The Intersection of the Bipartisan Infrastructure Law and Davis-Bacon Act Requirements for Federal Contractors and Subcontractors – Ward and Smith, PA

June 17, 2022

The BIL is estimated to create an additional 800,000 jobs. The United States Department of Labor ("DOL") contends that such new jobs will "expand the middle class, revitalize our nation's transportation, communications and utility systems and build a more resilient, reliable, and environmentally sound future." The White House asserts that the BIL will provide protection to "critical labor standards on construction projects," as a substantial portion of the construction projects included in the BIL will be subject to requirements of the Davis-Bacon Act ("DBA" or the "Act").

While the BIL provides new revenue sources and opportunities for construction projects, federal contractors and subcontractors should ensure that their businesses comply with the DBA's prevailing wage rates and labor standards requirements.

In its simplest form, the DBA, enacted in 1931, requires federal contractors and subcontractors to pay prevailing wage rates and fringe benefits to certain construction workers employed on certain federal contracts. The DOL's Wage and Hour Division ("WHD") administers and enforces the Act's requirements on federally funded and assisted construction projects. The DBA applies to contracts:

With respect to the DBA applying to federal contracts above $2,000, this value threshold only applies to the initial federal contract. If the threshold is met, however, then the DBA applies to any lower-tier subcontracts even if the value of the subcontract is less than $2,000.

There are various requirements for federal contractors and subcontractors under the DBA, which the United States Supreme Court has described as "a minimum wage law designed for the benefit of construction workers." The Act was designed to protect construction workers' wage standards from federal contractors who may base their contract bids on wage rates that are lower than the local wage level. Under the DBA, federal contractors and subcontractors are required, among other things, to do the following:

Federal contractors and subcontractors should ensure that covered workers are properly classified for the work such individuals perform and paid in accordance with the prevailing wage rate for their classification.

Employers will often face recordkeeping challenges when they have nonexempt employees who perform covered (manual) work and non-covered (administrative) work in the same workweek.

In such instances, the employer must determine whether the employee is salaried or paid hourly. If the employee is salaried, the employer must determine whether the employee's salary is greater than or equal to the prevailing wage rate for the employee's classification. If not, the employer contractor is required to increase the employee's pay for the week the covered work is performed.

Likewise, if the employee is paid hourly, then the employer must ensure the employee's hourly rate is greater than or equal to the prevailing wage rate for the employee's classification.

Federal contractors and subcontractors could face various consequences due to their failure to comply with the DBA, ranging from termination of the federal contract and debarment to a contracting agency withholding money due to the contractor to cover back wages due to employees as well as criminal prosecution. Accordingly, federal contractors and subcontractors should consult with legal counsel to ensure they comply with the various DBA requirements for any covered contracts.

-- 2022 Ward and Smith, P.A. For further information regarding the issues described above, please contact Xavier D. Lightfoot or Devon D. Williams.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.

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The Intersection of the Bipartisan Infrastructure Law and Davis-Bacon Act Requirements for Federal Contractors and Subcontractors - Ward and Smith, PA