To calculate the prevailing wage on a federally funded construction project, add two figures from the Davis-Bacon wage determination that applies to your project: the basic hourly rate and the fringe benefit rate for the worker’s labor classification. That combined figure is the minimum hourly obligation for every laborer and mechanic on the site. The Davis-Bacon Act triggers this requirement on federal or federally assisted construction contracts worth more than $2,000.1Office of the Law Revision Counsel. 40 USC Subtitle II, Part A, Chapter 31, Subchapter IV – Wage Rate Requirements Everything else in the calculation is about pulling the right numbers and applying them correctly.
Pull the Right Wage Determination First
The wage determination is a schedule the Department of Labor publishes for a specific geographic area and construction type. You find current determinations on SAM.gov by filtering to your state, county, and category.2U.S. General Services Administration. Wage Determinations Rates can differ sharply between neighboring counties, so location matters.
The Department of Labor recognizes four construction types, and the nature of the work controls the choice, not the funding source:3U.S. Department of Labor. Davis-Bacon Wage Determinations
- Building: enclosed structures with walk-in access, plus related utilities and site work.
- Residential: single-family homes, townhouses, and apartments of four stories or fewer.
- Highway: roads, streets, runways, parking areas, and similar paving that is not part of a building or heavy project.
- Heavy: everything else, including dredging, water and sewer lines, dams, major bridges, solar and wind farms, and flood control.
A water main installed under a building site is classified as heavy, not building.4U.S. Department of Labor. Davis-Bacon Wage Determination Conformance Request Guide
Which Version of the Determination Applies
The version that governs your contract is generally the one in effect on the date of contract award, or the start of construction if there is no formal award. On sealed-bid contracts, any revision issued at least 10 calendar days before bid opening must be incorporated into the solicitation.3U.S. Department of Labor. Davis-Bacon Wage Determinations Later modifications generally do not apply once the contract is awarded, unless the contract includes option periods or uses a general determination that updates before an option is exercised. Using an expired or superseded schedule is a common source of underpayment.
Classify the Worker by the Duties They Actually Perform
Each classification on the determination — carpenter, sheet metal worker, laborer, electrician, and so on — carries its own basic rate and fringe rate. Classify each worker by the duties they actually perform on site, not by their company title. If someone the company calls a “general helper” spends the day installing electrical conduit, that person is owed the electrician rate.
Workers Who Perform More Than One Role in a Week
When one employee performs work in more than one classification during a single workweek, track the exact hours in each role and pay the corresponding rate for each block of hours. If you fail to keep accurate time records for the split duties, the worker must be paid the highest applicable rate for every hour worked that week.5eCFR. 29 CFR 5.5 – Contract Provisions and Related Matters The Department of Labor resolves classification disputes by looking at how contractors in the same county typically assign those duties on similar projects.
When the Classification You Need Is Not on the Determination
If you need to use a worker in a role the determination does not list, submit Standard Form 1444 to the contracting officer before that worker starts on site.6Acquisition.GOV. 22.406-3 Additional Classifications The request proposes a specific wage (including fringe) that bears a reasonable relationship to the other rates on the determination. If the contractor, the workers or their representatives, and the contracting officer all agree, the request goes to the Wage and Hour Division for approval; if any party disagrees, the Division makes the final call. Either way, the Division typically acts within 30 days, and the approved rate applies retroactively to the first day the classification was used.
Do the Math
The core calculation is addition. If the determination lists a basic rate of $30.00 and a fringe rate of $10.00 for a classification, the total hourly obligation is $40.00.
Crediting Fringe Benefits
You can meet the fringe portion by paying it as cash on top of the basic rate, by providing bona fide fringe benefits, or by combining the two. Bona fide fringe benefits include employer contributions toward health insurance, life insurance, retirement pensions, paid vacation, paid holidays, and apprenticeship training costs.7eCFR. 29 CFR Part 5 Subpart B – Interpretation of the Fringe Benefits Provisions of the Davis-Bacon Act Payments you already owe under other laws, such as Social Security taxes or workers’ compensation premiums, do not count toward the fringe obligation, and neither do your administrative costs for running benefit plans.
If you contribute $4.00 an hour toward health insurance for the worker in the example above, you have a $4.00 credit against the $10.00 fringe rate and owe the remaining $6.00 in cash on the paycheck. If you provide no benefits at all, you pay the full $10.00 in cash on top of the basic rate.
Annualizing Periodic Benefits
When a benefit is paid on a periodic basis rather than hourly, such as an annual health insurance premium that covers project and non-project work alike, annualize the cost to get the hourly credit. Divide the total cost of the benefit by the total hours the worker performed across all jobs, covered and non-covered, during the relevant period.8eCFR. 29 CFR 5.25 – Rate of Contribution or Cost for Fringe Benefits If the contribution varies by worker, calculate the credit separately for each individual. The same method applies to paid vacation, sick leave, and apprenticeship training.9U.S. Department of Labor. Fact Sheet 66E – The Davis-Bacon and Related Acts – Compliance With Fringe Benefit Requirements
Overtime: Multiply Only the Basic Rate
The Contract Work Hours and Safety Standards Act requires time-and-a-half for all hours over 40 in a workweek on covered contracts exceeding $100,000 (or $150,000 for contracts subject to the Federal Acquisition Regulation).10U.S. Department of Labor. Overtime Pay on Government Contracts The overtime multiplier applies only to the basic hourly rate. The fringe rate stays at straight time.
Using the same $30.00 basic and $10.00 fringe:
- Overtime basic rate: $30.00 × 1.5 = $45.00
- Fringe rate, unchanged: $10.00
- Overtime hourly obligation: $55.00
Multiplying the combined $40.00 by 1.5 would produce $60.00, overpaying by $5.00 for every overtime hour. Across a full crew, that error compounds fast.
Apprentices and the Ratio Rule
Apprentices can be paid below the full journeyworker rate, but only if they are individually registered in an apprenticeship program approved by the Department of Labor’s Office of Apprenticeship or a recognized State Apprenticeship Agency.11U.S. Department of Labor. Davis-Bacon Compliance Principles An unregistered worker performing apprentice-level tasks must be paid the full journeyworker rate for the work performed.
The apprentice-to-journeyworker ratio on site cannot exceed the ratio in the registered program or the ratio applicable in the project’s area, whichever governs.12eCFR. 29 CFR Part 5 – Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction Any apprentice beyond the permitted ratio must be paid the full prevailing wage for the work actually performed. If your project sits in a different area from where your program is registered, the local ratio applies; if no local ratio exists, your program’s ratio controls.
Document the Calculation on Certified Payroll
Every contractor and subcontractor on a covered project files a certified payroll report each week. The standard form is WH-347, though any format with the same information is acceptable, and each report must reach the contracting agency (or the entity administering federal funds) within seven days of the pay date.13U.S. Department of Labor. Instructions for Completing Davis-Bacon and Related Acts Weekly Certified Payroll Form WH-34714Energy.gov. Davis Bacon Frequently Asked Questions The report shows each worker’s classification, hours by day (split between straight time and overtime), the straight-time and overtime rates paid, cash paid in lieu of fringe benefits (listed separately), and gross, deduction, and net pay. A responsible company official signs a Statement of Compliance on page two each week certifying that the payroll is accurate and that every worker was paid the applicable prevailing wage.
You must also post the applicable wage determination and Form WH-1321 at the site where workers can see them for the duration of covered work.15U.S. Department of Labor. Davis-Bacon Poster (Government Construction) Payroll records, time cards, and pay stubs must be retained for at least three years after the contract ends.14Energy.gov. Davis Bacon Frequently Asked Questions
What a Calculation Error Costs
If your rate math is wrong, the contracting agency can withhold payments from your contract, and must do so if the Department of Labor requests it in writing. In serious cases the agency can cross-withhold from other federal contracts you hold.16U.S. Department of Labor. Investigative Procedures and Remedies on Davis-Bacon Contracts You owe back wages for any underpayment, and for overtime violations under the Contract Work Hours and Safety Standards Act you also owe liquidated damages of $33 per worker for each calendar day the worker was required to work over 40 hours without proper overtime pay.12eCFR. 29 CFR Part 5 – Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction A crew of 10 on unauthorized overtime for five days generates $1,650 in liquidated damages on top of the wages owed. Willful violations can trigger a three-year debarment from all federal and federally assisted contracts.17U.S. Department of Labor. Fact Sheet 66 – The Davis-Bacon and Related Acts