Wages for Federal Construction Projects: New Requirements Under Davis-Bacon Act and Executive Order 14026

How much are you paying your employees? Wages for federally-funded construction projects have increased under the Davis-Bacon and Related Acts and Executive Order 14026.The Davis-Bacon and Related Acts (“DBRA”) applies to contractors and subcontractors performing work on federally-funded or assisting with contracts in excess of $2,000.00 for the construction, alteration, or repair of public buildings or public works. The DBRA requires federal contractors and their subcontractors to pay employees “no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area.” 40 U.S. Code § 3141 et. seq. the same prevailing wages and benefits as similar projects in the same geographical area.On August 28, 2023, the U.S. Department of Labor released a final rule entitled “Updating the Davis-Bacon and Related Acts Regulations.” The final rule seeks to redefine how prevailing wages and benefits are determined on federally-funded construction projects. Under the new rule, prevailing wages must be equivalent to:

1. the wage paid to the majority of laborers in the same classification on similar projects in the area during the period in question
2. if the same wage is not paid to the majority, then the wage will be paid to the greatest number if more than 30% of laborers in a given trade in a particular locality; or
3. if less than 30%, then the wage will be based on the weighted average.

These regulations apply to contracts entered into after October 23, 2023.The prevailing wage cannot be lower than the applicable minimum wage.  Notably, minimum wages were increased  under Executive Order 14026. This raises the minimum wage paid by federal contractors from $15.00/hour to $17.20/hour. For federal contracts signed, renewed or extended from January 1, 2015 through January 29, 2022, the rate for non-tipped employees is $12.90/hour and $9.09/hour for employees compensated with cash wages plus tips.If you have any questions regarding about Davis-Bacon wages and related regulations impact your federal or federally-funded contract, we recommend you contact an experienced construction attorney. By Callie A. Kanthack