Federal government construction contracting is a highly regulated business. One of the major challenges facing any government construction contractor is compliance with Davis-Bacon Act’s requirement to pay prevailing wages.

The Davis-Bacon and Related Acts, apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Federal and federally funded contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The Davis-Bacon Act directs the Department of Labor to determine such locally prevailing wage rates. The Davis-Bacon Act prevailing wage provisions also apply to federally assisted construction projects through grants, loans, loan guarantees, and insurance. For example, all projects financed through EPA’s water and sewer state revolving funds are required to comply with the Davis-Bacon Act.

Prevailing Wages

The solicitation for a federal or federally assisted contract covered by the Davis-Bacon Act will typically contain a Department of Labor prevailing wage determination applicable to the project. Wage determination generally fall within one of four construction types: building, heavy, highway or residential. For example, the following is a current wage determination for building projects in Marshall County, Alabama. Note that some wage rates include fringe benefits, but not all.

 

Rates

Fringes

Power equipment operators: 

Cherry Picker (Hydraulic

Crane under 100 Ton) and

Forklift

$ 21.08

8.31

Crane (Hydraulic &

Conventional Cranes-100

ton and over) and Boom

Oiler

$ 22.08

$ 18.42           

8.31

8.31

IRONWORKER, STRUCTURAL

$ 25.59      

11.99

PIPEFITTER

$ 25.50           

13.20

BRICKLAYER

$ 18.00

0.00

CARPENTER, Includes Form Work

$ 14.13

0.00

CEMENT MASON/CONCRETE FINISHER

$  8.50

0.00

ELECTRICIAN

$ 14.00

0.32

IRONWORKER, REINFORCING

$ 12.59            

0.00

LABORER:  Asphalt Spreader

$ 11.75

0.16

LABORER:  Common or General

$  7.25

0.08

LABORER:  Plaster Tender

$  9.00

0.00

OPERATOR:  Backhoe

$ 12.50

0.14

OPERATOR:  Bulldozer

$ 17.01

2.61

OPERATOR:  Grader/Blade

$ 15.50

1.79

OPERATOR:  Loader (Front End)

$ 11.56

0.00

OPERATOR:  Roller

$  9.23           

0.10

PAINTER:  Brush Only

$ 10.55

0.00

PLUMBER

$ 14.90           

0.00

ROOFER, Includes Built Up,   

Polyurethane Foam, Metal,  

Shake & Shingle, and Single  

Ply Roofs

$ 12.32

0.00

SHEET METAL WORKER

$ 14.20           

3.17

TRUCK DRIVER

$  9.50           

0.11

Even though the wage determination is printed in the solicitation, it is good practice to check the Department of Labor’s website to verify the determination is current, particularly if the solicitation is delayed for any reason. After a contract is awarded, any subsequent increase in prevailing wages will entitle the contractor to a change order to cover the increased wages and benefits.

It is extremely important that every worker be paid in accordance with the correct wage classification. If there is any question about a worker’s proper classification, it should be clarified with the contracting agency at the start of the project. It may also happen that the project requires a skilled craft not listed in the wage determination. When this occurs it is necessary for the contractor to initiate a request for a conformance. This is done by submitting form SF-1444 to the Department of Labor’s  public email box: whd-cbaconformance_incoming@dol.gov. Conformances are not granted overnight, if at all. When in doubt, plan on paying the highest applicable rate and avoid penalties for underpayment.

An added complication can arise if one worker falls under multiple classifications depending on the work she performs at different times. If the same worker puts up the framing (carpentry) and subsequently ties rebar (iron worker), that worker will be subject to different prevailing wage requirements for those different tasks. The contractor must classify and pay the worker as an carpenter for the hours spent framing and then change the worker’s classification to iron worker for the hours spent tying rebar. And the contractor’s certified payrolls must accurately reflect the time spent working in different classifications.

Each general classification also can have sub-classifications that can have different prevailing wages. For example, a laborer who spends a day placing concrete will fall into the “concrete worker” subcategory. However, another laborer who runs power tools to vibrate the concrete or drill holes for anchor bolts can fall under the “power tools” subcategory. Often, a contractor cannot avoid running into Davis Bacon Act trouble just by classifying workers correctly per their general trade. The contractor must specifically classify each worker based on the work being done that hour and how that work aligns with the governing sub-classifications that exist within the applicable geographic area.

Contractors on open-shop federal projects will find that Davis Bacon wage determinations rarely contain helper classifications. Helper classifications may be issued in or added to a wage determination only where the duties of the helpers are clearly defined and distinct from those of the journeyman classification and from a laborer, the use of such helpers is an established prevailing practice in the area, and the term “helper” is not synonymous with “trainee” in an informal training program. As a practical matter, helper classifications are rarely included in wage determinations and helpers must be paid the prevailing wage for their craft.

On union jobs, workers may be employed as apprentices if they meet the following criteria:

  1. A person employed and individually registered in a bona fide apprenticeship program registered with the U.S. Department of Labor, Employment and Training Administration, Bureau of Apprenticeship and Training, or with a State Apprenticeship Agency recognized by the Bureau, or
  2. A person in the first 90 days of probationary employment as an apprentice in such an apprenticeship program, who is not individually registered in the program, but who has been properly certified to be eligible for probationary employment as an apprentice.

The proper wage rates to be paid to apprentices and trainees are those specified by the particular programs in which they are enrolled, expressed as a percentage of the journeyman rate on the wage determination. In the event employees reported as apprentices or trainees on a covered project have not been properly registered or are used at the job site in excess of the ratio to journeymen permitted under the approved program, they must be paid the applicable wage rates for the work they perform. This applies regardless of work classifications which may be listed on the submitted payrolls and regardless of their level of skill.

Contractors on Davis Bacon projects must post the Department of Labor’s “Employee Rights Under the Davis-Bacon Act” poster at the site of the work in a prominent and accessible place where it may be easily seen by employees. There is no particular size requirement. The wage determination must be similarly posted.

Document Retention and Certified Payrolls

Once worker classifications have been established and prevailing wage rates set, the contractor should keep all documents that relate to classification decisions. If the contractor had to talk to the contracting officer or the Department of Labor to get assistance in determining what work should fall under which classifications, the contractor should keep records of those conversations as evidence that the contractor made a good effort to properly classify the work. Just as important as paying the correct prevailing wage, is keeping records documenting payment of the correct prevailing wage. Contractors must maintain payroll and basic records for all laborers and mechanics during the course of the work and for a period of three years thereafter.

Records to be maintained include:

  • 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.

Davis Bacon contractors must also submit certified payrolls on a weekly basis. Every certified payroll submitted must be accompanied by a Statement of Compliance. The contractor, subcontractor or the authorized officer or employee of the contractor or subcontractor who supervises the payment of wages must sign the weekly statement. This must be completed within seven days after the regular pay date for the pay period.

Penalties

Failure to pay the correct wages on Davis Bacon contracts can have steep penalties. The government can withhold contract payments sufficient to cover the contractor’s shortfalls in what the workers should have been paid under the correct prevailing wage. The contractor also runs the risk of contract termination, debarment, and False Claims Act damages. Given these potential penalties, federal contractors who have any doubts concerning Davis Bacon Act compliance should consult with an experienced government contracts lawyer before problems arise.