Detailed terms & definitions for prevailing wages, certified payroll, and Davis-Bacon Act requirements

Core Terms and Definitions

Area Practice

The customary classification and wage rate for a particular type of work in a specific geographic area, as determined by surveys and investigations conducted by the Department of Labor.

Certified Payroll

A legally required payroll record, typically submitted weekly on projects covered by the Davis-Bacon Act, documenting the wages paid to each worker. It verifies that all workers are receiving the prevailing wage and that the contractor is in compliance with labor regulations.

Conformance Process

The procedure used to add a worker's classification to a wage determination when the needed classification is not listed. This process requires approval from the Department of Labor and ensures that workers in unlisted classifications receive wages in line with similar classifications.

Davis-Bacon Act (DBA)

A federal law enacted in 1931 required contractors and subcontractors on federally funded or assisted construction projects to pay their laborers and mechanics no less than the locally prevailing wages for corresponding work. This ensures that lower-wage labor from outside areas does not disadvantage local workers.

General Wage Determination

A type of wage determination issued by the DOL for a general locality without reference to a specific project. It applies to any local project and reflects the wages typically paid for similar work.

Prevailing Wage

The average hourly wage, benefits, and overtime paid to most workers within a specific geographic area. These wages are determined by the Department of Labor (DOL). They must be paid to workers on government-funded construction projects to ensure fair compensation and prevent undercutting local labor standards.

Prevailing Wage Survey

The Department of Labor conducted a process to collect wage and fringe benefit data from contractors and workers in a specific geographic area. This data determines the prevailing wage rates for various job classifications in that area.

Project Wage Determination

A wage determination that applies to a specific federal project. It is requested by a contracting agency when a project's scope or conditions require more tailored wage rates, such as for large or unique construction endeavors.

Service Contract Act (SCA)

Federal law requires contractors and subcontractors performing services on prime contracts over $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality or the rates contained in a predecessor contractor's collective bargaining agreement.

Site of Work

The physical place or places where the construction called for in the contract will remain when work on it has been completed, and any other site where a significant portion of the building or work is constructed, provided that such site is explicitly established for the performance of the contract or project.

Wage Determination

A ruling by the DOL establishes the prevailing wage rates for various labor classifications in a specific geographic area. This determination is based on surveys of wages in the area and is issued as part of government contracts to ensure that workers are fairly compensated.

Payroll and Reporting

Certified Payroll Report

A report, usually filed weekly, details the hours worked, wages earned, and benefits each worker receives on a project. This report certifies that the law has paid prevailing wages and helps monitor compliance with labor standards.

Form WH-347

This is a standard form used by contractors to submit weekly certified payroll reports. It provides a detailed breakdown of wages, fringe benefits, and deductions for each worker employed on a covered project, ensuring compliance with the Davis-Bacon Act.

Statement of Compliance

This is a mandatory section of the certified payroll report where contractors affirm that the information submitted is accurate and that all wages have been paid in compliance with the applicable prevailing wage laws. This statement is a legal document that carries significant penalties for falsification.

Weekly Payroll Submissions

Contractors working on federally funded projects must submit certified payroll records to the contracting agency weekly. This frequent reporting ensures ongoing compliance and provides a regular audit trail for labor enforcement.

Employee Classifications and Work Types

Additional Classification Request

A formal request was made to the Department of Labor to add a job classification not listed in the applicable wage determination. This process ensures that all workers on a project are correctly classified and paid according to their duties.

Apprentice

A worker enrolled in a formal training program recognized by the DOL. Apprentices typically earn lower wages than fully qualified workers (journeymen) but must be paid at least the DOL-established rate for apprentices. They are also entitled to scheduled wage increases as they progress through the training program.

Helper Classification

A distinct category of worker who assists other skilled trades but does not have the same level of skill or training. The use of helpers on Davis-Bacon projects is strictly regulated, and their wage rates must be approved through the conformance process.

Independent Contractor

A self-employed individual who provides services to a company under specific terms. In prevailing wage laws, the classification of workers as independent contractors is scrutinized to ensure it's not being used to avoid paying prevailing wages.

Journeyman

A worker who has completed an apprenticeship or equivalent training in a specific trade is fully qualified to perform that work. Journeymen must be paid the prevailing wage rate for their trade as established in the wage determination.

Labor Classification

Categories of work that the DOL defines to determine the appropriate wage rates. Examples include electricians, plumbers, and laborers. Each classification has a specific prevailing wage rate based on the work's complexity and skill level.

Legal and Compliance

Copeland "Anti-Kickback" Act

A federal law that prohibits contractors from inducing any person employed on a federally funded project to give up any part of the compensation to which they are entitled. It also requires contractors to submit weekly certified payroll reports.

Debarment

Contractors who violate the Davis-Bacon Act, often through falsifying payroll records or failing to pay prevailing wages, face a severe penalty. Debarred contractors are prohibited from bidding on or working on federal contracts for three years, typically three years.

Department of Labor (DOL)

The U.S. federal agency responsible for enforcing labor standards, including the Davis-Bacon Act. The DOL ensures that contractors comply with wage determinations and that workers on public projects receive fair wages.

Falsification of Payroll Records

The illegal act of submitting incorrect or misleading information in certified payroll reports. Falsifying payroll records can result in severe penalties, including fines, restitution, and potential debarment from future government contracts.

Restitution

The process by which underpaid wages are repaid to workers when a contractor fails to meet the prevailing wage requirements. Restitution is often ordered following an investigation by the DOL or a contracting agency when wage violations are discovered.

Wage and Hour Division (WHD)

A division of the DOL is tasked with enforcing the provisions of the Davis-Bacon Act, including conducting investigations and audits to ensure that workers receive the prevailing wage and that certified payroll reports are accurate.

Wage and Hour Division (WHD) Investigation

The WHD conducted a formal inquiry to ensure compliance with labor laws, including the Davis-Bacon Act. Investigations may involve reviewing payroll records, interviewing workers, and inspecting work sites.

Withholding

A legal remedy used by contracting agencies to withhold payments to a contractor if they are found to violate prevailing wage laws. This can happen if certified payroll records are incomplete or workers are not paid the required wages.

Project-Specific Terms

General Contractor

General contractors are the contractors with overall responsibility for the completion of a project. They are responsible for ensuring that all workers, including those employed by subcontractors, are paid the appropriate prevailing wages.

Prime Contract

A contract directly between the government or contracting agency and the general contractor responsible for the overall project. Prime contractors must ensure that all workers, including those employed by subcontractors, are paid prevailing wages.

Public Works Project

A construction, alteration, or repair project funded by the federal, state, or local government. These projects are subject to prevailing wage laws and require contractors to comply with certified payroll reporting.

Subcontractor

A company or individual hired by the prime contractor to perform specific tasks on a project. Subcontractors must also comply with prevailing wage requirements and submit certified payroll reports for their workers.

Recordkeeping and Audits

Audit

A formal review of a contractor's payroll and work records to ensure compliance with the Davis-Bacon Act. The DOL or the contracting agency can conduct audits, which may result in enforcement actions if violations are found.

Daily Report

A record kept by contractors that details the number of workers on site, the hours they worked, and the tasks completed each day. This report supports certified payroll submissions by documenting work progress and labor usage on public works projects.

Time Cards

Time cards are individual records of the hours worked by each employee. They are critical for ensuring accurate certified payroll reporting and compliance with prevailing wage requirements.

Benefits, Compensation, and Overtime

Cash Equivalent of Fringe Benefits

When an employer does not provide actual benefits, they can pay the cash equivalent of the required fringe benefits directly to the worker. This ensures compliance with the total prevailing wage requirement.

Fringe Benefits

Workers receive non-wage compensation in addition to their hourly pay. Examples include health insurance, retirement plans, and paid leave. Fringe benefits can be provided in cash or as benefits-in-kind and are required in prevailing wage calculations.

Gross Wages

Gross wages are the total wages earned by a worker before any deductions for taxes, insurance, or other withholdings. They include both the base rate and any fringe benefits paid in cash.

Net Wages

The amount of money a worker takes home after all deductions, such as taxes, insurance premiums, and union dues, have been subtracted from their gross wages.

Overtime Pay

Compensation is paid at a rate of at least one and a half times the regular hourly wage for hours worked beyond the standard 40-hour workweek or 8-hour workday, as required by the Contract Work Hours and Safety Standards Act (CWHSSA).