Show Me the Bacon: Davis-Bacon Wage Determination in Federally Funded Public Works Projects
With budgets falling into place and the beginning of the new fiscal year drawing near, grant season is officially around the corner. Federal projections have estimated approximately $1 trillion for aid to State, local, tribal, and territorial governments in 2023. With the annual review of public finances, along with the accompanying updates to local Capital Improvement Plans, many local entities are primed to seek federal assistance with their large-scale public work projects.
For construction projects, local governmental entities must follow those rules and procedures outlined in Chapter 2269 of the Texas Government Code, which prescribes contracting and delivery requirements for public work contracts. A “public work contract” has been defined as a contract for “constructing, altering, or repairing a public building or carrying out or completing any public work.”
For those entities utilizing state or federal funds for the completion of a public work project, additional contracting and delivery requirements may vary from grant-to-grant, depending on the funding agency. However, generally, the Davis-Bacon and Related Acts (the “Davis-Bacon Act”) application of a local prevailing wage determination will apply consistently to all federally funded construction projects across the board. In fact, Chapter 2258 of the Texas Government Code provides for the right to workers to be paid at prevailing wage rates.
The Davis-Bacon Act requires the payment of local prevailing wages to construction workers for performing work on federally funded construction projects. It applies to all federal contracts, in excess of $2,000.00, for the construction, alteration, or repair of public buildings or public works. It requires contractors and subcontractors to pay their laborers employed under such contracts no less than the locally prevailing wages and fringe benefits for corresponding or similar projects in the area. The “Related Acts” of the Davis-Bacon Act extend this requirement to those contracts utilized for providing aid and assistance through grants, loans, loan guarantees, and insurance. Note that the requirements of the Davis-Bacon Act generally apply to any use of federal funds for construction (e.g., reimbursement for project costs sought from FEMA).
The Davis-Bacon Act prevailing wage consists of the basic hourly wage rate and any fringe benefits rate listed for a specific classification of workers. There are four categories under which a wage determination may fall: (1) building construction, (2) residential construction, (3) highway construction, and (4) heavy construction. The prevailing wage obligation may be met by either paying each laborer the applicable prevailing wage in its entirety or through a combination of cash wages and fringe benefits. To review the applicable wage determinations, the Federal government has provided a searchable resource to better locate the prevailing wage rate in your area.
When contracting for construction of public work contracts, the contracting local governmental entity must remember to include provisions within the bid and contract documents regarding the entity’s required conformance to the Davis-Bacon Act’s prevailing wage rate determinations.
When unable to classify an appropriate labor classification on the applicable general wage determination, the Department of Labor may issue a conformance. The Department of Labor shall grant a conformance only when the type of work needed for a project is not performed by a labor classification already listed on the applicable wage determination.
Penalties for failure to follow the Davis-Bacon Act may result in the withholding of sufficient amounts to satisfy liabilities for underpayment of wages and for liquidated damages for overtime violations. Violations of Davis-Bacon contract clauses may render a contract terminable, contractor liability to the government, and debarment for a period of up to three years.
More information regarding the application of the Davis-Bacon Act can be found at the Department of Labor’s Wage and Hour Division’s website.
Please do not rely on this article as legal advice. We can tell you what the law is, but until we know the facts of your given situation, we cannot provide legal guidance. This website is for informational purposes and not for the purposes of providing legal advice. Information about our commercial and business litigation practice can be found here.
