In the realm of the Davis-Bacon Act and construction contracts, paying proper wages is at the top of any government contractor’s compliance checklist. In fact, the primary function of the Davis-Bacon Act is to protect local communities from the economic upheaval associated with large federal projects by guaranteeing a prevailing wage and fringe benefit. It may seem straightforward, but Davis-Bacon wages come with their own set of challenges. Luckily, there are resources available to contractors to help them maintain compliance!
The Davis-Bacon Act
The Davis-Bacon Act, also known as the DBA, requires payment of local prevailing wages to construction workers performing on federally funded construction projects. The DBA apples to any construction federal contract in excess of $2000. Construction projects include building, alterations, and repairs, like painting and decorating, on public buildings or in public works. The prevailing wage exists for the laborers and mechanics that make these projects possible, ensuring that they earn fringe benefits and a wage that corresponds to what they would be paid for similar projects in the area.
Understanding Davis-Bacon Wages
When one thinks of Davis-Bacon wages, the prevailing wage is the first thing that comes to mind. The prevailing wage is the combination of the basic hourly wage rate and any fringe benefits listed for a specific classification of workers. The contractor has the option to pay each laborer the prevailing wage entirely in cash or by a combination of cash and bona fide fringe benefits.
The list of hourly wage rates and fringe benefit rates for each classification of worker on a DBA contract is called a wage determination. Wage determinations are calculated based on the geographical area where a particular type of construction is taking place. The Wage and Hour Division turns to surveys of local wages to determine the correct Davis-Bacon wages for the area.
There are two types of wage determinations used in Davis-Bacon contracts: general determinations and project determinations. A general wage determination reflects Davis-Bacon wages as determined by the Wage and Hour Division to be prevailing in a specific region for a specific type of construction. A project wage determination is issued at the request of a contractor or contracting agency and is uniquely applicable to that specific project.
Davis-Bacon Wages Classifications for Workers
Wage determinations are issued for four types of construction categories that can occur under Davis-Bacon contracts: building construction, residential construction, highway construction, and heavy construction. Each of these classifications pertains to a very specific type of work and the wage determinations are unique to the particular category of labor.
Building Construction: This category encompasses construction, alteration, or repair of sheltered enclosures with walk-in access. It pertains to buildings that are intended to house persons, machinery, equipment, or is in association with the installation of utilities and equipment.
Residential Construction: This covers the construction, repair, and alteration of single family homes, townhouses, apartments, and incidental site work associated with housing projects like parking areas, streets, and sidewalks.
Highway Construction: For roads, stress, highways, parking areas and most other paving work that isn’t connected to residential and business construction, the highway category includes that construction, alteration, and repair on those projects.
Heavy Construction: This category touches all other projects that do not fall under the previous categories. Some examples include dredging, sewage lines, dams, bridges, and flood control projects.
Conformance and the Unique Needs of DBA Contractors
Sometimes, there is no project and labor classification that properly suits a particular contract. In that case, a contractor or contracting agency may seek a “conformance” from the Wage and Hour Division to create a new class of laborer and determine a unique wage determination for that specific contract. The Wage and Hour Division has its own criteria for review conformance requests and determining whether conformance is appropriate and determining a corresponding wage.
In September 2021, the Department of Labor published a new resource for Davis-Bacon Act contractors to help them better understand construction categories, Davis-Bacon wages, and clarity on the limited circumstances that may call for conformance requests.
At Boon, we understand that every DBA contractor has totally individual needs. We work that into our approach to benefits. We work within the wage determination to provide bona fide fringe benefits for contractors working under the Davis-Bacon Act. Custom solutions can create a path to contractor success. No one understands that better than us.
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