Davis-Bacon Act Compliance for Construction Contractors

The "prevailing wage" is the combination of the basic hourly rate and fringe benefits paid to the majority of workers in a particular classification (electrician, plumber, carpenter, laborer, etc.) in the geographic area where the work is performed. The U.S. Department of Labor (DOL) Wage and Hour Division conducts surveys of wages paid on similar construction projects in each area to establish these rates.

Prevailing wages are published in wage determinations (WDs), which are project-specific documents incorporated into federal construction contracts. Each WD lists the wage rates and fringe benefits for every applicable labor classification in the relevant geographic area. Contractors are required to pay at least the rates listed in the WD — they may pay more, but never less.

The fringe benefit component can be paid in cash, contributed to a bona fide benefit plan (health insurance, pension, vacation), or a combination of both. If the contractor provides benefits worth less than the WD fringe rate, the difference must be paid in cash. Contractors may not reduce the basic hourly rate to offset fringe benefit costs.

The Davis-Bacon Act applies to contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works of the United States. The threshold is remarkably low, capturing nearly all federal construction activity. "Construction" includes painting, decorating, demolition, installation of equipment, and virtually any work on a building or structure.

Beyond the core Davis-Bacon Act, approximately 60 "related Acts" extend prevailing wage requirements to construction projects receiving federal financial assistance — including projects funded by federal grants, loans, loan guarantees, and insurance. These related Acts cover programs administered by HUD, DOT, EPA, FEMA, and other agencies. If your construction project involves any federal funding, Davis-Bacon prevailing wages likely apply.

The coverage extends to all subcontractors at every tier. A prime contractor on a Davis-Bacon project must ensure that all subcontractors, regardless of tier, comply with the prevailing wage requirements. The prime contractor is ultimately responsible for the compliance of the entire project workforce.

Wage determinations are published on the System for Award Management (SAM.gov) website under the "Wage Determinations" section (formerly beta.SAM.gov and before that, WDOL.gov). WDs are organized by state, county, and construction type (building, heavy, highway, or residential). The contracting officer selects the applicable WD and incorporates it into the solicitation and resulting contract.

Before bidding on a federal construction project, contractors should carefully review the applicable wage determination to understand labor cost requirements. The WD identifies every covered classification and the corresponding basic hourly rate and fringe benefit rate. If a needed classification does not appear in the WD, the contractor or contracting agency must request an "additional classification and wage rate" (conformance) from DOL.

Wage determinations are updated periodically. The WD that is incorporated into the contract at the time of award (or the bid opening date for sealed-bid contracts) is the applicable WD for the life of the contract, unless the contract includes option periods or the contract is modified to add new work requiring a different type of construction.

Every contractor and subcontractor on a Davis-Bacon project must submit weekly certified payrolls to the contracting agency. The standard form is DOL Form WH-347, though agencies may accept equivalent formats that contain all required information. Each payroll must be accompanied by a "Statement of Compliance" signed by the contractor or an authorized officer.

The certified payroll must include: the name, address, and Social Security number (last four digits only on copies submitted to the contracting agency) of each worker; their labor classification; the hourly wage rate paid (both basic rate and fringe benefit rate); the daily and weekly number of hours worked; itemized deductions; and the net wages paid. The Statement of Compliance certifies that the payroll is correct and complete and that each worker has been paid the applicable prevailing wage rate.

Falsifying a certified payroll is a federal crime. The Statement of Compliance contains a warning that willful falsification may result in criminal prosecution under 18 U.S.C. § 1001 and 31 U.S.C. § 3729 (the False Claims Act). Beyond criminal liability, payroll fraud can result in contract termination, debarment for up to three years, and civil damages.

Apprentices may be employed at less than the prevailing journeyman wage rate, but only if they are individually registered in a bona fide apprenticeship program registered with the DOL Office of Apprenticeship or a State Apprenticeship Agency. The apprentice must be paid at least the percentage of the journeyman rate specified in the apprenticeship program's standards for their level of progress.

The ratio of apprentices to journeymen on the project may not exceed the ratio permitted by the apprenticeship program. Any apprentice performing work on the project who is not registered or who is performing work outside the scope of the apprenticeship program must be paid the full journeyman prevailing wage rate.

Helpers — workers who assist journeymen but are not registered apprentices — present a compliance risk. Under DOL regulations, the use of helpers is permitted only if the applicable wage determination includes a helper classification. If no helper classification exists in the WD, all workers must be classified and paid as journeymen for the type of work they are performing. Misclassifying journeyman-level workers as helpers to pay them less is a common Davis-Bacon violation.

The DOL Wage and Hour Division investigates Davis-Bacon complaints and conducts compliance reviews. When violations are found, the agency may withhold contract funds sufficient to cover underpayments to workers. The contracting agency can withhold payments to the prime contractor for violations by any subcontractor on the project, giving primes a strong incentive to monitor their subcontractors.

Contractors that willfully or repeatedly violate Davis-Bacon requirements may be debarred from federal contracting for up to three years. Debarment applies to the contractor entity, its officers, and its controlling shareholders. During the debarment period, the contractor is ineligible to receive any federal contracts or subcontracts.

The 2023 Davis-Bacon Act final rule significantly increased penalties and expanded enforcement mechanisms. The updated rule raised the per-worker, per-day penalty for violations, clarified the definition of "site of the work" to cover more off-site fabrication, and strengthened anti-retaliation protections for workers who report prevailing wage violations.