Working for the federal government requires being knowledgeable about the many rules and regulations put in place to protect workers. The Davis-Bacon Act (DBA) is one such rule. Federal contractors must comply with the DBA and its related acts or face penalties like enforced payment of back wages and fringe benefits to withholding funds on federal contracts, contract termination, and even debarment from all government contracts for three years.
What is the Davis-Bacon Act?
The DBA was created in 1931 to protect workers from receiving low pay while competing for federally funded construction projects during the Great Depression. The act, as currently amended, requires that any federal contractor who takes on a job over $2,000 on public buildings or public works, must pay their workers no less than the prevailing wage and fringe benefits as on similar projects. Types of work include construction, alteration or repair (including painting and decorating).
The Secretary of Labor determines the local prevailing wage rates. The Davis-Bacon “prevailing wage” is the basic hourly rate and any fringe benefits listed in a Davis-Bacon wage determination. Contractors can pay their workers’ prevailing wage entirely as cash wages or a combination of cash wages and employer-provided bona fide fringe benefits. Prevailing wages, including fringe benefits, must be paid on all hours worked on the site of the work and employers must submit weekly certified payroll records.
The DBA rule is defined in conjunction with “related acts,” or the Davis-Bacon and Related Acts (DBRA), because of the many federal laws that authorize federal assistance for construction through grants, loans, loan guarantees and insurance. Examples include: Federal Aid Highway Acts, the Housing and Community Development Act of 1974, the Federal Water Pollution Control Act and the acts and Executive Orders listed below.
McNamara-O’Hara Service Contract Act (SCA)
The McNamara-O’Hara Service Contract Act is similar to the DBA as it requires contractors and subcontractors to pay workers the wage rates and fringe benefits that prevail locally. The McNamara-O’Hara Service Contract Act differs from the DBA as it relates to prime contracts over $2,500 and the employer must adhere to collective bargaining agreements. The Department of Labor (DOL) issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract.
For any federal contracts less than $2,500, workers must at least receive the federal minimum wage as dictated under the Fair Labor Standards Act.
Walsh-Healey Public Contracts Act (PCA)
The Walsh-Healey Public Contracts Act (PCA) establishes minimum wage, maximum hours, and safety and health standards for federal contracts in excess of $15,000 for manufacturing or providing materials, supplies, articles or equipment to the U.S. government or the District of Columbia. The Wage and Hour Division administers all the provisions of the PCA except the safety and health requirement, which are administered by OSHA.
Copeland “Anti-Kickback” Act
The Copeland “Anti-Kickback” Act prohibits a contractor or subcontractor from persuading an employee to give up any or part of his or her entitled compensation on federal contracts in excess of $2,000. Federal work contracts include construction, prosecution, repair or completion of public buildings or public works which are financed in whole or part by loans or grants from the United States.
The Copeland Act also requires contractors to pay workers weekly in cash or negotiable instruments and submit weekly payroll reports. The Anti-Kickback provision applies even when no labor standards statute covers the contract but does not apply to contracts for which the only federal assistance is a loan guarantee.
Executive Order 13658
Executive Order 13658 establishes a minimum wage for contractors. On Aug. 31, 2020, the DOL published a notice that raised the rate to $10.95 per hour, effective Jan. 1, 2021. The minimum wage requirement applies to all contracts for construction covered by the Davis-Bacon Act. Executive Order 13658 was originally signed by President Obama in 2014.
Executive Order 13706
Executive Order 13706 establishes paid sick leave for federal contractors. Signed on Sept. 7, 2015, the order requires any contractor working with the federal government to provide employees with up to seven days paid sick leave per year, including paid leave for family care.
Certified Payroll Reporting
Staying compliant with DBA and related DOL acts require accurately tracking employee time and classifying that time under the correct prevailing wage designation. As mentioned above, workers protected under the DBA must receive the same prevailing wage and fringe benefits being paid to similarly employed laborers in the region. This prevailing wage is guaranteed by completing a certified payroll report for those employees.
- Submitting Federal Form WH-347 for certified weekly payrolls on contracts subject to the DBA. And, ensuring each of the form’s fields are filled out correctly, including: Name of Contractor, Name and ID Number of Worker, Work Classification, Total Hours, Rate of Pay and Deductions. Current Davis Bacon wage rates for each state can be found online by filling in a few fields or providing the wage determination (WD) number.
- Paying certified payroll employees weekly.
- Clearly documenting employee name, address, correct job classification, rate of pay, daily and weekly hours worked, and amount actually paid in payroll.
- Certifying the payroll submission by signing a statement of compliance, included in the WH-347 form.
For federal contractors, selecting the correct job classification and making the right Wage Determination for each employee is critical to complying with DBA. While some categories are straightforward, i.e., plumber, painter, electrician, other are more general, like labor. These different distinctions can create confusion and lead to misclassifying workers.
How ExakTime Can Help
ExakTime ensures all employees are classified correctly and your certified payroll information is lined up and ready for Form WH-347.
ExakTime’s mobile time clock app records every hour your employees work, including lunches and overtime, all in real-time. This eliminates inaccurate time sheets, which can slow down payroll.
The ExakTime solution supports certified payroll compliance with:
- A drop-down menu so you can simply choose “certified payroll” for a job site, automatically classifying all hours worked at the site
- A certified payroll report that lets you review the hours worked at those sites by employee
- The option to create customized “certified payroll” cost codes for every certified payroll site, so employees can clock in under the correct code for their “contract action”, or job
ExakTime also automatically saves records of all your employee timesheets. That means no matter if you need to check on payment from two weeks ago or two years, it can be securely accessed with just a couple of clicks. Make compliance automatic by scheduling a demo to see how ExakTime’s solutions can work for you.