Client Alerts
November 23, 2011

Is your construction project subject to the Davis-Bacon Act?

Stites & Harbison, PLLC, Client Alert, November 23, 2011

by Stites & Harbison, PLLC

Contractors working on federal construction projects or projects involving federal funds need to know when the project is subject to the Davis-Bacon Act prevailing wage requirements. The Davis-Bacon Act (40 U.S.C. §3141 et seq.) requires prevailing wages, set by the Secretary of Labor, to be paid to workers on construction projects over $2,000 to which the federal government is a party for “construction, alteration, or repair, including painting and decorating, of a public building and public works of the government.”

However, in addition to construction contracts to which the United States is a party, Congress has added the Davis-Bacon Act prevailing wage requirements to projects that receive federal funding even though the United States is not a party to the contract. The funding which is subject to Davis-Bacon Act is in the form of federal assistance programs to construction projects, such as loans, loan guarantees, grants or insurance.

In fact, there are over 60 other statutes that require Davis-Bacon Act wages to be paid on projects financed in whole or in part with federal funds. These other statutes relate to construction projects for such things as housing, transportation, health care and water pollution reduction. These statutes can be found in the Code of Federal Regulations: 29 C.F.R. Part 1, and 29 C.F.R. 5.1(a). Examples of the related statutes to which Davis-Bacon Act wages must be paid are:

  1. Projects receiving funding from the 2009 American Recovery and Reimbursement Act.
  2. U.S. Department of Housing and Urban Development (HUD) financing of the construction of low income residences on housing authority projects.
  3. Federal Highway Administration providing grants to states for the reconstruction of roads and bridges on federal highways.
  4. Environmental Protection Agency (EPA) funded contracts for a sewer project or local public works/water-sewer authority project.

President Obama’s recent jobs bill filed in the Senate, “American Jobs Act of 2011” (S. 1549), if passed, would have required all contractors or subcontractors on projects funded by the Act to pay Davis-Bacon Act prevailing wages.

In summary, the Davis-Bacon Act can apply to your project if: (1) it is a project for more than $2,000 to which the federal government is a party and which involves the construction, alteration or repair of a public building or public works involving the employment of mechanics or labors on the site; or (2) if a project is financed with federal funds under a statute that requires the recipient to pay Davis-Bacon Act wages.

Because the Davis-Bacon Act may apply to projects other than those in which the federal government is a party, contractors must be aware of any Davis-Bacon Act requirements on a project before bidding. Normally, the owner's bid documents will specify whether prevailing wages apply to the project. If Davis-Bacon Act wages must be paid on the project, the contractor and subcontractors should include prevailing wage calculations in their bid or proposal.

Related Capabilities
Health Care - Construction Business Litigation