Construction Wage Rate (Davis-Bacon) Threshold
over $2,000
Also known as: Davis-Bacon Act threshold, prevailing wage construction threshold
At a Glance
- Current amount
- Over $2,000
- Where it is set
- 40 U.S.C. § 3142 (Davis-Bacon Act), implemented by FAR Subpart 22.4
- What it requires
- Payment of locally prevailing wages and fringe benefits to laborers and mechanics
- Applies to
- Contracts for construction, alteration, or repair of public buildings or public works in the U.S.
- Below the line
- Construction contracts of $2,000 or less are exempt
What It Is
The Construction Wage Rate Requirements threshold is the dollar line above which a federal construction contract must pay its laborers and mechanics no less than the locally prevailing wages and fringe benefits determined by the Department of Labor. Set by the Davis-Bacon Act (40 U.S.C. § 3142) and implemented in FAR Subpart 22.4, the requirement attaches to contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works within the United States. Covered contracts incorporate a Davis-Bacon wage determination listing minimum hourly wages and fringe benefits by construction trade classification for the locality, and the contractor — and its subcontractors at every tier — must pay at least those rates and submit weekly certified payrolls. The $2,000 trigger is deliberately low, so essentially every federal construction contract is covered. Like the Service Contract Labor Standards, the requirement floors labor cost by determination rather than market, shifting construction competition away from wages.
What Changes at This Dollar Level
- Above $2,000, a federal construction contract must pay laborers and mechanics locally prevailing wages and fringe benefits set by a Davis-Bacon wage determination.
- The wage determination sets minimum rates by construction trade classification for the place of performance.
- The prime and all subcontractors must submit weekly certified payrolls demonstrating compliance.
- Construction contracts of $2,000 or less are exempt.
Key Features
| Feature | What It Means |
|---|---|
| Near-universal for construction | At a $2,000 trigger, essentially every federal construction contract is covered by the prevailing-wage requirement. |
| By trade classification | The Davis-Bacon wage determination lists minimum wages and fringes by construction trade for the locality, so estimating must follow the determination. |
| Flows down to every subcontractor | The prevailing-wage obligation applies to the prime and to subcontractors at every tier, not just the top-level contractor. |
| Weekly certified payrolls | Covered contractors must submit weekly certified payrolls, making compliance a documented, auditable obligation throughout performance. |
What It Means for an SDVOSB
A service-disabled veteran-owned small business bidding federal construction is essentially always over the $2,000 Davis-Bacon line, so the wage determination is a fixed input to every estimate — and, as with service work, it levels the field because every competitor on the same set-aside must pay the same prevailing wages. The compliance load falls on your paperwork discipline: you and every subcontractor must submit weekly certified payrolls, and a Davis-Bacon violation can mean withheld payments, back-wage liability, and damaged past performance. There is also a limitations-on-subcontracting interaction worth planning around — on a construction set-aside, the self-performance limits are measured on labor, and Davis-Bacon-covered labor is central to that math, so structure your crews and similarly situated subcontractors with both the wage determination and the subcontracting limits in view.
Watch Out For
- Estimating with market wages instead of the Davis-Bacon determination — the determined rates are a floor you cannot bid under.
- Forgetting subcontractor flow-down — every tier of subcontractor must pay prevailing wages and submit certified payrolls.
- Neglecting weekly certified payrolls — missing or false payrolls can lead to withheld payments and liability.
- Assuming a small repair job is exempt — the threshold is only $2,000, so nearly all federal construction is covered.
Run the Numbers
Frequently Asked
What is the Davis-Bacon threshold?
The Davis-Bacon threshold is the dollar line — over $2,000 — above which a federal construction contract must pay its laborers and mechanics at least the locally prevailing wages and fringe benefits set by a Department of Labor wage determination. It comes from the Davis-Bacon Act (40 U.S.C. § 3142), implemented in FAR Subpart 22.4, and applies to contracts for the construction, alteration, or repair of public buildings or public works in the United States. Contracts of $2,000 or less are exempt.
Do Davis-Bacon requirements flow down to subcontractors?
Yes. The prevailing-wage obligation applies to the prime contractor and to subcontractors at every tier on a covered construction contract. Each must pay laborers and mechanics at least the wages and fringe benefits in the applicable Davis-Bacon wage determination and submit weekly certified payrolls. An SDVOSB prime is responsible for ensuring its subcontractors comply, so the requirement has to be built into subcontract terms and monitored during performance.
How is Davis-Bacon different from the Service Contract Labor Standards?
Both require paying locally prevailing wages set by Department of Labor determinations, but they cover different work and have different triggers. Davis-Bacon (over $2,000) applies to construction, alteration, and repair of public buildings and works, using wage determinations by construction trade. The Service Contract Labor Standards (over $2,500) apply to service contracts, using wage determinations by service-employee labor category.
Primary Sources
- 40 U.S.C. § 3142 — Rate of wages for laborers and mechanics
- FAR 22.403-1 — Davis-Bacon Act
- FAR Subpart 22.4 — Labor Standards for Construction Contracts
Plain-English reference, not legal advice. Acquisition-related dollar thresholds are periodically re-indexed for inflation and the underlying FAR sections and statutes are amended from time to time — always confirm the current figure and its exceptions against the FAR and the actual solicitation before relying on it, and consult qualified counsel for your specific situation.
Change log (1)
- LaunchedPublished the federal procurement dollar thresholds reference covering the dollar lines that shape an SDVOSB set-aside — the micro-purchase threshold (FAR 2.101), the simplified acquisition threshold and the automatic small-business reserve (FAR 2.101 / 19.203), the commercial simplified-procedures ceiling (FAR 13.500), the SDVOSB sole-source ceiling (FAR 19.1406), the subcontracting-plan threshold (FAR 52.219-9), the certified cost or pricing data / TINA threshold (FAR 15.403-4), the Cost Accounting Standards threshold (48 CFR 9903.201-1), the Service Contract Labor Standards (41 U.S.C. § 6702) and Davis-Bacon (40 U.S.C. § 3142) labor thresholds, and the FFATA subaward reporting threshold (FAR 52.204-10) — each with an at-a-glance quick-facts card showing the current dollar amount, a what-changes-at-the-line list, a key-features table, an SDVOSB-specific angle, watch-outs, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source citations, and cross-links into the glossary, regulation explainers, clauses, how-to guides, FAQ, and the size-standard, set-aside eligibility, subcontracting, and price-to-win calculators.