Federal prevailing wage law, known as the Davis-Bacon Act and Related Acts (Davis-Bacon Act), is applicable to almost every federal and federal-aid project. The rules governing the Davis-Bacon Act have been essentially unchanged for 40 years. But now, for the first time since the Reagan administration, the U.S. Department of Labor (Department) is updating the Davis-Bacon Act and making a number of significant changes to how the Davis-Bacon Act is administered. The updated regulations will be published in the Federal Register on August 23, 2023 and will become effective 60 days later on October 23, 2023. The draft final rule can be found here.
The final rule (at 716 pages, including supplementary information) contains a host of changes and updates, but there are a few that are of particular note. The primary and most significant change is a new definition of “prevailing wage.” Under the new rule, the prevailing wage will be determined by the wage paid to at least 30% of the workers in a particular trade and locality, rather than the current 50%. Previously, if at least 50% of workers in a particular trade and locality did not earn a single wage rate, the Department would use a weighted average. With a weighted average, the more low rates in the survey, the lower the determination of the prevailing wage. According to Vice President Kamala Harris, who was in Philadelphia earlier this month to announce the new regulations, under the new rule, a heavy equipment operator in Pittsburgh could expect their rate to go up from $17 per hour to $27 per hour.
Other changes set forth in the final rule are intended to keep prevailing wage determinations up‑to‑date and provide the Department with new tools for enforcement.
To enable faster updates to wage determinations, under the new rule, the Department will be able to rely on and adopt the prevailing wage determinations of state and local authorities, which may occur more often and take less effort than the Department’s own surveys.
To boost enforcement, the new rule contains an anti-retaliation provision to protect workers who raise concerns about wages, with enforcement actions that include debarment, and additional provisions allowing the Department to withhold payments from a contractor that is not complying with the requirements.
While the Biden administration is enthusiastic about the new rule, its enthusiasm is not shared by everyone. During the rulemaking process, the Associated Builders and Contractors (ABC), a trade group representing mostly non-union contractors, submitted a 67-page letter with comments and objections to the new rule. The ABC has now indicated that it plans to bring a legal challenge to the rule. “Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation,” said Ben Brubeck, ABC’s Vice President of Regulatory, Labor and State Affairs.
The new rule will undoubtedly bring change to federal and federally-assisted projects. It is important for both owners and contractors at every tier to become familiar with the new processes and requirements. There are also potential cost implications arising from the new rule that will need to be taken into consideration when developing projects and assessing the pool of available contractors for a given project. How it all plays out remains to be seen.
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