Prevailing Wage & Davis-Bacon: A Contractor's Guide

Quick answer

On many public projects you're legally required to pay your crew a prevailing wage — a minimum hourly rate plus fringe benefits set by the government for each trade and location. On federally funded construction, that requirement comes from the Davis-Bacon Act. Getting this right is a pricing issue before it's a compliance issue: if you bid without the correct wage rates, you'll either lose money or lose the job.

What prevailing wage means for your bid

Prevailing wage sets a floor on what you pay workers on a covered project. The idea is that public projects shouldn't be won by underpaying labor, so the government publishes the local going rate for each trade and requires everyone to meet it. For you, that means labor cost on a prevailing-wage job is largely fixed by the wage determination — you can't sharpen your bid by cutting wages, so your competitive edge has to come from productivity, logistics, and accurate estimating.

How Davis-Bacon works

The Davis-Bacon Act applies to federal and federally assisted construction contracts over $2,000. The U.S. Department of Labor publishes wage determinations — schedules of required wage and fringe rates for each labor classification in a given area — and the applicable determination is attached to the solicitation. You and your subcontractors must pay at least those rates to every worker in each classification, and prime contractors are responsible for their subs' compliance.

Certified payroll and compliance

Documentation is where prevailing wage becomes real work. On Davis-Bacon projects you file certified payroll — federally, a weekly Form WH-347 — showing each worker's hours, classification, rate paid, deductions, and a signed statement of compliance. Common pitfalls include misclassifying workers (paying a laborer rate for work that requires a higher classification), missing the fringe-benefit portion, and late or inaccurate filings. Build the payroll process into the job from day one rather than reconstructing it later.

State "Little Davis-Bacon" laws

Beyond the federal act, many states have their own prevailing-wage laws covering state and local public works, often above a dollar threshold — while other states have none at all. Rates, thresholds, and filing rules differ by state, and a project can be subject to state rules, federal Davis-Bacon (if federal money is involved), or both. Our state guides note each state's prevailing-wage situation; always confirm the specific requirement in the solicitation.

Note that services work (janitorial, grounds maintenance) follows a different regime — the federal Service Contract Act — not Davis-Bacon. For the bigger pursuit picture, see How to Win Government Contracts.