As previously discussed in our blog Inflation Reduction Act: Wage and Apprenticeship Requirements, the Inflation Reduction Act (the “IRA”) restructured the tax credit system associated with qualified clean energy projects. In particular, to receive the full value of various tax credits, companies must now pay the prevailing wage rates and employ a certain number of registered apprentices in the construction, alteration, and/or repair of qualified clean energy facilities or projects as defined under the Code.

Because the clean energy industry has until now not often needed to comply with the Davis-Bacon Act (the “DBA” or the “Act”) requirements to pay the prevailing wage rates to laborers working on clean energy construction projects, many companies in the renewable energy industry may be unfamiliar with the concept of prevailing wage or how the apprenticeship program works.

This discussion addresses: (1) commonly asked questions about prevailing wage and apprentices; and (2) major takeaways from the initial guidance (the “Guidance”) on these requirements that the Treasury Department and the Internal Revenue Service (the “IRS”) released on November 29, 2022, and subsequently published in the Federal Register on November 30, 2022.

Prevailing Wage and Apprenticeship Requirements FAQs

What is the Davis-Bacon Act?

The DBA requires the payment of prevailing wage rates to all laborers and mechanics employed for the construction, alteration, or repair of certain federally funded or assisted contracts, which now includes certain renewable energy projects under the IRA.[1] Legislation that authorizes federal assistance for construction—via grants, loans, loan guarantees, and insurance—and incorporate Davis-Bacon reporting requirements are known as the Davis-Bacon Related Acts (the “Related Acts” and collectively with the DBA, the “DBRA”).[2]

Congress intended the Act to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area. 

What is a prevailing wage?

The prevailing wage is the combination of the basic hourly rate of wages and fringe benefits paid to the majority of similarly situated workers in a particular craft or type of work within a given geography. Simply put, the prevailing wage is considered the “minimum wage” for workers subject to contracts covered by the DBRA. 

What is a wage determination?

A wage determination is the list of hourly wage rates and fringe benefit rates for each classification of laborers and mechanics, which the Department of Labor Wage and Hour Division (the “WHD”), determined to be prevailing in a certain geographic area for a specific type of construction. 

To determine the prevailing wage rates that are included in wage determinations, the WHD surveys local wages paid to laborers and mechanics employed in various types of construction in local areas across the country. There are two types of wage determinations: (i) general wage determination, and (ii) and project wage determination.

General wage determinations reflect the wage rates determined by WHD to be prevailing in a specific geographic area for a certain type of construction. General wage determinations do not expire. As referenced in the Guidance, the general wage determinations issued by the Department of Labor (“DOL”) are published online at They are available for contracting agencies to incorporate into covered contracts and for contractors to post at the job site of covered projects without consulting with the Department of Labor (“DOL”).

Project Wage Determinations, on the other hand, are issued at the request of a contracting agency and are applicable to the named project only. They typically expire 180 calendar days from the date of issuance. They are uncommon and must be requested using DBRA Standard Form (SF) 308.

How can I comply with the payment of prevailing wage? 

To comply with payment of prevailing wages, the taxpayer must first look to the prevailing wage determination covering the time period of the project for the specific region of the state where the project is located.

As a general rule, the wage determination incorporated into a bid solicitation and related contract award establishes the minimum wage rates and fringe benefits that must be paid for the entire term of the contract.[3] 

Does paying prevailing wages mean that a developer might as well sign up a Project Labor Agreement (“PLA”)?

No. Many non-union companies can comply with prevailing wage requirements, so a company is not necessarily limited to only union signatory workforce.

As mentioned above, the prevailing wage rate is based upon surveys conducted by the federal government. Thus, there are instances when the prevailing wage may be less than the union wage. However, signing a PLA can reduce the risk of being investigated. 

What is a qualified apprentice?

As defined in the Guidance, a qualified apprentice is a person employed by the taxpayer or any contractor/subcontractors who is participating in a registered apprenticeship program as defined in the Code.

How do interactions with an apprenticeship program typically work? 

The process starts with the taxpayer and/or subcontractor reaching out to a registered apprenticeship program for dispatch of apprentices. The registered apprenticeship program can in turn respond to the request, citing any conditions, or not respond altogether. The registered apprenticeship program may or may not dispatch apprentices for several reasons. We expect more guidance from the Treasury Department and the IRS on how this interaction will work.

Apprentices or trainees may be paid at less than the wage rates listed in the contract wage determination only when they are in an apprenticeship program registered with the Department of Labor or with a state apprenticeship agency recognized by the Department. Information on wage rates paid to apprentices and trainees is not reflected in Davis-Bacon wage determinations.[4] The proper wage rates to be paid to apprentices and trainees are those specified by the programs in which they are enrolled, expressed as a percentage of the journeyman rate on the wage determination.[5]

As referenced in the Guidance, registered apprenticeship programs can be located using the Office of Apprenticeship’s partner finder tool, available at and through the applicable State Apprenticeship Agency, 

Will there be enough apprentices to satisfy the apprentice requirement under the IRA?

There will likely be shortage of apprentices if the following generation continue to steer away from skilled-trade jobs. In addition, while the IRA undoubtedly produced a surge in demand for apprenticeships, it did little to address the supply. The question remains as to whether the DOL can keep up in quickly approving apprenticeship programs in the necessary occupations and geographic areas hosting these clean energy projects.

Does a developer have to ask multiple apprenticeship programs? If so, how many? How do we know?

We expect more guidance from the Treasury Department and the IRS on this topic. It is unclear from the statute and the Guidance, which simply reiterates the language in the statute, if a developer/contractor has to ask multiple registered apprenticeship programs.

Key Takeaways from the Guidance

60-day Grace Period and Beginning of Construction

The release of the Guidance started the 60-day clock after which qualified clean energy projects must meet the prevailing wage and apprenticeship (the “PWA”) requirements to receive the full tax credit amount. The Guidance specifically provides that it “serves as the published guidance establishing the 60-day period” with regard to the applicability of the PWA requirements. As the Guidance was published in the Federal Register on November 30, 2022, taxpayers have until January 28, 2023 to “begin construction” of qualified clean energy projects to be exempt from the PWA requirements.

The Guidance confirms that taxpayers may rely on existing renewable guidance in establishing the beginning of construction for purposes of the PWA requirements. Specifically, the Guidance provides that taxpayers may establish that construction of the project has begun prior to the end of the 60-day period by: (i) starting physical work of a significant nature (the “Physical Work Test”), or (ii) paying or incurring five percent or more of the total cost of the facility (“Five Percent Safe Harbor”). Both methods are subject to the additional requirement that the taxpayer must demonstrate continuous construction or efforts toward completion of the project once construction begins (the “Continuity Requirement”).

Code Sections Subject to the Prevailing Wage and Apprenticeship Requirements

CreditPrevailing Wage RequirementApprenticeship Requirement
Section 30C – Alternative Fuel Vehicle Refueling Property Credit
Section 45/45Y – Production Tax Credit
Section 45L – New Energy Efficient Homes Credit
Section 45Q – Carbon Oxide Sequestration Credit
Section 45U – Zero-Emission Nuclear Power Production Credit
Section 45V – Clean Hydrogen Production Credit
Section 45Z – Clean Fuel Production Credit
Section 48/48E – Investment Tax Credit
Section 48C – Qualifying Advanced Energy Project Credit
Section 179D – Energy Efficient Commercial Buildings Deduction

*Code sections 45, 45Y, 48, and 48E are not subject to the PWA requirements if the applicable project has a maximum net output of less than 1 megawatt.

Prevailing Wage Requirements

The prevailing wage requirements are satisfied if the taxpayer: (1) pays the prevailing wage to laborers and mechanics employed in the construction, alteration, or repair of the project; and (2) maintains and preserves sufficient records, including books of account or records for work performed by contractors or subcontractors, to substantiate that prevailing wages were paid.

The Guidance defines the term “construction, alteration, or repair” to mean the term “construction, prosecution, completion, or repair” under the DBA, which the DBA defines as “[a]ll types of work done on a particular building or work at the site thereof including work at a facility which is deemed a part of the site of the work within the meaning of [the Code].” 29 C.F.R. § 5.2(j)(1). This includes without limitation to the following activities:

(i) Altering, remodeling, installing (where appropriate) on the site of the work of items fabricated off-site;

(ii) Painting and decorating;

(iii) Manufacturing or furnishing of materials, articles, supplies or equipment on the site of the building or work;

(iv) Transportation between the site of the work within the meaning of [the Code] and a facility which is dedicated to the construction of the building or work and deemed a part of the site of the work within the meaning of [the Code]; and

(v) Transportation of portion(s) of the building or work between a site where a significant portion of such building or work is constructed, which is a part of the site of the work within the meaning of [the Code], and the physical place or places where the building or work will remain.

Id. at 5.2(j)(1)(i)–(iv)(B).

While the Guidance does not provide any information on whether operational and maintenance activities after the construction of the facility requires payment of prevailing wages, operational and maintenance activities likely do not fall into the category of activities subject to the DBA. See 48 C.F.R. § 970.2204-1-1(a)(1). Under 970.2204–1–1 Administrative controls and criteria for application of the Davis–Bacon Act in operational or maintenance activities, it expressly provides that:

  1. Particular work items falling within one or more of the following criteria normally will be classified as non-covered by the Davis–Bacon Act, hereinafter referred to in this section as the “Act.”
    • Work and services that are a part of operational and maintenance activities or which, being very closely and directly involved therewith, are more in the nature of operational activities than construction, alteration, and/or repair work. This includes work and services which would involve a material risk to continuity of operations, to life or property, or to DOE operating requirements, if performed by persons other than the contractor’s regular production and maintenance forces. However, any decision that contracts or work items are non-covered for these reasons must be made by the Head of the Contracting Activity without power of delegation.

48 C.F.R. § 970.2204-1-1(a)(2).

Apprenticeship Requirements

The apprenticeship requirements are met if the taxpayer:

(1) satisfies the Apprenticeship Labor Hour Requirements (10% for facilities that begin construction before January 1, 2023; 12.5% for facilities that begin construction after December 31, 2022, through December 31, 2023; and 15% thereafter), subject to any applicable ratio requirements;

(2) satisfies the Apprenticeship Participation Requirements, meaning each taxpayer who employs four or more individuals to work on the project must employ one or more qualified apprentices; and

(3) maintains and preserves sufficient records, including books of account or records for work performed by contractors or subcontractors, to substantiate that the first two requirements were satisfied.

Although the Guidance provides for a percentage of apprenticeship labor hours required if the construction begins before January 1, 2023, this requirement is essentially moot because as discussed above, taxpayers have until January 28, 2023 to “begin construction” of qualified clean energy projects to be exempt from the PWA requirements.

The Guidance simply repeats the same information from the statute with regard to the good faith effort exception to the apprenticeship requirements. Specifically, it states that if the taxpayer requests qualified apprentices from a registered apprenticeship program and such request was denied for reasons other than the taxpayer’s refusal to comply with the established standards and requirements of the registered apprenticeship program; or the program fails to respond within five business days, the taxpayer is deemed to satisfy the apprenticeship requirements. The Guidance does not provide any information on whether the taxpayer only has to make a request for qualified apprentices from a single registered apprenticeship program or whether it is required to make the request from all the apprenticeship programs covering the specific geographic area where the project is located.


The major takeaway from the Guidance is that it established the IRA’s 60-day post-guidance deadline for a project to “begin construction” to avoid the new PWA requirements and still obtain the full credit amounts. For taxpayers seeking to avoid being subject to the PWA requirements, the Guidance provides that qualified energy projects must “begin construction” by January 28, 2023. While the Guidance started the clock on the 60-day period after which projects must meet the PWA requirements, it provides minimal additional guidance on the PWA requirements. Indeed, nearly all the information in the Guidance simply reiterates the language in the statute. 

We expect to see further guidance with respect to the PWA requirements from the Treasury Department and IRS after January 28, 2023. We will continue to provide updates on developments related to the IRA’s PWA requirements. In the meantime, please reach out with any questions relating to the IRA or the PWA requirements.


[1] See U.S. Dep’t of Labor, Fact Sheet #66: The Davis-Bacon and Related Acts (March 2022),

[2] Id.

[3] See U.S. Dep’t of Labor, Davis-Bacon and Related Acts (DBRA) Frequently Asked Questions, Question 11. Once construction has begun, are the workers- wage rates affected when the wage determination for the area in which the project is located is changed?,

[4] Id. at Question 13. Can apprentices, trainees, and/or helpers work on a project covered by the Davis-Bacon or related Acts (DBRA), and what wage rates must they be paid?

[5] Id.