Government Contracts

How does the Department of Labor Determine Prevailing Wage Rates for Residential Construction?

Contracts for construction subject to the Davis-Bacon and related Acts (DBRA) must contain a prevailing wage determination (WD). The wages on the WD are typically determined by surveying ongoing or recently completed construction projects within a geographic area. The U.S. Department of Labor’s Wage and Hour Division (WHD) conducts surveys of projects under construction or completed during a set survey time frame in an effort to gather specific wage rate data paid to the various classifications of workers found on construction projects. Construction work is broken out into four different types of construction for which WHD gathers wage rate data and issues wage determinations: Building, Heavy, Highway and Residential. See All Agency Memoranda 130 and 131 for more information concerning each type of construction and concerning circumstances in which multiple wage determinations (i.e., wage determinations for more than one type of construction) may apply to a construction project.

How does WHD define “residential construction” for purposes of the DBRA?

Residential construction consists of those projects involving the construction, alteration, or repair of single family houses or apartment buildings of no more than four floors in height.

Examples of residential construction include town homes or row houses, single family homes, mobile homes, multi-family houses, apartment buildings of four floors or less, and student housing of four floors or less.

See AAM 130 and 131 for more information concerning the definition of residential construction.

What constitutes a “floor” for purposes of determining whether a project involves residential or building construction?

For DBRA purposes, the number of floors (also sometimes referred to as “stories”) is a primary consideration in determining whether construction is residential. Therefore, when distinguishing “residential” from “building” construction, the following criteria apply in order to determine the number of floors.

First Floor:

  • A lowermost floor is considered to be the first floor if it is (a) primarily above ground level on one or more sides, and (b) contains at least 50% living accommodations or related non-residential uses, such as laundry space, recreation/hobby rooms, commercial use, and/or corridor space.
  • A lowermost floor is considered a first floor without regard to the percentage test if it is primarily above ground level on two or more sides.
  • A lowermost floor is considered a first floor if it contains the main entrance to the building.
  • A lowermost floor is considered a first floor without regard to whether it is above or below ground level if it is used for apartment space in a way substantially similar to the upper floors.


  • Floors below ground level used for storage, parking, mechanical systems/equipment, etc., are considered basement floors which are not used in determining a building’s height.


  • An attic is unfinished space located immediately below the roof. This space is not used in determining a buildings height even if used for storage.


  • A half-floor over a building’s fourth floor would preclude a residential classification. A half-floor is finished as living accommodations located wholly or partially within the roof frame with floor space at least half as large as the floor below.

Top Floor:

  • The top floor, not finished for living accommodations, between the uppermost floor and the ceiling or the roof above, with floor space as large as the floor below, is considered a floor for purposes of determining a building’s height.

Who is obligated to pay prevailing wages, as determined by the Secretary of Labor, for various job classifications in accordance with Davis-Bacon labor standards requirements on covered projects?

Generally, under the terms of DBRA-covered contracts, “contractors and subcontractors” who perform contract work must pay at least the locally prevailing wages, as determined by WHD to laborers and mechanics they employ on the site of the work. In a few instances, under specific related Acts administered by the U.S. Department of Housing and Urban Development, coverage is not limited to “contractors and subcontractors.” In particular, under the United States Housing Act of 1937, public housing authorities are required to pay their employees Davis-Bacon prevailing wage rates on DBRA-covered projects.

Generally, a business engaged by a prime contractor to perform work called for under the prime contractor’s contract for construction may be considered a “subcontractor” obligated to meet the Davis-Bacon requirements with regard to laborers and mechanics the subcontractor employs to perform such contract work.

What does it mean to be “employed” within the meaning of the DBRA?

Every person performing the duties of a laborer or mechanic in the construction, prosecution, completion, or repair of a public building or public work, or building or work financed in whole or in part by loans, grants, or guarantees from the United States, is employed for purposes of the DBRA regardless of any contractual relationship alleged to exist between the contractor and such person. 29 CFR § 5.2(o).

Who are “laborers and mechanics” covered by the Davis-Bacon prevailing wage requirements?

The applicable regulatory definition of “laborer or mechanic” is set forth in 29 CFR § 5.2(m):

The term laborer or mechanic includes at least those workers whose duties are manual or physical in nature (including those workers who use tools or who are performing the work of a trade), as distinguished from mental or managerial. The term does not apply to workers whose duties are primarily administrative, executive, or clerical, rather than manual. Persons employed in a bona fide executive, administrative, or professional capacity as defined in 29 CFR part 541 are not deemed to be laborers or mechanics. Working foremen who devote more than 20 percent of their time during a workweek to mechanic or laborer duties, and who do not meet the criteria of part 541, are laborers and mechanics for the time so spent.