Published date: 08/30/2023

Amidst all the buzz surrounding the historic updates recently made to the Davis-Bacon and Related Acts (DBRA), it’s important to not only focus on what it has become, but also recount what it was (and still is – even after the changes go into effect this October 2023).

Because the reality is, this is huge news for the construction industry – so huge that it has thrust “Davis-Bacon” and “prevailing wages” into the headlines… even for those that aren’t quite as familiar with the labor compliance laws. After all, there are plenty of contractors that have avoided public works because of all the “strings attached”.

But we may have recently started to see that sentiment shift a bit given how much opportunity there currently is in public works. With the Bipartisan Infrastructure Bill pumping billions of dollars into the country’s public infrastructure and opportunities like the Inflation Reduction Act enticing organizations with higher tax credits to employ prevailing wages… the door is open.

So, let’s break it down. What is Davis-Bacon in its simplest terms?

The Davis-Bacon Act in a Nutshell

Since its inception in 1931, the Davis-Bacon Act (DBA) has been instrumental in ensuring that workers in the public works construction industry receive equitable payment for their labor. The law requires that all federally funded or assisted public works construction projects valued over $2,000 must utilize prevailing wages.

Breaking Down “Prevailing Wage” and How it’s Determined

As defined by the DBA, a prevailing wage is a type of minimum wage set by the U.S. Department of Labor (USDOL) for a particular type of work (craft classification) in construction. These minimum wages are published in a wage determination – a document released by the USDOL containing current rates. A wage determination is typically calculated through the use of wage surveys by geographic location to reflect regional market rates. The prevailing wage for each craft classification is comprised of the hourly wage rate and the fringe benefit rate; these must both be compensated in some form to all workers on public works projects. Note: Davis-Bacon regulates federal rates, but many states (and even some localities) have their own set of distinct prevailing wage requirements.

Federal wage determinations for corresponding craft classifications are published online at SAM.gov.

The Exception

Contractors are legally obligated to pay their workers at least the prevailing rates specified in the wage determination. The exception to this requirement is if the employee is enrolled in a registered apprenticeship program recognized by the USDOL, in which case they may receive a lower wage. However, there are still rules dictating what that lower wage can be, and it typically depends on the particular apprenticeship program that the worker is registered with.

Speaking of which… each program will likely have a specific apprenticeship ratio that needs to be followed to employ them on a project. And by ratio, we mean that there are rules specifying how many journeymen must be present for every one apprentice working on a project. Yes, this is another component of Davis-Bacon that must be complied with.

Job Title vs. Actual Work Performed

Another thing to consider: the prevailing wage rate is based on the type of work conducted rather than the job title of the worker. For instance, if a  carpenter performs cement mason duties for a project one day, the prevailing wage rate for a cement mason classification (not a carpenter), would apply to that day’s tasks. This can be tricky if not properly reported and can be an expensive error – whether intentional or not. It’s considered a form of misclassification, and it is very common.

Davis-Bacon’s Related Acts

Apart from Davis-Bacon, there exist several “Related Acts” (DBRA) that serve as a supplementation to Davis-Bacon regulations for ventures that obtain federal aid. A few of these acts are:

•           The Contract Work Hours and Safety Standards Act (CWHSSA)

•           The Copeland Anti-Kickback Act

•           The Walsh-Healey Public Contracts Act

•           The McNamara-O’Hara Service Contract Act

For a deeper dive into these Related Acts, check out our recent blog on the topic. 

Who’s Monitoring?

The enforcement of the DBRA starts from the top at the USDOL. They mandate that contracting agencies and awarding bodies gather and oversee certified payroll reports (CPRs) and other documentation from contractors working on federally funded projects. Prime contractors will often oversee compliance on their projects as well since they are liable for their subcontractors.

Simplifying the Compliance Process

Meeting all of these obligations can be a cumbersome task for contractors and their certified payroll administrators, but there are quite a few things contractors can do to make it easier. For one, there’s software out there that can help automate the most tedious parts of compliance. Most notably: the process of both creating certified payrolls AND double checking them for accuracy and compliance. It cannot be stressed enough; there is no better way to mitigate risk than to employ a solution that will help you discover and correct violations before an agency finds them. Plus, it will drastically reduce the time, expenses, and storage requirements involved in maintaining compliance.

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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.

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