What is a prevailing wage?
If you are a General Contractor working on a federally funded project or want to get federally funded construction job contracts, you need to know about prevailing wages. In 1931, the United States passed the Davis-Bacon Act, which is a federal law that requires that workers on federally funded projects get paid the local prevailing wage if the contract for the project is over $2,000. If you fail to pay your workers according to the prevailing wage, you not only risk contract payments being withheld but also face your contract being terminated, financial liability for any resulting costs to the government as well as a ban from work on federal contracts for up to three years.
What Is the Prevailing Wage for My Contract?
A “prevailing wage” is made up of the hourly rate plus any fringe benefits listed in the contract’s Davis-Bacon wage determination and varies based on the type of work performed. Prevailing wages are set by the Wage and Hour Division of the United States Department of Labor (DOL) and listed in the contract’s Davis-Bacon wage determination. Just over half of the states have “Little Davis-Bacon Laws” that set statutory thresholds. While states like Connecticut, Delaware, Maryland, Nevada and Vermont have thresholds that can start at $100,000, states like Illinois, Massachusetts, Nebraska, New York, Texas and Washington have no threshold amounts. You can look up Davis-Bacon wage determinations on the government website SAM.gov. Both general contractors and subcontractors are legally required to prominently display the relevant Davis-Bacon wage determination with the Davis-Bacon poster (WH-1321) on the job site so that it is easily accessible to workers.
Stay Informed about Prevailing Wages
It is up to you as a general contractor or subcontractor to ensure that you stay compliant with Davis-Bacon and Related Acts (DBRA). The State Workforce Agency sets an expiration date for the prevailing wage that usually ranges from 90 days to no more than 1 year from the determination date, so it is important to stay informed of your wage determinations and their expiration dates. The DOL offers resources for compliance on its website at https://www.dol.gov/agencies/whd/compliance-assistance.
Cross Accounting Solutions has decades of experience helping general contractors and subcontractors in the construction industry stay compliant on federally funded projects by offering services, such as certified payroll. If you would welcome the convenience and reassurance of working with a compliance consulting firm with proven experience specific to the construction industry, reach out to CAS today.
Call CAS at (832) 220-9303