The Davis-Bacon Act of 1931 requires contractors and subcontractors working on federal construction projects to pay their workers prevailing wages and maintain certified payroll records. Compliance with Davis-Bacon requirements is crucial to avoid potential legal issues, penalties, and damaged business relationships. Unfortunately, many contractors and subcontractors make mistakes when preparing Davis-Bacon certified payroll, which can result in costly consequences. In this blog, we will discuss the five common mistakes to avoid with Davis-Bacon certified payroll and ensure compliance with the Davis-Bacon requirements.
Selecting the Right Construction Accounting Software
Failing to Understand the Prevailing Wage Rates
The first mistake that many contractors make is not fully understanding the prevailing wage rates for the area in which they are working. The Davis-Bacon Act requires that contractors pay workers the prevailing wage rate for their particular trade and geographic location. The prevailing wage rates are determined by the Department of Labor and can vary widely depending on the location and type of work being done.
To avoid this mistake, contractors should do their research before starting a project to determine the prevailing wage rates for their area. They can do this by contacting their local Department of Labor office or by using online resources like the Wage Determinations OnLine (WDOL) website. Contractors should also keep in mind that prevailing wage rates can change over time, so it’s important to stay up-to-date on any changes to the rates.
Another common mistake that contractors make is misclassifying workers. The Davis-Bacon Act requires that contractors pay workers the prevailing wage rate for their particular trade. However, if a worker is misclassified as a lower-paid trade, the contractor may be underpaying the worker and in violation of the law.
To avoid this mistake, contractors should ensure that they are accurately classifying workers based on their job duties and skill level. Contractors should also be aware of the “conformance process” outlined in the Davis-Bacon Act, which allows them to request that the Department of Labor approve a different classification for a particular job if they believe that the prevailing wage rate for that job is too high.
Failing to Keep Accurate Records
The Davis-Bacon Act requires that contractors keep accurate records of the hours worked and wages paid to each worker on a government-funded construction project. Failure to keep accurate records can result in fines and legal action.
To avoid this mistake, contractors should implement a system for tracking and recording employee hours and wages. This can be done manually or using a software system designed specifically for Davis-Bacon certified payroll. Contractors should also keep in mind that the records must be kept for a minimum of three years after the completion of the project.
Inadequate Record Keeping for Fringe Benefits
In addition to the basic hourly wage, the Davis-Bacon Act requires that contractors also pay certain “fringe benefits” to workers, such as health insurance, retirement benefits, and paid time off. Contractors must include the value of these fringe benefits in their certified payroll reports, and failure to do so can result in fines and legal action.
To avoid this mistake, contractors should ensure that they have a system for tracking and recording all fringe benefits paid to workers. This can be done manually or using a software system designed specifically for Davis-Bacon certified payroll. Contractors should also be aware that there are specific rules for how fringe benefits must be calculated and reported, so it’s important to consult with an expert if you’re unsure about how to handle fringe benefits.
Failing to Submit Certified Payroll Reports on Time
Finally, one of the most common mistakes that contractors make is failing to submit certified payroll reports on time. The Davis-Bacon Act requires that contractors submit certified payroll reports on a weekly basis, and failure to do so can result in fines and penalties.
To avoid this mistake, contractors should establish a system for submitting certified payroll reports on time. This can include setting reminders, using software systems that automate the submission process, and ensuring that all necessary information is included in the report before submitting. Contractors should also be aware that late submission of certified payroll reports can result in delays in receiving payment for work done on the project, which can have serious financial consequences.
Compliance with Davis-Bacon certified payroll requirements is crucial for contractors and subcontractors working on federal construction projects. Failing to comply with Davis-Bacon requirements can result in costly penalties, legal issues, and damaged business relationships. By avoiding the five common mistakes when preparing Davis-Bacon certified payroll, contractors and subcontractors can ensure compliance with Davis-Bacon requirements, reduce risks, and maintain a positive business reputation.
Foundation Software provides Davis-Bacon certified payroll solutions designed to help contractors and subcontractors maintain compliance with Davis-Bacon requirements. Our expert team can help you avoid common mistakes, ensure compliance, and maintain a positive business reputation. If you’re interested in learning more about how our Davis-Bacon certified payroll solutions can help your business, contact us today. We are committed to helping your business succeed and thrive in the construction industry.