January 2012

Previous versions obsolete

U.S. Department of Housing 

and Urban Development

Labor Relations Desk Guide

LR01.DG

DAVIS-BACON

LABOR STANDARDS

A Contractor’s Guide 

to Prevailing Wage Requirements 

for Federally-Assisted Construction Projects

i

INTRODUCTION

This Guide has been prepared for you as a contractor performing work on construction projects 

that are assisted by the Department of Housing and Urban Development and subject to DavisBacon prevailing wage requirements. This Guide does not address contractor requirements 

involved in direct Federal contracting where HUD or another Federal agency enters into a 

procurement contract. In this latter case, the Federal Acquisition Regulations (FAR) are applicable. While the guidance contained in this Guide is generally applicable to any Davis-Bacon 

covered project, specific questions pertaining to direct Federal contracts should be addressed 

to the Contracting Officer who signed the contract for the Federal agency.

Our objective here is to provide you with a guide which is simple and non-bureaucratic yet 

comprehensive and which will help you better understand and comply with Davis-Bacon labor 

standards. HUD’s Office of Labor Relations worked closely with the Department of Labor’s 

Wage and Hour Division to make sure that the labor standards provisions in your contract and 

the specifics of complying with them represent the latest information. It is the Department of 

Labor which has general administrative oversight of all Federal contracting agencies, such as 

HUD, which administer the day-to-day responsibilities of enforcing Davis-Bacon provisions in 

construction contracts they either fund or assist in funding.

There are three chapters in this Guide. The first chapter offers a brief description of the laws 

and regulations associated with Federal labor standards administration and enforcement and 

discusses both what’s in your contract that requires Davis-Bacon compliance and your responsibilities. The second chapter deals with labor standards and payroll reporting requirements. 

The third chapter discusses what can happen in the event there is a dispute about the wage 

rates that should be (or have been) paid and any back wages that may be due. 

Finally, not all HUD construction projects are covered by Davis-Bacon wage rates. For the purpose of this Guide, we are assuming that a determination has already been made that DavisBacon wage rates are applicable. Should you wish assistance in determining whether DavisBacon wage rates apply to a particular project or if you need other related technical assistance, 

please consult with the HUD Labor Relations Field staff for your area. If you don’t know which 

staff to contact, a list of Labor Relations field offices and their geographic areas and telephone 

numbers can be found on HUD’s Home Page at the address below.

Visit the Office of Labor Relations on-line:

http://www.hud.gov/offices/olr

Obtain additional copies of this Guide and other publications at our website or by telephone 

from HUD’s Customer Service Center at (800)767-7468.

iii

TABLE OF CONTENTS

INTRODUCTION................................................................................................................i

CHAPTER 1 LAWS, REGULATIONS, CONTRACTS

AND RESPONSIBILITIES.................................................................1-1

1-1 DAVIS-BACON AND OTHER LABOR LAWS. .......................................................1-1

a. The Davis-Bacon Act (DBA)...............................................................................1-1

b. The Contract Work Hours and Safety Standards Act (CWHSSA)......................1-1

c. The Copeland Act (Anti-Kickback Act)................................................................1-2

d. The Fair Labor Standards Act (FLSA)................................................................1-2

1-2 DAVIS-BACON REGULATIONS.............................................................................1-2

1-3 CONSTRUCTION CONTRACT PROVISIONS .......................................................1-2

1-4 RESPONSIBILITY OF THE PRINCIPAL CONTRACTOR......................................1-3

1-5 RESPONSIBILITY OF THE CONTRACT ADMINISTRATOR.................................1-4

CHAPTER 2 HOW TO COMPLY WITH LABOR STANDARDS

AND PAYROLL REPORTING REQUIREMENTS .............................2-1

SECTION - I THE BASICS

2-1 THE WAGE DECISION ...........................................................................................2-1

a. The work classifications and wage rates............................................................2-1

b. Posting the wage decision..................................................................................2-2

2-2 ADDITIONAL “TRADE” CLASSIFICATIONS AND WAGE RATES.......................2-2

a. Additional classification rules .............................................................................2-2

b. Making the request.............................................................................................2-3

c. HUD review ........................................................................................................2-3

d. DOL decision......................................................................................................2-3

2-3 CERTIFIED PAYROLL REPORTS..........................................................................2-4

a. Payroll formats ...................................................................................................2-4

b. Payroll certifications ...........................................................................................2-4

c. “No work” payrolls ..............................................................................................2-4

d. Payroll review and submission...........................................................................2-5

e. Payroll retention .................................................................................................2-5

f. Payroll inspection ...............................................................................................2-5

2-4 DAVIS-BACON DEFINITIONS................................................................................2-5

a. Laborer or mechanic ..........................................................................................2-5

b. Employee ...........................................................................................................2-6

c. Apprentices and trainees....................................................................................2-6

d. Prevailing wages or wage rates .........................................................................2-7

e. Fringe benefits....................................................................................................2-7

f. Overtime.............................................................................................................2-7

g. Deductions .........................................................................................................2-8

h. Proper designation of trade................................................................................2-8

i. Site of work.........................................................................................................2-8
iv

SECTION - II REPORTING REQUIREMENT

2-5 COMPLETING A PAYROLL REPORT....................................................................2-9

a. Project and contractor/subcontractor information...............................................2-9

b. Employee information.........................................................................................2-9

c. Work classification..............................................................................................2-9

d. Hours worked .....................................................................................................2-10

e. Rate of pay.........................................................................................................2-10

f. Gross wages earned ..........................................................................................2-10

g. Deductions .........................................................................................................2-11

h. Net pay...............................................................................................................2-11

i. Statement of compliance....................................................................................2-11

j. Signature............................................................................................................2-11

SECTION III - PAYROLL REVIEWS AND CORRECTIONS

2-6 COMPLIANCE REVIEWS.......................................................................................2-12

a. On-site interviews...............................................................................................2-12

b. Project payroll reviews .......................................................................................2-12

2-7 TYPICAL PAYROLL ERRORS AND REQUIRED CORRECTIONS .......................2-12

a. Inadequate payroll information...........................................................................2-12

b. Missing identification numbers ...........................................................................2-12

c. Incomplete payrolls ............................................................................................2-13

d. Classifications ....................................................................................................2-13

e. Wage Rates........................................................................................................2-13

f. Apprentices and trainees....................................................................................2-13

g. Overtime.............................................................................................................2-13

h. Computations .....................................................................................................2-13

i. Deductions .........................................................................................................2-13

j. Fringe benefits....................................................................................................2-14

k. Signature............................................................................................................2-14

l. On-site interview comparisons ...........................................................................2-14

m. Correction certified payroll..................................................................................2-14

2-8 RESTITUTION FOR UNDERPAYMENT OF WAGES.............................................2-14

a. Notification..........................................................................................................2-14

b. Computing wage restitution................................................................................2-15

c. Correction certified payrolls................................................................................2-15

d. Review of correction CPR ..................................................................................2-15

e. Unfound workers ................................................................................................2-15
v

CHAPTER 3 LABOR STANDARDS DISPUTES, ADMINISTRATIVE 

REVIEWS, WITHHOLDING, DEPOSITS AND ESCROW 

ACCOUNTS, AND SANCTIONS.......................................................3-1

3-1 INTRODUCTION .....................................................................................................3-1

3-2 ADMINISTRATIVE REVIEW ON LABOR STANDARDS DISPUTES.....................3-1

a. Additional classifications and wage rates...........................................................3-1

b. Findings of underpayment..................................................................................3-2

3-3 WITHHOLDING.......................................................................................................3-2

3-4 DEPOSITS AND ESCROWS ..................................................................................3-3

3-5 ADMINISTRATIVE SANCTIONS ............................................................................3-4

a. DOL debarment..................................................................................................3-4

b. HUD sanctions ...................................................................................................3-4

3-6 FALSIFICATION OF CERTIFIED PAYROLL REPORTS........................................3-5

APPENDICIES

ACRONYMS AND SYMBOLS...........................................................................................A-1

DAVIS-BACON - RELATED WEB SITES* ........................................................................A-2

HUD-4720, Project Wage Rate Sheet ..............................................................................A-3

WH-347, Payroll Form/Statement of Compliance ..........................................................A-4

1-1

CHAPTER 1 LAWS, REGULATIONS, CONTRACTS 

AND RESPONSIBILITIES

The following paragraphs describe what the labor standards laws and regulations actually say 

and what they mean to you on HUD projects: 

1-1 DAVIS-BACON AND OTHER LABOR LAWS.

a. The Davis-Bacon Act (DBA). The Davis-Bacon Act requires the payment of prevailing 

wage rates (which are determined by the U.S. Department of Labor) to all laborers and 

mechanics on Federal government and District of Columbia construction projects in 

excess of $2,000. Construction includes alteration and/or repair, including painting and 

decorating, of public buildings or public works.

b. The Contract Work Hours and Safety Standards Act (CWHSSA). CWHSSA 

requires time and one-half pay for overtime (O/T) hours (over 40 in any workweek) 

worked on the covered project. The CWHSSA applies to both direct Federal 

contracts and to indirect Federally-assisted contracts except where the assistance 

is solely in the nature of a loan guarantee or insurance. CWHSSA violations 

carry a liquidated damages penalty ($10/day per violation). Intentional violations 

of CWHSSA standards can be considered for Federal criminal prosecution.

 

CWHSSA does not apply to prime contracts of $100,000 or less. In addition, some HUD 

projects are not covered by CWHSSA because some HUD programs only provide loan 

guarantees or insurance. CWHSSA also does not apply to construction or rehabilitation 

contracts that are not subject to Federal prevailing wage rates (e.g., Davis-Bacon wage 

rates, or HUD-determined rates for operation of public housing and Indian block grantassisted housing). However, even though CWHSSA overtime pay is not required, Fair 

Labor Standards Act (FLSA) overtime pay is probably still applicable. (See also Labor 

Relations Letter SL-95-01, CWHSSA Coverage threshold for overtime and health and 

safety provision, available on-line at the HUD Labor Relations Library at: www.hud.gov/

offices/olr/library.cfm)

Most HUD construction work is not covered by the DBA itself since HUD seldom contracts 

directly for construction services. Most often, if Davis-Bacon wage rates apply to a HUD 

project it is because of a labor provision contained in one of HUD’s “Related Acts” such 

as the U. S. Housing Act of 1937, the National Housing Act, the Housing and Community 

Development Act of 1974, the National Affordable Housing Act of 1990, and the Native 

American Housing Assistance and Self-Determination Act of 1996. The Related Acts are 

often referred to as the Davis-Bacon and Related Acts or DBRA.
1-2

c. The Copeland Act (Anti-Kickback Act). The Copeland Act makes it a Federal crime 

for anyone to require any laborer or mechanic (employed on a Federal or Federallyassisted project) to kickback (i.e., give up or pay back) any part of their wages. The 

Copeland Act requires every employer (contractors and subcontractors) to submit 

weekly certified payroll reports (CPRs) and regulates permissible payroll deductions.

d. The Fair Labor Standards Act (FLSA). The FLSA contains Federal minimum wage 

rates, overtime (O/T), and child labor requirements. These requirements generally apply 

to any labor performed. The DOL has the authority to administer and enforce FLSA. 

HUD will refer to the DOL any possible FLSA violations that are found on HUD projects. 

 

1-2 DAVIS-BACON REGULATIONS.

The Department of Labor (DOL) has published rules and instructions concerning 

Davis-Bacon and other labor laws in the Code of Federal Regulations (CFR). These 

regulations can be found in Title 29 CFR Parts 1, 3, 5, 6 and 7. Part 1 explains how 

the DOL establishes and publishes DBA wage determinations (aka wage decisions) and 

provides instructions on how to use the determinations. Part 3 describes Copeland Act 

requirements for payroll deductions and the submission of weekly certified payroll reports. 

Part 5 covers the labor standards provisions that are in your contract relating to DavisBacon Act wage rates and the responsibilities of contractors and contracting agencies to 

administer and enforce the provisions. Part 6 provides for administrative proceedings 

enforcing Federal labor standards on construction and service contracts. Last, Part 7 

sets parameters for practice before the Administrative Review Board. These regulations 

are used as the basis for administering and enforcing the laws.

1-3 CONSTRUCTION CONTRACT PROVISIONS 

Each contract subject to Davis-Bacon labor standards requirements must contain labor 

standards clauses and a Davis-Bacon wage decision. These documents are normally 

bound into the contract specifications.

a. The labor standards clauses. The labor standards clauses describe the responsibilities 

of the contractor concerning Davis-Bacon wages and obligate the contractor to comply 

with the labor requirements. The labor standards clauses also provide for remedies in 

the event of violations, including withholding from payments due to the contractor to 

ensure the payment of wages or liquidated damages which may be found due. These 

contract clauses enable the contract administrator to enforce the Federal labor standards 

applicable to the project. HUD has standard forms that contain contract clauses. For 

example, the HUD-2554, Supplementary Conditions to the Contract for Construction, 

which is issued primarily for FHA multifamily housing and other construction projects 

DOL Regulations are available on-line on the World Wide Web:

http://www.dol.gov/dol/allcfr/Title_29.htm
1-3

administered by HUD; the HUD-4010, Federal Labor Standards Provisions, which is used 

for CDBG and HOME projects, and the HUD-5370, General Conditions of the Contract for 

Construction or the HUD-5370-EZ (construction contracts ≤$100,000) which are used for 

Public and Indian Housing projects.

b. Davis-Bacon Wage Decisions. The Davis-Bacon wage decision (or wage determination) 

is a listing of various construction work classifications, such as Carpenter, Electrician, 

Plumber and Laborer, and the minimum wage rates (and fringe benefits, where prevailing) 

that people performing work in those classifications must be paid.

Davis-Bacon wage decisions are established by the DOL for various types of construction 

(e.g., residential, heavy, highway) and apply to specific geographic areas, usually a 

county or group of counties. Wage decisions are modified from time to time to keep them 

current. In most cases, when the contract is awarded or when construction begins, the 

wage decision is “locked-in” and no future modifications are applicable to the contract or 

project involved.

1-4 RESPONSIBILITY OF THE PRINCIPAL CONTRACTOR

The principal contractor (also referred to as the prime or general contractor) is responsible 

for the full compliance of all employers (the contractor, subcontractors and any lower-tier 

subcontractors) with the labor standards provisions applicable to the project. Because 

of the contractual relationship between a prime contractor and his/her subcontractors, 

subcontractors generally should communicate with the contract administrator only through 

the prime contractor. (See Contract Administrator, below.)

To make this Guide easier to understand, the term “prime contractor” will mean the 

principal contractor; “subcontractor” will mean all subcontractors including lower-tier 

subcontractors; and the term “employer” will mean all contractors as a group, including 

the prime contractor and any subcontractors and lower-tier subcontractors.

HUD program labor standards forms are available on-line at:

www.hud.gov/offices/adm/hudclips/index.cfm

All current Davis-Bacon wage decisions can be accessed on-line at no cost at:

http://www.wdol.gov
1-4

1-5 RESPONSIBILITY OF THE CONTRACT ADMINISTRATOR. 

The contract administrator is responsible for the proper administration and enforcement 

of the Federal labor standards provisions on contracts covered by Davis-Bacon 

requirements. We use this term to represent the person (or persons) who will provide 

labor standards advice and support to you and other project principals (e.g., the owner, 

sponsor, architect), including providing the proper Davis-Bacon wage decision 

(see 2-1, The Wage Decision) and ensuring that the wage decision and contract clauses 

are incorporated into the contract for construction. The contract administrator also monitors 

labor standards compliance (see 2-6, Compliance Reviews) by conducting interviews 

with construction workers at the job site and reviewing payroll reports, and oversees any 

enforcement actions that may be required.

The contract administrator could be an employee or agent of HUD, or of a city or county or 

public housing agency. For HUD projects administered directly by HUD staff, usually FHAinsured multifamily projects, the contract administrator will be the HUD Labor Relations 

field staff. But many HUD-assisted projects are administered by local contracting agencies 

such as Public Housing Agencies (PHAs), Indian tribes and tribally-designated housing 

entities (TDHEs), and States, cities and counties under HUD’s Community Development 

Block Grant (CDBG) and HOME programs. In these cases, the contract administrator 

will likely be local agency staff. In either case, the guidance for you remains essentially 

the same.

The DOL also has a role in monitoring Davis-Bacon administration and enforcement. In 

addition, DOL has independent authority to conduct investigations. A DOL investigator 

or other DOL representative may visit Davis-Bacon construction sites to interview 

construction workers or review payroll information.
2-1

CHAPTER 2 HOW TO COMPLY WITH LABOR STANDARDS 

AND PAYROLL REPORTING REQUIREMENTS

WHERE TO START? Now that you know you’re on a Davis-Bacon project and you know 

some of the legal and practical implications, what’s next?

SECTION I - THE BASICS

2-1 THE WAGE DECISION. 

Davis-Bacon labor standards stipulate the wage payment requirements for Carpenters, 

Electricians, Plumbers, Roofers, Laborers, and other construction work classifications 

that may be needed for the project. The Davis-Bacon wage decision that applies to the 

project contains a schedule of work classifications and wage rates that must be followed. 

If you don’t have it already (and by now you should), you’ll want to get a copy of the 

applicable Davis-Bacon wage decision.

a. The work classifications and wage rates. A Davis-Bacon wage decision is simply a 

listing of different work classifications and the minimum wage rates that must be paid 

to anyone performing work in those classifications. You’ll want to make sure that the 

work classification(s) you need are contained in the wage decision and make certain 

you know exactly what wage rate(s) you will need to pay. Some wage decisions 

cover several counties and/or types of construction work (for example, residential 

and commercial work) and can be lengthy and difficult to read. Contact the contract 

administrator (HUD Labor Relations field staff or local agency staff) if you have 

any trouble reading the wage decision or finding the work classification(s) you need.

To make reading lengthy wage decisions easier for you, the contract administrator may 

prepare a Project Wage Rate Sheet (HUD-4720). This Sheet is a one-page transcript that 

will show only the classifications and wage rates for a particular project. A blank copy of 

a Project Wage Rate Sheet is provided for you in the appendix. Also, a fillable version of 

this form is available on-line at HUDClips (see web address in the Appendix). Contact the 

contract administrator monitoring your project for assistance with a Project Wage Rate 

Sheet.

Remember, the wage decision is contained in the contract specifications along with the 

labor standards clauses. See 1-3, Construction Contract Provisions.
2-2

b. Posting the wage decision. If you are the prime contractor, you will be responsible for 

posting a copy of the wage decision (or the Project Wage Rate Sheet) and a copy of the 

DOL Davis-Bacon poster titled Employee Rights under the Davis-Bacon Act (Form WH1321) at the job site in a place that is easily accessible to all of the construction workers 

employed at the project and where the wage decision and poster won’t be destroyed by 

wind or rain, etc. The Employee Rights under the Davis-Bacon Act poster is available in 

English and Spanish on-line at HUDClips (see address in the Appendix).

2-2 ADDITIONAL “TRADE” CLASSIFICATIONS AND WAGE RATES. 

What if the work classification you need isn’t on the wage decision? If the work 

classification(s) that you need doesn’t appear on the wage decision, you will need to 

request an additional classification and wage rate. This process is usually very simple 

and you’ll want to start the request right away. Basically, you identify the classification 

you need and recommend a wage rate for DOL to approve for the project. There are a 

few rules about additional classifications; you’ll find these rules in the DOL regulations, 

Part 5, and in the labor clauses in your contract. The rules are summarized for you here:

a. Additional classification rules. Additional classifications and wage rates can be 

approved if:

1. The requested classification is used by construction contractors in the area of the 

project. (The area is usually defined as the county where the project is located).

2. The work that will be performed by the requested classification is not already 

performed by another classification that is already on the wage decision. (In other 

words, if there already is an Electrician classification and wage rate on the wage 

decision you can’t request another Electrician classification and rate.)

3. The proposed wage rate for the requested classification “fits” with the other wage 

rates already on the wage decision. (For example, the wage rate proposed for 

a trade classification such as Electrician must be at least as much as the lowest 

wage rate for other trade classifications already contained in the wage decision.) 

And,

4. The workers that will be employed in the added classification (if it is known who the 

workers are/will be), or the workers’ representatives, must agree with the proposed 

wage rate. 

The Employee Rights under the Davis-Bacon Act poster (WH-1321) replaces the Notice 

to all Employees. The new poster is available in English and Spanish on-line at HUDClips 

(see address in the Appendix).
2-3

b. Making the request. A request for additional classification and wage rate must be made 

in writing through the contract administrator. (If the contract administrator is a local 

agency, the agency will send the request to the HUD Labor Relations staff.) If you are a 

subcontractor, your request should also go through the prime contractor. All you need to 

do is identify the work classification that is missing and recommend a wage rate (usually 

the rate that employer is already paying to the employees performing the work) for that 

classification. You may also need to describe the work that the new classification will 

perform.

c. HUD review. The HUD Labor Relations field staff will review the requested classification 

and wage rate to determine whether the request meets the DOL rules outlined in paragraph 

2-2(a), above. If additional information or clarification is needed, the staff will contact the 

prime contractor (or contract administrator for local agency projects) for more information, 

etc. If the Labor Relations review finds that the request meets the rules, the staff will give 

preliminary approval on the request and refer it to the DOL for final approval. The staff 

will send to you a copy of the preliminary approval/referral letter to the DOL.

If the HUD Labor Relations staff doesn’t think the request meets the rules and if agreement 

can’t be reached on the proper classification or wage rate for the work described, the 

HUD Labor Relations staff will not approve the request. In this case, the staff will send 

your request to the DOL with an explanation why HUD believes that the request shouldn’t 

be approved. The DOL still has final decision authority. You will receive a copy of the 

disapproval/referral letter to the DOL.

d. DOL decision. The DOL will respond to HUD Labor Relations in writing about the 

additional classification and wage rate request. HUD Labor Relations will notify you of 

the DOL decision in writing. If the DOL approves the request, the prime contractor must 

post the approval notice on the job site with the wage decision.

If the DOL does not approve the request, you will be notified about what classification and 

wage rate should be used for the work in question. You will also receive instructions about 

how to ask for DOL reconsideration if you still want to try to get your recommendation 

approved.

It’s always a good idea to talk to the contract administrator before submitting an additional 

classification and wage rate request. The contract administrator can offer suggestions 

and advice that may save you time and increase the likelihood that DOL will approve your 

request. Usually, the contract administrator can give you an idea about what the DOL will 

finally decide.
2-4

2-3 CERTIFIED PAYROLL REPORTS. 

You’ll need to submit a weekly certified payroll report (CPR) beginning with the first week 

that your company works on the project and for every week afterward until your firm has 

completed its work. It’s always a good idea to number the payroll reports beginning with 

#1 and to clearly mark your last payroll for the project “Final.”

a. Payroll formats. The easiest form to use is DOL’s WH-347, Payroll. A sample copy of 

the WH-347 is included in the back of this Guide. You may access a fillable version of 

the WH-347 on-line at HUDClips (see web address in the Appendix). Also, the contract 

administrator can provide a few copies of the WH-347 that you can reproduce.

b. Payroll certifications. The weekly payrolls are called certified because each payroll 

is signed and contains language certifying that the information is true and correct. The 

payroll certification language is on the reverse side of the WH-347. If you are using 

another type of payroll format you may attach the certification from the back of the WH347, or any other format which contains the same certification language on the WH-347 

(reverse).

c. “No work” payrolls. “No work” payrolls may be submitted whenever there is a 

temporary break in your work on the project, for example, if your firm is not needed on 

the project right now but you will be returning to the job in a couple of weeks. (See tip 

box, for “no work” payroll exemption!) However, if you know that your firm will not be 

working on the project for an extended period of time, you may wish to send a short 

note to the contract administrator to let them know about the break in work and to give 

an approximate date when your firm will return to the project. If you number payrolls 

consecutively or if you send a note, you do not need to send “no work” payrolls. 

You are not required to use Payroll form WH-347. You are welcome to use any other type 

of payroll, such as computerized formats, as long as it contains all of the information that 

is required on the WH-347.

DOL’s website has Payroll Instructions and the Payroll form WH-347 in a “fillable” PDF 

format at this address:

www.dol.gov/whd/forms/wh347.pdf

If you number your payroll reports consecutively, you do not need to submit “no work” 

payrolls!
2-5

d. Payroll review and submission. The prime contractor should review each subcontractor’s 

payroll reports for compliance prior to submitting the reports to the contract administrator. 

Remember, the prime contractor is responsible for the full compliance of all subcontractors 

on the contract and will be held accountable for any wage restitution that may be found 

due to any laborer or mechanic that is underpaid and for any liquidated damages that 

may be assessed for overtime violations. All of the payroll reports for any project must be 

submitted to the contract administrator through the prime contractor.

e. Payroll retention. Every contractor (including every subcontractor) must keep a complete 

set of their own payrolls and other basic records such as employee addresses and full 

SSNs, time cards, tax records, evidence of fringe benefit payments, for a Davis-Bacon 

project for at least 3 years after the project is completed. The prime contractor must keep 

a complete set of all of the payrolls for every contractor (including subcontractors) for at 

least 3 years after completion of the project.

f. Payroll inspection. In addition to submitting payrolls to the contract administrator, every 

contractor (including subcontractors) must make their own copy of the payrolls and 

other basic records available for review or copying to any authorized representative from 

HUD or from DOL.

2-4 DAVIS-BACON DEFINITIONS. 

Before we discuss how to complete the weekly payroll forms, we need to review a couple 

of definitions. These definitions can help you understand what will be required of you:

a. Laborer or mechanic. “Laborers” and “mechanics” mean anyone who is performing 

construction work on the project, including trade journeymen (carpenters, plumbers, sheet 

metal workers, etc.), apprentices, and trainees and, for CWHSSA purposes, watchmen 

and guards. “Laborers” and “mechanics” are the two groups of workers that must be paid 

not less than Davis-Bacon wage rates.

1. Working foremen. Foremen or supervisors that regularly spend more than 

20% of their time performing construction work and do not meet the exclusions 

in paragraph 2 below are covered “laborers” and “mechanics” for labor standards 

purposes for the time spent performing construction work.

2. Exclusions. People whose duties are primarily administrative, executive or 

clerical are not laborers or mechanics. Examples include superintendents, office 

staff, timekeepers, messengers, etc. (Contact the contract administrator if you 

have any questions about whether a particular employee is excluded.)

An alert prime contractor that reviews subcontractor payroll submissions can detect any 

misunderstandings early, prevent costly underpayments and protect itself from financial 

loss should underpayments occur.
2-6

b. Employee. Every person who performs the work of a laborer or mechanic is “employed” 

regardless of any contractual relationship which may be alleged to exist between a 

contractor or subcontractor and such person. This means that even if there is a contract 

between a contractor and a worker, the contractor must make sure that the worker is 

paid at least as much as the wage rate on the wage decision for the classification of work 

they perform. Note that there are no exceptions to the prevailing wage requirements for 

relatives or for self-employed laborers and mechanics.

c. Apprentices and trainees. The only workers who can be paid less than the wage rate on 

the wage decision for their work classification are “apprentices” and “trainees” registered in 

approved apprenticeship or training programs. Approved programs are those which have 

been registered with the DOL or a DOL-recognized State Apprenticeship Council (SAC). 

Apprentices and trainees are paid wage rates in accordance with the wage schedule in 

the approved program.

1. Probationary apprentice. A “probationary apprentice” can be paid as an apprentice 

(less than the rate on the wage decision) if the DOL or SAC has certified that the 

person is eligible for probationary employment as an apprentice.

2. Pre-apprentice. A “pre-apprentice”, that is, someone who is not registered in a 

program and who hasn’t been DOL- or SAC-certified for probationary apprenticeship 

is not considered to be an “apprentice” and must be paid the full journeyman’s rate 

on the wage decision for the classification of work they perform.

3. Ratio of apprentices and trainees to journeymen. The maximum number of 

apprentices or trainees that you can use on the job site cannot exceed the ratio of 

apprentices or trainees to journeymen allowed in the approved program.

Most often, the apprentice/trainee wage rate is expressed as a series of percentages tied 

to the amount of time spent in the program. For example, 0-6 months: 65%; 6 months 

- 1 year: 70%; etc. The percentage is applied to the journeyman’s wage rate. On DavisBacon projects, the percentage must be applied to the journeyman’s wage rate on the 

applicable wage decision for that craft.

For more information about working subcontractors, ask the contract administrator or 

your HUD Labor Relations Field Staff for a copy of Labor Relations Letter LR-96-01, 

Labor standards compliance requirements for self-employed laborers and mechanics. 

Labor Relations Letters and other helpful Labor Relations publications are available at 

HUD’s Labor Relations web site (see the list of web site addresses in the Appendix).
2-7

d. Prevailing wages or wage rates. Prevailing wage rates are the wage rates listed on the 

wage decision for the project. The wage decision will list a minimum basic hourly rate 

of pay for each work classification. Some wage decisions include fringe benefits which 

are usually listed as an hourly fringe rate. If the wage decision includes a fringe benefit 

rate for a classification, you will need to add the fringe benefit rate to the basic hourly rate 

unless you provide bona fide fringe benefits for your employees.

1. Piece-work. Some employees are hired on a piece-work basis, that is, the 

employee’s earnings are determined by a factor of work produced. For example, 

a Drywall Hanger’s earnings may be calculated based upon the square feet of 

sheetrock actually hung, a Painter’s earnings may be based upon the number 

of units painted. Employers may calculate weekly earnings based upon 

piece rates provided the weekly earnings are sufficient to satisfy the wage 

rate requirement based upon actual hours, including any overtime, worked. 

Accurate time records must be maintained for any piece-work employees. 

If the weekly piece rate earnings are not sufficient, the employer must 

recompute weekly earnings based upon the actual hours worked and 

the rate on the wage decision for the work classification(s) involved.

e. Fringe benefits Fringe benefits can include health insurance premiums, retirement 

contributions, life insurance, vacation and other paid leave as well as some contributions 

to training funds. Fringe benefits do not include employer payments or contributions 

required by other Federal, State or local laws, such as the employer’s contribution to 

Social Security or some disability insurance payments. 

f. Overtime. Overtime hours are defined as all hours worked on the contract in excess of 

40 hours in any work week. Overtime hours must be paid at no less than one and onehalf times the regular rate of basic pay plus the straight-time rate of any required fringe 

benefits.

Note that the total hourly wage rate paid to any laborer or mechanic (basic wage or basic 

wage plus fringe benefits) may be no less than the total wage rate (basic wage or basic 

wage plus fringe benefits) on the wage decision for their craft. If the value of the fringe 

benefit(s) you provide is less than the fringe benefit rate on the wage decision, you will 

need to add the balance of the wage decision fringe benefit rate to the basic rate paid to 

the employee. For example, if the wage decision requires $10/hour basic rate plus $5/

hour fringe benefits, you must pay no less than that total ($15/hour) in the basic rate or 

basic rate plus whatever fringe benefit you may provide. You can meet this obligation 

in several ways: you could pay the base wage and fringe benefits as stated in the wage 

decision, or you could pay $15 in base wage with no fringe benefits, or you could pay $12 

basic plus $3 fringe benefits. You can also off-set the amount of the base wage if you pay 

more in fringe benefits such as by paying or $9 basic plus $6 fringe benefits; as long as 

you meet the total amount. The amount of the base wage that you may off-set with fringe 

benefits is limited by certain IRS and FLSA requirements.
2-8

g. Deductions. You may make payroll deductions as permitted by DOL Regulations 29 CFR 

Part 3. These regulations prohibit the employer from requiring employees to “kick-back” 

(i.e., give up) any of their earnings. Allowable deductions which do not require prior DOL 

permission include employee obligations for income taxes, Social Security payments, 

insurance premiums, retirement, savings accounts, and any other legally-permissible 

deduction authorized by the employee. Deductions may also be made for payments on 

judgments and other financial obligations legally imposed against the employee.

h. Proper designation of trade. You must select a work classification on the wage decision 

for each worker based on the actual type of work he/she performed and you must pay each 

worker no less than the wage rate on the wage decision for that classification regardless 

of their level of skill. In other words, if someone is performing carpentry work on the 

project, they must be paid no less than the wage rate on the wage decision for Carpenters 

even if they aren’t considered by you to be fully trained as a Carpenter. Remember, the 

only people who can be paid less than the rate for their craft are apprentices and trainees 

registered in approved programs.

1. Split-classification. If you have employees that perform work in more than 

one trade during a work week, you can pay the wage rates specified for each 

classification in which work was performed only if you maintain accurate time 

records showing the amount of time spent in each classification of work. If you do 

not maintain accurate time records, you must pay these employees the highest 

wage rate of all of the classifications of work performed.

i. Site of work. The “site of work” is where the Davis-Bacon wage rates apply. Usually, 

this means the boundaries of the project. “Site of work” can also include other adjacent 

or virtually adjacent property used by a contractor or subcontractor in the construction of 

the project, like a fabrication site that is dedicated exclusively, or nearly so, to the project.

Referring, again, to our example above where the wage decision requiring a $15 total 

wage obligation ($10 basic wage plus $5 fringe benefits) was met by paying $9 base 

wage plus $6 fringe benefits: Note that overtime rates must be based on one and one-half 

times the basic rate as stated on the wage decision. In the above example, the employer 

must pay for overtime: $15/hr ($9 basic + $6 fringe) plus $5 (one-half of $10, the wage 

decision basic rate) for a total of $20 per hour.
2-9

SECTION II - REPORTING REQUIREMENTS

2-5 COMPLETING A PAYROLL REPORT. 

What information has to be reported on the payroll form? The weekly payroll form doesn’t 

ask for any information that you don’t already need to keep for wage payment and tax 

purposes. For example, you need to know each employee’s name; his or her work 

classification (who is working for you and what do they do?), the hours worked during the 

week, his or her rate of pay, the gross amount earned (how much did they earn?), the 

amounts of any deductions for taxes, etc., and the net amount paid (how much should 

the paycheck be made out for?). No more information than you need to know in order to 

manage your work crew and make certain they are paid properly. And, certainly, no more 

information than you need to keep for IRS, Social Security and other tax and employment 

purposes.

You are required to submit certified payrolls to illustrate and document that you have 

complied with the prevailing wage requirements. The purpose of the contract administrator’s 

review of your payrolls is to verify your compliance. Clearer and complete payroll reports 

will permit the contract administrator to complete reviews of your payroll reports quickly.

a. Project and contractor/subcontractor information. Each payroll must identify the 

contractor or subcontractor’s name and address, the project name and number, and the 

week ending date. Indicate the week dates in the spaces provided. Numbering payrolls 

is optional but strongly recommended.

b. Employee information. Effective January 18, 2009, payrolls shall not report employee 

addresses or full Social Security Numbers (SSNs). Instead, the first payroll on which 

each employee appears shall include the employee’s name and an individually identifying 

number, usually the last 4 digits of the employee’s SSN. Afterward, the identifying number 

does not need to be reported unless it is necessary to distinguish between employees, 

e.g., if two employees have the same name.

Employers (prime contractors and subcontractors) must maintain the current address 

and full SSN for each employee and must provide this information upon request to the 

contracting agency or other authorized representative responsible for federal labor 

standards compliance monitoring. Prime contractors may require a subcontractor(s) to 

provide this information for the prime contractor’s records. DOL has modified form WH347, Payroll, to accommodate these reporting requirements.

c. Work classification. Each employee must be classified in accordance with the wage 

decision based on the type of work they actually perform.

For many contractors, the Weekly Certified Payroll is the only Davis-Bacon paperwork 

you need to submit!
2-10

1. Apprentices or trainees. The first payroll on which any apprentice or trainee 

appears must be accompanied by a copy of that apprentice’s or trainee’s registration 

in a registered or approved program. A copy of the portions of the registered or 

approved program pertaining to the wage rates and ratios shall also accompany 

the first payroll on which the first apprentice or trainee appears.

2. Split classifications. For an employee that worked in a split classification, make 

a separate entry for each classification of work performed distributing the hours of 

work to each classification, accordingly, and reflecting the rate of pay and gross 

earnings for each classification. Deductions and net pay may be based upon the 

total gross amount earned for all classifications.

d. Hours worked. The payroll should show ONLY the regular and overtime hours worked 

on this project. Show both the daily and total weekly hours for each employee. If an 

employee performs work at job sites other than the project for which the payroll is prepared, 

those “other job” hours should not be reported on the payroll. In these cases, you should 

list the employee’s name, classification, hours for this project only, the rate of pay and 

gross earnings for this project, and the gross earned for all projects. Deductions and net 

pay may be based upon the employee’s total earnings (for all projects) for the week.

e. Rate of pay. Show the basic hourly rate of pay for each employee for this project. If 

the wage decision includes a fringe benefit and you do not participate in approved fringe 

benefit programs, add the fringe benefit rate to the basic hourly rate of pay. Also list the 

overtime rate if overtime hours were worked.

1. Piece-work. For any piece-work employees, the employer must 

compute an effective hourly rate for each employee each week based 

upon the employee’s piece-work earnings for that week. To compute 

the effective hourly rate, divide the piece-work earnings by the total 

number of hours worked, including consideration for any overtime hours.

The effective hourly rate must be reflected on the certified payroll and this hourly 

rate may be no less than the wage rate (including fringe benefits, if any) on the 

wage decision for the classification of work performed. It does not matter that the 

effective hourly rate changes from week-to-week, only that the rate is no less than 

the rate on the wage decision for the classification of work performed.

f. Gross wages earned. Show the gross amount of wages earned for work performed on 

this project. Note: For employees with work hours and earnings on other projects, you 

may show gross wages for this project over gross earnings all projects (for example, 

$425.40/$764.85) and base deductions and net pay on the “all projects” earnings.

Remember, the overtime rate is computed at one and one-half times the basic rate of pay 

plus any fringe benefits. For example, if the wage decision requires $10/hour basic plus 

$5/hour fringe benefits, the overtime rate would be: ($10 x 1 1⁄2) + $5 = $20/hour.
2-11

g. Deductions. Show the amounts of any deductions from the gross earnings. “Other” 

deductions should be identified (for example, Savings Account or Loan Repayment). Any 

voluntary deduction (that is, not required by law or by an order of a proper authority) 

must be authorized in writing by the employee or provided for in a collective bargaining 

(union) agreement. A short note signed by the employee is all that is needed and should 

accompany the first payroll on which the other deduction appears.

h. Net pay. Show the net amount of wages paid.

i. Statement of compliance. The Statement of Compliance is the certification. It is 

located on the reverse side of a standard payroll form (WH-347). Be sure to complete 

the identifying information at the top, particularly if you are attaching the Statement of 

Compliance to an alternate payroll form such as a computer payroll. Also, you must 

check either 4(a) or 4(b) if the wage decision contains a fringe benefit. Checking 4(a) 

indicates that you are paying required fringe benefits to approved plans or programs; 

and 4(b) indicates that you are paying any required fringe benefit amounts directly to 

the employee by adding the fringe benefit rate to the basic hourly rate of pay. If you are 

paying a portion of the required fringe benefit to programs and the balance directly to the 

employee, explain those differences in box 4(c).

j. Signature. Make sure the payroll is signed with an original signature in ink. The payroll 

must be signed by a principal of the firm (owner or officer such as the president, treasurer 

or payroll administrator) or by an authorized agent (a person authorized by a principal 

in writing to sign the payroll reports). Signature authorization (for persons other than a 

principal) should be submitted with the first payroll signed by such an agent. Signatures 

in pencil; signature stamps; xerox, pdf and other facsimiles are not acceptable.

Only one employee authorization is needed for recurring (e.g., weekly) other deductions. 

Written employee authorization is not required for income tax and Social Security 

deductions.

Only one Statement of Compliance is required for each employer’s weekly payroll no 

matter how many pages are needed to report the employee data.
2-12

SECTION III - PAYROLL REVIEWS AND CORRECTIONS

2-6 COMPLIANCE REVIEWS. 

The contract administrator or other inspector may visit the project site and interview 

some of the workers concerning their employment on the project. The DOL may also 

independently conduct its own reviews (see 1-5). In addition, the contract administrator will 

periodically review payrolls and related submissions, comparing the interview information 

to the payrolls, to ensure that the labor standards requirements have been met. You will 

be notified by the contract administrator if these reviews find any discrepancies or errors. 

You will be given instructions about what steps must be taken to correct any problems.

a. On-site interviews. Every employer (contractor, subcontractor, etc.) must make their 

employees available for interview at the job site with the contract administrator or other 

agency representative, or HUD or DOL representative. The interviews are confidential 

and the employee will be asked about the kind of work they perform and their rate of 

pay. Every effort will be made to ensure that these interviews cause as little disruption 

as possible to the on-going work. The interviewer will record the interview information, 

usually on a form HUD-11, Record of Employee Interview, and forward the interviews to 

the contract administrator.

b. Project payroll reviews. The contract administrator will compare the information on 

the interview forms to the corresponding payrolls to ensure that the workers are properly 

listed on the payrolls for the days and hours worked on the job site, work classification 

and rate of pay. The contract administrator will also review the payroll submissions to 

make certain that the payrolls are complete and signed; that employees are paid no less 

than the wage rate for the work classification shown; apprentice and trainee certifications 

are submitted (where needed); employee or other authorizations for other deductions are 

submitted (where needed); etc.

2-7 TYPICAL PAYROLL ERRORS AND REQUIRED CORRECTIONS. 

The following paragraphs describe common payroll errors and the corrective steps you 

must take.

a. Inadequate payroll information. If an alternate payroll format used by an employer (such 

as some computer payrolls) is inadequate, e.g., does not contain all of the necessary 

information that would be on the optional form WH-347, the employer will be asked to 

resubmit the payrolls on an acceptable form.

b. Missing identification numbers. If the first payroll on which an employee appears does 

not contain the employee’s individually identifying number, the employer will be asked 

to supply the missing information. This information can be reported on the next payroll 

submitted by the employer if the employer is still working on the project. Otherwise, the 

employer will be asked to submit a correction certified payroll.
2-13

c. Incomplete payrolls. If the information on the payroll is not complete, for example, if 

work classifications or rates of pay are missing, the employer will be asked to send a 

correction certified payroll.

d. Classifications. If the payrolls show work classifications that do not appear on the wage 

decision, the employer will be asked to reclassify the employees in accordance with the 

wage decision or the employer may request an additional classification and wage rate 

(see 2-2). If reclassification results in underpayment (i.e., the wage rate reported on the 

payroll is less than the rate required for the new classification), the employer will be asked 

to pay wage restitution to all affected reclassified employees. (see 2-8 for instructions 

about wage restitution.)

e. Wage rates. If the wage rates on the payroll are less than the wage rates on the wage 

decision for the work classifications reported, the employer will be asked to pay wage 

restitution to all affected employees.

f. Apprentices and trainees. If a copy of the employee’s registration or the approved 

program ratio and wage schedule are not submitted with the first payroll on which an 

apprentice or trainee appears, the employer will be asked to submit a copy of each 

apprentice’s or trainee’s registration and/or the approved program ratio and wage 

schedule. If the ratio of apprentices or trainees to journeymen on the payroll is greater 

than the ratio in the approved program, the employer will be asked to pay wage restitution 

to any excess apprentices or trainees. Also, any apprentice or trainee that is not registered 

in an approved program must receive the journeyman’s wage rate for the classification of 

work they performed.

g. Overtime. If the employees did not receive at least time and one-half for any overtime 

hours worked on the project, the following will occur:

1. If the project is subject to CWHSSA overtime requirements, the employer will be 

asked to pay wage restitution for all overtime hours worked on the project. The 

employer may also be liable to the United States for liquidated damages computed 

at $10 per day per violation. Or,

2. If the project is not subject to CWHSSA, the employer will be notified of the possible 

FLSA overtime violations. Also, the contract administrator may refer the matter to 

the DOL for further review.

h. Computations. If the payroll computations (hours worked times rate of pay) or extensions 

(deductions, net pay) show frequent errors, the employer will be asked to take greater 

care. Wage restitution may be required if underpayments resulted from the errors.

i. Deductions. If there are any “Other” deductions that are not identified, or if employee 

authorization isn’t provided, or if there is any unusual (very high, or large number) 

deduction activity, the employer will be asked to identify the deductions, provide employee 

authorization or explain unusual deductions, as necessary.
2-14

j. Fringe benefits. If the wage decision contains fringe benefits but the payroll does not 

indicate how fringe benefits were paid [neither 4(a) nor 4(b) is marked on the Statement 

of Compliance], the employer may be asked to submit correction certified payrolls and 

will be required to pay wage restitution if underpayments occurred. However, if the basic 

hourly rates for the employees are at least as much as the total wage rate on the wage 

decision (basic hourly rate plus the fringe benefit rate), no correction is necessary.

k. Signature. If the payroll Statement of Compliance is not signed or is missing, the employer 

will be asked to submit a signed Statement of Compliance for each payroll affected. If the 

Statement of Compliance is signed by a person who is not a principle of the firm and that 

person has not been authorized by principle to sign, the employer will be asked to provide 

an authorization or to resubmit the Statement(s) of Compliance bearing the signature of 

a principle or other authorized signatory.

l. On-site interview comparisons. If the comparison of on-site interviews to the payrolls 

indicates any discrepancies (for example, the employee does not appear on the payroll 

for the date of the interview), the employer will be asked to submit a correction certified 

payroll report.

m. Correction certified payroll. Any and all changes to data on a submitted payroll report 

must be reported on a certified correction payroll. In no case will a payroll report be 

returned to the prime contractor or employer for revision.

2-8 RESTITUTION FOR UNDERPAYMENT OF WAGES. 

Where underpayments of wages have occurred, the employer will be required to pay 

wage restitution to the affected employees. Wage restitution must be paid promptly in the 

full amounts due, less permissible and authorized deductions. All wages paid to laborers 

and mechanics for work performed on the project, including wage restitution, must be 

reported on a certified payroll report. 

a. Notification to the Employer/Prime contractor. The contract administrator will notify the 

employer and/or prime contractor in writing of any underpayments that are found during 

payroll or other reviews. The contract administrator will describe the underpayments and 

provide instructions for computing and documenting the restitution to be paid. The employer/

prime contractor is allowed 30 days to correct the underpayments. Note that the prime 

contractor is responsible to the contract administrator for ensuring that restitution is paid. If 

the employer is a subcontractor, the subcontractor will usually make the computations and 

restitution payments and furnish the required documentation through the prime contractor.

HUD does not enforce or attempt to provide advice on employer obligations to make 

deductions from employee earnings for taxes or Social Security. However, HUD may 

refer to the IRS or other responsible agency copies of certified payroll reports that show 

wages paid in gross amounts (i.e., without tax deduction) for its review and appropriate 

action.
2-15

b. Computing wage restitution. Wage restitution is simply the difference between the wage 

rate paid to each affected employee and the wage rate required on the wage decision 

for all hours worked where underpayments occurred. The difference in the wage rates 

is called the adjustment rate. The adjustment rate times the number of hours involved 

equals the gross amount of restitution due. You may also compute wage restitution by 

calculating the total amount of Davis-Bacon wages earned and subtracting the total 

amount of wages paid. The difference is the amount of back wages due.

c. Correction certified payrolls. The employer will be required to report the restitution 

paid on a correction certified payroll. The correction payroll will reflect the period of time 

for which restitution is due (for example, Payrolls #1 through #6; or a beginning date and 

ending date). The correction payroll will list each employee to whom restitution is due and 

their work classification; the total number of work hours involved (daily hours are usually 

not applicable for wage restitution); the adjustment wage rate (the difference between 

the required wage rate and the wage rate paid); the gross amount of restitution due; 

deductions and the net amount actually paid. A properly signed Statement of Compliance 

must accompany the correction payroll.

d. Review of correction CPR. The contract administrator will review the correction certified 

payroll to ensure that full restitution was paid. The prime contractor shall be notified in 

writing of any discrepancies and will be required to make additional payments, if needed, 

documented on a correction certified payroll within 30 days.

e. Unfound workers. Sometimes, wage restitution cannot be paid to an affected employee 

because, for example, the employee has moved and can’t be located. After wage 

restitution has been paid to all of the workers who could be located, the employer must 

submit a list of any workers who could not be found and paid (i.e., unfound workers) 

providing their names, Social Security Numbers, last known addresses and the gross 

amount due. In such cases, at the end of the project the prime contractor will be required 

HUD no longer requires the signature of the employee on the correction payroll to evidence 

employee receipt of restitution payment. In addition, except in the most extraordinary 

cases, HUD no longer requires employers to submit copies of restitution checks (certified, 

cashiers, canceled or other), or employee-signed receipts or waivers.

The contract administrator may communicate directly with a subcontractor when the 

underpayments are plainly evident and the subcontractor is cooperative. It is best 

to work through the prime contractor when the issues are complex, when there are 

significant underpayments and/or the subcontractor is not cooperative. In all cases, 

the subcontractor must ensure that the prime contractor receives a copy of the required 

corrective documentation.
2-16

to place in a deposit or escrow account an amount equal to the total gross amount of 

restitution that could not be paid because the employee(s) could not be located. The 

contract administrator will continue attempts to locate the unfound workers for 3 years 

after the completion of the project. After 3 years, any amount remaining in the account for 

unfound workers will be credited and/or forwarded by the contract administrator to HUD. 
3-1

CHAPTER 3 LABOR STANDARDS DISPUTES, ADMINISTRATIVE 

REVIEWS, WITHHOLDING, DEPOSITS AND ESCROW 

ACCOUNTS, AND SANCTIONS 

WHAT HAPPENS WHEN THINGS GO WRONG?

3-1 INTRODUCTION. 

Even in the best of circumstances, things can go wrong. In a Davis-Bacon context, 

“things going wrong” usually means there’s a difference of opinion or a dispute about 

whether and to what extent underpayments have occurred. These disputes are usually 

between the contract administrator and one or more employers (the prime contractor and/

or a subcontractor). The dispute may involve something simple such as an additional 

classification request that is pending before the DOL; or something as significant as 

investigative findings following a complaint of underpayment. This chapter discusses 

some of what you may expect and what you can do to make your views known and to 

lessen any delays in resolving the problem or issue.

3-2 ADMINISTRATIVE REVIEW ON LABOR STANDARDS DISPUTES. 

As mentioned in the Introduction above, a dispute about labor standards and compliance 

can arise for a number of reasons. The labor standards clauses in your contract and DOL 

regulations provide for administrative review of issues where there is a difference of views 

between the contract administrator and any employer. The most common circumstances 

include:

a. Additional classifications and wage rates. Additional classification and wage rate 

requests are sometimes denied by the DOL. An employer that is dissatisfied with the denial 

can request reconsideration by the DOL Wage and Hour Administrator. The employer 

may continue to pay the wage rate, as requested, until a final decision is rendered on 

the matter. When the final decision is known, the employer will be required to pay any 

additional wages that may be necessary to satisfy the wage rate that is established.

1. Reconsideration. The DOL normally identifies the reasons for denial in its 

response to the request. Any interested person (for example, the contract 

administrator, employer, representatives of the employees) may request 

reconsideration of the decision on the additional classification request. The 

request for reconsideration must be made in writing and must thoroughly 

address the denial reasons identified by the DOL. Employer requests for 

reconsideration should be made through the contract administrator but may 

be made directly to the DOL. (See 2-2(d), and also DOL Regulations 29 CFR 

1.8.) All requests initiated by or made through the contract administrator or HUD 

must be submitted through the HUD Headquarters Office of Labor Relations.
3-2

2. Administrative Review Board. Any interested party may request a review of the 

Administrator’s decision on reconsideration by the DOL’s Administrative Review 

Board. DOL regulations 29 CFR Part 7 explain the procedures for such reviews. 

(See also 29 CFR 1.9.)

b. Findings of underpayment. Compliance reviews and other follow-up enforcement 

actions may result in findings of underpayment. The primary goal in every case and at 

every step in this process is to reach agreements about who may have been underpaid 

and how much wage restitution may be due and, of course, to promptly deliver restitution 

to any underpaid workers. The contract administrator will usually work informally with you 

to reach such agreements. You will have an opportunity to provide additional information 

to the contract administrator that may explain apparent inconsistencies and/or resolve the 

discrepancies.

If informal exchanges do not result in agreement, the final determination and schedule 

of back wages due will be presented to you in writing and you will be permitted 30 days 

in which to correct the underpayment(s) or to request a hearing on the matter before the 

DOL. The request for hearing must be made in writing through the contract administrator 

and must explain what findings are in dispute and the reasons. In such cases, HUD is 

required to submit a report to DOL for review and further consideration. All requests for 

DOL hearing must be submitted through the HUD Headquarters Office of Labor Relations.

1. DOL review. The DOL will review the contract administrator’s report and the 

arguments against the findings presented in the hearing request. The DOL may 

affirm or modify the findings based upon the materials presented. You will be notified 

in writing by the DOL of the results of its review. If DOL concludes that violations 

have occurred, you will be given an opportunity to correct any underpayments or 

to request a hearing before a DOL Administrative Law Judge (ALJ). (See DOL 

Regulations 29 CFR 5.11 (b) and 29 CFR Part 6, Rules of Practice for Administrative 

Proceedings.)

2. Administrative Review Board. Contractors and/or subcontractors may request a 

review by the Administrative Review Board of the decision(s) rendered by the DOL 

ALJ in the administrative hearing process. See DOL regulations 29 CFR Part 7 for 

more information about this proceeding.

3-3 WITHHOLDING. 

The contract administrator shall cause withholding from payments due to the prime 

contractor to ensure the payment of wages which are believed to be due and unpaid, 

for example, if wage underpayments or other violations are not corrected within 30 days 

after written notification to the prime contractor. DOL may also direct the withholding 

of contract payments for alleged wage underpayments. Withholding is considered to 

be serious and is not taken unless warranted. If withholding is deemed necessary, you 

will be notified in writing. Only the amounts needed to meet the contractor’s (and/or 

subcontractors’) liability shall be withheld.
3-3

3-4 DEPOSITS AND ESCROWS. 

In every case, we attempt to complete compliance actions and resolve any disputes 

before the project is completed and final payments are made. Sometimes, corrective 

actions or disputes continue after completion and provisions must be made to ensure 

that funds are available to pay any wage restitution that is ultimately found due. In these 

cases, we allow projects to proceed to final closing and final payments provided the prime 

contractor deposits an amount equal to the potential liability for wage restitution and 

liquidated damages, if necessary, in a special account. The deposit or escrow account is 

controlled by the contract administrator. When a final decision is rendered, the contract 

administrator makes disbursements from the account in accordance with the decision. 

Deposit/escrow accounts are established for one or more of the following reasons:

a. Where the parties have agreed to amounts of wage restitution that are due but the 

employer hasn’t furnished evidence yet that all of the underpaid workers have received 

their back wages, e.g., some of the workers have moved and could not be located. The 

amount of the deposit is equal to the total gross amount of restitution due to workers lacking 

payment evidence. As these workers are paid and proper documentation is provided 

to the contract administrator, amounts corresponding to the documented payments are 

returned to the depositor. Amounts for any workers who cannot be located are held in the 

deposit/escrow account for three years and disposed as described in 2-8(f) of this Guide.

b. Where underpayments are suspected or alleged and an investigation has not yet 

been completed. The deposit is equal to the amount of wage restitution and any liquidated 

damages, if applicable, that are estimated to be due. If the final determination of wages 

due is less than the amount estimated and placed in the escrow account, the escrow will 

be reduced to the final amount and the difference will be returned to the depositor.

If the parties agree to the investigative findings, the amounts due to the workers will be 

paid by the employer. As these workers are paid and proper documentation is provided to 

the contract administrator, the gross amounts corresponding to the documented payments 

are returned to the depositor.

1. If the employer is unable to make the payments to the workers, e.g., lacks the 

funds necessary, the contract administrator may make disbursements directly to 

the workers in the net amounts calculated by the employer. The amounts withheld 

from the workers for tax deduction will be returned to the employer as payments to 

workers are made. The employer shall be responsible for reporting and transmitting 

withholdings to the appropriate agencies.

Remember, the prime contractor is responsible and will be held liable for any wage restitution 

that is due to any worker employed in the construction of the project, including workers 

employed by subcontractors and any lower-tier subcontractors. See 1-4, Responsibility 

of the Principal Contractor, and 2-8, Restitution for Underpayment of Wages.
3-4

2. If the employer is not cooperating in the resolution, the contract administrator shall 

make disbursements to the workers in accordance with the schedule of wages 

due. Amounts for unfound workers will be retained as described above (See 2-8(f) 

and 3-4(a)).

If the parties do not agree and an administrative hearing is requested, the escrow will be 

maintained as explained in 3-4(c), below.

c. Where the parties are waiting for the outcome of an administrative hearing that has 

been or will be requested contesting a final determination of wages due. The deposit 

shall be equal to the amount of wage restitution and liquidated damages, if applicable, 

that have been determined due. Once a final decision is rendered, disbursements from 

the escrow account are made in accordance with the decision.

3-5 ADMINISTRATIVE SANCTIONS. 

Contractors and/or subcontractors that violate the labor standards provisions may face 

administrative sanctions imposed by HUD and/or DOL.

a. DOL debarment. Contractors and/or subcontractors that are found by the Secretary 

of Labor to be in aggravated or willful violation of the labor standards provisions of the 

Davis-Bacon and Related Acts (DBRA) will be ineligible (debarred) to participate in any 

DBRA or Davis-Bacon Act contracts for up to 3 years. Debarment includes the contractor 

or subcontractor and any firm, corporation, partnership or association in which the 

contractor or subcontractor has a substantial interest. Debarment proceedings can be 

recommended by the contract administrator or can be initiated by the DOL. Debarment 

proceedings are described in DOL regulations 29 CFR 5.12.

b. HUD sanctions. HUD sanctions may include Limited Denials of Participation (LDPs), 

debarments and suspensions.

1. Limited Denial of Participation. HUD may issue to the employer a limited denial 

of participation (LDP) which prohibits the employer from further participation in 

HUD programs for a period up to one year. The LDP is usually effective for the 

HUD program in which the violation occurred and for the geographic jurisdiction of 

the issuing HUD Office. HUD regulations concerning LDP’s are found at 24 CFR 

24.700-24.714.

Remember, if you have any questions or need assistance concerning labor standards 

requirements help is always available. Contact the contract administrator for the 

project you’re working on or the HUD Field Labor Relations staff in your area.
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2. Debarment and suspensions. In certain circumstances, HUD may initiate its own 

debarment or suspension proceedings against a contractor and/or subcontractor 

in connection with improper actions regarding Davis-Bacon obligations. For 

example, HUD may initiate debarment where a contractor has been convicted for 

making false statements (such as false statements on certified payrolls or other 

prevailing wage certifications) or may initiate suspension where a contractor has 

been indicted for making false statements. HUD regulations concerning debarment 

and suspension are found at 24 CFR Part 24.

3-6 FALSIFICATION OF CERTIFIED PAYROLL REPORTS. 

Contractors and/or subcontractors that are found to have willfully falsified payroll reports 

(Statements of Compliance), including correction certified payroll reports, may be subject 

to civil or criminal prosecution. Penalties may be imposed of $1,000 and/or one year in 

prison for each false statement (see Section 1001 of Title 18 and Section 231 of Title 31 

of the United States Code).

Remember, if you have any questions or need assistance concerning labor standards 

requirements help is always available. Contact the contract administrator for the 

project you’re working on or the HUD Field Labor Relations staff in your area.
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ACRONYMS AND SYMBOLS

CDBG - Community Development Block Grant

CFR - Code of Federal Regulations

CPR - Certified Payroll Report

CWHSSA - Contract Work Hours and Safety Standards Act

DBA - Davis-Bacon Act

DBRA - Davis-Bacon and Related Acts

DOL - Department of Labor

FHA - Federal Housing Administration

FLSA - Fair Labor Standards Act

HUD - Housing and Urban Development (Department of)

IHA - Indian Housing Authority

LCA - Local Contracting Agency

LDP - Limited Denial of Participation

O/T - Overtime

PHA - Public Housing Agency

S/T - Straight-time

SAC - State Apprenticeship Council/Agency

TDHE - Tribally-Designated Housing Entity

§ - Section

¶ - Paragraph
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DAVIS-BACON - RELATED WEB SITES*

HUD Office of Labor Relations:

 www.hud.gov/offices/olr

HUD Regulations:

http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR

HUDClips (HUD Forms and Publications):

 www.hud.gov/offices/adm/hudclips/index.cfm

DOL Davis-Bacon and Related Acts Homepage:

http://www.dol.gov/whd/contracts/dbra.htm

DOL Regulations:

 http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR

Davis-Bacon Wage Decisions:

www.wdol.gov

DOL Forms:

 www.dol.gov/whd/programs/dbra/forms.htm

 *Web addresses active as of January 2012
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Project Wage Rate Sheet

U.S. Department of Housing 

and Urban Development 

Office of Labor Relations

Project Name: Wage Decision Number/Modification Number:

Project Number: Project County:

Work 

Classification

Basic 

Hourly 

Rate (BHR)

Fringe 

Benefits

Total 

Hourly 

Wage Rate

Laborers

Fringe 

Benefits

$

Bricklayers $ Group # BHR Total Wage

Carpenters $ $

Cement Masons $ $

Drywall Hangers $ $

Electricians $ $

Iron Workers $ $

Painters $ Operators Fringe Benefits: $

Plumbers $ Group # BHR Total Wage

Roofers $ $

Sheet Metal Workers $ $

Soft Floor Workers $ $

Tapers $ $

Tile Setters $ Truck Drivers Fringe Benefits: $

Other Classifications Group # BHR Total Wage

$

$

$

Additional Classifications (HUD Form 4230-A)

Work 

Classification

Basic 

Hourly 

Rate (BHR)

Fringe 

Benefits

Total 

Hourly 

Wage Rate

Date of

HUD Submission

to DOL

Date of 

DOL

Approval

$

$

$
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U.S. Department of Housing and Urban Development

Office of Departmental Operations and Coordination

Washington, DC 20410

Email: www.OfficeofLaborRelations@hud.gov

Labor Relations Desk Guide

LR01.DG