When it comes to paying workers on a project that requires Davis Bacon Prevailing Wage Rates, you want to make sure you’re doing it right. You can bid correctly if you know how to calculate davis-bacon wages.
You must pay your employees a minimum rate set by your county because the project is receiving federal funds for the project. Every contractor working on the project must pay a wage and fringe benefit along with filing employee weekly wage an hour reporting.
Calculate your hourly man rate cost from the Department of Labor’s Wage Determination page for all Davis-Bacon required jobs. Choose your state, county of the project location, and select Building for Construction type. LABORER: Common or General is the cleaning company work type.
On the certified payroll sheet you will have to enter FICA and withholding tax for each employee, then you must add these 2 deductions up to equal total deductions. To calculate FICA withholdings, multiply 7. 65% x gross amount earned. Example. week earned for employee 1 = $400., the FICA deductions are $30.60 and the withholding tax depends on each employee dependent selection in which the employee should fill in using a W-4 form. The most common withholding percentage is 4.5%, so in our example of $400 gross income for the week, the withholdings will be $18. Total deductions for this employee is $48.60.
If you need help calculating what rate you’re required to pay workers, check out our formula sheet.
Paperwork is important. Here are some helpful documents you might need:
Here are some frequently asked questions regarding the Davis-Bacon Act:
Q: Who is required to sign payroll?
A: Payroll submissions must be signed by a manager, accounting employee, or owner and operator of your company. Neither project managers, general contractors, nor superintendents may sign payroll.
Q: Why do workers earn a higher rate with Davis-Bacon?
A: Simply put, jobs requiring Davis-Bacon wages are funded by the state. Cleaning contractors who work on-site must pay state mandated wages and benefits directly to employees and submit weekly payroll reports.
The United States Department of Labor states, “Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for construction, alteration, or repair (including painting and decorating) of public buildings or public works. Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. Davis-Bacon Act directs the Department of Labor to determine such locally prevailing wage rates.” Visit the Department of Labor for more information.
Keep in mind that the state may audit a company within three months of invoicing.
Q: What do subcontractors need to provide for payroll?
A: Workers who act as subcontractors must submit a SF 1413 listing your company as the direct contractor and listing themselves as subcontractors. These employees do not have deductions and will receive a Form 1099 at year end.
Q: What do payroll submissions need to include?
A: Every payroll submission contains two pages. Page one includes employee information, classification, and hours worked. The second page includes the original statement of compliance. Each submission must include an original and copy.
Make sure your payroll includes the following information:
– Worker’s name and identification number (e.g. last four digits of Social Security number.) Worker’s full address is required only on the first week of payroll.
– Correct classification on wage decision for each worker.
– Hourly rate of pay must be in accordance with the wage decision. Rate may be higher but not less than decision.
– Total daily and weekly number of hours worked.
– All deductions, net, and gross pay.
– If a laborer works on other projects during the week, payrolls must show amount earned on ARRA project, total gross pay, and total deduction.
Each payroll submission is to be numbered for each week of work on a project, even if no work is performed. The last week of payroll should be marked, “Final.”