Construction contractors are governed by the Davis-Bacon Act (DBA), which puts Davis-Bacon Act compliance at the top of any contractors’ priority list. Whether you’re a seasoned pro or celebrating your first contract win, a brush up of the basics is always a good idea. Let’s dive into the origins of the DBA, the basics of Davis-Bacon compliance, and why compliance is crucial.
The Purpose of the Davis-Bacon Act
The Davis-Bacon Act was passed in 1931, establishing the requirement that contractors pay the local prevailing wage on public works projects in construction. It applies to any contract valued in excess of $2000 that involves construction, alteration, and repair on government projects. The Davis-Bacon Act’s emphasis on paying a local prevailing wage and fringe benefits was created to protected communities from the upheaval usually caused by federal contracts. The DBA essentially levels the playing field by preventing outside contractors from entering a higher cost area and underbidding local contractors.
Davis-Bacon Act Compliance
The basics of Davis-Bacon Act compliance are pretty straightforward. It’s the burden of keeping up with compliance that’s tricky. During the performance of the contract, employees must be paid at least once a week with full wages, as well as the employer’s choice of two options – fringe benefits or paying the fringe amount out in cash. Additionally, companies are required to maintain basic records for all workers during the performance of the contract and for at least three years after. These records must contain basic employee information such as a name and social security number, hourly rates of pay, any rates associated with the fringe, hours worked in the performance of the contract, and details on any fringe benefit plans and programs and proof that the program has been communicated to the workforce.
Being cognizant of the requirements of the DBA makes it easy for contractors to set up strategies for compliance and their future success.
Penalties for Non-Compliance
The Davis-Bacon Act is enforced by the Wage and Hour Division of the Department of Labor. Penalties for non-compliant contractors and subcontractors can be incredibly steep, causing an administrative headache and perhaps even going so far as to keep a contractor from bidding on future projects. Compliance flows from top to bottom, so it’s important that contractors be prepared.
Common penalties associated with being out of compliance with the DBA include paying owed back wages and fringe benefits to the employees, personal liability to company officials, withholding payments due to the contractor, and termination of the contract as well as prohibition from all government contracts for a three-year period.
Your Partner in Compliance
Compliance begins with a concentrated effort of legal, administrative, and accounting expertise. That’s the value that we provide at Boon. Boon has 40+ years of experience in the government contracting space, making us subject matter experts in the Davis-Bacon Act, the Service Contract Act, and other regulations that pertain to contractors. Our solutions are fully compliant, competitive, and delivered with a consultative approach that ensures that our solution is the right fit for your business.
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