- Wage Determinations
- Funding Agency Requirements
- Funding Recipient Requirements
- Contractor Requirements
- Common Compliance Issues
- Enforcement and Administrative Proceedings
What is the Davis-Bacon Act and why do its requirements apply to BIL-funded construction projects?
Enacted in 1931, the Davis-Bacon Act requires that contractors and subcontractors pay laborers and mechanics working on federal construction projects no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. Since then, many other federal laws that authorize federal assistance for construction projects, such as through grants, loans, loan guarantees, and insurance, have required funding recipients to comply with the requirements of the Davis-Bacon Act, including payment of locally prevailing wages. These laws are commonly referred to as Davis-Bacon Related Acts. The vast majority of the funding assistance provided under the BIL is subject to Davis-Bacon labor standards. In some instances, the BIL creates new funding programs and explicitly applies prevailing wage requirements to those programs, while in other instances the BIL adds funds to or expands the scope of existing programs that already require the payment of Davis-Bacon prevailing wages. When a project receives federal assistance under one of those programs, Davis-Bacon prevailing wage requirements apply to construction work on that project.
How do I know if a BIL-funded project is subject to Davis-Bacon labor standards?
Funding recipients should refer to the materials provided by the funding agency applicable to the BIL-funding or assistance to determine if Davis-Bacon labor standards apply to the federal funding or assistance. If the materials do not specify that the BIL funding or assistance requires Davis-Bacon labor standards to be incorporated in a contract for construction but the funding recipient believes that the funding in question may or should be covered, the funding recipient should contact the funding agency or WHD for assistance. Contractors should reference the solicitation materials provided by the funding recipient or funding agency to determine if the project in question is subject to Davis-Bacon labor standards. If the materials do not specify that the BIL-funded project requires Davis-Bacon labor standards to be incorporated into the construction contract but the contractor believes that the funding in question may or should be subject to Davis-Bacon labor standards, the contractor should contact the funding recipient or funding agency for additional assistance.
Part of a construction project is funded under a BIL assistance program that requires payment of Davis-Bacon prevailing wages, but the rest of the funding for the project comes from state or local sources that do not require payment of Davis-Bacon prevailing wages. Do Davis-Bacon prevailing wage rates apply to all of the construction work on the project, or only to construction work on that portion of the project that was assisted with BIL funding?
Unless the language of the Davis-Bacon Related Act specifies otherwise, when a project receives any funding that requires payment of Davis-Bacon prevailing wages, construction work at the site of the work for the entire project is generally subject to Davis-Bacon prevailing wage requirements, regardless of how the funding recipient chooses to allocate that funding among the different activities relating to that project. For example, the Davis-Bacon Related Act language in Division D, Energy, of the BIL states that Davis-Bacon prevailing wage requirements apply to any construction work on a project that receives even partial funding under Division D. WHD has long recognized that a project consists of all construction necessary to complete the project regardless of the number of contracts involved so long as all contracts awarded are closely related in purpose, time and place. See All Agency Memorandum 207, page 5.
Are Davis-Bacon prevailing wage requirements applicable to all of the federal funding programs authorized by the BIL?
No. While many of the funding programs authorized by the BIL require Davis-Bacon labor standards, Davis-Bacon requirements apply only where:
- the BIL specifically applies prevailing wage requirements to the funding or assistance program, or
- the BIL adds funds to or expands the scope of existing programs already covered under another Davis-Bacon Related Act.
For example, the broadband assistance programs under Division F of the BIL do not require the payment of Davis-Bacon prevailing wages; however, funding agencies may consider the payment of prevailing wages as a positive factor when determining funding allocation. Even when Davis-Bacon prevailing wage requirements are not explicitly required, WHD will still provide guidance to funding applicants and funding agencies who are considering including Davis-Bacon labor protections as a factor when making funding awards.
Is there any dollar threshold for the application of Davis-Bacon prevailing wage requirements?
The Davis-Bacon Act includes a $2,000 threshold for coverage of a prime contract. If a prime contract meets the requirements for coverage, all sub-contracts and task orders under that prime contract are also covered, even if the individual contract or task order is for less than $2,000. The $2,000 threshold applies to the total cost of a prime contract; it is not based on contract labor costs alone.
Do the Davis-Bacon prevailing wage requirements apply when a local government agency performs construction work as part of a project that receives funding or assistance under a program that is covered by a Davis-Bacon Related Act?
Governmental agencies, including state and local agencies, generally are not considered to be contractors or subcontractors subject to Davis-Bacon prevailing wage requirements. Therefore, with just a few exceptions that are not likely applicable to the BIL, when a state or local agency receives funding covered under a Davis-Bacon Related Act but chooses to perform the work with its own employees, it does not have to pay agency employees Davis-Bacon prevailing wages. However, if the state or local agency contracts the work out, those contracts would be subject to Davis-Bacon prevailing wage requirements. In that case, the agency would have to include the Davis-Bacon labor standards clauses and applicable wage determination(s) in the contract(s), and the contractor and subcontractors performing work on the project would have to pay prevailing wage rates to their construction workers.
Do the Davis-Bacon prevailing wage requirements apply when federal assistance is provided to tribal governments under a BIL program that is covered by a Davis-Bacon Related Act provision?
For purposes of Davis-Bacon coverage, tribal governments are treated in the same manner as state and local governments. When a tribal government chooses to perform the work with its own employees, it does not have to pay those employees Davis-Bacon prevailing wages. However, if the tribal government contracts out the work, those contracts would be subject to the Davis-Bacon prevailing wage requirements. In that case, the tribal government would have to include the Davis-Bacon labor standards clauses and applicable wage determination(s) in the contract(s), and the contractor and subcontractors performing work on the project would have to pay prevailing wage rates to their construction workers.
Must all workers who perform work on construction projects that receive BIL funding that is covered by a Davis-Bacon Related Act be paid Davis-Bacon prevailing wage rates?
Contractors and subcontractors are required to pay Davis-Bacon prevailing wage rates to laborers and mechanics who perform work on the project, including bona fide apprentices and trainees. Laborers and mechanics include workers who perform primarily manual or physical work, including those who use the tools of a trade. However, workers such as timekeepers, inspectors, architects or engineers, or anyone exempt under the part 541 regulations under the Fair Labor Standards Act, are generally not considered laborers or mechanics and, therefore, are not required to be paid prevailing wages because they do not generally perform primarily physical or manual work or use the tools of a trade. In addition, prevailing wages generally are only required to be paid to laborers and mechanics when they are employed on the site of work, as defined in 29 CFR 5.2(l).
Do Davis-Bacon prevailing wage requirements apply to a worker who receives a 1099 as an independent contractor?
The Davis-Bacon prevailing wage requirements apply to all laborers and mechanics engaged in construction on the site of the work, whether or not they are considered employees or independent contractors. Laborers and mechanics receiving a 1099 must still be paid Davis-Bacon prevailing wages and must still be reported on the certified payroll. If a contractor or subcontractor classifies any covered worker as an independent contractor, the contractor or subcontractors should report on the certified payroll that FICA and taxes are not being withheld. The funding agency or funding recipient may ask that the certified payroll identify such workers in some fashion so they know why FICA and taxes were not withheld. Employers are also generally subject to the Fair Labor Standards Act for all hours worked by their employees and the misclassification of workers as independent contractors may result in violations of other worker protection laws.
If business owners perform construction work on a BIL-funded project that is subject to Davis-Bacon labor standards, are they covered by the Davis-Bacon prevailing wage requirements?
Bona fide business owners who are exempt according to Department of Labor regulations at 29 CFR Part 541.102 are not laborers and mechanics and, therefore, are not required to be paid prevailing wages. All of the criteria reflected in 29 CFR Part 541.102 would need to be satisfied before a business owner could be considered exempt.
Can a BIL-funded project be subject to both Davis-Bacon prevailing wage requirements and state prevailing wage requirements? If so, which prevailing wage rates are applicable?
Where a construction project receives both federal and state or local funding, the project may be subject to both Davis-Bacon prevailing wage requirements and state or local laws that similarly require payment of prevailing wage rates set by the state or locality. In such situations, contractors must, at minimum, comply with the Davis-Bacon prevailing wage requirements. However, where state or local prevailing wage requirements are also applicable, the contractor should, on a classification-by-classification basis, pay whichever prevailing wage rate is higher, and meet whichever requirements are more protective of workers.
The Davis-Bacon Related Act language that applies the Davis-Bacon requirements to the BIL program funding the project says that laborers and mechanics “shall be paid wages at rates not less than those prevailing on similar projects in the locality as determined by the Secretary of Labor,” but doesn’t mention any requirements other than payment of prevailing wages. Does that mean that the contractors on that project just have to pay prevailing wage rates, or are they subject to all of the normal Davis-Bacon requirements, such as the submission of certified payrolls and weekly payment of wages?
Reorganization Plan No. 14 authorizes the Secretary of Labor to “prescribe appropriate standards, regulations, and procedures” to “assure consistent and effective enforcement” of the labor standards in the DBA and the Related Acts. Similarly, the Copeland Act states that the Secretary “shall prescribe reasonable regulations for contractors and subcontractors engaged in constructing, carrying out, completing, or repairing public buildings, public works, or buildings or works that at least partly are financed by a loan or grant from the Federal Government. The regulations shall include a provision that each contractor and subcontractor each week must furnish a statement on the wages paid each employee during the prior week.” Under this authority, WHD has applied the Davis-Bacon labor standards to Davis-Bacon Related Act projects in the same way as Davis-Bacon Act projects unless Congress has clearly indicated an exception in the Davis-Bacon Related Act. The BIL does not contain such an exception. Funding recipients therefore must ensure that all of the Davis-Bacon labor standards clauses at 29 CFR 5.5 are incorporated into contracts awarded for BIL-funded projects subject to Davis-Bacon labor standards, and contractors must follow all of those requirements, including the requirements for certified payroll and weekly payment of wages.
FAQs relating to Davis-Bacon wage determinations can be found here.
Funding Agency Requirements
What are the responsibilities of federal agencies that provide BIL funding for construction covered by a Davis-Bacon Related Act?
Federal agencies providing BIL funding must inform funding recipients that Davis-Bacon prevailing wage requirements apply and must ensure that the funding recipients include the required Davis-Bacon labor standards clauses set forth in 29 CFR 5.5 and the applicable wage determination(s) into all contracts for construction receiving such funding. The funding agency must not approve any payment, advance, grant, loan, or guarantee of funds unless the funding agency has ensured that the Davis-Bacon labor standards clauses and applicable wage determinations have been included in such contracts. The funding agency should advise the funding recipients on the applicability of the prevailing wage requirements and the applicability of wage determinations to their projects. Together with the funding recipients, the funding agency should review and maintain certified payrolls, and investigate compliance with Davis-Bacon prevailing wage requirements through site visits, interviews and other forms of oversight. The funding agency is also responsible for withholding payments to the extent considered necessary to pay workers the full amount of prevailing wages due either at the request of WHD or on their own initiative if the agency has reason to believe a violation has occurred.
Do funding agencies have to collect certified payrolls from contractors on construction projects receiving BIL funding that is covered by a Davis-Bacon Related Act?
The funding agency should receive certified payrolls collected by the funding recipients, review the certified payrolls for compliance issues, and keep them for at least three years from the date the construction work has been completed on the covered project, unless the funding agency has delegated this responsibility to the funding recipients. If the funding agency has delegated certified payroll review and maintenance to the funding recipients, the funding agency should still exercise oversight to ensure that the funding recipients are requiring, collecting, reviewing, and maintaining certified payrolls.
Funding Recipient Requirements
What are the responsibilities of funding recipients who receive BIL funding that is covered by a Davis-Bacon Related Act for their construction projects?
Funding recipients and sub-recipients, such as state and local agencies, must ensure that the Davis-Bacon labor standards clauses set forth in 29 CFR 5.5 and the applicable wage determination(s) are included in all construction contracts funded through a program that is covered by a Davis-Bacon Related Act. They must also ensure that the prime contractor(s) are aware of their obligation to include Davis-Bacon labor standards clauses and applicable wage determination(s) in all subcontracts. They should provide guidance to contractors regarding the application of wage determinations to covered projects and on the scope of worker classifications contained in the wage determination(s). Funding recipients should likewise engage in day-to-day oversight of such projects, ensuring that the contractor(s) have posted the Davis-Bacon Employee Rights poster (WH-1321), the applicable wage determination(s), and any approved conformances (additional labor classifications and corresponding wage rates approved by WHD specifically for the contract in question). They should also review certified payroll and related documents, and interview workers to confirm compliance in accordance with any enforcement procedures established by the federal funding agency. Where funding recipients determine that violations have occurred, but the contractor refuses to pay the prevailing wages due to workers, or they determine that debarment may be appropriate, funding recipients should coordinate with the funding agency and forward such cases to WHD for further action, as described in All Agency Memorandums 182 and 215.
What are the funding recipient’s responsibilities for collecting and maintaining the certified weekly payrolls?
Funding recipients, including sub-recipients, should receive and review certified weekly payrolls submitted by all contractors and subcontractors for accuracy and to identify potential compliance issues. Funding recipients should then transmit the original certified payrolls to the funding agency as required by 29 CFR 5.5(a)(3)(ii)(A), while maintaining copies for themselves, unless the funding agency has delegated the responsibility for maintaining the original certified payrolls to the funding recipient. Although many funding agencies have delegated the responsibility for maintaining the certified payrolls when the funding recipients are state or local government agencies, funding recipients should verify whether that is the case with their funding agency. Original certified weekly payrolls must be maintained for 3 years after the completion of the project and be made available to WHD upon request, as required by 29 CFR 5.6(a)(2).
What if the funding recipient fails to include Davis-Bacon contract clauses or wage determination(s) in the contract for construction? Do the contractor(s) performing the work still have to pay Davis-Bacon prevailing wages?
If the funding recipient does not incorporate Davis-Bacon labor standards clauses and/or the applicable wage determination(s) into a covered contract, the funding recipient must modify the contract to incorporate the clauses and/or any applicable wage determination(s), usually retroactively to the start of the contract. This must be done before payment of prevailing wages can be enforced. Where the Davis-Bacon labor standards clauses and/or wage determination(s) had to be subsequently incorporated into the contract, the funding recipient may need to provide additional compensation to the contractor if it causes an increase in wages owed to workers, depending upon the applicable requirements. Alternatively, the funding recipient could terminate and resolicit the contract with the applicable labor standards clauses and wage determinations.
What obligations do contractors have to workers on contracts subject to the Davis-Bacon prevailing wage requirements?
Contractors must post the Davis-Bacon Employee Rights poster (WH-1321), a copy of any applicable wage determination(s), and any approved conformances (additional labor classifications and corresponding wage rates approved by WHD specifically for the contract in question) at the site of the work in a prominent and easily accessible place where they can easily be seen by workers. Contractors must pay the applicable Davis-Bacon prevailing wages for the correct labor classification(s) of work that their workers perform on covered contracts. Workers must be paid the prevailing wages due to them weekly, with the exception of contributions to bona fide fringe benefit plans, which must be made no less often that quarterly.
What obligations do contractors have to subcontractors on contracts subject to the Davis-Bacon prevailing wage requirements?
Contractors must include the Davis-Bacon labor standards clauses found at 29 CFR 5.5 in any subcontracts, and must also include a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor is responsible for subcontractor or lower tier subcontractor compliance with all of the Davis-Bacon prevailing wage requirements and should exercise the necessary oversight to ensure these requirements are met.
What are the contractors’ recordkeeping obligations on contracts subject to the Davis-Bacon prevailing wage requirements?
Contractors must maintain a record of workers’ payroll and hours worked, including the name, address, and social security number of each such worker, their correct labor classification(s), hourly rates of wages paid, including rates of contributions or costs anticipated for bona fide fringe benefits and how those rates were computed, daily and weekly number of hours worked, deductions made, and actual wages paid. Contractors employing apprentices under approved apprenticeship programs must also maintain written evidence of the registration of apprenticeship programs, the registration of the apprentices, and the ratios and wage rates required by the applicable programs. Contractors must also submit on a weekly basis a copy of payrolls, including a signed Statement of Compliance, to the funding recipient that awarded the contract. Contractors may use optional form WH-347 for their certified payrolls, or may use any other format, so long as that format includes the same information and an identical Statement of Compliance. Where the funding agency or funding recipient has established guidelines or procedures for the submission of certified payrolls, such as an electronic payroll submission system, contractors should comply with those procedures.
Common Compliance Issues
These questions address some of the most common compliance questions that WHD encounters. The DBA/DBRA Compliance Principles Prevailing Wage Seminar training video provides additional information on Davis-Bacon compliance topics.
Proper Classification and Payment of Workers
What if there is no rate for a labor classification on the wage determination? Can the contractor just use the rate for that classification from another wage determination?
No. If a needed labor classification is missing from the applicable wage determination(s) the contractor must submit a conformance request to the contracting agency, who will submit it to WHD, so that the needed labor classification with an appropriate wage rate is added to the wage determination(s) applicable to the contract. The wage rate would be set in accordance with 29 CFR 5.5(a)(1)(ii) and All Agency Memorandum 213. Additional information about the conformance process is available here.
How should contractors pay workers when they work in more than one labor classification in the same workweek?
When workers work in more than one labor classification, the contractor may pay them the different wage rates applicable to each labor classification, so long as the contractor accurately keeps track of the actual hours worked in each classification and pays the differing rates in accordance with that record. The contractor cannot estimate the hours worked in each classification or use an average. If the contractor does not want to keep an accurate record of the time spent in each classification, the contractor must instead pay the highest applicable wage rate for all hours worked.
Similarly, if, during the same workweek, a worker works on a project that is covered and on a project that is not covered by Davis-Bacon prevailing wage requirements, the contractor is required to keep an accurate record of the worker’s time at both types of jobs, and must make sure that the worker receives at least the applicable prevailing wage rate for all hours worked on the job covered by the Davis-Bacon prevailing wage requirements.
When may contractors take deductions from workers’ wages?
For any type of deduction other than those specifically listed in 29 CFR 3.5, the contractor must submit a deduction approval request annually to WHD, which will evaluate the deduction to determine whether it meets the requirements set forth in 29 CFR 3.6:
- that the contractor does not benefit directly or indirectly from the deduction;
- that the deduction is not prohibited by law;
- that the worker voluntarily consented to the deduction in writing prior to the time period when the work was performed or the deduction is provided for in a collective bargaining agreement; and
- that the deduction serves the convenience and interest of the worker, not the contractor.
WHD will issue a letter to the contractor indicating whether such deductions are approved. If the contractor is not issued an approval letter, any deduction not specifically listed in 29 CFR 3.5 is not permissible. Even when such a letter has been issued, funding recipients may want to take other steps to ensure whether the deductions are still in accordance with the information that the contractor provided in their deduction approval request, such as obtaining the workers’ signed deduction authorization forms or confirming through periodic interviews that the deductions are made for the reasons stated in the approval letter.
Are there any exceptions to the requirement that workers be paid weekly?
No. Under Davis-Bacon labor standards, covered workers must actually be paid weekly and certified payrolls must be submitted weekly. As required under 29 CFR 3.4, each weekly statement required must be delivered by the contractor or subcontractor, within seven days after the regular payment date of the payroll period, to a representative of a federal or state agency in charge at the site of the work. If there is no representative of a federal or state agency at the site of the work, the statement should be mailed by the contractor or subcontractor, within seven days after the regular payment date of the payroll period, to a federal or state agency contracting for or financing the work.
May contractors pay workers cash in lieu of Davis-Bacon fringe benefits?
Yes. The Davis-Bacon prevailing wage is the combination of the basic hourly rate and any fringe benefits listed in a Davis-Bacon wage determination. Contractors can meet this obligation by paying each covered worker the applicable prevailing wage for the classification of work they perform entirely as cash wages or by a combination of cash wages and employer-provided bona fide fringe benefits. Examples of bona fide fringe benefits include life insurance, health insurance, pension plans, vacation pay, holiday pay, or paid sick leave.
How should contractors pay Davis-Bacon fringe benefits to employees who also work on Davis-Bacon projects and projects not subject to Davis-Bacon prevailing wage requirements during the same pay period?
Generally, a contractor is required to make contributions to a fringe benefit plan based on an employee’s total hours of work on both Davis-Bacon prevailing wage covered projects and projects not covered by Davis-Bacon prevailing wages for the time period covered by the fringe benefit contributions. Contributions should not be attributed solely to the employee’s work on projects covered by Davis-Bacon labor standards. This principle is known as annualization. For example, a wage determination that states the wage rate for a worker’s classification is $21.50 per hour and the fringe benefit rate is $4.50 per hour, for a total prevailing wage rate of $26.00 per hour. The contractor pays a premium of $500 per month for the worker’s health insurance. Over the course of the month, that worker works 87 hours on the Davis-Bacon covered jobsite and 83 hours on non-Davis-Bacon work, for a total of 170 hours worked that month. The contractor would divide the $500 premium for that month by the 170 hours worked that month, to come up with an allowable fringe benefit credit of $2.94 per hour. For the worker’s hours worked on the Davis-Bacon Related Act covered project, the contractor would have to pay the worker $23.06 per hour, the total prevailing wage of $26.00 per hour minus the $2.94 allowable fringe benefit credit for the health insurance benefit that the contractor had already provided, either in cash wages or other fringe benefit contributions.
Must contractors include overtime hours in the total hours worked when computing the creditable hourly rate for fringe benefit contributions?
Yes, in determining the fringe benefit credit that can be claimed for fringe benefit contributions for an employee, the contribution must be divided by all hours worked by the employee in that time period, including overtime hours.
May contractors satisfy any part of their fringe benefit obligations to a worker with per diem payments, such as lodging, meals, and other incidental expenses incurred while traveling?
No. Per diem payments are not considered bona fide fringe benefits. The costs of lodging and meals provided by the contractor may however be considered part of the workers’ wages if the lodging and meals provided are primarily for the workers’ benefit and convenience. However, if the lodging and meals are primarily for the contractor’s benefit, such as when a worker is required to live on the employer’s premises or where the worker is required to travel away from home to further the contractor’s business, those expenses must be covered by the contractor to the extent necessary to prevent the workers from receiving a wage below the applicable prevailing wage and cannot be credited as part of the workers’ wages. For example, where a contractor sends workers who are regularly employed in their home community away from home to perform work at a location outside of daily commuting distances, so that the workers as a practical matter can only go home on weekends, the cost of board and lodging and weekend travel to their homes and back to the worksite is considered primarily for the contractor’s benefit and must be reimbursed to the worker. That reimbursement is not creditable towards the Davis-Bacon prevailing wage. Whether lodging, meals, and other travel expenses are primarily for the benefit of the contractor or the worker is a fact-specific determination, based on such circumstances as the worker’s home community and normal commuting area and the circumstances requiring travel to another location.
When may workers be considered bona fide apprentices that may receive apprentice rates on Davis-Bacon covered projects? Can any worker who is receiving some kind of formal training in a construction trade be considered an apprentice?
To be considered a bona fide apprentice who can be paid a rate less than the applicable prevailing wage rate, a worker must be individually registered in an apprenticeship program approved by the Department of Labor’s Employment Training Administration, Office of Apprenticeship, or a state agency recognized by the Department of Labor’s Office of Apprenticeship. Trainees enrolled in certain training programs approved by the Federal Highway Administration may similarly be paid a rate less than the applicable prevailing wage rate.
How does a contractor know whether a state has been authorized by DOL to approve apprenticeship programs?
A map showing which states have been approved, along with state agency contact information, is available at https://www.dol.gov/agencies/eta/apprenticeship/contact.
How do contractors calculate the prevailing wage rate to be paid to an apprentice? If the apprenticeship program lists a rate for the apprentice levels, do contractors pay that rate, or a percentage of the rate listed in the applicable wage determination?
On a Davis-Bacon project, the wages paid to workers are always based on the applicable prevailing wage rates listed in the wage determination, even for apprentices and trainees. Although many apprenticeship agreements provide a percentage of the journeyworker rate due for each level of apprenticeship, sometimes the agreements only list the rates paid to apprentices and the rate paid to journeyworkers. For apprentices and trainees enrolled in such programs, contractors will have to convert that apprentice rate to a percentage and apply it to the base hourly wage rate listed in the applicable wage determination to find the rate that the contractor needs to pay that apprentice while they are working on that Davis-Bacon project.
May apprentices also be paid a lower fringe benefit rate on Davis-Bacon covered projects?
If the apprenticeship agreement explicitly states that a percentage applies to fringe benefits, or specifically states a lower fringe benefit amount that can be similarly applied to fringe benefit rate in the applicable wage determination, then the contractor may apply that percentage to the fringe benefits listed in the wage determination. However, if the apprenticeship agreement is silent as to fringe benefits, the full fringe benefit amount must be paid to the apprentice.
Do the Davis-Bacon prevailing wage requirements require the payment of an overtime premium?
It depends. Although the Davis-Bacon Act itself does not include overtime pay requirements, a Davis-Bacon Related Act, the Contract Work Hours and Safety Standards Act (CWHSSA), does require the payment of overtime on certain covered contracts (generally, prime contracts over $100,000). CWHSSA requires that each laborer or mechanic (including watchmen and guards) who works more than 40 hours on a covered contract in a workweek must receive at least one and one-half times the applicable basic rate of pay – generally the rate listed in the Davis-Bacon wage determination, excluding the fringe benefit amount listed (if any) – for all hours worked over 40 in a workweek on the covered contract. A workweek, which can begin on any day of the week, is a fixed and regularly recurring period of 168 hours – seven consecutive 24-hour periods. In addition, the Fair Labor Standards Act (FLSA), the federal law of most general application concerning wages and hours of work may also apply. The FLSA requires non-exempt employees to receive one and one-half times their regular rates of pay for all hours over 40 worked in a workweek (regardless of whether the work performed includes Davis-Bacon Related Act-covered work).
How should a contractor pay overtime to a worker who works in more than one labor classification, or works at both Davis-Bacon and non-Davis-Bacon jobs in the same workweek?
Whether computing overtime due under CWHSSA or the FLSA, the method used is the same, and applies to workers who work in different labor classifications and workers subject to the FLSA who work on both Davis-Bacon and non-Davis-Bacon jobs in the same workweek. Workers are paid straight time at their respective rates; the contractor only needs to compute the additional half-time due. This is generally done by calculating a worker’s weighted average rate, in which the worker’s total straight-time compensation for that week, at all rates, is divided by the worker’s total hours worked that week, at all jobs, to determine the worker’s regular rate for overtime purposes. The worker would then be due half of that regular rate for each hour of that they worked that week.
Do contractors have to pay workers fringe benefits for overtime hours?
Yes, Davis-Bacon prevailing wages, including any listed fringe benefit rates, must be paid for all covered hours worked by covered workers, including overtime hours. However, although contractors must pay fringe benefits for overtime hours, they are not required to compute and pay additional half-time on the fringe benefits paid.
Do contractors performing construction work on BIL-funded or assisted construction projects subject to Davis-Bacon labor standards have to submit certified payrolls every week?
Yes, certified payrolls must be submitted weekly to the funding recipient within seven days of the regular pay date for that weekly pay period.
Who should sign certified payrolls?
Certified payrolls must be signed by someone who oversees the payment of wages and the work performed. They must also be in a position to know that the information provided in the certified payrolls accurately reflects all of the covered workers working on the project during that week, the hours and classifications of work they performed, and that they were paid all of the prevailing wages that they were due. Submitting accurate certified payrolls signed by a responsible party is critical. Contracting agencies can withhold contract funds if certified payrolls are not submitted or are submitted unsigned, and falsification of certified payrolls can even lead to criminal penalties.
Is it permissible for certified payroll to be signed with digital or e-signatures?
Electronic submission of certified payroll with electronic signatures is permitted under the Copeland Act, but individual contracting agencies determine electronic submission options; this is because contractors submit the information directly to each contracting agency, not to WHD. To be valid, electronic signatures must meet the requirements of the Government Paperwork Elimination Act. The signature must identify and authenticate a particular person as the source of the electronic signature and indicate that person’s approval of the electronic submission. Many electronic systems provide for such signatures. However, copies or scans of handwritten signatures are generally not sufficient. Additionally, while electronic submissions are permitted, contracting agencies must allow contractors who are unable or unwilling to submit certified payroll electronically to use another method
When should contractors mark 4(a) or 4(b) on the certified payroll form?
The contractor fills out boxes 4(a) or 4(b) to designate the method the contractor uses to provide fringe benefits to its workers on Davis-Bacon covered projects. The contractor selects 4(a) when the contractor makes contributions to bona fide fringe benefit plans, and chooses 4(b) when fringe benefits are paid in cash. If the contractor uses more than one method to pay fringe benefits, they should mark either 4(a) or 4(b) on the certified payroll form depending on which method of paying fringe benefits applies to the majority of the contractor’s workers, and then explain any exceptions to how fringe benefits are generally paid in section 4(c). For example, if a contractor pays most of their workers cash in lieu of fringe benefits, but makes contributions to bona fringe benefit plans for carpenters in accordance with the terms of a collective bargaining agreement, the contractor should mark 4(b) to show that most workers have been paid cash in lieu of fringe benefits but explain in section 4(c) that the contractor is making fringe benefit contributions to the relevant plans for carpenters.
Enforcement and Administrative Proceedings
How are complaints addressed and investigations conducted by WHD?
Workers and third parties may file a complaint with any WHD office if they believe a contractor has failed to comply with Davis-Bacon labor standards. After receiving the complaint, WHD may initiate an investigation or may seek to resolve the complaint through conciliation. WHD also agency-initiates investigations to determine compliance.
In a Davis-Bacon labor standards investigation, WHD inspects relevant records, such as contracts, certified payrolls as well as other supporting payroll records, records relating to apprenticeship, and records of hours worked. WHD interviews the contractor and the contractor’s workers at the worksite during normal work hours. WHD may also conduct phone or mail interviews as needed. Funding agencies, funding recipients and contractors are required to cooperate with authorized representatives of WHD in all aspects of an investigation. Through the entirety of the investigation, WHD keeps the complainant(s) information, if any, confidential.
Federal funding agencies may also conduct their own investigations or have their funding recipients conduct their own investigations. Federal funding agencies may establish their own guidelines for such investigations, provided that such guidelines are consistent with WHD’s guidelines in light of DOL’s coordinating role in the administration and enforcement of the Davis-Bacon and Related Acts.
Can a funding recipient request copies of contracts between a prime contractor and its subcontractors to ensure that Davis-Bacon and Related Acts provisions and wage determinations are included?
Yes. 29 CFR 5.6(a)(1) states that no funds shall be paid by the contracting agency to the contractor unless they have ensured that the labor standards clauses and wage determinations have been incorporated into contracts subject to Davis-Bacon labor standards. 29 CFR 5.2(h) defines “contract” as a prime contract subject to Davis-Bacon labor standards and any sub-contract of any tier under such a prime contract. As a result, funding recipients, like other contracting agencies, have the authority to ensure that labor standards clauses and wage determinations have been incorporated into sub-contracts. This is one method that contracting agencies can use to make sure this requirement is met.
What are some signs that workers may be underpaid and/or misclassified that funding recipients and agencies should look for when reviewing certified payrolls?
Some wage discrepancies may be evident from a comparison of the certified payrolls with the applicable wage determination(s), such as, for example, where a contractor used an incorrect wage rate for a classification, or paid fringe benefits in cash but not for all hours worked. In addition, examination of certified payroll records may exhibit other signs of a potential violation, such as where the certified payroll shows a high proportion of apprentices to journeyworkers on site, or where certified payrolls show a pattern of having an inordinately high number of laborers for the kind of work being performed. Another indicator of a potential misclassification of workers and/or inaccurate records of hours worked, is where the certified payroll consistently shows workers with the same split of hours between two labor classifications, week after week. Another potential red flag is when some workers consistently show significantly fewer hours on the certified payroll than other workers on the work site, or whose hours on the certified payroll do not match up with the daily reports for the work site; this may be a sign that workers are not being paid the proper prevailing wage rates but are instead being paid a piece rate or a day rate that does not compensate the worker for all hours actually worked. Additional examples of violations that may be uncovered when reviewing certified payrolls can be found on the DBA/DBRA Certified Payroll training video.
How often are employee interviews required or recommended for a Davis-Bacon compliance investigation?
There is no specific number of interviews required for project investigations. Interviews must be sufficient in number to establish the degree of adequacy and accuracy of the records and the nature and extent of any violations. They should also be generally representative of all classifications of employees on the project under investigation. Employees should be questioned regarding other employees they worked with as well as the duties performed and hours worked by those employees.
What happens if a contractor is found to be in violation of the Davis-Bacon prevailing wage requirements?
If WHD finds that a contractor has not paid the applicable Davis-Bacon prevailing wages, WHD will request that the contractor remedy the violation(s). WHD may also have the funding agency or funding recipient withhold payments in sufficient amounts to satisfy liabilities for underpayment of wages and for liquidated damages for overtime violations under the Contract Work Hours and Safety Standards Act. In addition, contactors found to be in violation of the Davis-Bacon prevailing wage requirements may be grounds for contract termination, contractor liability for any resulting costs to the government and/or debarment from future contracts for a period of up to three years.