New U.S. Department of Labor Rule Updates the Davis-Bacon and Related Acts Regulations

The U.S. Department of Labor (DOL) is updating the prevailing wage regulations that implement the Davis Bacon and Related Acts. A major change will be how prevailing wage rates for federally funded construction projects are calculated. The impact will generally be to increase the hourly earnings of construction workers for prime contractors and subcontractors on projects that receive federal funding.
 

The Rule Will Become Effective on October 23, 2023

On August 8, 2023, the DOL announced that it will publish in the Federal Register on August 23, a final rule updating the Davis Bacon and Related Acts. The changes will apply, with limited exceptions, to construction contracts entered into after that date. The following is a non-exhaustive list of key provisions in the final rule.
 

The Rule Changes How Prevailing Wages Are Calculated

The 800-page rule will restore the DOL’s definition of prevailing wage to make it equal to the wage rate paid to at least thirty percent (30%) of workers, (rather than the existing fifty percent (50%), in a given trade in the locality of the project.

The DOL says the new rule should make the process of updating the prevailing wage rates easier. Since 1983, the DOL has used pay surveys to set the prevailing wage in the federally funding project’s location. In this process, at least fifty one percent (51%) of surveyed wages needed to be within a “same or similar” margin. If not, the weighted average of all wages is used. According to the DOL this could result in situations where low wages drag down the overall wage rate for a particular trade.

Most wage determinations by the DOL will continue to use the county where the project is located as the basic geographic unit for determining the prevailing wage. If there is not sufficient wage data for a particular county, however, the DOL may use data from nearby counties.

The rule would authorize the DOL to adopt prevailing wage rates determined by state and local governments. The DOL would also be able to issue wage determinations for labor classifications where insufficient data was received through its wage survey process.

In addition, the final rule allows for periodic updates to a prevailing wage rate when such rate is outdated and has not been set by a collective bargaining agreement.
 

Increased Enforcement Provisions in the Rule

The DOL will also have greater authority to withhold money from a contractor in order to pay workers the appropriate prevailing wage rate.

The new rule will require an anti retaliation provision in contracts subject to Davis Bacon to protect workers from being punished or fired if they raise wage-related concerns.

The rule has a provision that expands upon the existing requirement making prime contractors responsible for Davis Bacon compliance of their subcontractors. Prime contractors will be required to pay any back wages regardless of intent.

There will be a responsibility requirement on “upper tier” subcontractors to pay back wages of lower tier subcontractors if they had knowledge or recklessness of underpaying the prevailing wage rate or otherwise violating the prevailing wage law.

There will be more stringent recordkeeping requirements. Contractors will be required to keep not only the payroll records, but also each worker’s last known phone number, email address, and contact information. Records of each worker’s correct classification or classifications actually performed, and the hours worked in each classification must be retained. Contractors, subcontractors and funding recipients must maintain Davis-Bacon contracts, subcontracts, and related documents. The retention period for all of these records is for at least three years after the work on the prime contract for the project is completed.
 

The Rule Clarifies that Energy Infrastructure Projects and Other Work May Be Subject to the Davis-Bacon and Related Acts

The final rule clarifies that certain projects, such as installation of solar panels, wind turbines, broadband internet and electric car changing stations will be considered construction activities subject to the Davis-Bacon Act. 

Demolition and removal activities are subject to the Davis-Bacon and Related Acts labor standards when such activities alone constitute construction, alteration, or repair of a building or work. 
 

The Rule Revises the Definition of “Site of Work” to Include a “Secondary Construction Site”

The final rule will make the Davis-Bacon and Related Acts labor standards applicable to a “secondary construction site” which is defined as any other site where a significant portion of the building or work is constructed, provided that such construction is for specific use in that building or work and does not simply reflect the manufacture or construction of a product made available to the general public, and provided that the site is either established specifically for the performance of the contract or project, or is dedicated exclusively, or nearly so, to the performance of the contract or project for a specific period of time. 

Various trade associations have indicated there will be litigation challenging the changes enunciated in the final rule.  If you have any questions about the provisions in the rule, you may contact Catherine Strauss at (614) 462-1069 or catherine.strauss@icemiller.com or Patrick Devine at (614) 462.2238 or patrick.devine@icemiller.com at Ice Miller LLP. 

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.