Federally Funded Construction and the Payment of Locally Prevailing Wages

Updated November 13, 2023

Federally Funded Construction and the Payment of

Locally Prevailing Wages

Introduction

Since the 1930s, numerous statutes have been enacted that

establish minimum labor standards for various classes of

workers. Some of these standards apply broadly to most

employers (e.g., the Fair Labor Standards Act and the

National Labor Relations Act), while others apply more

narrowly to private employers that enter into contracts with

the federal government for construction work or for the

purchase of goods or other types of services. This In Focus

examines the federal law that prescribes labor standards for

federal construction contracts—the Davis-Bacon Act—and

a series of related statutes that incorporate the Davis-Bacon

Act standards into their provisions.

The Davis-Bacon Act

The Davis-Bacon Act (DBA), 40 U.S.C. §§3141-3148,

requires government contractors to pay locally prevailing

wages to laborers and/or mechanics employed on certain

federally funded construction projects. Enacted in 1931, the

DBA reflects Congress’s interest in giving the government

“the power to require its contractors to pay their employees

the prevailing wage scales in the vicinity of the building

projects.” S. Rept. 71-1445, at 1-2 (1931). Pursuant to the

DBA, the Secretary of Labor calculates prevailing wages by

reviewing wages paid to laborers and mechanics employed

on projects of a similar character to the contract work in the

area in which the work is performed. The DBA defines

wages to include not only a basic hourly rate of pay, but

also health, retirement, and other fringe benefits.

The DBA requires government contractors to pay locally

prevailing wages when (1) there is a contract in excess of

$2,000; (2) the United States or the District of Columbia is

a party to the contract; and (3) the contract is for

construction, alteration, and/or repair of public buildings or

public works of the United States or the District of

Columbia within the geographical limits of the United

States or District of Columbia. Contractors are generally

required to pay locally prevailing wages to laborers and

mechanics when a construction project satisfies these three

conditions.

The contracting agency may terminate a contract if it

discovers that a contractor has not paid the required

prevailing wages. Following termination, it may contract to

complete the work and hold the original contractor liable

for any excess costs incurred. The Comptroller General of

the United States is required to distribute to all federal

agencies a list of individuals or firms that have failed to pay

laborers and mechanics a prevailing wage under the DBA.

Federal agencies may not award a contract to persons or

firms appearing on the list or to any firm, corporation,

partnership, or association in which such persons or firms

have an interest until three years after the date of

publication of the list.

Davis-Bacon Related Acts

CRS has identified 49 statutes that authorize financial

assistance for construction projects through grants, loans,

and other funding mechanisms to which Congress has

added prevailing wage provisions. These laws, described as

Davis-Bacon related acts because of their prevailing wage

requirements, involve construction in areas such as

transportation, housing, pollution reduction, and health. The

related acts’ prevailing wage requirements apply when

federal financial assistance is provided for construction,

even if the federal government is not a contracting party or

no public building or public work is involved.

In general, the prevailing wage provisions of the various

related acts are phrased similarly and refer to the wages

prescribed by the Secretary of Labor under the DBA. For

example, Section 1702(k) of the Energy Policy Act of 2005,

42 U.S.C. §16512(k), states, in relevant part: “All laborers

and mechanics employed by contractors and subcontractors

in the performance of construction work financed in whole

or in part by a loan guaranteed under this subchapter shall

be paid wages at rates not less than those prevailing on

projects of a character similar in the locality as determined

by the Secretary of Labor in accordance with subchapter IV

of chapter 31 of Title 40.” The following lists Davis-Bacon

related acts, at present (ordered by U.S. Code citations):

1. Farm Security and Rural Investment Act, §9003(f); 7

U.S.C. §8103(f)

2. Housing Act of 1959, §401(f); 12 U.S.C. §1701q(c)(3)

3. National Housing Act, §212; 12 U.S.C. §1715c

4. Tennessee Valley Authority Act, §3(b); 16 U.S.C.

§831b(b)

5. National Foundation on the Arts and the Humanities Act,

§§5(k), 7(j); 20 U.S.C. §§954(n), 956(j)

6. General Education Provisions Act, §439; 20 U.S.C.

§1232b

7. Education of the Deaf Act, §§105(b)(4), 202(b)(5); 20

U.S.C. §§4305(b)(4), 4332(b)(5)

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Federally Funded Construction and the Payment of Locally Prevailing Wages

8. Federal-Aid Highway Act, §12(a); 23 U.S.C. §113(a)

9. Indian Health Care Improvement Act, §303(b); 25 U.S.C.

§1633(b)

10. Native American Housing Assistance and SelfDetermination Act, §104(b); 25 U.S.C. §4114

11. Hawaiian Homelands Homeownership Act, §203; 25

U.S.C. §4225(b)

12. Indian Self-Determination and Education Assistance

Act, §§7, 509(g); 25 U.S.C. §§5307, 5389(g)

13. P.L. 117-169, commonly known as the Inflation

Reduction Act, §§13101(f), 13102(k), 13104(d), 13105(a),

13204(a), 13303(a)(1), 13304(d), 13404(d), 13501(a),

13702(a), 13704(a); 26 U.S.C. §§30C(g)(2), 45(b)(7),

45L(g)(2), 45Q(h)(3), 45U(d)(2), 45V(e)(3), 45Z(f)(6)(A),

48(a)(10), 48C(e)(5), 48E(d)(3), 179D(b)(4)

14. Federal Water Pollution Control Act, §513; 33 U.S.C.

§1372

15. Save Our Seas 2.0 Act, §302(e), 33 U.S.C. §4282(e)

16. Veterans Nursing Home Care Act, §4(a); 38 U.S.C.

§8135(a)(8)

17. Postal Reorganization Act, §410(b)(4)(C); 39 U.S.C.

§410(b)(4)(C)

18. Appalachian Regional Development Act of 1965, §402;

40 U.S.C. §14701

19. Hospital Survey and Construction Act, §605(a)(5); 42

U.S.C. §291e(a)(5)

20. Safe Drinking Water Act, §2(a); 42 U.S.C. §300j-9(e)

21. Public Health Service Act, §§1621(b)(1)(I),

1642(b)(1)(D); 42 U.S.C. §§300s-1(b)(1)(I), 300t12(b)(1)(D)

22. U.S. Housing Act of 1937, §12; 42 U.S.C. §1437j

23. Housing and Community Development Act of 1974,

§§110, 802(g); 42 U.S.C. §§1440(g), 5310

24. Housing Act of 1964 (farm housing), §516(f); 42 U.S.C.

§1486(f)

25. Defense Housing and Community Facilities and

Services Act of 1951, §310; 42 U.S.C. §1592i

26. Headstart, Economic Opportunity, and Community

Partnership Act of 1974, §11; 42 U.S.C. §2992a

27. Atomic Energy Act, §1804; 42 U.S.C. §2297g-3

28. Housing and Urban Development Act of 1965, §707; 42

U.S.C. §3107

30. Domestic Volunteer Service Act of 1973, §406; 42

U.S.C. §5046

31. Robert T. Stafford Disaster Relief and Emergency

Assistance Act, §611(j)(9); 42 U.S.C. §5196(j)(9)

32. Energy Policy and Conservation Act, §399A(g)(4); 42

U.S.C. 6371h-1(g)(4)

33. National Energy Conservation Policy Act, §312; 42

U.S.C. §6371j

34. Public Works Employment Act of 1976, §§109, 208; 42

U.S.C. §§6708, 6728

35. Energy Conservation and Production Act, §45(h); 42

U.S.C. §6881(h)

36. Solid Waste Disposal Act, §2; 42 U.S.C. §6979

37. Clean Air Act, §314; 42 U.S.C. §7614

38. Cranston-Gonzalez National Affordable Housing Act,

§811(j)(5); 42 U.S.C. §8013(j)(5)

39. Comprehensive Environmental Response,

Compensation, and Liability Act, §104(g); 42 U.S.C.

§9604(g)

40. Head Start Act, §644(g)(3); 42 U.S.C. §9839(g)(3)

41. HOME Investment Partnerships Act, §286(a); 42 U.S.C.

§12836(a)

42. Energy Policy Act, §§963(c)(4)(B), 1702(k); 42 U.S.C.

§§16293(c)(4)(B), 16512(k)

43. Energy Independence and Security Act,

§§136(d)(2)(A), 491(d), 545(a)(1), 803(b)(3), 1112(a); 42

U.S.C. §§17013(d)(2)(A), 17121(d), 17155(a)(1),

17282(b)(3); 49 U.S.C. §22301(e)

44. Infrastructure Investment and Jobs Act, §41101, 42

U.S.C. §18851

45. Boulder Canyon Project Adjustment Act, §15; 43

U.S.C. §618n

46. Urban Mass Transportation Act, §10(a); 49 U.S.C.

§5333(a)

47. Rail Passenger Service Act, §405; 49 U.S.C. §24312

48. Airport and Airway Improvement Act, §515(b); 49

U.S.C. §47112(b)

49. Delaware River Basin Compact, P.L. 87-328, §15.1

Elizabeth Weber Handwerker, Analyst in Labor Policy

Jon O. Shimabukuro, Legislative Attorney

29. Public Works and Economic Development Act, §602;

42 U.S.C. §3212

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IF11927

Federally Funded Construction and the Payment of Locally Prevailing Wages

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