How the Davis-Bacon Act Affects Subcontractors: Legal Considerations

Working as a subcontractor on federal contracting projects requires strict adherence to legal and administrative rules. One such obligation is complying with the Davis-Bacon Act, which ensures fair wages for construction workers on federally funded projects. Non-compliance risks can include fines, reputational damage, and disqualification from future contracts. In this blog, we explore how the Davis-Bacon Act impacts subcontractors, including prevailing wage requirements, compliance monitoring, and the role of lower-tier subcontractors.

A Brief History of the Davis-Bacon Act

The Davis-Bacon Act, passed in 1931, mandates that contractors and subcontractors on federal projects pay their workers prevailing wages. These wage rates are determined by the Department of Labor (DOL) and vary by location and job classification.

Subcontractors must:

• Pay employees according to DOL’s prevailing wage determinations.
• Include fringe benefits, such as health insurance, where applicable.
• Maintain accurate records to demonstrate compliance.

Failure to meet these requirements can result in back wage payments and disqualification from federal contracts. More details on prevailing wages can be found on our Davis-Bacon Act resource page.

Impact on Subcontractors

Wage Compliance and Monitoring

Subcontractors must ensure that workers, including those hired by lower-tier subcontractors, are paid prevailing wages. Compliance monitoring is essential, as errors in payroll reporting or wage payments can trigger DOL investigations, potentially leading to severe penalties.

Liability for Non-Compliance

While prime contractors are responsible for overseeing wage compliance for the entire project, lower-tier subcontractors are not exempt from liability. Subcontractors failing to meet wage or reporting obligations may face fines and could jeopardize their relationship with prime contractors. A proactive approach to compliance, including collaboration with higher-tier contractors, is crucial.

Legal Considerations for Subcontractors

Record-Keeping Obligations

Subcontractors must keep meticulous records to comply with the Davis-Bacon Act. These include:

• Detailed payroll records.
• Certified Payroll Reports (CPRs) submitted to the DOL.

Proper documentation helps subcontractors demonstrate compliance and avoid legal pitfalls.

Enforcement Mechanisms
The DOL actively audits federal projects, and violations can result in:

• Repayment of back wages.
• Significant fines for subcontractors.
• Disqualification from federal contracting opportunities.

Compliance monitoring systems can assist subcontractors in staying aligned with both federal and state prevailing wage laws.

Case Example: Frank Bros. v. Wisconsin DOT

Case Background

In Frank Bros. v. Wisconsin DOT, a subcontractor contested the applicability of Wisconsin’s state prevailing wage law, arguing it conflicted with the federal Davis-Bacon Act. The case centered on whether Wisconsin’s inclusion of truck drivers in prevailing wage determinations superseded federal law.

Court Ruling

The court upheld Wisconsin's right to enforce its prevailing wage law, which included additional requirements not covered under the Davis-Bacon Act. The ruling highlighted that federal law sets a minimum standard, and states may implement supplementary regulations to address local labor conditions.

For the full court opinion and analysis, refer to Frank Bros. v. Wisconsin DOT.

Challenges Subcontractors Face

Compliance with the Davis-Bacon Act and related state laws presents challenges:

• Variable Wage Rates: Prevailing wages vary significantly by region and job type.
• Complex Monitoring Needs: Subcontractors must monitor compliance for their own employees and lower-tier subcontractors.

Investing in compliance tools and staying informed about regulatory changes can help subcontractors navigate these challenges.

Whitcomb Selinsky PC Can Help

At Whitcomb Selinsky PC, we provide legal expertise to help subcontractors meet the requirements of the Davis-Bacon Act. From compliance monitoring to resolving disputes, our team is skilled in navigating government contracting regulations. Explore our Davis-Bacon Act resource page to learn how we can assist you.

Conclusion

The Davis-Bacon Act demands strict adherence to wage standards and record-keeping from subcontractors working on federal projects. Compliance is not optional, and ensuring wage accuracy, especially for lower-tier subcontractors, is vital. For expert guidance, reach out to Whitcomb Selinsky PC today. We’re here to help you succeed in government contracting.