The Contractor’s Guide to Prevailing Wage Determination

  • May 15, 2023

A prevailing wage determination, sometimes referred to as a Davis-Bacon determination, is the clerical backbone of construction work that’s funded by government agencies. The Davis-Bacon Act of 1931 is the legislation which makes it mandatory for contractors to comply with prevailing wage rules or risk penalties, hence Davis-Bacon sometimes being used as a synonym for prevailing wage determination within the industry. 

Regardless of whether you want to call it prevailing wage or Davis-Bacon determination, you must make sure these determinations and their associated paperwork and payouts are followed to the letter of the law, otherwise it’s possible to face government-imposed penalties which include fines and failure to secure future contracts.

To secure your financial future as a contractor who wants to continue competing for government-backed projects, you can learn more about prevailing wage determinations below, including how processing works and how much time it takes.

What Is a Prevailing Wage Determination

A prevailing wage determination is the hourly wage rate contractors are required to pay workers on construction projects backed by state or federal funding. The purpose of prevailing wage determinations is two-fold: Make sure workers receive a good rate of pay for their completed work, and to keep costs consistent throughout a geographic area so that contractors don’t undercut their bids or shortchange their workers. 

It’s a system born from The Great Depression, when workers relied on government assistance to avoid exploitation and to ensure they were paid a livable wage to support their families.

Generally, workers such as laborers, electricians, painters, carpenters, and those who perform tasks on a government-funded project are required to receive a prevailing wage. Office workers and company crew located offsite who work on other projects usually are not eligible.

How are Davis-Bacon Wages Determined?

Prevailing wage determinations are decided by the departments of labor at the state and federal level. It’s customary for the determinations made to be based on prevailing wage rates throughout the defined region.

This information used to make determinations can be pulled from a variety of data sources, and it varies based on government agency, and whether it’s a state or federal job.

Prevailing Wage Determination Processing Time

In addition to paying them the correct rate, workers must be paid on a recurring schedule, typically once a week. Part of that pay frequency includes contractors submitting a statement to their government on behalf of their eligible workers. This statement must include how many hours each employee worked, plus gross wages, deductions, and withholdings. 

These reports usually need to be submitted for review weekly. In addition to the worker information above, sometimes certified statements of compliance or affidavits confirming wage payments are required for filing. What exactly must be filed can differ from state to state, and from government agency to government agency.

Simplifying Prevailing Wage Determinations

As you’ve learned, there’s a lot of nuance to absorb when it comes toprevailing wage determinations, and what’s required for contractors to be compliant and in good standing with government agencies. Fortunately, there’s a cloud-based solution you can count on to reduce your paperwork and processing time — no matter your location or the agency you must file with.

Certified Payroll Reporting, powered by Points North, makes it easy to put together prevailing wage reports so you know your payroll is always accurate and in compliance with the government agencies you must report to.For accurate and timely assistance, contact us to get started. Our expert team is happy to give you a free demo and answer any questions you may have.

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