Davis-Bacon Act

The Davis-Bacon Act (40 U.S.C. 3141-3148) requires that federal construction contractors and subcontractors pay workers at least the locally prevailing wages and fringe benefits determined by the Department of Labor (DOL) for the applicable labor classifications and work location, ensuring federal construction projects do not undercut local labor markets by using workers paid below prevailing community rates.

What is the Davis-Bacon Act?

Enacted in 1931 during the Great Depression, the Davis-Bacon Act applies to federal contracts for construction, alteration, or repair of public buildings or public works exceeding $2,000. DOL publishes wage determinations (WDs) that establish the minimum wage rate and fringe benefit amount for each labor classification in each county or geographic area, updated regularly based on local survey data and collective bargaining agreement rates. FAR Subpart 22.4 implements Davis-Bacon requirements in federal contracts.

The wage determination for a project is incorporated into the contract and sets the floor for all covered workers. A journeyman electrician on a federal building project in Fairfax County, VA, for example, must be paid no less than the WD rate for electricians in that county, regardless of what the contractor's commercial wages are. If the WD rate is $48.23/hr with $14.87/hr in fringe benefits, the contractor's actual prevailing wage obligation for that worker is $63.10/hr total compensation, even if its commercial market rate for electricians is $55/hr.

Davis-Bacon covers direct construction labor, laborers, mechanics, and other craft workers employed directly on the construction site. It does not apply to materials suppliers, supervisors, or administrative staff. The contractor is also responsible for ensuring subcontractors comply with Davis-Bacon requirements on their portion of the work, and the prime contractor bears responsibility for subcontractor violations in addition to its own.

The 2023 Davis-Bacon Act final rule (effective October 23, 2023) updated the prevailing wage methodology, requiring that a rate be found "prevailing" when paid to at least 50% of workers in a classification (the previous standard required a majority). This update significantly raised prevailing wage rates in many localities and extended Davis-Bacon to a broader range of construction activities, including transmission line and solar energy projects on federal lands.

Why Davis-Bacon Matters for Government Contractors

Davis-Bacon compliance is a wage and contract administration requirement with direct financial consequences. Misclassifying workers into lower-rated labor categories to reduce wage costs, paying below the WD rate, or failing to make the required fringe benefit contributions results in back pay liability, contract withholding, debarment, and potential False Claims Act exposure. Construction contractors bidding on federal work must analyze the applicable WD for each work location, verify that proposed labor costs meet or exceed WD rates, and build WD-compliant wage structures into their project cost estimates.

Example

A general contractor bids on a $4.5M federal courthouse renovation in Richmond, VA. The applicable DOL wage determination for Richmond City lists the prevailing wage for Carpenters at $46.75/hr with fringe of $17.30/hr. The contractor's commercial carpenters earn $42/hr base with $9.50/hr fringe. To comply with Davis-Bacon, the contractor must pay its federal project carpenters at least $46.75/hr (a $4.75/hr wage increase) and increase fringe contributions to $17.30/hr (a $7.80/hr fringe increase). The total labor cost differential, $12.55/hr per carpenter for a 10-carpenter crew over 18 months, represents approximately $470,000 in additional labor costs that must be included in the proposal price.

Frequently Asked Questions

How are Davis-Bacon wage determinations obtained?

Wage determinations are accessed through the SAM.gov Wage Determinations tool (sam.gov/wage-determinations) or through DOL's website. The contracting officer typically incorporates the applicable WD into the solicitation's Section J attachments. The WD specifies labor classifications by title and type (for example, "Carpenter," "Electrician," "Ironworker - Reinforcing") and lists the hourly basic rate and hourly fringe benefit rate for each. Contractors should verify the WD is the most current one applicable to the project's geographic area and type of construction before pricing.

What is the conformance process for unlisted labor categories?

When a contractor needs to employ a worker in a labor classification not listed in the applicable wage determination, it must submit a conformance request to the contracting officer and ultimately DOL for approval of a new classification and wage rate. The conformance rate must be comparable to the rates for similar classifications in the WD and must be at least the prevailing commercial rate for that classification in the area. Conformance requests take time, contractors should identify any needed conformances early, well before the work is scheduled to begin.

Does Davis-Bacon apply to Design-Build contracts?

Yes. Federal Design-Build contracts that include the construction phase are subject to Davis-Bacon for the construction work. The design phase is generally not subject to Davis-Bacon (design professionals are not covered workers under the Act), but the construction phase must comply with applicable WDs. On Design-Build contracts, the solicitation typically identifies the anticipated WDs that will apply to the construction phase so that offerors can account for prevailing wages in their price proposals.

How does Davis-Bacon enforcement work?

DOL Wage and Hour Division (WHD) investigators conduct compliance investigations in response to complaints or through proactive enforcement initiatives. Contracting officers may also conduct on-site compliance reviews. Evidence of violations (payroll records, worker interviews) can result in withholding of contract payments pending correction of underpayments, back-wage disbursements to affected workers, and in serious cases, contractor debarment from federal contracts for up to three years. Payroll records must be submitted weekly by contractors and subcontractors on Davis-Bacon covered contracts (Certified Payrolls using Form WH-347) and retained for three years after project completion.