Almost every federal construction job comes with a minimum pay rule called Davis-Bacon. It's the part of government work contractors worry about most, but it comes down to three things: pay at least the listed rates, keep records, and send them in weekly.
New to the term? Read prevailing wage explained, or run the numbers with the prevailing wage calculator.
When it applies
Davis-Bacon covers federal contracts over $2,000 for building, alteration or repair work in the U.S., including painting and decorating. It covers laborers and mechanics working on the site, including your subcontractors' workers. It does not cover office staff, or owners and supervisors who don't do the physical work themselves.
Service jobs, like janitorial or grounds upkeep, fall under a different law (the Service Contract Act), with its own wage determination.
The wage determination
Every covered solicitation includes a wage determination (WD) for the county where the work is. It lists each trade (roofer, electrician, painter, laborer and so on) with:
- a basic hourly rate, and
- a fringe benefit amount per hour.
You must pay each worker at least the basic rate plus the fringe for the work they're actually doing. You can pay the fringe as benefits (health, pension), as extra cash on the paycheck, or a mix. If one worker does two trades, either track their hours by trade or pay the higher rate for all of it.
Pricing your bid around it
- Find the WD in the solicitation attachments before you price labor.
- Check your normal rates against it trade by trade. In rural counties your rates may already be higher. In cities the WD can be well above what you usually pay.
- Add your payroll taxes and insurance on top of the WD rate, just like normal.
- Budget an hour or two a week for certified payroll.
- On contracts over $100,000, workers also get time-and-a-half for hours over 40 in a week.
Certified payroll
Every week the job runs, you send a certified payroll report (form WH-347, or your own format with the same information) to the contracting officer. It lists each worker, their trade, their hours and their pay, and it's signed to confirm it's accurate. Subcontractors send theirs too, usually through you. Many payroll services can produce it automatically.
On the job site
- Post the wage determination and the Davis-Bacon poster (WH-1321) where workers can see them.
- Apprentices can be paid lower apprentice rates only if they're in a registered apprenticeship program.
- The agency may interview workers on site to check what they're paid.
Why it's not a reason to skip federal work
Every bidder on the job is held to the same rates, so nobody undercuts you on labor. If you price the WD correctly and keep clean weekly payroll, Davis-Bacon is just one more line of admin. We check the wage determination for every bid we prepare for clients.