Fact Sheet #66C: The Davis-Bacon and Related Acts: Labor Standards Clauses and Subcontract Agreements

This fact sheet provides general information regarding the basic requirement of contractors to include certain labor standards clauses and applicable wage determinations in subcontract agreements subject to the Davis-Bacon and Related Acts.

The Davis-Bacon and Related Acts (DBRA) – Labor Standards Clauses

Basic Requirements – Contracting Agency

Agency contracting officers have the primary responsibility of ensuring that the required labor standards contract clauses and applicable wage determination(s) are incorporated into covered contracts between the federal, state, or local governmental agency and the contractor (often referred to as the prime contract). Where a contract is for construction, the required clauses include those that implement the Davis-Bacon Act (DBA), the overtime provisions of the Contract Work Hours and Safety Standards Act (CWHSSA), the Copeland Act, and the prevailing wage provisions of the other statutes referenced by 29 CFR § 5.1 that apply to projects that receive federal assistance (the Davis-Bacon Related Acts).

In any contract subject to the labor standards provisions of DBRA, the contracting agency is required to include in the prime contract the clauses set forth in 29 CFR § 5.5 relating to minimum wages, overtime, apprentices, withholding, payrolls and basic records, subcontracts, liabilities and penalties for violations, and anti-retaliation. See 29 CFR § 5.5 and FOH 15f. For direct federal procurement contracts governed by the Federal Acquisition Regulation (FAR), these clauses are located at 48 CFR § 52.222-4 and 48 CFR §§ 52.222-6 to -15. See 48 CFR § 22.407.

Normally, these requirements are found in the prime contract under headings such as “Davis-Bacon Act” or “labor standards” or “prevailing wage requirements” or “federal requirements.”

Where the contracting agency has not incorporated the applicable labor standards clauses and correct wage determination into the prime contract, the contract clauses, along with the applicable wage determinations, will be considered to be a part of every prime contract subject to the DBRA labor standards provisions, and will be effective by operation of law, unless the WHD Administrator grants a variance, tolerance, or exemption from the application of 29 CFR § 5.5(e). Absent such a variance, tolerance, or exemption,, the Wage and Hour Division will be able to enforce the provisions of the labor standards clauses, including the payment of prevailing wage rates, even if the clauses and applicable wage determination(s) were not incorporated into the prime contract. Where the clauses and applicable wage determination(s) are effective by operation of law, the contracting agency must compensate the prime contractor for any resulting increase in wages in accordance with applicable law.

Basic Requirements – Prime Contractors and Subcontractors

When a prime contract is covered by the DBRA, every subcontract of any tier under that prime contract is also covered, regardless of the dollar value of the subcontract. Prime contractors are ultimately responsible for compliance by any upper-tier or lower-tier subcontractor with all the contract clauses in 29 CFR § 5.5, and must ensure that the labor standards set forth in 29 CFR § 5.5(a)(1) through (11) and 29 CFR § 5.5(b)(1) through (5) are incorporated, either in full text or by reference, in their subcontract agreements. Prime contractors must also ensure that their subcontract agreements include a clause requiring their subcontractors to include these labor standards clauses in any lower-tier subcontracts. 29 CFR § 5.5(a)(6) and 29 CFR § 5.5(b)(4). Contractors who subcontract by means of purchase orders or other informal-type contract forms will be considered in compliance with 29 CFR § 5.5 provided they attach copies of the applicable wage determination and labor standards clauses to the subcontract form. See FOH 15f00(b).

It is best practice to insert the full text of the DBRA contract clauses from the prime contract into the subcontract, as well as a copy of the applicable wage determination(s). Such inclusion in full reduces the risk of confusion or disputes over whether particular subcontractors received adequate notice. While the Department prefers incorporation in full, particularly of the applicable wage determination(s), incorporation by reference will be deemed sufficient to comply with the flow-down responsibilities in 29 CFR § 5.5(a)(6) where it provides a citation to the full text of the contract clauses and sufficiently identifies the applicable wage determination(s) by general wage determination number, modification number, and publication date, for example providing that: “The Davis Bacon and Related Acts, and their implementing regulations, including the applicable contract clauses, identified at 29 CFR § 5.5 [or the equivalent FAR contract clauses], and Davis-Bacon Act Wage Determination No. AL20220091, modification No. 3, published March 17, 2022, are incorporated by reference into this contract as if fully set forth in this contract.”

For direct federal procurement contracts governed by the FAR, the prime contractors are required to submit to the contracting officer a fully executed SF 1413, Statement and Acknowledgment, form upon award of each subcontract of any tier, with the subcontractor’s signed and dated acknowledgment that the labor standards clauses have been included in the subcontract. See 48 CFR § 52.222–11(d)(1).

Typical Problems

Failure to flow-down the labor standards to subcontractors. When a prime contractor fails to include the labor standards clauses in subcontracts in which they should have been included, and does not incorporate them by reference in the subcontracts, the subcontractor’s workers are still entitled to receive compensation in accordance with the wage determination in the prime contact. See 29 CFR § 5.5(a)(1)(i). In such circumstances, since the subcontractor may not have contracted to pay the DBRA rates, the subcontractor generally will not be held responsible. However, the prime contractor would be obligated to pay the subcontractor’s laborers and mechanics as required by the labor standards provisions of the prime contract. See 29 CFR §§ 5.5(a)(6) and 5.5(b)(4), see also FOH 15f00(c). Similarly, if an upper-tier subcontractor fails to flow-down the labor standards provisions to a lower-tier subcontractor, the upper-tier subcontractor will also be obligated to pay the subcontractor’s employees any unpaid prevailing wages.

Improper flow-down. Vague or cursory efforts by a prime contractor or upper-tier subcontractor to incorporate DBRA requirements by reference do not satisfy the contractor’s contractual flow-down obligations. For example, it is improper to include only a simple statement such as “the Davis-Bacon Act applies” or a simple reference that “all documents and provisions of the prime contract are hereby incorporated into the subcontract.” While these examples do not satisfy the prime contractor’s or upper-tier subcontractor’s contractual flow-down obligations, lower-tier subcontractors should be aware that, as a legal matter, such flow-down language may still obligate a lower-tier subcontractor to pay prevailing wages to their workers, depending on the facts and circumstances.

Where a prime contractor or upper-tier contractor fails to adequately flow-down the labor standards clauses, this may, in appropriate circumstances, support debarment of the prime contractor or upper-tier contractor from federal or federally-assisted contracts. See 29 CFR § 5.12. In addition, as a general rule, a prime contractor is ultimately liable for violations committed by subcontractors of any tier. Thus, in addition to adequate flow-down of the labor standards clauses, prime contractors should ensure they appropriately monitor subcontractors for compliance with the requirements of the DBRA, including monitoring the certified payroll reports and payment of prevailing wage rates applicable to the type of work performed. Failure to do so could ultimately result in back wage liability for the prime contractor.

Additional Resources

• Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction – 29 CFR part 5
• Government Contracts Compliance Assistance
• Fact Sheet #66: The Davis-Bacon and Related Acts (DBRA)
• Standard Form 1413 – Statement and Acknowledgement SF1413