Contractors and subcontractors who work on publicly funded projects must be cognizant of the wage equality laws established in the Davis-Bacon Act. As the flagship piece of prevailing wage legislation in the United States, the Davis-Bacon Act helps workers obtain due compensation for provisions of labor or supplies. Unfortunately, due to the scope and complexity of this highly debated piece of legislation, maintaining compliance can prove troublesome for contractors.
In this editorial, the Orlando construction attorneys at Cotney Construction Law will detail a comprehensive overview of the Davis-Bacon Act to help contractors develop a better understanding of their responsibilities when disseminating compensation to their workers. Recently, the number of Davis-Bacon Act violations in the construction industry is on the uptick, bringing with it lofty fines, debarment from future contracts, and, in some cases, prison time. If your construction firm needs legal assistance with matters pertaining to the Davis-Bacon Act, consult an Orlando construction attorney.
Protecting Wages Since 1931
On March 3, 1931, the Davis-Bacon Act was passed by Congress and signed into law by President Herbert Hoover. Named after its sponsors, former Pennsylvania Senator and Secretary of Labor James J. Davis and Representative Robert L. Bacon, the Davis-Bacon Act was established to stop contractors from utilizing migrant workers in place of local workers to artificially drive down wages. In the midst of the Great Depression, the displacement of local workers and increased pressure toward lower wages threatened to entrench local economies in a quagmire of squalor.
Today, the Davis-Bacon Act continues to protect the hard-earned wages of construction workers while simultaneously bringing balance to the federal bidding system. This allows federal, state, and local governments to work on important projects like buildings, dams, housing projects, roads, water treatment plants, schools, airports, and more without public funding distressing local wages.
What Are Prevailing Wages?
It’s important that contractors and subcontractors are familiar with the concept of prevailing wages when engaging in public works contracts. Many contractors mistakenly equate prevailing wages with the minimum wage. In a previous article, Do Prevailing Wage Laws Help or Hurt Public Construction?, we defined prevailing wages as “the hourly wage, standard benefits, and overtime paid to the majority of workers within a defined area.”
Prevailing wages are closely intertwined with the mechanics of the Davis-Bacon Act. The Davis-Bacon Act designates the Department of Labor as the entity tasked with identifying local prevailing wage rates. Contractors and subcontractors must always pay attention to the prevailing wage laws in their area when engaging in publicly funded construction projects.
Introducing the “Related Acts”
The Davis-Bacon Act is often referred to as the Davis-Bacon and Related Acts, but what exactly are these “related acts”? Over time, Congress introduced more and more prevailing wage provisions to roughly 60 statutes for the purpose of assisting publicly funded construction projects related to transportation, housing, air and water pollution reduction, and health through grants, loans, loan guarantees, and insurance. When a construction project qualifies for financial assistance under multiple federal statutes, there’s a strong chance that Davis-Bacon prevailing wage requirements apply.
Who Does the Davis-Bacon Act Protect?
Contractors and subcontractors who contribute provisions of labor or materials in excess of $2,000 for the construction, alteration, or repair of public property are required by law to adhere to the policies of the Davis-Bacon and Related Acts. This even includes jobs like painting and decorating. Contractor and subcontractors are responsible for compensating their contracted laborers and mechanics at a rate equal to or greater than the local prevailing wages and fringe benefits being offered by comparable projects within the same locality.
Additionally, to remain compliant with the Contract Work Hours and Safety Standards Act, prime contracts with values north of $100,000 require all contractors and subcontractors to pay their workers, including guards and watchmen, an overtime rate of one and one-half times the regular rate of pay for any hours exceeding the standard 40-hour workweek. Contracts covered by the Davis-Bacon Act may also answer to the overtime provisions detailed in the Fair Labor Standards Act.
Where Does the Davis-Bacon Act Apply?
The Davis-Bacon Act applies to all 50 states and the District of Columbia; however, there are some exceptions. The United States Department of Labor uses the following example to illustrate one such exception:
“Davis-Bacon prevailing wage provisions would apply to a construction contract located in Guam or the Virgin Islands funded under the Housing and Community Development Act of 1974, even though the Davis-Bacon Act itself does not apply to Federal construction contracts to be performed outside the 50 States and the District of Columbia.”
Remember, prevailing wages in your area will differ from other areas. If you are breaking ground on a publicly funded project for the first time in a new area and you need to get a better understanding of the Davis-Bacon and Related Acts that apply to your project, consult an Orlando construction law attorney.
3 Important Facts About the Davis-Bacon Act
As Orlando construction lawyers, we’ve seen firsthand how violating the Davis-Bacon Act can spell disaster for a construction firm. In fact, four federal contractors were recently cited for violating the Davis-Bacon Act and forced to retroactively pay a total of $255,474 to 53 current and former workers.
In many cases, once investigators have collected evidence proving that you have violated the Davis-Bacon Act, it’s already too late to make amends. Fortunately, when you partner with an Orlando construction law firm, a knowledgeable and experienced attorney will help you prevent noncompliance and defend you against prevailing wage violations. Here are a few facts about the Davis-Bacon Act that every contractor should know:
- Although prevailing wages are determined by local, state, and federal laws, all federal projects must comply with the Davis-Bacon Act. Therefore, these wages are determined on the federal level, but applied locally.
- According to the Davis-Bacon Act, prevailing wage laws apply to “all mechanics and laborers employed on the site of the work.” Contractors must recognize which employees and work sites meet these definitions.
- As defined in the Code of Federal Regulations, a laborer or mechanic includes any “workers whose duties are manual or physical in nature . . . as distinguished from mental or managerial.” Depending on the circumstances, this can include apprentices, trainees, helpers, and foremen spending 20 percent or more of their workweek providing physical labor to the work site.
- 29 CFR § 5.2 defines the work site as the “the physical place or places where the building or work called for in the contract will remain.” Therefore, provisions of labor taking place off-site may not qualify under the Davis-Bacon Act as they are not being “employed on the site of the work.”
- Prevailing wages are determined by Form WD-10, which is distributed by the Department of Labor’s regional offices as a way to collect information about local wages. These wage-determination surveys are important and cover three types of construction: building, heavy/highway, and residential. The data collected will be used to determine the average pay and fringe benefit rates for workers contracted to provide labor or supplies to publicly funded projects in their area.
Department of Labor Compliance and the Davis-Bacon Act
Contractors must be careful to avoid worker misclassification when dealing with public works projects governed by the Davis-Bacon Act. Department of Labor compliance is essential if you want to continue working on lucrative government projects. Remember, the Davis-Bacon Act is designed to help workers get paid a fair rate and avoid being undercut by government spending practices. By providing a wage floor for locking in fair compensation for workers, the Davis-Bacon Act also assists contractors by making it nearly impossible for them to be outbid by another contractor trying to import workers to an area for less pay.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.