Back wages on a Davis-Bacon job: what to do when a worker was underpaid

A worker was paid less than the wage determination required. Maybe the payroll used last year's rate after a modification took effect, or someone ran the excavator for 2 days and was paid as a laborer. Once you know, the fix has 4 parts: compute what's owed, pay it, show it on the payroll, and keep the proof.

Compute the shortfall

Every Davis-Bacon rate has 2 parts, the basic hourly rate and the fringe. Compute each gap separately, because they behave differently on overtime.

Basic rate. The gap per hour times straight-time hours. On a contract covered by the Contract Work Hours and Safety Standards Act, overtime after 40 hours is 1.5 times the basic rate, and 29 CFR 5.32 says that basic rate can never be lower than the determination's. So a basic-rate shortfall also makes the overtime rate short, by 1.5 times the gap, for every overtime hour.

Fringe. The gap per hour times all hours worked, straight time and overtime alike. Fringe is excluded from the overtime computation under 5.32, so it is never multiplied by 1.5.

Do this week by week. Each week's payroll gets its own correction.

A worked example

The determination for the classification is $36.40 basic and $14.85 fringe. The worker was paid $34.00 an hour plus $13.00 cash in lieu of fringe, and worked 9 hours a day Monday through Friday: 40 hours straight time and 5 hours overtime.

The overtime line is the one people miss. The basic-rate gap is $2.40, so the overtime gap is $3.60 an hour. The fringe gap of $1.85 applies to all 45 hours at the same $1.85.

If the same pay ran for 3 identical weeks, the worker is owed $591.75 before interest. These figures come from the same calculation the app uses to fill a WH-347; you can check your own numbers with the overtime calculator and the fringe credit calculator.

If the worker's fringe went to a plan, the fringe shortfall can be paid to the worker in cash or contributed to the plan on the worker's behalf. Section 5.10 allows restitution either way.

Add interest

The 2023 rule added an interest clause to the Davis-Bacon contract clauses. Section 5.5(a)(1)(vi) says that when a contractor fails to pay all or part of the required wages, "the contractor will be required to pay interest on any underpayment of wages." Section 5.10 sets the method: interest from the date of the underpayment, at the rate the IRS charges on underpaid taxes under 26 U.S.C. 6621, compounded daily.

That rate is reset each quarter. Use the rate for each period the money was owed, from each week's payday to the day you pay.

The June 24, 2026 judgment in the Northern District of Texas vacated 3 provisions of the 2023 rule: truck drivers, material suppliers and operation of law. The interest provisions were not among them and still apply.

Pay it and keep the proof

Pay the worker by check or direct deposit, labeled as a Davis-Bacon adjustment for the weeks involved. Keep the check copy or deposit record, and a signed receipt if you can get one. Payroll records, including these, stay in the file for 3 years after all work on the prime contract is completed. Retention rules.

Show it on a revised payroll

File a revised WH-347 for each affected week under the original payroll number, with a new signed Statement of Compliance. In the remarks, state the amount of the shortfall, the date paid and the check or deposit. For the example above: "Revised payroll 6. Basic rate corrected from $34.00 to $36.40 and cash fringe from $13.00 to $14.85 per WD modification 2. Shortfall of $197.25 ($114.00 wages, $83.25 fringe) plus interest paid 10/9 by check no. 2215." Some agencies want a separate restitution payroll instead; ask the prime. How to file a revised payroll.

When the agency or DOL finds it first

The contracting agency can withhold from the prime's payments enough to cover the back wages and interest, on its own or at the written request of the Department of Labor. Under 5.5(a)(2) it can also withhold from other federal or Davis-Bacon contracts the same prime holds, and the Department's claim to withheld money comes ahead of sureties, bankruptcy trustees and assignees. The prime can then look to you under the subcontract. The prime's side.

In a Wage and Hour Division investigation, the Division computes the back wages. Its findings may not be reduced without the Department's approval. A contractor that disputes the findings can ask for a hearing under 29 CFR 5.11. Once the case is settled, the Division asks the contracting agency to transfer the withheld funds to it and pays the workers.

Overtime violations on a CWHSSA contract add liquidated damages owed to the United States: $33 per worker for each calendar day on which the worker was required or permitted to work past 40 hours in the week without overtime pay. Paying back wages does not rule out debarment, according to the Department's investigation guidance.

When you can't find the worker

Start with the worker's last known address, phone number and email address, which 29 CFR 5.5(a)(3)(i) requires you to keep. Write down each attempt and its date.

Part 5 doesn't say what a contractor does with wages it can't deliver on its own. Tell the prime and the contracting agency, show them the attempts, and follow their instruction in writing. Where the Wage and Hour Division is distributing back wages, it holds the money of a worker it can't find for 3 years while it keeps looking, and then sends it to the U.S. Treasury. Workers can search for money owed to them on the Division's Workers Owed Wages page.