The Davis-Bacon Act of 1931: All You Need to Know
If you've ever worked as an intern on a government construction project, you might have come across theDavis-Bacon Act of 1931. Perhaps, if you’re a contractor, those words might have deterred you from bidding on a federal-funded project.
Technically, Davis-Bacon is the name of a piece of prevailing wage legislation. However, people use it to refer to various requirements. It is arguably the most debated set of construction laws and is also why many companies avoid bidding on Davis-Bacon projects.
Despite the misinformation, there are a few basic facts about Davis-Bacon that will help clear your doubts about Bacon jobs.
What Is the Davis-Bacon Act of 1931?
The Davis-Bacon Act is a federal law that guidesall contractors and subcontractors working on government-funded projects. The law ensures that they pay all their workers' fair wages, benefits, and overtime bonuses.
The Bacon law also ensures that contractors and subcontractors worth $100,000 pay an overtime rate at one-and-half times the prevailing hourly rate to all their workers, including guards and watchmen. Overtime starts to count after the usual 40 hours per week.
Under the law, contractors pay their employees weekly. They must also send certified copies of payroll records to the government agency that oversees the project every week.
What Are the Prevailing Wages?
Contractors need to be familiar with the concept of prevailing wages before embarking on public contracts. Often, many of them mistakenly equate prevailing wages with the minimum wage.
Prevailing wages are the hourly wages, standard benefits, and overtime paid to most workers with similar roles within a defined area. They are directly intertwined with the stipulations of the Davis-Bacon Act. The Act designates the Department of Labor as the body that helps to identify and declare local prevailing wage rates.
Prevailing wages are also known as the minimum Davis-Bacon wages. The Department of Labor publishes salaries alongside the Service Contractor Act wage determinations. Each wage determinations also lists a fringe portion and a cash portion for each worker classification. However, contractors may use cash to payout fringe requirements, especially since prevailing wages differ from one area to the other.
Davis-Bacon Act History
President Herbert Hoover signed the Bacon Act into law on March 3, 1931. The Bacon Law, named after former Pennsylvania Senator James J. Davis and a former Secretary of Labor, RobertL. Bacon, was established to prevent contractors from taking advantage of migrant workers in place of local workers to reduce wages significantly.During the Great Depression, workers' displacement and increased pressure for lower wages threatened to entrench local economies. The Davis-Bacon Act provided a remedy to the situation.
Today, Bacon's law continues to protect the hard-earned wages of construction workers. It also brings a balance to the federal bidding system. The Davis-Bacon Act enables federal, state, and local governments to work on meaningful projects. It helps build roads, dams, buildings, water treatment plants, airports, schools, housing projects and so on, without public funding distressing local wages.
Who Does the Davis-Bacon Act Protect?
The law protects workers and communities from being short-paid by non-local contractors. These constructors obtain federal construction projects by underbidding local wage levels and cause economic disruption. Therefore, the law requires contractors and subcontractors who contribute labor provisions over $2,000 for construction, repair, or alteration of public property to adhere strictly to the Davis-Bacon and Related Acts' policies. The Act does not exclude jobs like painting and decoration.
Contractors and subcontractors compensate their contracted workers at a rate equal to or greater than the locally prevailing wages. Also, they add fringe bonuses offered by similar projects within the same locality.
Where Does the Davis-Bacon Act Apply?
The Davis-Bacon Act applies to all 50 states and the District of Columbia. However, it does not include federal construction projects outside the 50 states and the District of Columbia.
Essential Facts About the Davis-Bacon Act
Violating the Bacon law can spell disaster for a construction firm. Recently, four federal contractors violated the Davis-Bacon law and were forced to pay $255,474 to 53 former and current workers.
Here are a few facts every contractor should know:
1. PrevailingWages Are Set Federally and Applied Locally
Prevailing wage requirements involve several local, state and federal laws. However, Bacon law governs most federal projects.
2. Several Criteria Determine Who Benefits from Davis-Bacon Wages
The Bacon law constrains contractors and subcontractors to pay prevailing wages to all employed mechanics and laborers. However, contractors need to determine who these workers are and the worksite.
The Code of Federal Regulations defines a mechanic or laborer as “any worker whose duties are physical or manual in nature… as distinguished from mental or managerial.” Depending on the conditions, this may include trainees, apprentices, supervisors, and helpers who spend at least 20 percent of their workweek providing manual or physical labor.
Also, the worksite refers to the physical place(s) where the building or work indicated in the contract will remain. However, the law includes sites that contractors established to perform work nearly exclusively to the project.
Therefore, off-site provision of labor may not qualify under the Davis-Bacon Act.
3. Workers Determine Prevailing Wages
The Department of Labor regional offices distributes WD-10 forms to gather information about local wages. This information is used to determine the prevailing wages.
The wage determination surveys cover three types of construction: building, residential, and heavy/highway. The data collected will determine the average rate and fringe benefits rates for workers employed to provide supplies and labor to government projects in their area.
Compliance with the Davis-Bacon Act
Bacon law requires contractors to do the following:
1. Proper Record Keeping
Contractors must keep a detailed report of the employee wage and hours worked on the job for at least three years after job completion. The record must contain the name, physical mailing address, hourly wage rate, classification, the net amount of wages, and each employee's social security number.
2. Keeping Employees Informed
Contractors are to keep their workers informed of their prevailing wage rates by hanging information posters that fully state their rights.
3. Hiring Veterans for Federal Contracts
Contractors are to employ an affirmative program to hire recently discharged, Vietnam-era veterans and those with disabilities. Contractors must also keep a record of the number of veterans employed, their hiring location, and their work category.
4. Certified Payroll
Contractors pay their employees weekly and send certified copies of all payroll records to the government agency overseeing the project every week. However, complying with the Act and submitting certified payroll reports depends on the employee's classification.
Under the Fair Labor Standards Acts (FLSA), an employee's benefits and overtime rate determine their classification. Classification of employees ensures proper recording of employee’s information on weekly certified payroll reports.
However, keeping records of employees can be quite cumbersome. Thankfully, you can make this easier by using a time management software like Traqq. This tool has comprehensive features such as real-time logging of events, website and app monitoring, automatic reports generation, and screenshots. It has all the features contractors need keep adequate FLSA-compliant records.
On a Final Note
Due diligence is necessary before bidding on federal projects. However, that shouldn't discourage contractors from exploring this area. Several resources are readily available to help them understand Davis-Bacon wages and other requirements.
Consequently, this may help ensure compliance with the various statutes that govern Davis-Bacon jobs. A contractor can begin to take these attractive contracts and make the most successful opportunities with proper understanding.