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​Understanding Your Obligations for Federally Financed Construction Projects

Published on 8/10/2015 12:00:00 AM

Does your business handle federally financed construction projects? If so, you need to be aware of the Davis-Bacon Act of 1931 – a federal law requiring you to pay construction workers the local prevailing wage. Designed to control wage exploitation, the law applies to “contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration or repair (including painting and decorating) of public buildings or public works.”

Specifically, you’re expected to pay laborers and mechanics the local prevailing wage and any fringe benefits, as determined by the Department of Labor (DOL). The wage amount is based on two important criteria:

  1. Project location
  2. Type of construction, such as building, residential, highway or heavy construction

Apprentices and trainees may be paid less than the predetermined rate, but only if they’re part of an apprenticeship or training program recognized by the DOL.

In addition, if you handle prime contracts of $100,000 or more, you’re required to pay employees time and a half for 40+ hours worked in a week, under the Contract Work Hours and Safety Standards Act.

Don’t commit the common employer mistakes with the Davis-Bacon Act. If you’re a covered federal contractor or subcontractor, you must:

  • Properly classify laborers and mechanics
  • Pay the full prevailing wage for your area, for all hours worked
  • Maintain thorough records, including registration documents for apprenticeship programs
  • Submit weekly certified payroll records to the contracting agency
  • Display an attorney-approved Davis-Bacon poster that satisfies federal contractor posting requirements

The penalties for non-compliance are steep. Any aggravated or willful violations while performing work on Davis-Bacon-covered projects could lead to contract termination, suspension and/or debarment from future contracts for up to three years. Further, contract payments may be withheld to cover unpaid wages and damages due to overtime violations with the Contract Work Hours and Safety Standards Act.

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Jaime Lizotte
Presented by: Jaime Lizotte,
HR Solutions Manager
Hiring, recordkeeping, time and attendance tracking, employee discipline, filing 1099 and W2s ... all of these tasks create overhead expenses and detract from revenue-generating activities.