State:

National
To ensure that organized labor has a fair chance to bid for government contracts, U.S. law requires all employers engaged in the performance of federal contracts to pay “prevailing” wages to their workers. This ensures that nonunion employers cannot gain an unfair bidding advantage by paying wages far below the union rate and passing the savings on to the government in lower bids. Virtually all federal expenditures in the private sector are covered by prevailing wage provisions. The main statutes in this area are the Davis-Bacon Act governing federal construction contracts, the McNamara-O'Hara Service Contract Act governing contracts to provide services to the federal government, and the Walsh-Healey Public Contracts Act governing the manufacturing of goods for the government.
For more information, see DOL's Wage and Hour Division prevailing wage resource book, found at http://www.dol.gov/whd.
The Davis-Bacon and Related Acts (DBRA) requires all contractors and subcontractors performing work on federal or District of Columbia construction contracts or federally assisted contracts in excess of $2,000 to pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits for corresponding classes of laborers and mechanics employed on similar projects in the area. The prevailing wage rates and fringe benefits are determined by the Secretary of Labor for inclusion in covered contracts
. Employers can access wage information through the Wage Determinations OnLine (WDOL) Internet website found at http://www.wdol.gov. The website allows contracting agencies to request and obtain wage determinations through the online services provided by DOL (29 CFR Parts 1 and 4). See Wage Determinations Available Online, below for more information.
If it is believed that a wage determination is not accurate, any interested person may request a reconsideration of a wage determination or of a ruling regarding application of a wage determination to a specific construction project. The request must be presented in writing, accompanied by supporting data or other pertinent information to the DOL’s Wage and Hour Division. The Wage and Hour Division should respond within 30 days or notify the requestor within this time frame that additional time is needed.
Employers subject to the Act must pay time and a half for hours worked in excess of 40 per week. Workers employed off-site and those employed on-site in nonconstruction jobs are not covered by the Act. Employers covered by the Act must maintain certified payroll reports on DOL Form WH-347 and must open these reports and other pertinent records to review and inspection by DOL upon a finding that probable cause exists to conduct an investigation of the employer's payroll practices. The wage determination and a Davis-Bacon poster (WH-1321) must be posted at all times by the contractor and its subcontractors in a prominent, conspicuous, and accessible place at a worksite (40 USC 276a et seq.).
The wage rates for bona fide supervisory employees are not regulated under the DBRA because their duties are primarily administrative or executive in nature rather than those of laborers or mechanics. However,bona fide supervisory employees who devote more than 20 percent of their time during a workweek to mechanic or laborer duties are laborers and mechanics for the time so spent, and must be paid at least the appropriate wage rates specified in the wage determination. Employees who are bona fide executive, administrative, or professional employees as defined under the Fair Labor Standards Act (29 CFR 541) are not covered by the DBRA.
Apprentices and trainees may be paid a rate lower than the prevailing rate if they are employed pursuant to a federally sanctioned apprenticeship or training program. This lesser amount, however, cannot be less than the appropriate percentage of the “journeyman rate” listed in the prevailing wage determination. The full amount of benefits must also be paid, not just a percentage of benefits.
The Davis-Bacon Act is enforced by the Wage and Hour Division of DOL's Employment Standards Administration. The Wage and Hour Division, acting through its regional offices, can receive and investigate complaints, inspect employer documents, interview witnesses, conduct hearings, and issue penalties. Decisions of the Wage and Hour Division can be appealed to a federal administrative law judge, and ultimately to the federal court system.
Employers who have been found to be in violation may be subject to termination of their government contracts and debarment from participation in other government contracts for a period of up to 3 years. DOL might also require that contract payments be withheld from the contractor and used to satisfy any unpaid wage obligations. In addition, many government contracts provide for liquidated damages that may be assessed against the contractor for wage and hour violations. Falsification of payroll data can result in criminal penalties.
The DOL conducts what is known as a DBRA survey on an ongoing basis. This survey collects wage data from government contractors and is used to determine the prevailing wages to be paid to each classification of laborer and mechanic on federally funded or assisted projects. Participation in the survey is completely voluntary, but high rates of participation by contractors in any given region will help to ensure that the prevailing wages set for that region are an accurate reflection of actual wage rates. Contractors who want to learn more about the survey or obtain the forms needed to participate should contact their DOL Area Representative. See Additional Information in this section for contact information.
The DOL has issued a final rule that fully implements the Wage Determinations OnLine (WDOL) website found at http://www.wdol.gov . The new rule updates existing regulations to allow contracting agencies to request and obtain wage determinations through the online services provided by the DOL website (29 CFR Parts 1 and 4).
WDOL includes guidance for contracting agencies on how to select the appropriate wage determination for each contract action and provides access to the most current wage determinations and to databases that contain archived wage determinations under both the Service Contract Act and the Davis-Bacon Act. A feature on the site alerts users to future revisions to particular wage determinations. The WDOL does not affect how DOL’s Wage and Hour Division determines prevailing wages under either law.
The website replaces the paper SF-98 with an electronic e-98 and enables contracting agencies alternatively to use the WDOL website for obtaining wage determinations.
The McNamara-O’Hara Service Contract Act (SCA) requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement.
The U.S. Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract. For contracts equal to or less than $2,500, contractors are required to pay the federal minimum wage as provided in Section 6(a)(1) of the Fair Labor Standards Act. For prime contracts in excess of $100,000, contractors and subcontractors must also, under the provisions of the Contract Work Hours and Safety Standards Act, as amended, pay laborers and mechanics, including guards and watchmen, at least one and one-half times their regular rate of pay for all hours worked over 40 in a workweek. The overtime provisions of the Fair Labor Standards Act may also apply to SCA-covered contracts.
Exemptions. The Act does not apply to certain types of contracted services. These exemptions include:
• Contracts for construction, alteration, or repair, including painting and decorating of public buildings or public works (these are covered by the Davis-Bacon Act);
• Work required in accordance with the provisions of the Walsh-Healey Public Contracts Act;
• Contracts for transporting freight or personnel where published tariff rates are in effect;
• Contracts for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934;
• Contracts for public utility services;
• Employment contracts providing for direct services to a federal agency by an individual or individuals;
• Contracts for operating postal contract stations for the U.S. Postal Service;
• Services performed outside the United States (except in territories administered by the United States, as defined in the Act); and
• Contracts subject to administrative exemptions granted by the Secretary of Labor in special circumstances because of the public interest or to avoid serious impairment of government business.
Contractors who are subject to a collective bargaining agreement (CBA) may pay rates according to the CBA provided those rates are not less than the applicable prevailing rate. Employers are required to post a notice of the compensation required, including applicable wage determinations, in a prominent, conspicuous, and accessible place at each worksite (41 USC 351et seq.).
Executive Order (EO) 13495, “Nondisplacement of Qualified Workers Under Service Contracts,” requires that workers on a federal service contract who would otherwise lose their jobs as a result of the completion or expiration of a contract be given the right of first refusal for employment with the successor contractor. The regulations apply to all service contracts (prime and subcontractor) above the simplified acquisition threshold (currently $150,000) and their solicitations, except those excluded, that succeed contracts for the same or similar services at the same location.
The regulations for EO 13495 exclude certain types of contracts and employees from their requirements as well as allow the head of a contracting department or agency to exempt any of its contracts from the regulations if it finds the requirements would not serve the purposes of the EO or would impair the Federal government’s ability to procure services economically or efficiently. Under the regulations, a successor contractor may reduce the size of the workforce, may give first preference to certain of its current employees, and may offer employment to the predecessor’s employees in positions for which they are qualified other than those which they held previously. For more information, see DOL's Wage and Hour Division website at http://www.dol.gov/whd/.
The SCA is enforced by the Wage and Hour Division of the DOL Employment Standards Administration. Wage and benefit determinations are issued on a contract-by-contract basis in response to specific requests by the contracting agency. The Wage and Hour Division, acting through its regional offices, can receive and investigate complaints, inspect employer documents, interview witnesses, conduct hearings, and issue penalties. Decisions of the Wage and Hour Division can be appealed to a federal administrative law judge, and ultimately to the federal court system.
Employers that have been found to be in violation may be subject to termination of their government contracts and liability to the government for any resulting costs. Violators can also be debarred from participating in any other government contracts for a period of up to 3 years. The DOL might also require that contract payments be withheld from the employer and used to satisfy any unpaid or underpaid wage and fringe benefit obligations.
The Walsh-Healey Public Contracts Act (PCA) requires contractors engaged in the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia to pay employees who produce, assemble, handle, or ship goods under contracts exceeding $10,000 the federal minimum wage for all hours worked and time and one-half their regular rate of pay for all hours worked over 40 in a workweek.
Although the Act refers to prevailing rates, it has historically been used to require payment of minimum wage rates, not union rates. Since the 1950s, federal authorities have indexed the rate under this Act to the statutory minimum wage. Because most employees covered by the Act can command more than the statutory minimum wage in today's employment market, the Act does not have a great deal of practical effect. However, the Act does contain mechanisms that make it possible for federal labor authorities to set higher rates. Time and a half must be paid for all hours worked in excess of 40 in a workweek. The Act prohibits the use of child labor on covered contracts. Executive, administrative, and professional employees are not covered by the Walsh-Healey Act. Employers are required to post a notice of the compensation required in a prominent, conspicuous, and accessible place at each worksite (41 USC 35et seq.).
The underpayment of wages and overtime pay may result in the withholding of contract payments in amounts sufficient to reimburse the underpayment. The penalty for employing underage minors or convicts is $10 per day per person, for which contract payments may also be withheld. The DOL may also bring legal action to collect wage underpayment and fines for illegally employing minors and convicts. Violators may also have their current contracts cancelled, and be debarred from future federal contracts for a 3-year period.
All of the laws discussed above are administered by the Wage and Hour Division of the DOL Employment Standards Administration. Employers can obtain a wealth of additional information by visiting the agency's DBRA website. The website contains downloadable forms and posters, detailed information about the administration of prevailing wage laws, information about and forms for participation in the DBRA survey, and other useful resources. The address for the website is http://www.dol.gov/whd. The Wage and Hour Division has also created a prevailing wage resource book for employers with obligations under the Recovery Act, available at dol.gov/whd/recovery/pwrb/toc.htm.
The regional Wage and Hour Division offices can be found at http://www.dol.gov/whd/contact_us
To obtain a hard-copy subscription to DOL's weekly update of DBRA wage determinations, employers may contact the Government Printing Office Document Order Desk at 212-512-1800.
Reviewed February 2016.
Related Topics:
National
To ensure that organized labor has a fair chance to bid for government contracts, U.S. law requires all employers engaged in the performance of federal contracts to pay “prevailing” wages to their workers. This ensures that nonunion employers cannot gain an unfair bidding advantage by paying wages far below the union rate and passing the savings on to the government in lower bids. Virtually all federal expenditures in the private sector are covered by prevailing wage provisions. The main statutes in this area are the Davis-Bacon Act governing federal construction contracts, the McNamara-O'Hara Service Contract Act governing contracts to provide services to the federal government, and the Walsh-Healey Public Contracts Act governing the manufacturing of goods for the government.
For more information, see DOL's Wage and Hour Division prevailing wage resource book, found at http://www.dol.gov/whd.
The Davis-Bacon and Related Acts (DBRA) requires all contractors and subcontractors performing work on federal or District of Columbia construction contracts or federally assisted contracts in excess of $2,000 to pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits for corresponding classes of laborers and mechanics employed on similar projects in the area. The prevailing wage rates and fringe benefits are determined by the Secretary of Labor for inclusion in covered contracts
. Employers can access wage information through the Wage Determinations OnLine (WDOL) Internet website found at http://www.wdol.gov. The website allows contracting agencies to request and obtain wage determinations through the online services provided by DOL (29 CFR Parts 1 and 4). See Wage Determinations Available Online, below for more information.
If it is believed that a wage determination is not accurate, any interested person may request a reconsideration of a wage determination or of a ruling regarding application of a wage determination to a specific construction project. The request must be presented in writing, accompanied by supporting data or other pertinent information to the DOL’s Wage and Hour Division. The Wage and Hour Division should respond within 30 days or notify the requestor within this time frame that additional time is needed.
Employers subject to the Act must pay time and a half for hours worked in excess of 40 per week. Workers employed off-site and those employed on-site in nonconstruction jobs are not covered by the Act. Employers covered by the Act must maintain certified payroll reports on DOL Form WH-347 and must open these reports and other pertinent records to review and inspection by DOL upon a finding that probable cause exists to conduct an investigation of the employer's payroll practices. The wage determination and a Davis-Bacon poster (WH-1321) must be posted at all times by the contractor and its subcontractors in a prominent, conspicuous, and accessible place at a worksite (40 USC 276a et seq.).
The wage rates for bona fide supervisory employees are not regulated under the DBRA because their duties are primarily administrative or executive in nature rather than those of laborers or mechanics. However,bona fide supervisory employees who devote more than 20 percent of their time during a workweek to mechanic or laborer duties are laborers and mechanics for the time so spent, and must be paid at least the appropriate wage rates specified in the wage determination. Employees who are bona fide executive, administrative, or professional employees as defined under the Fair Labor Standards Act (29 CFR 541) are not covered by the DBRA.
Apprentices and trainees may be paid a rate lower than the prevailing rate if they are employed pursuant to a federally sanctioned apprenticeship or training program. This lesser amount, however, cannot be less than the appropriate percentage of the “journeyman rate” listed in the prevailing wage determination. The full amount of benefits must also be paid, not just a percentage of benefits.
The Davis-Bacon Act is enforced by the Wage and Hour Division of DOL's Employment Standards Administration. The Wage and Hour Division, acting through its regional offices, can receive and investigate complaints, inspect employer documents, interview witnesses, conduct hearings, and issue penalties. Decisions of the Wage and Hour Division can be appealed to a federal administrative law judge, and ultimately to the federal court system.
Employers who have been found to be in violation may be subject to termination of their government contracts and debarment from participation in other government contracts for a period of up to 3 years. DOL might also require that contract payments be withheld from the contractor and used to satisfy any unpaid wage obligations. In addition, many government contracts provide for liquidated damages that may be assessed against the contractor for wage and hour violations. Falsification of payroll data can result in criminal penalties.
The DOL conducts what is known as a DBRA survey on an ongoing basis. This survey collects wage data from government contractors and is used to determine the prevailing wages to be paid to each classification of laborer and mechanic on federally funded or assisted projects. Participation in the survey is completely voluntary, but high rates of participation by contractors in any given region will help to ensure that the prevailing wages set for that region are an accurate reflection of actual wage rates. Contractors who want to learn more about the survey or obtain the forms needed to participate should contact their DOL Area Representative. See Additional Information in this section for contact information.
The DOL has issued a final rule that fully implements the Wage Determinations OnLine (WDOL) website found at http://www.wdol.gov . The new rule updates existing regulations to allow contracting agencies to request and obtain wage determinations through the online services provided by the DOL website (29 CFR Parts 1 and 4).
WDOL includes guidance for contracting agencies on how to select the appropriate wage determination for each contract action and provides access to the most current wage determinations and to databases that contain archived wage determinations under both the Service Contract Act and the Davis-Bacon Act. A feature on the site alerts users to future revisions to particular wage determinations. The WDOL does not affect how DOL’s Wage and Hour Division determines prevailing wages under either law.
The website replaces the paper SF-98 with an electronic e-98 and enables contracting agencies alternatively to use the WDOL website for obtaining wage determinations.
The McNamara-O’Hara Service Contract Act (SCA) requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement.
The U.S. Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract. For contracts equal to or less than $2,500, contractors are required to pay the federal minimum wage as provided in Section 6(a)(1) of the Fair Labor Standards Act. For prime contracts in excess of $100,000, contractors and subcontractors must also, under the provisions of the Contract Work Hours and Safety Standards Act, as amended, pay laborers and mechanics, including guards and watchmen, at least one and one-half times their regular rate of pay for all hours worked over 40 in a workweek. The overtime provisions of the Fair Labor Standards Act may also apply to SCA-covered contracts.
Exemptions. The Act does not apply to certain types of contracted services. These exemptions include:
• Contracts for construction, alteration, or repair, including painting and decorating of public buildings or public works (these are covered by the Davis-Bacon Act);
• Work required in accordance with the provisions of the Walsh-Healey Public Contracts Act;
• Contracts for transporting freight or personnel where published tariff rates are in effect;
• Contracts for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934;
• Contracts for public utility services;
• Employment contracts providing for direct services to a federal agency by an individual or individuals;
• Contracts for operating postal contract stations for the U.S. Postal Service;
• Services performed outside the United States (except in territories administered by the United States, as defined in the Act); and
• Contracts subject to administrative exemptions granted by the Secretary of Labor in special circumstances because of the public interest or to avoid serious impairment of government business.
Contractors who are subject to a collective bargaining agreement (CBA) may pay rates according to the CBA provided those rates are not less than the applicable prevailing rate. Employers are required to post a notice of the compensation required, including applicable wage determinations, in a prominent, conspicuous, and accessible place at each worksite (41 USC 351et seq.).
Executive Order (EO) 13495, “Nondisplacement of Qualified Workers Under Service Contracts,” requires that workers on a federal service contract who would otherwise lose their jobs as a result of the completion or expiration of a contract be given the right of first refusal for employment with the successor contractor. The regulations apply to all service contracts (prime and subcontractor) above the simplified acquisition threshold (currently $150,000) and their solicitations, except those excluded, that succeed contracts for the same or similar services at the same location.
The regulations for EO 13495 exclude certain types of contracts and employees from their requirements as well as allow the head of a contracting department or agency to exempt any of its contracts from the regulations if it finds the requirements would not serve the purposes of the EO or would impair the Federal government’s ability to procure services economically or efficiently. Under the regulations, a successor contractor may reduce the size of the workforce, may give first preference to certain of its current employees, and may offer employment to the predecessor’s employees in positions for which they are qualified other than those which they held previously. For more information, see DOL's Wage and Hour Division website at http://www.dol.gov/whd/.
The SCA is enforced by the Wage and Hour Division of the DOL Employment Standards Administration. Wage and benefit determinations are issued on a contract-by-contract basis in response to specific requests by the contracting agency. The Wage and Hour Division, acting through its regional offices, can receive and investigate complaints, inspect employer documents, interview witnesses, conduct hearings, and issue penalties. Decisions of the Wage and Hour Division can be appealed to a federal administrative law judge, and ultimately to the federal court system.
Employers that have been found to be in violation may be subject to termination of their government contracts and liability to the government for any resulting costs. Violators can also be debarred from participating in any other government contracts for a period of up to 3 years. The DOL might also require that contract payments be withheld from the employer and used to satisfy any unpaid or underpaid wage and fringe benefit obligations.
The Walsh-Healey Public Contracts Act (PCA) requires contractors engaged in the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia to pay employees who produce, assemble, handle, or ship goods under contracts exceeding $10,000 the federal minimum wage for all hours worked and time and one-half their regular rate of pay for all hours worked over 40 in a workweek.
Although the Act refers to prevailing rates, it has historically been used to require payment of minimum wage rates, not union rates. Since the 1950s, federal authorities have indexed the rate under this Act to the statutory minimum wage. Because most employees covered by the Act can command more than the statutory minimum wage in today's employment market, the Act does not have a great deal of practical effect. However, the Act does contain mechanisms that make it possible for federal labor authorities to set higher rates. Time and a half must be paid for all hours worked in excess of 40 in a workweek. The Act prohibits the use of child labor on covered contracts. Executive, administrative, and professional employees are not covered by the Walsh-Healey Act. Employers are required to post a notice of the compensation required in a prominent, conspicuous, and accessible place at each worksite (41 USC 35et seq.).
The underpayment of wages and overtime pay may result in the withholding of contract payments in amounts sufficient to reimburse the underpayment. The penalty for employing underage minors or convicts is $10 per day per person, for which contract payments may also be withheld. The DOL may also bring legal action to collect wage underpayment and fines for illegally employing minors and convicts. Violators may also have their current contracts cancelled, and be debarred from future federal contracts for a 3-year period.
All of the laws discussed above are administered by the Wage and Hour Division of the DOL Employment Standards Administration. Employers can obtain a wealth of additional information by visiting the agency's DBRA website. The website contains downloadable forms and posters, detailed information about the administration of prevailing wage laws, information about and forms for participation in the DBRA survey, and other useful resources. The address for the website is http://www.dol.gov/whd. The Wage and Hour Division has also created a prevailing wage resource book for employers with obligations under the Recovery Act, available at dol.gov/whd/recovery/pwrb/toc.htm.
The regional Wage and Hour Division offices can be found at http://www.dol.gov/whd/contact_us
To obtain a hard-copy subscription to DOL's weekly update of DBRA wage determinations, employers may contact the Government Printing Office Document Order Desk at 212-512-1800.
Reviewed February 2016.
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