Prevailing Wage vs. Davis-Bacon: What’s the Difference?

If you bid public or government-funded construction, you will hear "prevailing wage" and "Davis-Bacon" constantly—often as if they mean the same thing. They are closely related but distinct, and understanding the difference keeps you compliant and paid.

What is the Davis-Bacon Act?

The Davis-Bacon Act is the federal law that requires contractors on federal and federally assisted construction projects over $2,000 to pay laborers and mechanics no less than the local prevailing wages and fringe benefits. It is the law that creates the requirement.

What is a prevailing wage?

A prevailing wage is the actual required hourly wage plus fringe benefits for a specific job classification in a specific geographic area, as determined by the Department of Labor. Davis-Bacon is the law; the prevailing wage is the rate the law requires you to pay.

Do states have their own prevailing wage laws?

Yes. Many states have their own prevailing wage laws (sometimes called "little Davis-Bacon" laws) that apply to state-funded projects, often with their own rates and reporting rules. Always check both federal and state requirements for your project.

Certified payroll and prevailing wage compliance is a core specialty of ours. See our payroll & certified payroll services, or read our full certified payroll guide.

FAQ

Common Questions

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Is Davis-Bacon the same as prevailing wage?
Not exactly. Davis-Bacon is the federal law requiring prevailing wages on federal construction; prevailing wage is the actual rate the law requires you to pay for each classification.
Who sets prevailing wage rates?
The U.S. Department of Labor sets federal prevailing wage rates through wage determinations; states set their own rates for state-funded projects.
Do I need certified payroll for prevailing wage jobs?
Yes—prevailing wage projects almost always require weekly certified payroll reports (form WH-347 for federal work) proving you paid the correct rates.
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