Federal law exempts contracts worth less than $2,000 from the Davis-Bacon and Related Acts, according to the U.S. Department of Labor. The Davis-Bacon and Related Acts do apply to contractors and subcontractors performing on federally funded or assisted contracts for the construction, alteration or repair of public buildings or public works that exceed $2,000 in value.
The Davis-Bacon Act requires the companies to which it applies to pay the laborers and mechanics they employ a wage that is at least equal to the prevailing wage rates and fringe benefits for laborers and mechanics employed on similar projects in the area, explains the U.S. Department of Labor. Employers violating Davis-Bacon provisions on covered projects face punishment in the form of contract termination and debarment from future contracts for up to three years.
In 1927, U.S. Representative Robert Bacon from New York first introduced legislation in the House of Representatives to regulate wages paid to workers on federal workers, according to the Institute for Justice. Over the next four years, Bacon introduced a number of other proposals until, in 1931, Bacon and Senator James Davis introduced legislation together establishing a requirement for federal contractors to pay their employees the prevailing wage. Initially, the law applied to contracts of $5,000 or more until amendments passed in 1935 lowered that value to $2,500.