The Easiest Guide to the Davis-Bacon Act for General Contractors

Updated December, 2025

2025 Regulatory Update: The landscape of Davis-Bacon compliance has shifted dramatically. While the Department of Labor’s "Updating the Davis-Bacon and Related Acts Regulations" Final Rule (2023) introduced the most significant changes in 40 years, federal courts have blocked key provisions regarding truck drivers and material suppliers. Furthermore, the March 2025 rescission of Executive Order 14026 has reverted the federal contractor minimum wage for many projects. This guide has been updated to reflect these critical changes as of December 2025.

You've worked hard to turn a profit on a project funded by the federal government, but imagine your surprise when you find out you owe your employees several thousand dollars in back wages.

The Davis-Bacon Act (DBA) governs the wages paid to workers on federal construction projects. The general contractor is responsible for ensuring that they and their subcontractors follow these rules. In this article, we're going to walk through eight traps GCs can fall into if they don't plan appropriately.

Key Takeaways

• The Davis-Bacon Act establishes the prevailing wage GCs must pay workers performing physical labor on federal construction contracts.
• The site of the work includes the primary construction site, secondary construction sites, and adjacent or virtually adjacent dedicated support sites.
• GCs may meet the prevailing wage requirements with any combination of wages and bona fide fringe benefits, provided they meet other minimum wage requirements.

What is the Davis-Bacon Act?

The Davis-Bacon Act (DBA) and related acts (DBRA) require contractors working on federally funded public buildings and public works to pay construction workers the prevailing wage rates and submit certified payrolls. The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) administers this act and publishes the locally prevailing wages as wage determinations. These determinations are typically published for each county of each state and the District of Columbia for four types of construction (building, heavy, highway, and residential). Periodically, the WHD conducts a wage survey and publishes the updated wage determinations at sam.gov.

Who is Covered?

DBA-covered workers include those whose jobs are manual or physical in nature, such as laborers, mechanics, apprentices, trainees, and helpers. As such, the act covers all employees who perform construction work.

In contrast, the DBA does not cover mental and managerial jobs whose duties are primarily administrative, executive, or clerical. It expressly excludes architects, engineers, timekeepers, and inspectors. Also excluded are owners who own at least 20% of the business and are actively engaged in its management.

But wait, what about workers who perform physical and mental work, like forepersons? If they spend more than 20% of their time performing manual or physical labor, the DBA covers them for that time. For this reason, they must record their physical labor and supervisory work separately, or they will be considered covered employees for the entire workweek.

What Work is Covered?

The DBA covers all construction work at the site of the work, which includes primary and secondary construction sites and adjacent or virtually adjacent dedicated support sites. The primary construction site is where the work takes place. Secondary construction sites are locations where a significant portion of the work (entire portions or modules of the building or work, excluding commercial products made available to the public) is constructed, and the location is established for the contract or is dedicated almost exclusively to the job for a specific period (weeks, months, etc.). Adjacent or virtually adjacent dedicated support sites include batch plants, borrow pits, job headquarters, tool yards, and similar facilities set up and mainly dedicated to a single project and located adjacent or virtually adjacent to the project. This includes workers directing traffic around or away from the primary construction site.

The contractor’s permanent home offices, branch plant establishments, fabrication plants, and tool yards that were established without regard to the project are not considered part of the site of the work. Established suppliers’ fabrication plants, batch plants, borrow pits, job headquarters, and tool yards are also excluded, even if they are dedicated to a project for a period of time.

Are Truck Drivers Covered Under the DBA?

In 2024, a federal court injunction addressed the role of truck drivers and their assistants. As a result, when drivers are engaged in “offsite delivery work,” the duties typically performed by delivery drivers (such as waiting, loading, or unloading) are exempt from the DBA requirements, regardless of the duration of the work. 

Drivers who perform “non-delivery construction work” (such as installing materials and doing repairs) are covered by the DBA during the time they are engaged in this work. Additionally, drivers who transport materials at the “site of the work” (which includes the primary construction site, secondary sites, and adjacent or virtually adjacent dedicated support sites) are also covered by the DBA, including the time spent driving, waiting, loading, and unloading. For example, the time spent by drivers moving materials from a secondary construction site to the primary construction site (including loading, unloading, and delivering the materials) is covered by the DBA.

IThe DBA exempts bona fide "Owner-Operators" of trucks from prevailing wage rates (they are reported on payroll with no hours/rates listed). However, this exemption is strict: it applies only to drivers who actually own their truck. Drivers who rent their trucks are considered employees and are not exempt.

What are Prevailing Wages?

The DBA requires that covered workers on federal contracts be paid the prevailing wage set forth in the project's wage determination. The prevailing wage includes the basic hourly rate and fringe benefits.

GCs can meet the prevailing wage requirements by paying any combination of wages and bona fide fringe benefits, provided the total paid to the employee meets or exceeds the sum of the basic hourly rate and fringe benefits. For example, a GC doesn’t need to provide its employees with fringe benefits, as it may include the cost of the fringe benefits in the employees’ wages. Alternatively, if they provide more fringe benefits than are required, the excess funds spent on fringe benefits can be applied to the basic hourly rate.

Although basic hourly wages and fringe benefits can be used to meet each other's requirements, they are treated differently for overtime. GCs must pay one and a half times the basic hourly rate for hours worked in excess of 40 hours per workweek. The fringe benefits are the same for straight and overtime time.

Complying with the DBA on covered contracts does not relieve GCs from complying with executive orders and other federal regulations that provide worker protections, like the Fair Labor Standards Act (FLSA), which includes overtime and minimum wage requirements, and the Contract Hours and Safety Standards Act. At times, executive orders establish minimum wage rates for workers on jobs subject to the DBA, requiring that workers be paid the higher of the minimum wage in the executive order or the prevailing wage for their trade from the wage determination. These requirements may be included in the first part of the wage determination, so don’t just skip ahead to the prevailing wages for the trades you are looking for. GCs must also meet state and local minimum wage requirements.

🔎 Dive deeper into prevailing wage laws in construction.

What is a Bona Fide Fringe Benefit?

Bona fide fringe benefits include insurance (life, health, dental, and vision), pensions and retirement plans, and paid time off (vacation, holidays, and sick leave). The DBA expressly excludes Social Security, workers’ compensation insurance, unemployment compensation, use of a company vehicle, Thanksgiving turkeys, and Christmas bonuses.

The DBA also includes requirements for tracking and managing fringe benefits. Contributions to retirement and insurance plans must be made at least quarterly. These plans have additional requirements that are beyond the scope of this article. We recommend that GCs hire qualified advisors to ensure these benefits are correctly set up and managed.

Unfunded contributions (like funds set aside for vacation, holidays, and sick leave) are generally required to be accounted for separately. GCs should establish an accrued paid time off account in their accounting system and set aside funds in this account each pay period to cover future paid time off.

How Do GCs Show Conformance?

The DBA requires GCs and their subcontractors to submit a statement of compliance and certified payroll documenting each employee’s hours worked, wages, and fringe benefits. The certified payrolls are used to show that the contractor and their sub are in conformance with the project’s wage determination. Compliance must be shown for each employee and cannot be averaged across employees. For example, GCs cannot use the average fringe benefits provided to their employees but must determine the cost of the fringe benefit for each employee.

8 Traps to Avoid

Trap #1 - Using the Wrong Wage Determination

Using the wrong wage determination can leave your company responsible for back wages. GCs should always obtain the prevailing wage determination from the contract documents or the project’s contracting officer. If they have questions about prevailing wages or need wages for a trade not specified in the wage determination, they should submit a Request for Information/Clarification (RFI/RFC) to the project’s contracting officer and receive a written response. One should never make assumptions about prevailing wages. 

Trap #2 - Not Accounting for Suppliers

While commercial suppliers remain exempt, you must watch out for "Dedicated Facilities." If you establish a temporary facility (like a batch plant or fabrication yard) specifically for one federal project, and it is located at “site of the work” (which includes the primary construction site, secondary sites, and adjacent or virtually adjacent dedicated support sites) , it is likely covered. The "trap" is assuming that all off-site facilities are exempt; project-specific pop-up facilities are still a compliance minefield.

Trap #3 - Not Accounting for Off-Site Labor

Bona fide delivery drivers who merely drop off materials are not entitled to prevailing wages for their delivery time, regardless of how long they spend on site. The Trap: If your driver gets out of the truck to help install materials or perform labor at the site of the work, they cross the line into covered work. Keep drivers in the cab or strictly focused on loading or unloading to maintain the exemption.

Trap #4 - Exempting Owners Who Aren't Bona Fide

Ownership must be bona fide (genuine) for a business owner to be exempt from the DBA requirements. GCs can run into problems when they set their employees up as business owners and hire them as subcontractors. Suppose a GC owns several dump trucks that they rent to drivers to be used on the GC’s projects. The GC considers the drivers to be owner-operators who are exempt from the prevailing wage requirements. In this case, the drivers are still subject to the DBA requirements because they rent the trucks and are not bona fide business owners.

Trap #5 - Not Meeting the Minimum Wage

When dealing with employee wages, one must make sure they meet all wage requirements. Contractors must meet the minimum wages established by executive orders, the prevailing wages set in wage determinations, and state and local laws. Executive orders may change from time to time (as they did in March 2025, when the previous administration’s executive order was rescinded).  When new executive orders are issued, you shouldn’t just assume that the change applies to your project. You should submit a Request for Information/Clarification (RFI/RFC) to the contracting officer for the project you are working on or bidding on to get an official determination how they affect the project.

Trap #6 - Improperly Accounting for Optional Match

Retirement plans commonly include provisions that require the company to match an employee’s contribution, encouraging employees to save for retirement. If matching contributions are used to meet the DBA requirements, the GC must verify that the employees make their optional contributions. Should the employee choose not to contribute, which they have the right to do, the GC may be required to increase the employee’s wages by the cash equivalent of the GC’s retirement contribution to meet the DBA requirements.

Trap #7 - Not Calculating Insurance Credit for Each Employee

The 2023 Final Rule codified the principle of "Annualization," which has been the DOL’s position for several years. You cannot simply pay a monthly health premium and take 100% of the credit against your federal work hours. You must calculate the hourly equivalent by dividing the annual cost by all hours worked (both federal and private) by that employee during the year. The Trap: Failing to annualize is one of the most common reasons for back-wage assessments. If an employee works 1,000 hours on a Davis-Bacon job and 1,000 hours on a private job, you can only claim 50% of their annual health premium credit against the federal prevailing wage.

Trap #8 - Paying Less Than the Prevailing Wage When Adding Overtime

GCs may inadvertently pay less than the prevailing wage when adding overtime. Suppose a GC did not plan to use any overtime on a project when determining the employee’s wages, but later needed the employees to work overtime. In this case, the GC must revisit compliance with the prevailing wage. Some benefits adjust automatically (such as paying a percentage of the wages into a retirement account). Others (such as insurance) would decrease because their costs are spread over more hours (Keep in mind insurance costs must be annualized). If the employee’s wage rate exceeds the basic hourly rate, paying overtime on their wages would automatically pay overtime on the basic hourly rate. However, this would not be the case if fringe benefits were used to meet part of the basic hourly rate.

Where to Learn More About the Davis-Bacon Act

The U.S. Department of Labor has prepared the Prevailing Wage Resource Book to help GCs and federal agencies comply with the DBA. GCs working on federally funded projects should have their compliance and management personnel review this book.

Final Thoughts

Compliance with the DBA is a critical part of working on federally funded projects, and failure to do so can be expensive. This article briefly reviewed some of the compliance requirements and pitfalls. However, it is not all-inclusive. GCs working on these projects need to hire personnel experienced in working with the DBA, involve their accountant and legal team in reviewing compliance, and provide ongoing training in its requirements for all employees.