Employment Issues- Davis Bacon Act

The Davis-Bacon and Related Acts applies to contractors and subcontractors of federal contracts (including Washington, D.C.) when the contracts are in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. The Act requires that contractors and subcontractors subject to it must pay laborers and mechanics working under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The Department of Labor will determine such locally prevailing wage rates. As an example, District of Columbia wage determinations are located at this link.

The Davis-Bacon labor standards clauses and wage determinations must be included in the contracts.  An exception exists for apprentices, who may be employed at less than the predetermined rates. However, to do so, the apprentices must be registered in and employed pursuant to an apprenticeship program registered with the Department of Labor or a state apprenticeship agency recognized by the Department of Labor. Similarly, trainees may be paid at less than the predetermined rates if they are in a trainee program that is also certified by the Department of Labor.

For related contracts in excess of $100,000, contractors and subcontractors also must pay laborers and mechanics the overtime rate of one and one-half times their regular rate of pay for all hours worked over 40 hours in a workweek, per the Contract Work Hours and Safety Standards Act.

If it is a Davis-Bacon project, the federal contractor or subcontractor must pay weekly and submit weekly certified payroll records to the contracting agency.  The employer must also post the Davis Bacon Act poster relating to employee rights. This poster must be placed in a prominent and accessible place where it will be easily seen by workers. The applicable wage determination must also be posted in a similar fashion.

The employer must maintain all payroll and basic records for all covered laborers and mechanics both during the course of work and for three years after the completion of the work. This recordkeeping includes the following:

• Name, address and social security number;
• Each worker’s work classifications;
• Hourly rates of pay, including rates of contributions or costs anticipated for fringe benefits or their cash equivalents;
• Daily and weekly numbers of hours worked;
• Deductions made;
• Actual wages paid;
• Detailed information regarding bona fide fringe benefit plans and programs, including records that show that the plan or program has been communicated in writing to the laborers and mechanics affected;
• If applicable, detailed information regarding approved apprenticeship or trainee programs

This recordkeeping and a copy of all payrolls for the preceding week must be submitted to the contracting agency on a weekly basis. However, full social security numbers and home addresses should be excluded. In lieu of a full social security number, the last four digits of the employee’s social security number shall remain as an identifier. In addition to this information, the contractor or subcontractor must submit a signed “Statement of Compliance” within seven days of the regular pay date of the pay period.

If a contractor or subcontractor disregards the Act or are in “aggravated or willful violation” of the Act, the offending contractor or subcontractor may face debarment for up to three years. Contract payments may also be withheld to satisfy liabilities for unpaid wages and liquidated damages for overtime violations. The contracting agency may also be able to terminate the contract with cause.  The contractor may challenge such alleged violations to an administrative law judge of the contracting agency and appeal to the administrative review board of the contracting agency, as well as federal court.

For the contractor, the most important takeaways from the Davis Bacon Act are that first and foremost you should ensure you comply with the applicable wage determination and that you post the above required notices and wage determination so they can readily be seen by employees. The contractor must also ensure it remains diligent in providing the federal agency with the relevant information for recordkeeping and payroll purposes to ensure compliance with the Davis-Bacon and Related Acts. Prompt compliance with the Davis Bacon and related legislation will help protect the contractor from non-compliance assertions, termination, and, possibly debarment.