The Davis-Bacon Act Explained: What Every Contractor Needs to Know

What Is the Davis-Bacon Act?

The Davis-Bacon Act is a federal law that requires contractors and subcontractors on federally-funded construction projects to pay their laborers and mechanics no less than the locally prevailing wages and fringe benefits. It was signed into law in 1931 by President Herbert Hoover after being introduced by Senator James J. Davis and Representative Robert L. Bacon.

The original purpose was straightforward: prevent the federal government from driving down local construction wages by awarding contracts to out-of-area contractors who paid less.

In the early 1930s, contractors were importing lower-paid workers from other states to undercut local labor on federal building projects. The Davis-Bacon Act stopped that practice by requiring every worker on a federal project to earn at least the wage that's standard for their trade in that geographic area.

Nearly a century later, the law still operates on the same core principle: if the federal government is paying for construction, the workers building it must earn a fair wage. The Department of Labor's Wage and Hour Division (WHD) administers and enforces the Act.

Who Does It Apply To?

The Davis-Bacon Act applies to contractors and subcontractors working on federal construction contracts exceeding $2,000. That threshold has remained unchanged since 1931 — which means virtually every federal construction contract triggers Davis-Bacon requirements.

But the reach goes further than direct federal contracts. Through the Davis-Bacon and Related Acts (DBRA), more than 60 federal statutes extend prevailing wage requirements to construction projects that receive federal funding through grants, loans, loan guarantees, or insurance.

This includes projects funded by agencies like HUD, DOT, EPA, and the Department of Energy.

The law covers "laborers and mechanics" performing construction work. This includes virtually every trade worker on a job site:

• Electricians
• Plumbers
• Carpenters
• Ironworkers
• Operating engineers
• Laborers
• Painters

It does not typically cover bona fide executive, administrative, or professional employees.

What Are Prevailing Wages?

Prevailing wages are the hourly wage rates and fringe benefit amounts that the Department of Labor determines to be the standard for a specific construction trade in a specific geographic area. They are not minimum wages — they typically reflect union scale or the rate paid to the majority of workers in a given classification in a particular county.

The DOL publishes prevailing wage rates as "wage determinations" (WDs) on SAM.gov. Each wage determination is specific to a state, county, and type of construction (building, heavy, highway, or residential).

A single wage determination lists the prevailing rate for every relevant trade classification — Carpenter, Electrician, Plumber, Laborer, Operating Engineer, and so on.

Each wage determination lists two components for every classification: the base hourly rate and the fringe benefit rate. Together, these form the total prevailing wage that you must pay.

Fringe Benefits Under Davis-Bacon

Fringe benefits are a required part of the prevailing wage under the Davis-Bacon Act. The wage determination specifies a fringe benefit amount for each classification, and you must either pay it or account for it.

There are two ways to satisfy the fringe requirement:

• Funded (bona fide) fringe benefits: You make irrevocable contributions to approved benefit plans on behalf of your workers — health insurance, pension, vacation funds, apprenticeship training, and similar programs. The contributions must go to legitimate plans that genuinely benefit the workers.
• Unfunded (cash in lieu): You pay the fringe benefit amount directly to the worker as additional cash wages. This is perfectly acceptable under Davis-Bacon. Many smaller contractors choose this option because they don't have established benefit plans.

You can also split between funded and unfunded — contributing part of the fringe to a benefit plan and paying the remainder as cash.

Read more about the consequences in our Davis-Bacon penalties guide.

Weekly Reporting Requirements

Every contractor and subcontractor on a Davis-Bacon covered project must submit certified payroll reports weekly. The standard form is the WH-347, also known as the "Certified Payroll Report."

You must submit a completed WH-347 for each week in which any work is performed on the project — no exceptions.

The WH-347 reports every worker who performed covered work during the payroll week, including:

• Name and classification
• Hours worked each day
• Hourly rate
• Gross pay
• Deductions and net pay
• Fringe benefit contributions

Attached to the WH-347 is the Statement of Compliance — a certification signed under penalty of perjury by the contractor or an authorized officer. By signing, you're certifying that the information is correct and that all workers were paid at least the applicable prevailing wage.

Both the prime contractor and every subcontractor submit their own WH-347 forms. The prime is responsible for collecting sub payrolls and forwarding them to the contracting agency.

Our free WH-347 generator helps you create compliant forms with auto-calculated fields so you don't miss anything.

Does the Davis-Bacon Act Apply to My Project?

Here's a simple decision tree to determine if your project is covered:

1. Is it a federal contract or does it receive federal funding? This includes direct federal contracts, grants, loans, loan guarantees, and federal insurance. If yes, continue. If no, Davis-Bacon does not apply (though state prevailing wage laws may still apply).
2. Is the contract value over $2,000? The threshold is the total contract amount, not individual tasks or line items. If yes, continue. If no, Davis-Bacon does not apply.
3. Is the work "construction, alteration, or repair"? This covers building, remodeling, renovation, painting, decorating, installation of equipment, and similar physical work on public buildings or public works. If yes, Davis-Bacon applies. If no (for example, purely supply contracts or professional services), it does not apply.

The 2024 DOL Rule Update

In October 2023, the Department of Labor finalized its first major update to Davis-Bacon regulations in more than 40 years. The rule took full effect in 2024 and fundamentally changed several aspects of how the Act is administered.

Here are the key changes:

• Expanded definition of "site of work." The updated rule broadens what counts as the "site of the work" to include significant portions of off-site construction — such as dedicated fabrication or assembly facilities used specifically for the covered project. This means more workers at more locations may be entitled to prevailing wages.
• Return to the three-step prevailing wage calculation. The DOL restored the "30 percent rule" for determining prevailing wages. If a single rate is paid to 50% or more of workers in a classification, that rate prevails. If not, the rate paid to at least 30% prevails. If neither threshold is met, a weighted average is used. This methodology typically results in higher prevailing wage rates.
• Anti-retaliation protections. The rule added explicit protections for workers who report Davis-Bacon violations or participate in investigations.
• Updated wage surveys. The DOL committed to conducting more frequent wage surveys to ensure prevailing wage rates reflect current market conditions.
• Periodic adjustments for helpers and apprentices. The rule clarified requirements around helper classifications and updated standards for apprentice programs, making it harder to misuse lower-paying classifications to avoid prevailing wage obligations.

IIJA and IRA: Davis-Bacon Expands to Clean Energy

The Infrastructure Investment and Jobs Act (IIJA) of 2021 and the Inflation Reduction Act (IRA) of 2022 dramatically expanded the reach of Davis-Bacon requirements into industries that had little previous exposure to prevailing wage law — especially clean energy.

Under the IRA, projects that claim certain clean energy tax credits (including the Investment Tax Credit and Production Tax Credit) must meet prevailing wage and apprenticeship requirements to receive the full credit amount. Without meeting these requirements, the credit is reduced by up to 80%.

This applies to a wide range of project types:

• Solar installations
• Wind farms
• Battery storage
• Electric vehicle charging infrastructure
• Carbon capture facilities
• Other clean energy construction

The IIJA similarly attached Davis-Bacon requirements to billions of dollars in infrastructure spending — broadband deployment, EV charging networks, grid modernization, and water infrastructure projects now carry prevailing wage obligations.

If you're a clean energy contractor newly subject to Davis-Bacon, start with the basics:

1. Identify the correct wage determination for your project
2. Classify your workers accurately
3. Submit WH-347 certified payroll every week

Use our free WH-347 generator to get started without the guesswork.