What Is Davis-Bacon Wages? Pay Rules & Requirements Guide
What Are Davis-Bacon Wages?
Davis-Bacon wages are typically called prevailing wages. The U.S. Department of Labor (DOL) oversees federal worker wages, safety, and utilization for contracts receiving federal funding. The Davis-Bacon and Related Acts (DBRA) applies to contractors and subcontractors working on construction, alteration, or repair (including painting and decorating) of public buildings or public works and says that contractors must pay their laborers and mechanics employed no less than the local prevailing wages and fringe benefits for corresponding work on similar projects in the area. The DBRA applies to wages, fringe benefits, and overtime. Most states have implemented their own version of the Davis-Bacon Act, which is often referred to as Little Davis-Bacon.
How Do Davis-Bacon Wages Work?
The Department of Labor’s Wage and Hour Division reviews and monitors wages across the country and maintains the Sam.gov website, where agencies and contractors can search for prevailing wages related to their contracts. Prevailing wages can be determined by a number of factors including the average in the region, crafts and work classifications, job titles, and historical local wages. Prime and sub contractors sourcing workers for public projects can search the wage database to find the appropriate wage. If the agency uses eComply, the process of inputting and maintaining wage data is done for them at no cost.
What Is the Davis-Bacon Wage Rate?
The Davis-Bacon wage rate is the rate that has been determined by the DOL as the prevailing wage. This rate is updated twice a year, however, they will be updated more often if there are economic changes that would affect wages. It is determined by the location of the project, the worker’s classification and/or job title, and the type of work being provided.
How Do You Calculate Davis-Bacon Wages?
Prevailing wages are determined using a three-step calculation method established by the U.S. Department of Labor:
- Majority Rule – If over 50% of workers in a job category earn the same wage, that rate is set as the prevailing wage.
- 30% Rule – If no majority exists, the wage paid to at least 30% of workers is used.
- Weighted Average – If neither condition is met, a weighted average of all wages in the group is applied.
These wages are often used for public works projects and government contracts to ensure fair pay based on local labor market conditions.
What Are the Davis-Bacon Wage Requirements?
Prevailing wage requirements ensure that workers on public works projects receive fair compensation based on local labor market conditions. These requirements typically include:
- Mandatory Wage Rates: Workers must be paid at least the prevailing wage set by the Department of Labor or state agencies.
- Apprenticeship Standards: Some projects require a percentage of work hours to be completed by registered apprentices.
- Recordkeeping & Compliance: Employers must maintain payroll records to verify compliance with wage laws
- Penalties for Violations: Failure to meet prevailing wage requirements can result in fines or disqualification from future contracts.
In California, for example, all workers on public works projects must be paid prevailing wages. The IRS also enforces prevailing wage rules for certain clean energy tax incentives. A solution such as eComply can help agencies and contractors by digitizing the prevailing wage process. The solution organizes, tracks, and calculates reported wages to actual wages and flags any discrepancies. It will also notify the contractors if there are apprenticeship requirements and can track that data as well.
What Is the Difference Between Davis-Bacon and Prevailing Wage?
Davis-Bacon Act is the rule that sets the standards for the prevailing wage. Sometimes people refer to it as Davis-Bacon wage.
What Are Davis-Bacon Fringe Benefits?
Davis-Bacon fringe benefits are additional compensation that employers must provide to workers on federally funded construction projects. These benefits can be given in two ways:
- Cash Payment – Employers can pay the fringe benefit amount directly as part of the worker’s wages.
- Bona Fide Benefits – Employers can contribute to health insurance, pensions, vacation pay, or other approved benefit plans instead of paying the amount in cash.
Unlike standard wages, fringe benefits must be paid for all hours worked, including overtime. However, payments required by law—such as Social Security or workers’ compensation—do not count as fringe benefits.
Would you like to know how contractors ensure compliance with these requirements?
Who Enforces Davis-Bacon Wage Laws?
The Davis Bacon Act is enforced by the US Department of Labor’s Wage and Hour Division (WHD). The WDH will perform routine audits and will also investigate complaints filed against a contractor, to determine if a violation has occured. If a state has a Little Davis Bacon Act, that state’s equivalent department, such as California’s Department of Industrial Relations (DIR), enforces the law. eComply can help agencies and prime contractors match workers wages as reported in the system to real time wages, and if a discrepancy is found, the system will send notifications to the related parties. This gives them a chance to resolve the discrepancy before the DOL audits them.
All Construction Projects Require Davis-Bacon Wages?
No, not all construction projects require prevailing wages under the Davis-Bacon Act. Contractors can determine if prevailing wage requirements apply by considering the following factors:
- Project Funding: If the project is federally or state-funded, prevailing wages likely apply.
- Contract Type: Public works contracts, including construction, repair, and maintenance, often require prevailing wages.
- Threshold Amount: Some laws apply only if the contract exceeds a certain dollar amount (e.g., $2,000 under the Davis-Bacon Act).
- State & Local Laws: Different states have their own prevailing wage laws, which may have additional requirements.
Ensure your projects meet federal wage requirements without the stress. Get in touch with our team and let us handle your certified payroll management.
