Department Of Labor Changes Prevailing Wage Rate Calculation And Other Davis Bacon Regulations

• Jurisdiction: United States,Federal
• Law Firm: Peckar & Abramson PC
• Subject Matter: Employment and HR, Real Estate and Construction, Employee Rights/ Labour Relations, Construction & Planning
• Author: Mr Aaron Schlesinger, Jessica A. Merejo and Marcos Gonzalez
• Published date: 14 August 2023

The Department of Labor ("DOL") will soon issue final rules governing payment of workers on federal construction projects. Key changes include:

1. Restructured calculation of "prevailing wages";
2. Incorporation of anti-retaliation measures to protect victims of violations; and
3. Expanded rights to back wages where violations are found.

The changes come as billions of federal dollars are being poured into new clean energy investments and public works projects through the Inflation Reduction Act and the Infrastructure Investment and Jobs Act.¹

> The new DOL rule is the first update in 40 years to the formula used to set "prevailing wages" under the Davis-Bacon Act ("DBA") and Related Acts Regulation (collectively, the "DBRA"). The changes span over 800 pages; this alert will only explain the DBRA's key changes.

BACKGROUND:

The DBRA²requires the payment of prevailing wage rates and fringe benefits to laborers and mechanics on federal or federally-assisted construction contracts.³The DOL's prevailing wage rate includes local wages and fringe benefits paid to workers under their labor category and in their geographic area (locality). By requiring the payment of minimum prevailing wages, Congress sought to "ensure that Government construction . . . would not be conducted at the expense of depressing local wage standards."⁴The Supreme Court has called the DBA "a minimum wage law designed for the benefit of construction workers."⁵The DOL states that it is updating the '81-'82 regulations because they "were mistaken or ultimately resulted in outcomes that are increasingly in tension with the DBA statute itself."⁶

CHANGES:

Calculation Process Changes:

The changes include several elements intended to improve the information used for wage determinations and to speed up the determination process. To this end, the new rule gives the Wage and Hour Division (WHD) Administrator authority to adopt state or local wage determinations as the DBA prevailing wage in certain circumstances.⁷

The DOL currently utilizes a survey process and designates a rate as "prevailing" if more than 50% of workers in a locality are paid the same amount. If the survey does not produce sufficient responses, the prevailing rate is the weighted average. That approach is changing.

The new rule returns to the "three-step" method in effect from 1935 to 1983. Now, when there is no one wage paid to a majority of workers in a classification, a wage is prevailing if paid to at least 30% of workers ("the...