that, let’s break down a few these related acts.
Contract Work Hours and Safety Standards Act
The Contract Work Hours and Safety Standards Act (CWHSSA) is a federal law enacted in 1962. It sets forth certain requirements related to work hour limitations, overtime pay, and safety standards for contractors and subcontractors engaged in federal government contracts. In this way, it complements the Davis-Bacon Act by adding additional worker protection provisions on top of those laid out in the DBA.
For example, under CWHSSA, the standard workweek for laborers and mechanics employed on covered contracts is limited to 40 hours. In addition, any work performed beyond the standard 40 hours in a workweek must be compensated at a rate of one and a half times the laborer’s or mechanic’s basic rate of pay. It should be noted that that this is the only related regulation that allows for a fine, currently listed at $31 per violation, per employee, per day.
Regarding safety standards, CWHSSA mandates that contractors and subcontractors engaged in federal contracts comply with applicable occupational safety and health standards established by the Occupational Safety and Health Administration (OSHA) and other recognized state agencies.
Together, DBA and CWHSSA help ensure that workers on federally funded construction projects are compensated fairly, work reasonable hours, and are provided with a safe working environment.
Copeland Anti-Kickback Act
Does an employer that requires employees to give a portion of their wages back to the company sound shady? Yes, we thought so too. Are you surprised that there even had to be a law made to prevent an incident like that specifically? Again, same here.
Yet, here we are. The Copeland Anti-Kickback Act was, in essence, passed for that very reason. The federal law, enacted in 1934, works in conjunction with the Davis-Bacon Act to combat unethical practices in relation to wages on federally funded construction projects.
It makes it illegal for contractors and subcontractors to induce or receive kickbacks of any form from employee wages paid on federally funded projects. Companies are prohibited from accepting, soliciting, or receiving any part of the wages paid to their employees. This means that they cannot demand or receive kickbacks or illegal deductions from workers’ wages as a condition of employment. These provisions help protect workers’ rights to receive their full wages and prevent corruption.
The Act requires contractors to maintain accurate payroll records that clearly show the wages paid to each employee, along with any fringe benefits provided. In the world of prevailing wage, certified payroll reports are a big part of this. These records and the like must be made available for inspection by authorized representatives of the awarding agency. It is also the regulation that requires a statement of compliance (SOC), which requires an officer of the company filing the certified payroll report to sign a document under the penalty of perjury.
In conjunction with the Davis-Bacon Act, the Copeland Anti-Kickback Act strengthens the wage protections and integrity of federally funded construction projects. It helps ensure that workers are not exploited or subjected to unlawful practices in relation to their wages, promoting fair compensation and ethical standards in the construction industry.
Walsh-Healey Public Contracts Act
The Walsh-Healey Public Contracts Act (PCA) applies to contractors and subcontractors who supply materials, supplies, articles, or equipment to the government. It requires them to pay their workers no less than the applicable prevailing wage rate and fringe benefits for similar work in the local area.
The PCA, although not specifically related to construction, is included within the DBRA because it shares similar objectives. It applies to contractors engaged in the manufacturing or furnishing for government contracts exceeding a certain dollar threshold. The act requires contractors to pay minimum wages and adhere to working conditions established by the Secretary of Labor.
McNamara-O’Hara Service Contract Act
Similarly to how the PCA extends prevailing wages to those that are not necessarily on a construction site, the McNamara–O‘Hara Service Contract Act (SCA) does the same for service employees (such as janitors, security guards, and landscapers) that are paid with government funds. They, too, have applicable prevailing wage rates and fringe benefits that must be met for the type of work they do. And yes, that minimum varies depending on the area.
State Prevailing Wage Laws
In addition to the federal “Related Acts” as part of the DBRA outlined above, there are also 28 states in the US (as well as the District of Columbia), that have their own prevailing wage laws. This means that even the projects in those states that are not federally funded – but that still use state public funds – are subject to prevailing wages and fringes. And these rates can be determined by the states themselves. It’s therefore important to note that they very well may be different than their federal counterparts.
In cases where both state and federal funds are used on a project, contractors should understand that the higher between the two prevailing wage rates must be used.
Living Wage Ordinances
In the context of DBRA, it also bears mentioning that some cities and counties have enacted living wage ordinances that require businesses receiving government contracts or subsidies to pay their workers a minimum wage that is higher than the federal or state minimum wage.
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/.
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.