Understanding Davis-Bacon: Important Terms and Definitions

Understanding the definitions of Davis-Bacon will help you better understand the terms of federal regulation and what is expected of you for labor compliance.

Laborer or Mechanic – “Laborers” and “mechanics” include anyone who is performing construction work on the project, including trade journeymen (carpenters, plumbers, sheet metal workers, etc.), apprentices, and trainees and, for CWHSSA purposes, watchmen and guards. Anyone who is a part of these two groups of workers must be paid a minimum of the Davis-Bacon wage rates (prevailing wages.)

• Working Foremen or Supervisors that regularly spend more than 20% of their time performing construction work are covered “laborers” and “mechanics” for labor standards purposes for the time spent performing construction work. People whose duties are primarily administrative or clerical may be excluded from consideration as a laborer or mechanic. An example of excluded workers would include superintendents, office staff, etc. Any misunderstandings can result in costly underpayments and ultimately, large financial losses, so the proper communication should be made in order to eliminate any doubts.

Employee – Every person who performs the work of a laborer or mechanic is “employed.” If there is a contract between a contractor and a worker, the contractor must make sure that the worker is paid a minimum of the prevailing wage rate for the classification of work they perform. There are no exceptions to the prevailing wage requirements for relatives or self-employed laborers and mechanics.

Apprentices and Trainees – The only workers who can be paid less than the prevailing wage rate for their work classification are “apprentices” and “trainees” registered in approved apprenticeship or training programs. Approved programs must be registered with the Department of Labor or a DOL-recognized State Apprenticeship Council (SAC). Apprentices and trainees are paid wage rates in accordance with the wage schedule in the approved program.

Probationary Apprentice – A “probationary apprentice” can be paid as an apprentice (see above) if the Department of Labor or DOL-recognized State Apprenticeship Council (SAC) has certified that the person is eligible for probationary employment as an apprentice.

Pre-Apprentice – Someone who is not registered in an approved apprenticeship or training program and who hasn’t been DOL- or SAC-certified for probationary apprenticeship is not considered to be an “apprentice.” A pre-apprentice must be paid the full journeyman’s rate for the classification of work they perform.

Ratio of Apprentices and Trainees to Journeymen – Their is a maximum number of apprentices or trainees allowed on the job site relative to the amount of journeymen. For example, you may not have 95% apprentices or trainees and only 5% of the workers be journeymen. The approved program of apprenticeship or training will dictate the allowable ratio. Most often, the apprentice/trainee wage rate is expressed as a series of percentages (of the journeyman’s wage rate) based on the amount of time spent in the program.

To understand this more easily, an example may show that from 0-6 months in the program, an apprentice or trainee must be paid minimum of 65% the journeymen’s rate and between 6 months to one year in the program, they must be paid minimum of 70% the journeymen’s wage rate, and so on. On Davis-Bacon projects, the percentage of the journeymen’s rate that an apprentice or trainee is being paid must be taken from the prevailing wage for the classification that an apprentice or trainee is working.

Prevailing Wages or Wage Rates – The wage decision of a project will list a minimum basic hourly rate of pay for each work classification. Work classifications are based on the duties and work being performed on-site. Some wage decisions include fringe benefits which are usually listed as an hourly fringe rate. If the wage decision includes a fringe benefit rate for a classification, you will need to add the fringe benefit rate to the basic hourly rate unless you provide bona fide fringe benefits for your employees.

Piece-Work – Some employees are hired on a piece-work basis, meaning the employee’s earnings are determined by a factor of work produced. For example, a Painter’s earnings may be based upon the number of units painted on a piece-work basis. Employers may calculate weekly earnings based upon piece rates only if the weekly earnings are sufficient to satisfy the wage rate requirement based upon actual hours, including any overtime, worked. For this reason, accurate time records must be maintained for any piece-work employees. If the weekly piece rate earnings are not sufficient, the employer must recompute weekly earnings based upon the actual hours worked and the rate on the wage decision for the work classification(s) involved.

Fringe Benefits – Health insurance premiums, retirement contributions, life insurance, vacation and other paid leave as well as some contributions to training funds can be considered frine benefits. Fringe benefits do not include employer payments or contributions required by other Federal, State or local laws, such as the employer’s contribution to Social Security or some disability insurance payments.

Overtime – All hours worked on the contract in excess of 40 hours in any work week are overtime hours. Overtime hours must be paid at no less than one and one-half times the regular rate of basic pay plus the straight-time rate of any required fringe benefits. If the value of the fringe benefit(s) you provide is less than the fringe benefit rate on the wage decision, you will need to add the difference to the basic rate paid to the employee. As an example, if the wage decision requires $10/hour basic rate plus $5/ hour fringe benefits to be paid, you must pay no less than that total $15/hour in the basic rate or basic rate plus whatever fringe benefit you may provide.

In other word, you could pay the base wage and fringe benefits the exact way they are stated in the wage decision, or you could pay $15 in base wage with no fringe benefits. Similarly, you could pay $12 basic plus $3 fringe benefits. You can also off-set the amount of the base wage if you pay more in fringe benefits (with limitation) such as by paying $9 basic, plus $6 in fringe benefits; as long as you meet the total amount. The amount of the base wage that you may off-set with fringe benefits is limited by certain IRS and FLSA requirements.

Deductions – You may make payroll deductions as permitted by DOL Regulations 29 CFR Part 3. Allowable deductions that do not require prior permission from the Department of Labor include employee obligations for income taxes, Social Security payments, insurance premiums, retirement, savings accounts, and any other legally-permissible deduction authorized by the employee. Deductions may also be made for payments on judgments and other financial obligations legally imposed against the employee.

Proper Designation of Trade – You must select a work classification on the wage decision for each worker based on the actual type of work and duties he/she performed on-site and you must pay each worker no less than the prevailing wage rate for that classification regardless of their level of skill. In other words, if someone is performing carpentry work on the project, they must be paid no less than the wage rate on the wage decision for Carpenters even if they aren’t considered by you to be fully trained as a Carpenter.

Split-Classification – If you have employees that perform work in more than one trade during a work week, you can pay the wage rates specified for each classification in which work was performed only if you maintain accurate time records showing the amount of time spent in each classification of work. If you do not maintain accurate time records, you must pay these employees the highest wage rate of all of the classifications of work performed.

Site of work – The “site of work” is where the Davis-Bacon wage rates apply. Usually, this means the boundaries of the project. “Site of work” can also include other adjacent or virtually adjacent property used by a contractor or subcontractor in the construction of the project, like a fabrication site that is dedicated exclusively, or nearly so, to the project.