8.1 Federal & Virginia Labor Laws (FLSA, Davis-Bacon, Equal Opportunity)

Federal & Virginia Labor Laws (FLSA, Davis-Bacon, Equal Opportunity)

Construction contractors operating in Virginia must navigate a complex regulatory environment governed by federal and state labor standards. Compliance with wage, hour, prevailing wage, and anti-discrimination laws is not only mandatory for maintaining a contractor license but also crucial for avoiding severe statutory penalties, civil liability, and debarment from public contracting. General contractors must establish robust payroll and human resources management systems to ensure full compliance across all projects.

The Fair Labor Standards Act (FLSA) & Overtime Regulations

The Fair Labor Standards Act (FLSA), enforced by the U.S. Department of Labor (DOL) Wage and Hour Division (WHD), establishes federal standards for minimum wage, overtime pay, recordkeeping, and youth employment. In Virginia, contractors must also comply with the Virginia Overtime Wage Act and state minimum wage statutes (Va. Code § 40.1-28.8 et seq.), which set Virginia's state minimum wage at $12.00 per hour (exceeding the federal rate of $7.25 per hour).

Overtime Pay & The 40-Hour Workweek

Under the FLSA, covered non-exempt employees must receive overtime pay for all hours worked in excess of 40 hours in a single 7-day workweek. Overtime must be paid at a rate of at least 1.5 times (time and a half) the employee's regular rate of pay.

• Workweek Definition: A workweek is a fixed, regularly recurring period of 168 hours (7 consecutive 24-hour periods). It does not need to coincide with the calendar week.
• Averaging Prohibited: Hours worked cannot be averaged over a two-week pay period. If an employee works 50 hours in Week 1 and 30 hours in Week 2, the contractor owes 10 hours of overtime for Week 1.
• Regular Rate Calculation: The regular rate is determined by dividing total compensation earned in a workweek (excluding statutory exclusions) by total hours worked in that week. The regular rate must include non-discretionary bonuses, shift differentials, hazard pay, and piece-rate earnings. It excludes gifts, discretionary bonuses, premium pay for holidays, and employer contributions to benefit plans.

$\text{Regular Rate} = \frac{\text{Total Straight-Time Earnings} + \text{Non-Discretionary Bonuses}}{\text{Total Hours Worked in Workweek}}$

$\text{Total Overtime Pay} = (\text{Hours Worked over 40}) \times (\text{Regular Rate} \times 1.5)$

Non-Exempt vs. Exempt Employee Classifications

Not all workers qualify for overtime pay. To classify an employee as exempt from FLSA minimum wage and overtime requirements under the Executive, Administrative, or Professional (EAP) exemption, the employee must satisfy three tests:

1. Salary Basis Test: The employee must be paid a predetermined, fixed salary that cannot be reduced based on the quality or quantity of work performed.
2. Salary Level Test: The salary must meet or exceed federal statutory minimum thresholds ($684 per week, equivalent to $35,568 annually under standard baseline rules, subject to federal statutory updates).
3. Duties Test: The employee's actual job duties—not job titles—must meet specific legal criteria:
   • Executive Exemption: Primary duty is managing the enterprise or a recognized department; regularly directs the work of two or more full-time employees; possesses authority to hire or fire (or recommendations carry significant weight). Project Superintendents managing entire job sites often meet this test if salary thresholds are satisfied.
   • Administrative Exemption: Primary duty is performing office or non-manual work directly related to the management or general business operations of the employer or customers; requires exercising discretion and independent judgment on matters of significance (e.g., Senior Estimators, Purchasing Agents).
   • Learned Professional Exemption: Primary duty requires advanced knowledge in a field of science or learning acquired by a prolonged course of specialized intellectual instruction (e.g., Licensed Professional Engineers, Registered Architects).

Critical Note: Construction tradespeople, craft workers, carpenters, electricians, laborers, and working foremen who perform manual labor are non-exempt, regardless of their pay structure or job titles.

The Davis-Bacon Act & Public Works Prevailing Wage Laws

When contracting on public infrastructure or federal construction projects in Virginia, contractors must comply with federal prevailing wage requirements under the Davis-Bacon Act (40 U.S.C. § 3141 et seq.) as well as related federal Acts.

Statutory Scope & Prevailing Wage Determinations

The Davis-Bacon Act applies to contractors and subcontractors performing on federally funded or federally assisted contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. Key requirements include:

• Prevailing Wage Rate: Contractors must pay mechanics and laborers hourly wage rates and fringe benefits no less than those prevailing in the local county or jurisdiction, as determined by the U.S. Department of Labor Wage and Hour Division.
• Wage Determinations: The prevailing wage determination is incorporated directly into the contract solicitation and award documents. Rates vary by trade classification (e.g., Journeyman Electrician, Heavy Equipment Operator, Common Laborer).
• Fringe Benefits: Prevailing wage obligations can be satisfied by paying the basic hourly cash rate entirely or by combining cash wages with bona fide fringe benefit contributions (e.g., health insurance, retirement plans, apprenticeship training fund contributions).

Certified Payroll Reporting & Related Statutes

To demonstrate compliance, contractors on Davis-Bacon covered projects must submit weekly certified payroll records:

• Certified Payroll Reports (Form WH-347): Every contractor and subcontractor must submit weekly payroll records to the contracting agency within 7 days after the regular payment date of the payroll period. The report includes employee names, social security numbers, trade classifications, daily/weekly hours worked, hourly pay rates, fringe benefit credits, gross earnings, itemized deductions, and net pay.
• Statement of Compliance: Form WH-347 includes a mandatory sworn Statement of Compliance signed by the contractor certifying under penalty of perjury that the payroll records are correct and complete.
• The Copeland Anti-Kickback Act (18 U.S.C. § 874 & 40 U.S.C. § 3145): Makes it a federal crime to induce or force any worker on a public construction project to kick back or return any portion of their wages to the employer or supervisor. Violations carry fines and up to 5 years imprisonment.
• Contract Work Hours and Safety Standards Act (CWHSSA): Applies to federal contracts over $100,000, requiring overtime pay at 1.5 times the basic rate of pay for all hours worked over 40 in a workweek on covered projects.

Equal Employment Opportunity (EEO) & Anti-Discrimination Standards

Virginia contractors are subject to federal and state statutory frameworks prohibiting employment discrimination in hiring, firing, compensation, job assignments, promotions, and working conditions.

Federal Anti-Discrimination Statutes

Virginia Human Rights Act (VHRA)

Under Virginia Code § 2.2-3900 et seq., the Virginia Human Rights Act provides expanded state-level protections against employment discrimination:

• Coverage Thresholds: Covers Virginia employers with 6 or more employees for unlawful discriminatory practices (hiring, promotion, terms of employment). For claims alleging unlawful discharge, the threshold is 15 or more employees (or 6+ employees for discharge based on age).
• Protected Classes: Prohibits discrimination on the basis of race, color, religion, national origin, sex, pregnancy, childbirth or related medical conditions, age, marital status, disability, sexual orientation, gender identity, or veteran status.
• Enforcement: Enforced by the Office of Civil Rights under the Virginia Office of the Attorney General. Aggrieved employees may file administrative complaints or bring civil lawsuits for back pay, compensatory damages, punitive damages, and attorney fees.

Jobsite Posting & Mandatory EEO Compliance

Contractors must prominently display official EEO notices (such as the federal "Know Your Rights: Workplace Discrimination is Illegal" poster and OSHA/Virginia DOLI workplace notices) in conspicuous locations on every construction jobsite where employees and applicants can easily view them.