The Davis-Bacon Act of 1931 is a federal law that requires contractors to pay employees working on federally funded and partially federally funded projects a local prevailing wage. Thirty-two states also have their own version of the Davis-Bacon Act.
Getting certified
How does this law impact electrical estimators? It requires that an estimator use the prevailing labor rates for the proper geographical area. Another part of the law requires the accounting department to prepare a Certified Payroll, which is not as difficult as it sounds. It starts with the use of the government form WH-347 or something similar, which requires the same information you already use to calculate your regular payroll. There is one column you may not currently use, Work Classification, which is important to fill in correctly.
What makes the payroll support certified? Simply signing the Statement of Compliance, which states that all forms are correct and no employee is paid less than the prevailing wage for their work on the project. While it is not required by law, the person who prepares your payroll should receive training to prevent possible problems, such as misclassification of workers and penalties for late processing and submission.
Paying the right rate
The Davis-Bacon prevailing wage is the combination of the basic hourly wage rate and any fringe benefits rate listed for a specific classification of workers in the applicable Davis-Bacon wage determination. The contractor’s prevailing wage obligation may be met by either paying each laborer and mechanic the applicable prevailing wage entirely as cash wages or by a combination of cash wages and employer-provided bona fide fringe benefits. The Wage and Hour Division of the Department of Labor (DOL) determines the prevailing rate by conducting periodic surveys, broken down by specific geographic areas.
Most often, the prevailing rates are included with bid documents. Yes, this means you must read more than the electrical specifications, which is a good idea anyway. Reading some of the general documents is standard in my office, as I need to find information such as the bid form, schedule and the prevailing wage rates. If the prevailing rates are not in the bid documents, you can find them on SAM.gov. It does take a while to figure out how to navigate this website, so give yourself adequate time when you first dig into it.
History
The Davis-Bacon laws are not static. Besides the annual rate changes, there are often other changes at the state and federal levels. Sometimes, they are from specific new rules. Other times, they are a part of other legislation. A recent example of this is the Inflation Reduction Act of 2022. Under this act, taxpayers may receive increased tax benefits by meeting prevailing wage and apprenticeship requirements. These credits are only available to a few types of green energy projects. The final rules for this program were released on June 18, 2024, by the Department of Treasury and the Internal Revenue Service.
The federal version of the Davis-Bacon Act has been changing since immediately after its passage. Issues including difficulty in determining wages before submitting bids and creating enforcement mechanisms were argued for many years. There was also an effort to repeal the law in 1979. In an April 1979 report to Congress, the General Accounting Office (GAO, now called the Government Accountability Office) argued that: “(1) Significant changes in economic conditions, and the economic character of the construction industry since 1931, plus the passage of other wage laws, make the act unnecessary. (2) After nearly 50 years, the Department of Labor has not developed an effective program to issue and maintain current and accurate wage determinations; it may be impractical to ever do so. (3) The act results in unnecessary construction and administrative costs of several hundred million dollars annually (if the construction projects reviewed by GAO are representative) and has an inflationary effect on the areas covered by inaccurate wage rates and the economy as a whole.”
The debates regarding this continued throughout many administrations. In November 2013, President Obama signed the Streamlining Claims Processing for Federal Contractor Employees Act into law. It amended the Davis-Bacon Act by transferring authority from the GAO to the DOL for processing wage claims resulting from laborers and mechanics hired by contractors on public works projects.
The history of changes to the Davis-Bacon Act demonstrates that estimators and their employers must keep up with the constant modifications to legislation involving the construction industry.
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About The Author
CARR has been in the electrical construction business since 1971. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or [email protected], and read his blog at electricalestimator.wordpress.com.