This article was featured in the September 2023 edition of the Utility Contractors Association of New England, Inc.’s Construction Outlook.
On August 8, 2023, the United States Department of Labor (“DOL”) unveiled a new “final rule” intended to “update regulations that implement” the Davis-Bacon Act and related acts “to better the needs of construction workers on federal construction investments.” According to a DOL press release, the new updates – which become effective on October 23, 2023 – are the “most comprehensive in decades.” Additional information is available at the DOL’s website.
As many of you are aware, the Davis-Bacon Act applies to contractors and subcontractors performing work on federally-funded or federally-assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Generally speaking, the federal law requires contractors and subcontractors to pay their laborers and mechanics no less than the locally prevailing wages and fringe benefits. The DOL is empowered to “prescribe reasonable regulations” implementing the law, which appear as part of Title 29 of the Code of Federal Regulations. Before issuing its final rule this August, the last substantial revisions to the regulations occurred during the Reagan Administration, in 1981-1982.
There are too many changes to effectively address in this article; if it is of interest, we are happy to host a webinar to discuss the looming changes in more detail. Rather, this article is intended to make you aware of the coming changes and provide you with references to resources so that you can review, consult with competent and experienced counsel, and plan accordingly. The DOL has summarized notable changes as follows:
- Creating new efficiencies in the prevailing wage update system and making sure prevailing wage rates keep up with actual wages which, over time, would mean higher wages for workers.
- Returning to the definition of “prevailing wage” used from 1935 to 1983 to ensure prevailing wages reflect actual wages paid to workers in the local community.
- Periodically updating prevailing wage rates to address out-of-date wage determinations.
- Providing broader authority to adopt state or local wage determinations when certain criteria are met.
- Issuing supplemental rates for key job classifications when no survey data exists.
- Updating the regulatory language to better reflect modern construction practices.
- Strengthening worker protections and enforcement, including debarment and anti-retaliation provisions.
Notably, by returning to the pre-1982 definition of “prevailing wage,” the DOL is moving away from the current 2-step, weighted average process for calculating the applicable prevailing wage in favor of the following 3-step process:
- if a majority (over 50%) of wage rates in a classification are the same, that is the prevailing wage,
- if there is no majority, then the wage rate earned by the greatest number of workers, provided that at least 30% earn that rate, is the prevailing wage; and
- if no wage rate is earned by at least 30% of workers in the classification, use a weighted average.
The DOL has published a useful chart comparing the existing regulations to the new changes going into effect in October. In addition, the DOL has published a helpful FAQ. As you will see, the changes are voluminous and deal with numerous topics and details, including wage and fringe benefit rates, wage determinations, definitions (including with respect to demolition), compliance issues, and enforcement.
