Davis Bacon Act

Here is a Davis Bacon Act guide provided by HUD to it's contractors.  Although you may not be bidding a HUD project, this may serve as a helpful starting point in understanding what the Feds are looking for.

If you are looking for a guide as to what a fringe benefit is, we will post something soon.

If you have a question about a particular fringe benefit, contact Marq Heilig at Thompson Seizmore for an immediate answer.

The Davis-Bacon Act is a federal law enacted by the US government in 1931. In brief, the law forbids paying workers on public works projects less than the prevailing wage. Many of the public works construction projects are bid on by private companies who then perform the work, but underbidding by lowering employee wages can "allegedly" create an inequitable situation. Essentially, the Davis-Bacon Act attempted to correct this by demanding that all employees must be paid a prevailing wage, and this can be defined as a wage that would be average and expected in the same area for the same type of work.

Senator Jim Davis and Representative Robert L. Bacon sponsored the bill, and it may have been a partial response to anger created when workers from Alabama were hired to build a hospital in New York. Due to the fact that Alabama wages were generally lower than New York wages, the company with the successful bid was able to significantly lower its bid by paying the Alabamans, who were African Americans, much lower wages. Thus in part, the act sought to protect the rights for local workers to find jobs by demanding prevailing wages. This meant it wasn’t okay to pay an Alabaman salary for a New York job and little incentive existed to hire workers elsewhere for jobs that could be completed by local workers.

There is another concern and criticism of the Davis-Bacon Act that has persisted. It has been thought by some people to be a Jim Crow law. African American companies might have had an advantage of being able to underbid competitors for public works projects because their employees were generally paid less. Once the act passed, this advantage was removed because any companies bidding had to pay prevailing wage.

The most altruistic interpretation of the Davis-Bacon Act, and one taken by Judge William D. Bryant in 2002, is simply that the act aimed to employ local workers at fair wages in an era when unemployment was high. After the Great Depression, about 25% of working Americans were unemployed. Having a chance to make fair wages locally was a benefit to the worker. Nevertheless, criticism of the act continues, and there have been attempts to repeal the act and notable suspensions of the act during certain crises.

A few presidents have needed to suspend the act for short periods of time. President George H. W. Bush and President George W. Bush both suspended these regulations after massive hurricanes, as a means of more quickly rebuilding damaged areas at lower prices. President Nixon also suspended the Davis-Bacon Act to reduce inflation but this angered then Labor Secretary Peter J. Brennan, and Nixon reversed his decision in less than a month.

A few amendments to the Davis-Bacon Act have occurred over the years. Some of these allowed for fringe benefits to be counted as part of prevailing wage, and others expanded the terms under which the act could be applied. For example, in the 1990s, one addition was that construction work on Head Start buildings should fall under the act’s provisions.

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