Davis-Bacon Act & Prevailing Wage

The Davis-Bacon Act (1931) requires federal contractors and subcontractors on construction projects over $2,000 to pay workers no less than the "prevailing wage" — the locally determined rate for each trade and craft — plus fringe benefits. The Department of Labor's Wage and Hour Division sets prevailing wages through surveys of local pay rates, publishing wage determinations by county and trade category. Nearly 60 "Davis-Bacon Related Acts" extend the same requirements to federally assisted construction (HUD housing, highway projects, water infrastructure, EPA grants), meaning prevailing wage requirements reach far beyond pure federal contracts. The law is contentious precisely because it adds cost to federally funded construction — estimates range from a few percent to 15–20% above market rates depending on the project location — while simultaneously supporting union wage standards and middle-class construction wages in participating markets. The Inflation Reduction Act of 2022 tied its clean energy tax credits to Davis-Bacon compliance, making prevailing wage requirements central to the energy transition's labor economics.

Current Law (2026)

Legal Authority

• 40 U.S.C. § 3142 — Rate of wages (every contract over $2,000 for construction, alteration, or repair of public buildings or public works of the United States must contain a provision stating the minimum wages to be paid; these wages must be based on DOL determinations of the prevailing rate for corresponding classes of laborers and mechanics in the area)
• 40 U.S.C. § 3143 — Termination of work on failure to pay agreed wages (if the contracting officer finds that any laborer or mechanic employed by the contractor has been paid less than the required wage, the contract may be terminated and the contractor held liable for resulting excess costs)
• 40 U.S.C. § 3144 — Authority to pay wages and list contractors violating contracts (the Comptroller General may pay workers directly from withheld funds; DOL maintains a list of persons found to have disregarded their obligations — listed persons are ineligible for federal contracts for 3 years)

How It Works

The Davis-Bacon Act is the federal law that ensures construction workers on government-funded projects are paid the prevailing local wage — typically well above the federal minimum wage — a Depression-era labor protection that remains one of the most significant federal interventions in construction labor markets.

When the federal government contracts for construction — or when federal money funds state and local construction projects — the Davis-Bacon Act requires that all laborers and mechanics on the project be paid at least the prevailing wage for their trade in the geographic area. DOL determines prevailing wages through surveys of wage rates and fringe benefits paid on similar private construction projects in each locality. Under the 2023 regulatory update (the most significant overhaul in 40 years), if 30% or more of workers in a trade earn the same rate, that rate prevails — restoring the pre-1982 "30% rule" rather than requiring a majority. Prevailing wage rates include both a base hourly rate and fringe benefits (health insurance, pension, vacation, training). Davis-Bacon applies directly to federal construction contracts over $2,000 — but its reach extends far wider through approximately 60 "Davis-Bacon Related Acts," federal statutes that impose prevailing wage requirements on federally assisted construction, including the Federal-Aid Highway Act, Housing and Community Development Act, Clean Water Act, and airport improvement programs. The Infrastructure Investment and Jobs Act (2021) and Inflation Reduction Act (2022) significantly expanded coverage to clean energy projects, broadband infrastructure, and EV charging stations.

Enforcement runs through the contracting process. Prime contractors and subcontractors must submit weekly certified payroll reports — sworn statements that every worker was paid at least the applicable prevailing rate for their classified trade. Contracting agencies and DOL's Wage and Hour Division investigate complaints and audit payrolls; remedies include back pay, withholding of contract payments, contract termination, and debarment — placement on a federal ineligibility list for up to 3 years, effectively barring a contractor from federal work. The program is politically polarized: supporters argue it prevents the government from undermining local wage standards and supports apprenticeship pipelines; critics argue it inflates federal construction costs by 10–30% and disproportionately benefits union contractors. Despite repeated legislative efforts to repeal it, Davis-Bacon has survived since 1931 — and the 2021–2022 infrastructure and clean energy legislation expanded rather than contracted its reach.

How It Affects You

State Variations

Implementing Regulations (CFR)

• 29 CFR Part 1 — Procedures for Predetermination of Wage Rates: the DOL Wage and Hour Division's regulations for conducting wage surveys, issuing prevailing wage determinations, and processing reconsideration requests:

  • § 1.3 — Wage data collection: WHD conducts a continuing program to collect wage data from construction projects; data comes from contracting agencies' annual construction program reports and voluntary submissions from contractors, unions, and employer associations; organized by county, construction type (building, heavy, highway, residential), and occupation
  • § 1.5 — General and project wage determinations: WHD publishes general wage determinations covering standard construction types in specific counties (searchable in SAM.gov's Wage Determinations Online), valid for any federal contract in that area; project wage determinations are issued for specific projects when a general determination doesn't fit; contracting officers must incorporate the applicable wage determination before bidding
  • § 1.6 — Validity: once a wage determination is incorporated into a contract or construction begins, the rates are locked for that contract; subsequent WHD modifications don't apply retroactively; contractors can bid with certainty about their labor cost floor
  • § 1.8 — Reconsideration: any interested party may request reconsideration of a wage determination with specific evidence; reconsideration by the Administrator may be further appealed to the Administrative Review Board (§ 1.9)

  Part 1 produces the wage rates that define the labor cost floor for every Davis-Bacon-covered project. WHD's 2023 comprehensive revision (88 FR 57728) was the first major update in 40+ years — it changed the prevailing wage survey methodology to allow broader use of union wage data and updated the definition of "prevailing" to a weighted average in many circumstances, raising labor cost floors on federal construction projects in non-union-dense markets. Recent rulemakings: 88 FR 57728 (August 2023) — final rule comprehensively revising Davis-Bacon Part 1 methodology.

• 29 CFR Part 5 — Labor standards provisions applicable to contracts covering federally financed and assisted construction:

  • 29 CFR 5.5 — Contract provisions and related matters (required Davis-Bacon contract clauses; payroll and compliance requirements)
  • 29 CFR 5.25 — Effect of the Davis-Bacon fringe benefits provisions (contractors may satisfy the prevailing wage obligation through a combination of cash wages and bona fide fringe benefits — health insurance, pension, vacation, apprenticeship training; unfunded fringe benefits must be paid as cash wages)

• 29 CFR Part 525 — Prevailing wage rate determinations:

  • 29 CFR 525.1 — Purpose (establishes procedures for DOL to issue, modify, and supersede prevailing wage rate determinations for construction projects subject to Davis-Bacon and related acts)
  • 29 CFR 525.4 — Types of wage determinations (general wage determinations covering geographic areas by construction type; project wage determinations for specific contracts)

• 29 CFR Part 778 — Overtime compensation:

  • 29 CFR 778.5 — Effect of the Davis-Bacon Act on overtime calculations (Davis-Bacon prevailing wage requirements interact with FLSA overtime; when a worker's prevailing wage rate exceeds the FLSA minimum, the higher Davis-Bacon rate forms the regular rate for overtime computation purposes)

• 29 CFR Part 3 — Copeland Anti-Kickback Act Regulations (DOL — implements the Copeland Act of 1934 (40 U.S.C. § 3145), which prohibits contractors from requiring workers to "kick back" any part of their wages on federally funded construction projects; operates alongside Davis-Bacon to protect workers' ability to keep the wages they earn):

  • § 3.3 — Certified payrolls: each contractor and subcontractor on a covered project must submit a certified payroll record to the contracting agency on a weekly basis; the certified payroll includes: the full name, address, and Social Security number of each worker; their work classification; hours worked; rate of pay; gross wages; authorized deductions; and net wages paid; the payroll must be accompanied by a certification that it is accurate and that the worker was paid at least the prevailing wage for their classification
  • § 3.4 — Submission and preservation: certified payrolls must be submitted to the contracting federal agency within 7 days of the regular pay period; records must be preserved for 3 years and made available for inspection and copying by DOL's Wage and Hour Division; DOL may audit records at any time; falsification of certified payrolls is a federal crime under 18 U.S.C. § 1001
  • § 3.5 — Permissible deductions without DOL approval: contractors may make the following deductions from wages without applying for DOL approval: taxes required by law (federal income tax withholding, FICA); Social Security and Medicare contributions; union dues pursuant to a collective bargaining agreement; contributions to bona fide fringe benefit plans (health insurance, pension); court-ordered wage garnishments; insurance premiums at employee's request; and repayment of legitimate employer loans or advances at no interest
  • § 3.6 — Deductions requiring DOL approval: deductions not in the § 3.5 list — including charges for lodging, tools, or transportation provided by the contractor — require advance written approval from the Secretary of Labor; unapproved deductions below the prevailing wage constitute a Copeland Act violation even if the worker consented; the Copeland Act's purpose is to prevent contractors from "recapturing" prevailing wages through compelled purchases or deductions
  • § 3.10 — Methods of wage payment: wages must be paid in cash, negotiable instruments, or forms of additional compensation for which deductions are permissible under § 3.5; payment in company scrip, store credit, or below-market housing can constitute a Copeland violation if it effectively reduces take-home pay below the prevailing wage
  • § 3.11 — Incorporation into contracts: the Copeland Act regulations must be incorporated by reference into every contract covered by the Act; prime contractors are responsible for the compliance of all subcontractors on their project; violation by a subcontractor can result in the prime contractor losing the contract

  The Copeland Act's certified payroll requirement is the enforcement backbone of the Davis-Bacon system: without documentary proof that each worker received the prevailing wage, verification of Davis-Bacon compliance would depend entirely on worker complaints. The certified payroll requirement creates a paper trail — and a paper trail that can be verified by the contracting agency, DOL, and workers' advocacy organizations. The anti-kickback rule targets the historical practice of contractors requiring workers to buy tools, rent housing from the company, or pay "supervisors' fees" as a condition of employment — practices that effectively reduced wages below the face amount of the paycheck.

Pending Legislation

• HR 4148 (Rep. Smucker, R-PA) — Nullify DOL's 2023 Davis-Bacon rule, remove its regulatory effect. Status: Introduced.
• HR 6060 — Fund grants to replace lead service lines with prevailing wage requirements. Status: Introduced.

Recent Developments

• DOL's 2023 regulatory update was the most significant Davis-Bacon modernization in 40 years, restoring the "30% rule" and expanding coverage
• The Infrastructure Investment and Jobs Act (2021) and Inflation Reduction Act (2022) extended prevailing wage requirements to major new categories including clean energy construction, broadband, and EV charging infrastructure; the ARRA (2009) was the original model — its grant award terms at 2 CFR Part 176 established the Davis-Bacon flow-down mechanism that IIJA and IRA replicated
• IRA clean energy tax credits include prevailing wage bonuses — projects paying prevailing wages receive 5x the base credit amount
• Legal challenges to the 2023 regulatory update are ongoing
• Apprenticeship utilization requirements have been paired with prevailing wage provisions in recent legislation
• Trump executive order targeting Davis-Bacon in 2025: the administration issued an executive order directing DOL to review and potentially rescind the 2023 Davis-Bacon final rule that dramatically expanded coverage to millions of additional workers; a rescission would revert to the narrower pre-2023 regulatory definition.
• OBBBA and IRA prevailing wage nexus: the reconciliation bill's proposed modifications to IRA clean energy tax credits would also affect the prevailing wage bonus multiplier (currently 5x the base credit); any reduction in IRA credits could reduce contractor incentives to comply with the wage and apprenticeship requirements.
• Legal challenges to the 2023 rule continued in 2025 in the Fifth Circuit; contractor associations argued DOL exceeded its statutory authority — an argument strengthened after Loper Bright (2024) removed Chevron deference and required courts to independently assess whether DOL's broad reading of "laborers and mechanics" is correct under the statute.