Contractors that work on government funded projects have to follow a lot of rules and regulations, including those outlined by Davis-Bacon and Related Acts (DBRA). These regulations can be cumbersome and confusing, leading to costly compliance issues and even legal trouble. This can make government contracting a bit daunting, but if you know the laws you can tap into this profitable revenue stream.
The following five details are important for every government contractor know and understand. Keep in mind, however, that your state and municipality may have additional regulations in place, so always check with your department of labor for guidance.
What is Davis-Bacon & when does it apply?
The Davis-Bacon Act applies to federally funded contracts over $2,000 for the construction, alteration or repair or public buildings or public works. Federally assisted contracts, where federal and local dollars are combined, also fall under these rules. The Related Acts are additional federal statutes that authorize federal assistance in the form of contributions, grants, loans, insurance, or guarantees for certain programs. These also include additional labor standards that must be followed. Together these are referred to as Davis-Bacon and Related Acts or DBRA.
“Davis-Bacon wages” are set federally
The wage and fringe benefit rates required by Davis-Bacon and Related Acts are set at the federal level, but they are applied at the local level. These rates are determined by the Wage and Hour Division of the U.S. Department of Labor based on surveys they conduct to determine prevailing wages by job and region. They then set rates based on this information, divided up into labor category and geographic location, so “Davis-Bacon wages” are not uniform across the country. For example, the wage and fringe rate for a steel worker in California will be different than it is in Texas.
Prevailing wages are not always federal
While federal wage and fringe determinations under DBRA are prevailing wages, not all prevailing wages are federal. Many states, and even municipalities, have prevailing wage laws in place that are separate from DBRA. This means a company may have to determine which set of wage determinations is correct based on where they are and the type of contract it is. Typically, the higher prevailing and fringe rate should be used, but always check with your state department of labor for guidance. Learn more about state prevailing wage laws here.
Prevailing wages combine two pay rates
Prevailing wages are actually a combination of a predetermined hourly wage rate and an hourly fringe benefit rate. You have to add the hourly and fringe rate to find the correct prevailing wage. In the example below, you can see that that a Carpenter (1) would receive $41.84 as a hourly rate and $19.17 as an hourly fringe rate, totaling an hourly prevailing wage rate of $61.01.
For federal prevailing wage information, you can visit Sam.gov and select “Search wage determinations.” You can find local prevailing wage guidance by visiting your state’s department of labor.
Reporting is mandatory
Contractors and subcontractors working projects that fall under DBRA must submit weekly payroll reports to the federal agency that contracted the work. This should include information like the project name and location, the week covered by the payroll, employee details and wage-related information. Officially, you can use any format you want just as long as it includes all the required information. To make it easier to comply with the law however, the government created form WH-347. Depending on the type of contract, and state law, similar reporting may be required at the state level.
Read the complete instruction for filling out form WH-347 and bookmark these additional helpful resources:
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.