Remain Compliant: Updates to Davis Bacon and Related Act Regulations
What Are the Davis Bacon and Related Acts?
The Davis-Bacon Act (DBA) requires that each contract over $2,000 for work performed on federal or federally funded projects contain a clause that sets forth the minimum wages to be paid to contractors and subcontractors employed under the contract. The regulations of this act require that workers are paid no less than the locally prevailing wages and fringe benefits on an hourly basis for the work they complete on projects. This wage is determined by the Secretary of Labor.
The Related Acts refer to a series of added prevailing wage provisions to statutes that assist construction projects through grants, loans, etc. If the project is funded or assisted under more than one Federal law, prevailing wage provisions regulated in the DBA may apply.
Updates to the Davis-Bacon and Related Acts
The Department of Labor issued a final rule regarding the Davis-Bacon and Related Acts on August 8th, and they are scheduled to take effect on October 23, 2023. The government is saying that this final rule is being put in place to better reflect the needs of construction workers on federal construction investments. It delivers more clarity on terminologies within the acts as well as wage rates.
Some key changes to the Final Rule include:
- Revising the definition of “prevailing wage”.
- Periodically updating prevailing wage rates.
- Making the prevailing wage requirement effective by operation of law. This means that even if a federal agency does not include DBA language within their employer/contractor contract, they are still required to pay the prevailing wages.
- Updates to DBA regulatory language to reflect modern construction practices. Some of these updates include definitions of “building or work,” “covered transportation,” “material supplier,” and “prime contractor,” to name a few.
- Creating stronger protections and enforcement, which includes debarment and anti-retaliation provisions.
One of the biggest changes is that the term prevailing wage has been redefined, now following the “30-percent rule,” a 3-step process used for determining whether or not a wage is considered prevailing. This rule was followed between 1935-1982, before it was eliminated, based on the observation that it didn’t account for the majority of workers, giving undue weight to collectively bargained rates. The 30-percent rule’s 3-step process entails,
- Using the rate paid to a majority of workers.
→ If there is no such wage, then the wage paid to the largest number of workers would be used, so long as it was paid to a minimum of 30% of the workers.
→If the 30 percent rule can’t be met, then the weighted average rate is to be used.
The 30-percent rule is being reintroduced because the DOL believes that its removal in 1982 led to an overuse of average rates, citing that they had more than doubled. The weighted averages increased from approximately 15% of classification rates across all wage determinations to 64% now. The DOL’s position is that the reintroduction of the 30% rule serves to protect local wage standards.
Not everyone sees it that way, however. According to the Associated Builders and Contractors trade association (ABC), the prevailing wage determination process is completely inaccurate. Ben Brubeck, its Vice President of Regulatory, Labor, and State Affairs has stated, “The rule makes it much more likely that the DOL will adopt union wage scales at the prevailing wage at a greater frequency than in current practice, which already adopts union wage scales at improbable rates.”
Regardless which way you see things, contractors entering into any contracts after the effective date of the final rule (October 23, 2023) will be impacted.
DBA Compliance Seminars
The DOL will be hosting a free, virtual DBA compliance seminar on October 31, 2023 from 1:30-3:30 PM, EST. This seminar will provide an overview of the changes, wage determinations and conformances, and compliance assistance and enforcement processes.
Additionally, there will also be a free, virtual seminar on the Service Contract Act on Nov. 1, 2023 from 1:30-3:30 PM, EST.
You can register for these seminars on Eventbrite.
For more information regarding what the seminars entail, you can visit DOL’s Prevailing Wage Seminars page.
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