Published date: 08/28/2023

After much waiting and anticipation since the notice of proposed rulemaking was first announced over a year ago, it finally happened. Our industry has just experienced the biggest update to the Davis-Bacon and Related Acts (DBRA) in almost 40 years. What does this mean?

In this blog we’ll highlight some of the most notable changes and updates that were made during the USDOL’s ‘Final Ruling’ published on August 23, 2023. Please note, however, that this is not a full and comprehensive rundown of all the changes that were made. If you would like to read everything updated, it is advised to consult the USDOL’s official publication.

Per the USDOL, the updates below are to go into effect beginning October 23, 2023. Let’s dive in.

Update: Providing a mechanism that will regularly update non-collectively bargained prevailing wage rates

Non-collectively bargained prevailing wage rates have been pulled from the traditional method of USDOL survey data. However, collectively bargained rates have been sent in to the USDOL by their respective union as they are updated. Because of this, the non-collectively bargained wage rates on a wage determination are updated less frequently than the “union” rates.

The Final Ruling:

The final rule adds a provision allowing periodic adjustments of certain out-of-date non-collectively bargained prevailing wage and fringe benefit rates on wage determinations. These adjustments will be based on data from the Bureau of Labor Statistic’s Employment Cost Index (ECI) or its successor data. Qualifying prevailing wage and fringe rates may be adjusted based on ECI data no more frequently than once every 3 years, and no sooner than 3 years after the date that the rates are published.

Update: Returning to the definition of “prevailing wage” that was used from 1935 to 1983, and returning to the “three step” method (also known as the 30% rule) to determine prevailing rates

Since 1983, the method for determining prevailing wages was as follows:

1.         If a majority (over 50%) of wage rates in a classification are the same, that rate is to be used as the prevailing wage rate.

2.         If no wage rate is earned by at least 30% of workers in the classification, then a weighted average is used.

The Final Ruling:

The final rule reverts back to the original methodology for determining prevailing wages, known as the “three-step process”, that was in effect before 1983. The three-step process is as follows:

1.         If a majority (over 50%) of wage rates in a classification are the same, that rate is to be used as the prevailing wage rate.

2.         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 used as the prevailing wage rate (if exactly 30%, it would count as prevailing).

3.         If no wage rate is earned by at least 30% of workers in the classification, then a weighted average is to be used.

This final rule also permits the Wage and Hour Division (WHD) to count wage rates that may not be exactly the same – such as escalator-clause rates, zone rates, night-shift differential, and combined hourly-fringe rates – as the same rate (for the purpose of determining the prevailing wage) if those rates are “functionally equivalent.”

Update: Giving the USDOL the authority to adopt state or local prevailing wages

The WHD was able to “consider” state or local prevailing wage rates when creating wage determinations and had to give “due regard” to information obtained from state highway departments for highway wage determinations. However, the DBA regulations did not clearly authorize the WHD to adopt state or local rates.

The Final Ruling:

The final rule amends the regulations to explicitly permit the WHD to adopt state or local prevailing wage rates for both highway and non-highway construction. This only pertains to circumstances where doing so would be consistent with the purpose of the DBA. Essentially, the administrator must determine that the state or local government’s method and criteria for setting prevailing wage rates are substantially similar to those the WHD uses in making wage determinations.

The criteria are as follows:

  • The state or local government must set prevailing wage rates and collect relevant data using a survey or other process that generally is open to full participation by all interested parties.
  • A state or local wage rate must reflect both a basic hourly rate of pay as well as any locally prevailing bona fide fringe benefits, and each of these can be calculated separately.
  • A state or local government must classify laborers and mechanics in a manner that is recognized within the field of construction.
  • The state or local government’s criteria for setting prevailing wage rates must be substantially similar to those the Administrator uses in making wage determinations.

Update: Reducing the need for conformance requests by adding frequently requested conformances to wage determinations

The WHD has accepted conformance requests using the SF-1444 form. When there is insufficient data for a contractor to assign a worker classification, contractors submit this form and wait for a determination to be generated.

The Final Ruling:

The final rule creates a new procedure through which the WHD may identify (and list on the wage determination) wage and fringe benefit rates for certain classifications in which it received insufficient data through its wage survey program.

The WHD will list such classifications and their respective rates where:

1.         the work to be performed by the requested classification is not performed by a classification already in the wage determination for which a prevailing wage rate has already been determined; or

2.         the requested classification is commonly used by the construction industry in the general area; or

3.         the wage rate, including any bona fide fringe benefits, for the classification bears a reasonable relationship to the prevailing wage rates contained in the wage determination.

Update: Modifying the types of projects subject to DBRA

Some language within the DBA has been in need of updating to provide more clarity on what particular types of projects definitively qualify for prevailing wages.

The Final Ruling:

Under the final rule, the USDOL will provide examples of those types of projects in a non-exhaustive list. Solar panels, wind turbines, broadband installation, and installation of electric car chargers are all subject to Davis-Bacon labor standards if they are built as a part of a contract with a federal agency or are otherwise covered by a Related Act. The rule also specifies that coverage may apply even if the construction activity involves only a portion of a building or work.

Update: Clarifying definitions within the Davis-Bacon and Related Acts code

Some language within the DBA has been in need of updating to provide more clarity about definitions pertaining to things like worker classifications, site of work, and trucking.

The Final Ruling:

Under this final rule, the WHD is expressly authorized to issue multi-county project wage determinations with a single wage rate per classification, using data from all the relevant counties in which a project will be performed.

In the event there is not sufficient wage data for a given county, this final rule permits the WHD to use data from nearby counties, even if one county could be characterized as “metropolitan” and the other as “rural.”

The final rule adds alternatives for specific circumstances to the existing definition of “area” in the context of determinations:

1.         Multi-county project wage determinations for projects in multiple counties where all included counties’ data will be combined and a single wage rate per classification issued for the project, and

2.         For the highway category of construction, the WHD may use state DOT highway districts or similar state geographic subdivisions used in lieu of counties as the initial area unit of a wage determination.

The final rule defines the term “material supplier” and excludes it from the definition of “contractor”. It specifies that although a material supplier may both deliver and pick up materials, an entity that is solely engaged in picking up and hauling away materials is not a material supplier.

It goes on to say that where workers spend a significant portion of their day or week onsite, short periods of time that in isolation might be considered de minimis may be added together. The total amount of time a driver spends on the site of the work during a typical day or workweek – not just the amount of time that each delivery takes – is relevant to a determination of whether the onsite time is de minimis.

Under the final rule, DBRA labor standards will apply at 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. The site must also be established specifically for the performance of the contract or project, or dedicated exclusively, or nearly so, to the performance of the contract or project for a specific period of time.

Update: Strengthening worker protections and enforcement of laws

This rule does not change or update any existing DBA regulation. It simply creates new worker protection guidelines and strengthens current debarment laws.

The Final Ruling:

The final rule creates new anti-retaliation provisions that are intended to discourage contractors and subcontractors from engaging in – or causing others to engage in – unscrupulous business practices that may discourage worker participation in WHD investigations or other compliance actions.

The final rule also clarifies that funds may be cross-withheld from any contract held by the same prime contractor, even if the violations occurred on a different contract. It also strengthens the department’s ability to cross withhold when contractors use single-purpose entities, joint ventures, or other similar vehicles to secure DBRA-covered contracts.

The final rule revises the debarment provisions to apply the same debarment standards under both the DBA and Related Acts. It also revises the Related Acts debarment regulations to mirror the DBA debarment provisions.

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If you are looking to take an even deeper dive to learn the ‘ins’ and ‘outs’ of Davis-Bacon and prevailing wage compliance, check out our online courses at https://lcptracker.com/academy/.

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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.

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