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Home>>> Davis Bacon Act

Davis Bacon Act

Prevailing Wage Rates | Davis Bacon Wages

The Davis Bacon Act was passed by the Republican Congress of 1931 and signed by President Herbert Hoover.

The general intent of a prevailing wage law is to stabilize local wages and industry standards by preventing unfair and/or unregulated bidding practices.

Prevailing wage laws were originally intended to encourage the development of a high skill, high wage growth path for the labor market in general, and the construction labor market in particular.

The prevailing wage law the Davis Bacon Act created requires that construction workers on public projects be paid the wages and benefits that are found by the Department of Labor to be “prevailing” for similar work in or near the locality in which the construction project is to be performed.

Because the U.S. Constitution prohibits the federal government from dictating contract terms for the states in construction, the Davis Bacon Act does not cover construction work funded entirely by state and local governments. State prevailing wage laws set a minimum pay for construction workers on state and local projects, and the terms of the respective prevailing wage statutes among the states differ substantially.

The fact that prevailing wage laws and adherence to the Davis Bacon Act tend to stabilize and support local economies and labor markets has earned them bipartisan favor among legislators.

Davis Bacon Act Rules:

1) Davis Bacon Act Prevailing wage compensation has two parts:
d) the prevailing hourly wage --- a minimum basic hourly rate of cash payment,paid at least weekly, and
e) the prevailing wage fringe benefit --- which may be paid in the form of either
a) contributions to a fringe benefit plan, or as
b) additional cash wages.
2) Fringe benefits include benefits payable due to medical needs, disability, death, retirement, injury, illness, unemployment, vacation or holiday pay.
3) The “prevailing” wage is a function of geographic location and class of laborer.
4) There is no safe-harbor definition of ‘compensation’ that allows a qualified plan to ignore the part of compensation that represents the “prevailing hourly wage” if it is paid through W-2 pay.
5) Davis Bacon wages dollars contributed to a retirement plan must be deposited at least quarterly.

 



 

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