Construction projects—whether public or private—are governed by a complex framework of laws and regulations. One of the most important distinctions for contractors, developers, property owners, and design professionals to understand is the difference between state and federal construction laws. Failing to navigate these laws properly can result in project delays, financial penalties, or litigation. Below is a breakdown of how these two legal systems differ and where they overlap.
Jurisdiction and Scope
Federal Construction Laws
Federal construction laws typically apply to projects funded or commissioned by the U.S. government. These laws are primarily focused on:
- Federal public works projects (e.g., highways, courthouses, military facilities)
- Federal labor and wage requirements
- Procurement and bidding rules
- Environmental and safety regulations applicable nationwide
State Construction Laws
State laws apply to projects initiated or governed under the authority of state or local governments and to most private construction projects within the state. These laws are concerned with:
- Contractor licensing and registration
- State building codes and inspections
- Mechanic’s lien rights
- State-specific labor standards
- Public bidding requirements for state-funded projects
Contracting Requirements
Federal Projects
The Federal Acquisition Regulation (FAR) governs most federal construction contracts. These contracts often include provisions that are unique to federal work, such as:
- Mandatory use of certain contract clauses (e.g., “Buy American” requirements)
- Detailed procurement rules for competitive bidding
- Dispute resolution through federal claims procedures
- Extensive compliance with federal labor and environmental statutes
State and Local Projects
Each state has its own set of procurement laws. Some states adopt the American Institute of Architects (AIA) contract forms, while others require the use of standardized public construction agreements. Key differences often include:
- Licensing requirements for contractors and subcontractors
- Bonding requirements and limits
- Local preference laws in bidding
- Public works wage rate requirements
Labor and Employment Laws
Federal Law: Davis-Bacon Act
For federally funded projects over $2,000, the Davis-Bacon Act mandates payment of locally prevailing wages to laborers and mechanics. Additional federal laws, such as the Contract Work Hours and Safety Standards Act (CWHSSA) and the Occupational Safety and Health Act (OSHA), apply broadly to construction safety and labor practices.
State-Specific Labor Laws
Many states have their own prevailing wage laws (sometimes referred to as “Little Davis-Bacon” acts), which may set higher or different wage rates than the federal standards. States also regulate:
- Apprenticeship utilization
- Payroll reporting requirements
- Overtime thresholds and exemptions
- Right-to-work and union-related rules
Environmental and Safety Compliance
Federal Oversight
Agencies like the Environmental Protection Agency (EPA) and OSHA enforce environmental and safety rules across all 50 states. Their regulations apply to all large construction projects and often form the baseline compliance standard.
State Regulations
States can—and often do—enact stricter environmental or safety standards than federal law. These include stormwater discharge rules, hazardous material handling, noise ordinances, and more stringent building code enforcement by state-level agencies or local building departments.
Dispute Resolution and Claims
Federal Projects
Claims and disputes involving federal contracts must typically go through specific federal procedures, including the Contract Disputes Act and appeals to boards like the Civilian Board of Contract Appeals (CBCA).
State Projects
Dispute processes vary by state, but most follow state civil procedure rules. Some states require mandatory mediation or alternative dispute resolution (ADR) for public construction disputes. Claims related to mechanic’s liens or payment bonds are typically governed by state statutes.
Payment Protections
Federal – The Miller Act
The Miller Act requires prime contractors on federal projects to post payment and performance bonds. Subcontractors and suppliers may make claims against the payment bond but cannot file mechanic’s liens against federal property.
State – Mechanic’s Liens and Little Miller Acts
States provide broader protections through mechanic’s lien laws, allowing unpaid contractors to secure liens on private property. For public projects, state “Little Miller Acts” require bonding similar to the federal Miller Act, with unique notice and timing requirements in each state.
Why Legal Guidance Is Essential
The distinction between state and federal construction laws is more than procedural—it significantly affects project structure, risk allocation, compliance obligations, and dispute resolution. Contractors, developers, architects, and owners must understand which laws apply and how they impact contractual rights and responsibilities.
At Oberman Law Firm, our construction law attorneys help clients navigate both federal and state legal frameworks with confidence—whether they are bidding on a federal highway project, negotiating a state school construction contract, or developing a private commercial complex.
About Us
Oberman Law Firm represents clients in a wide range of practice areas, including private equity, M&A, healthcare, corporate transactions, intellectual property, data privacy and security, regulatory compliance and governance, cross-border transactions, labor and employment, construction law, litigation, private clients’ services, corporate restructuring, and white-collar and governmental disputes.
As a firm, we offer the highest quality legal advice coupled with extraordinary and tailored service to deliver exceptional results to our clients. Our philosophy is to invest deeply in the brightest legal talent and build dynamic teams that operate at the pinnacle of respective practice areas. We believe in empowering our attorneys, encouraging entrepreneurialism, operating ethically and with integrity, and collaborating to bring the very best to every client engagement. These principles have guided us in building extraordinary and successful long-term partnerships with our clients.
Author(s)
