In the latest Weekly Wright Report:
- DOL Proposes New Changes To The Davis-Bacon Act Regulations – read now
DOL Proposes New Changes To The Davis-Bacon Act Regulations
On March 18, 2022, the Department of Labor (DOL) issued a notice of proposed rule making in which it seeks to update and modernize the Davis-Bacon Act regulations set forth at 29 CFR parts 1, 3, and 5. The Davis-Bacon Act (DBA) was originally enacted in 1931 and requires the payment of locally prevailing wages and fringe benefits on virtually all federal contracts for construction. See 40 U.S.C. 3142. The Act’s purpose is “to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area.” The DOL last engaged in a comprehensive revision of the regulations governing the DBA in 1981. The DBA and related acts collectively apply to an estimated $217 billion in federal and federally assisted construction spending per year and provide minimum wage rates for an estimated 1.2 million U.S. construction workers.
The proposed rule includes several elements targeted at increasing the amount of information available for wage determinations and speeding up the determination process. In a proposal to amend § 1.3 of the regulations, the DOL outlines a new methodology to expressly give the WHD Administrator authority and discretion to adopt state or local wage determinations as the Davis-Bacon prevailing wage where certain specified criteria are satisfied. The DOL also proposes changes, in § 1.2, to the definition of “prevailing wage,” and, in § 1.7, to the scope of data considered to identify the prevailing wage in a given area. To address the overuse of weighted average rates, the Department proposes to return to the definition of “prevailing wage” in § 1.2 that it used from 1935 to 1983. Currently, a single wage rate may be identified as prevailing in the area only if it is paid to a majority of workers in a classification on the wage survey; otherwise a weighted average is used. The DOL proposes to return instead to the “three-step” method that was in effect before 1983. Under that method (also known as the 30-percent rule), in the absence of a wage rate paid to a majority of workers in a particular classification, a wage rate will be considered “prevailing” if it is paid to at least 30 percent of such workers.
Proposed revisions to §§ 1.3 and 5.5 are aimed at reducing the need for the use of “conformances” where the DOL has received insufficient data to publish a prevailing wage for a classification of worker. The proposed revisions would create a new procedure through which the DOL may identify (and list on the wage determination) wage and fringe benefit rates for certain classifications for which WHD received insufficient data through its wage survey program. The procedure should reduce the need for conformances for classifications for which conformances are often required.
The DOL also proposes to revise § 1.6(c)(1) to provide a mechanism to regularly update certain non-collectively bargained prevailing wage rates based on the Bureau of Labor Statistics Employment Cost Index. The mechanism is intended to keep such rates more current between surveys so that they do not become out-of-date and fall behind prevailing rates in the area.
The DOL also seeks to strengthen enforcement in several critical ways. The proposed rule seeks to address the challenges caused by the omission of contract clauses. The DOL proposes to designate the DBA contract clauses in § 5.5(a) and (b), and applicable wage determinations, as effective by “operation of law” notwithstanding their mistaken omission from a contract. This proposal seeks to expedite enforcement efforts to ensure the timely payment of prevailing wages to all workers who are owed such wages under the relevant statutes. In addition, the DOL proposes to include new anti-retaliation provisions in the Davis-Bacon contract clauses. The new language is intended to ensure that workers who raise concerns about payment practices or assist agencies or the DOL in investigations are protected from termination or other adverse employment actions.
Finally, to reinforce the remedies available when violations are discovered, the DOL proposes to clarify and strengthen the cross-withholding procedure for recovering back wages. The proposal seeks to clarify that cross-withholding may be accomplished on contracts held by agencies other than the agency that awarded the contract. The proposal also seeks to create a mechanism through which contractors will be required to consent to cross-withholding for back wages owed on contracts held by different but related legal entities in appropriate circumstances—if, for example, those entities are controlled by the same controlling shareholder or are joint venturers or partners on a federal contract.
The DOL is seeking comments from all industry stakeholders to the new proposed rules. If you have any questions on the Davis-Bacon Act or the new proposed rules, please contact any member of the WCS Government Contracts practice group.