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Q: What does the Davis-Bacon Act require?
The Davis-Bacon Act, and various state related acts, require contractors to pay all laborers and mechanics working on covered construction contracts the locally prevailing wage and fringe benefit for the work they perform.
Q: How do I meet my wage and fringe obligation under the Davis-Bacon Act?
A contractor or subcontractor performing work subject to the Act can discharge its prevailing wage obligation by paying cash, making payments or incurring costs for "bona fide" fringe benefits, or a combination of these methods.
Q: I pay the fringe benefits as cash (W2 income) to my employees. Is this the best way to meet the prevailing wage law requirements?
No, if you pay fringe benefit as W2 income, you are paying unnecessary payroll taxes (FICA, FUTA & SUTA) and possibly other payroll related burdens, such as workmen's compensation and liability insurance. (See your company's savings)
Q: What are examples of "bona fide" fringe benefits?
Certain benefits are recognized as common in the construction industry and examples include health, pension, life insurance, severance, vacation and holiday pay, and certain apprenticeship programs. The Department of Labor does not restrict the types of fringe benefits that can be considered "bona fide" or the dollar amount a contractor contributes towards such benefits.
Read our article in Construction Executive:
Tips for Contractors on Federal Or State Prevailing Wage Projects.
Q: What are some common payroll deductions that an employer cannot use to meet its Davis-Bacon Act obligation?
A contractor cannot take credit toward discharging its prevailing wage obligation for any benefit required by a federal, state or local law, such as, workers compensation, unemployment compensation or social security contributions. Furthermore, a contractor cannot offset the fringe benefit rate by an employee's use of a company vehicle or tool.
Q: What are the requirements for overtime on Davis-Bacon Act-covered work?
The Contract Work Hours and Safety Standards Act (CWHSSA), which covers most federal construction contracts, requires laborers and mechanics to be paid at one and one-half times their basic rate of pay for hours worked on covered contracts in excess of 40 in a week. Fringe benefits must also be paid for hours in excess of 40 in a week but they are paid at the straight rate not at time and a half.
Q: I am happy with my existing medical and retirement plan, but I am concerned that I am not in compliance with the Davis-Bacon or Service Contract Act, can PSA help?
Yes! PSA can audit your existing programs to determine if your company is in compliance. If you are not, PSA can show you how to keep your existing program and comply with the Davis-Bacon and Service Contract Acts. (See Prevailing Wage Services).
Q: When must my company comply with Executive Order 11246 concerning Affirmative Action Plans?
Your company must comply with Executive Order 11246, 120 days from contract if it meets one of the following requirements:
Your company or corporation is a Federal contractor or subcontractor.
Your company or corporation has fifty or more employees.
And if any one of the following statements is true:
- Your company or corporation has a Federal contract or subcontract of $50,000 or more.
- Your company or corporation has Government bills of lading which in any twelve-month period total or will likely total $50,000 or more.
- Your company or corporation has an open-ended or indefinite quarterly Federal contract or subcontract (such as a procurement order or standing invoice that will total $50,000 or more.
Q: The Drug Free Workplace Act of 1988 says my company must provide a drug free workplace.
What do I have to do?
The Act states that a company will be in compliance by agreeing to:
- Publish a statement notifying employees of its drug free policy.
- Establish an ongoing drug-free awareness program.
- Provide all employees a copy of the companies drug fee workplace policy.
- Notify the contracting officer in writing within 10 days of an employee drug conviction.
- Take appropriate actions, as defined by the act, within 30 days of receiving employee conviction notice.
- Make a good faith effort in providing a continuous drug free workplace program.
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