Davis-Bacon Compliance in 2025: What Every Contractor Needs to Know
In 2025, Davis-Bacon compliance is more important than ever. As federal infrastructure spending increases and oversight tightens, contractors working on government-funded construction projects need to be proactive, informed, and diligent.
This guide walks you through everything contractors need to know about Davis-Bacon compliance in 2025—whether you're a prime, subcontractor, or compliance consultant.
What Is the Davis-Bacon Act?
The Davis-Bacon Act (DBA), passed in 1931, mandates that workers on federally funded or assisted construction projects valued over $2,000 receive no less than the prevailing local wage rates (including fringe benefits) as determined by the U.S. Department of Labor.
It applies to:
Federal construction contracts
State/local projects receiving federal assistance (HUD, DOT, etc.)
Contractors and subcontractors at all tiers
2025 Updates to Davis-Bacon Enforcement
With the 2023 “Final Rule” now fully in effect, 2025 brings several notable changes and stricter compliance expectations:
1. Reinstated “Three-Step” Wage Determination Process
The DOL reinstated the original method for determining prevailing wages:
Majority rule first
If no majority, then the weighted average
If still unclear, use the modal rate
This results in higher wages in many areas, making proper classification even more critical.
2. More Frequent Wage Determination Updates
Wage rates are now updated more frequently, thanks to the digitization of systems. Contractors must check for modifications at the contract award and throughout the project's life.
3. Enhanced Recordkeeping Requirements
Contractors must retain:
Certified payroll records (WH-347)
Proof of fringe benefit payments
Employee classifications and timecards
Subcontractor documentation
All records must be retained for a minimum of 3 years and made available for inspection.
4. Prime Contractor Accountability for Subcontractors
Primes are fully responsible for their subcontractors’ compliance. This includes:
Verifying wage classifications
Ensuring timely payroll submissions
Addressing violations immediately
Understanding Certified Payroll: The WH-347 Form
The WH-347 is the cornerstone of Davis-Bacon compliance. This weekly form must be submitted for all laborers and mechanics and should include:
Names and job classifications
Hours worked
Gross and net wages
Deductions
Fringe benefits paid
Statement of compliance (signed)
Tip: Errors on this form are the #1 cause of audit failures. Use a digital system or labor compliance service to avoid costly mistakes.
Fringe Benefits: Pay Now or Plan Smart
Under the Davis-Bacon Act, contractors must meet both base rate and fringe benefit obligations. These can be paid:
Directly on the paycheck ("cash in lieu")
Into a bona fide benefit plan (health, retirement, apprenticeship training, etc.)
In 2025, the Department of Labor will conduct more thorough audits of fringe benefits tracking. Make sure:
All benefits are documented
The math adds up across pay periods
There is no duplication of fringe categories
Worker Classifications & Job Duties
Another hot-button compliance issue in 2025 is misclassification. Workers must be assigned the correct prevailing wage classification based on their actual job duties, not just their title.
Examples:
An “Electrician” doing general labor may need to be classified as a “Laborer” during those hours.
“Apprentices” must be registered with an approved program and supervised accordingly.
Best Practice: Utilize jobsite logs and task descriptions to support classifications in the event of a DOL audit.
Transitional Worker & Local Hire Compliance
If you’re working on City of Los Angeles projects, Measure JJJ and the Local Hire Ordinance require specific percentages of work hours to go to Transitional Workers and Local Residents.
Transitional Workers may include:
Veterans
Formerly incarcerated individuals
Single parents on public assistance
People with chronic unemployment or without a GED
Contractors must document all eligibility and sign off on Transitional Worker Certification Forms.
Learn more on our Local Hire Compliance Support page
Penalties for Non-Compliance
Failing to follow Davis-Bacon regulations can result in:
Payment withholding
Restitution orders
Debarment from future government contracts
Civil and criminal penalties
In 2025, with increased federal enforcement funding, non-compliance is riskier than ever.
How Davis Bacon Solutions Can Help
At DavisBaconSolutions.com, we offer:
Certified payroll prep & audits
Fringe benefit guidance
Subcontractor compliance oversight
Local Hire and Measure JJJ assistance
Complete labor compliance packages for contractors of all sizes
Don’t wait for an audit to find out something went wrong. Let us help you establish a proactive and protective compliance process that keeps your project—and your reputation—on track.
Davis-Bacon compliance in 2025 isn’t just about avoiding penalties—it’s about building trust, creating equitable job opportunities, and running projects smoothly. By understanding the rules, preparing your records, and partnering with the right compliance experts, you can confidently navigate federal projects.
Have questions? Contact us or request a free compliance consultation.