The construction cousin of the Service Contract Act

If your business does construction on federal or federally assisted projects, the law that governs your payroll isn't the Service Contract Act — it's the Davis-Bacon Act (DBA). The two are siblings: both let the government set minimum wages and fringe by labor category and locality, and both turn a payroll mistake into a compliance event rather than an accounting one. But Davis-Bacon applies specifically to contracts over $2,000 for the construction, alteration, or repair of public buildings or public works — and the wave of federally funded infrastructure work has pulled a lot of small contractors into its orbit who never bid a "federal" job in the traditional sense.

This is a practical working guide, not legal advice. Davis-Bacon enforcement is detailed and unforgiving, and a one-time review with a construction-labor or GovCon-experienced advisor before your first covered job is well worth it.

Prevailing wage determinations: your wage floor by trade and place

The core document is the wage determination published for the project's locality. It lists, for each construction trade — electrician, laborer, carpenter, operator, and so on — the minimum basic hourly rate and a separate fringe benefit amount that must be paid in that geographic area. A few things trip people up immediately:

  • Classification is by the work actually performed, not the title you use. A worker who spends the day pulling wire is an electrician for the hours they do that work, regardless of what their business card says.
  • Split-classification work must be tracked by the hour. If someone does laborer work in the morning and operates equipment in the afternoon, you record and pay each classification for the hours actually worked in it. You can't blend them into one convenient average.
  • Apprentices get reduced rates only under a registered program. You may pay a lower rate to apprentices only if they're enrolled in a bona fide, registered apprenticeship program and you stay within the allowed ratio of apprentices to journeyworkers. Calling someone an "apprentice" informally and underpaying them is a classic finding.

The fringe obligation — pay it or cash it out

Just like the SCA, the wage determination sets two numbers per classification: the base hourly wage and an hourly fringe. You satisfy the fringe by providing bona fide benefits (health, retirement, etc.) valued per hour, by paying the shortfall as additional cash wages, or — most commonly — a combination. The mistake that costs small contractors is paying the base rate perfectly and quietly underfunding the fringe; the unpaid fringe is back wages all the same, and it compounds across a crew and a project.

Certified payroll: the WH-347 every week

This is where Davis-Bacon demands the most discipline. Covered contractors (and their subcontractors) must submit weekly certified payroll — typically on Form WH-347 — to the contracting agency for every week any covered work is performed. Each submission includes:

  • Every covered worker's name and work classification,
  • The hours worked each day and total,
  • The rate paid and the fringe provided,
  • Deductions and net pay, and
  • A signed Statement of Compliance certifying, under penalty of law, that the payroll is correct and that the required wages and fringe were paid.

That signature is not a formality. Falsifying certified payroll is a serious matter that can carry criminal as well as civil exposure. The weekly cadence is also the part small contractors most often fumble — a missed or late WH-347 is itself a violation, separate from whether the wages were correct. Accurate daily hours by worker and classification are the raw material the certified payroll is built from, which is exactly the same timekeeping discipline a DCAA-compliant timekeeping system already enforces for other contract types.

The posting, the flow-down, and the subcontractor trap

A few obligations beyond payroll catch first-timers:

  • Post the wage determination at the job site where workers can see it, along with the required Davis-Bacon notice.
  • Flow the requirements down to subcontractors. As the prime, you're responsible for ensuring your subs comply and submit their own certified payrolls. A sub's Davis-Bacon failure becomes the prime's problem — withheld payments and liability flow uphill.
  • Don't misread "incidental" work. If a contract is principally services but includes more than an incidental amount of construction, Davis-Bacon can attach to the construction portion even on a contract you thought of as an SCA job. When a contract straddles both, get the coverage question answered before you price it.

Where this meets hiring and records

Davis-Bacon shapes recruiting and recordkeeping, not just payroll:

  • Price the bid to the wage determination. If your estimate assumes commercial wages but the project carries a DBA determination, your bid is wrong before you win it — the same pricing discipline that keeps proposal staffing honest.
  • Settle classification and rate at offer time. When you hire onto a covered project, the trade classification and prevailing rate should be documented in the offer and the position record, not improvised on the first WH-347.
  • Keep the records for the full retention period. Payrolls, the basis for each classification, fringe records, and apprenticeship documentation all have to be retained and producible on audit.

The bottom line

Davis-Bacon rewards contractors who treat prevailing wage as a design input: confirm whether the project is covered, pull the correct locality wage determination, classify every worker by the work they actually do, fund both wage and fringe, file accurate certified payroll every week, and make sure your subs do the same. Get that right and a Davis-Bacon audit reviews decisions you already documented. Get it wrong — a misclassification, an underfunded fringe, a string of late WH-347s — and you're looking at back wages, withheld contract payments, and, for willful violations, debarment that ends your ability to win federal work at all.