Introduction to the Davis Bacon Act

Davis Bacon Act Basics for Prevailing Wage Contractors
The Davis Bacon Act was created in 1931 with the intention of ensuring fair wages for all workers on Federal construction contracts. According to the U.S. Department of Labor (DOL):

“The DBA applies to contracts involving the construction, alteration, and/or repair (including painting or decorating) of public buildings or public works. These contracts must specify the minimum wages and fringe benefits to be paid to laborers and mechanics employed under the contract.”

To provide an idea of how large a scale this encompasses, from 2014 – 2017, more than 70 federal agencies spent over $169 billion on covered construction projects. The Department of Labor organizes these projects into four broad categories: Heavy, Highway, Building and Residential.

When the Davis Bacon Act Applies
• Federal government construction projects (buildings, public works etc.)
• Includes building, heavy, highway and residential categories
• Employees on the job site are doing manual or physical labor
• Jobs or contracts over $2,000

What it Mandates:
• Employees must be compensated with minimum prevailing wage and fringe benefits
based on their role not skill level (rates determined by the DOL and vary state-to-state)
• Posting those rates on the job-site
• Weekly certified payroll reports
• Full record keeping for a minimum of three years

Who it Applies To:
• Contractors and subcontractors, all employers

Why it’s Important to Your Business:
• Face fines, penalties and back-wages for non-compliance
• Potential withholding of contract funds by the government
• Potential “debarment” (no bidding for 3 years)
• Potential to maximize your bottom line by leveraging fringe benefits in lieu of cash
compensation. According to the DOL:

“Contractors may take credit (without prior approval from DOL) for bona fide FB fund contributions made to third-party trustees or insurers that: Are irrevocably paid; and Are made regularly, not less often than quarterly.”

At Archer Jordan we are experts at building and administering bona fide fringe benefit packages for government contractors. Our plans ensure compliance, increase bid competitiveness and maximize profitability.

5-Easy Steps to Fringe Benefit Compliance

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