The Federal Government spends billions of dollars in the construction business, making it one of the biggest spenders in the struggling industry.  In addition, the American Recovery and Reinvestment Act stimulus money has allowed the federal government to spend additional dollars within the construction industry in an effort to improve the economy. 

What does this mean to the contractors bidding and working on federal government construction contracts?  Answer, there’s an incredible opportunity, especially for vetrepreneurs, but it’s crucial to understand how to follow the rules and understand compliance. Let’s take a look at the rules and regulations covered under the Davis-Bacon Act (DBA), or more commonly referred to within the industry as “Prevailing Wage.” 
 

What is the Davis-Bacon Act?

The DBA was created in 1931 to protect local contractors from being under-bid by outside contractors on government-funded projects. It requires contractors to pay laborers and mechanics working on the project site the “prevailing wages” and fringe benefits consistent with those in the county where that the project site is located.

The working conditions that existed in 1931 that necessitated the Davis-Bacon Act haven’t changed all that much.  The important thing to know about federally-funded or partially-funded projects is that the workers (referred to as “laborers and mechanics”) that work on the project site are required to be paid prevailing wages in accordance with the wage decision for that area/county where the site of work is located.
 

Who does the Davis-Bacon Act Effect?

The DBA pertains to all contractors working on federally-funded or partially-funded federal construction projects and anyone involved within the project. That means from the owners and executives of the construction company, project managers, and the workers onsite as well as architects, attorneys, bonding companies, controllers, accountants and payroll professionals.

The Davis-Bacon Act governs construction projects that are funded or partially-funded with federal dollars requiring contractors to comply with the rules and regulations of the Davis-Bacon Act.  Failure to understand your obligations as an employer under Davis-Bacon Act can lead to a substantial and unexpected back wage liability, potential debarment, and even criminal prosecution.
 

How do I comply?

Wage determinations are published by the Hour and Wage Division of the U.S. Department of Labor and become part of the contract documents for the project. Contractual obligations require the payment of prevailing wage stated on the wage determination and weekly certified payroll submissions by the contractor to the regulating agency to validate the payment to the workers. Certified payroll reviews and random job site interviews of workers by the regulator agency is how compliance is verified and non-compliance is detected.

Anna Kessler is the vice president of Labor Compliance for NaVOBA member Trillacorpe Construction,

A Service-Disabled, Veteran-Owned Business (SDVOB).

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