The District Council of Iron Workers vs. the Wage and Hour Division: A Dispute Over Prevailing Wage Rates for Ironworker Classifications

In a case between the District Council of Iron Workers of the State of California and Vicinity (District Council) and the Wage and Hour Division (WHD) of the United States Department of Labor (DOL), a dispute arose regarding the determination of prevailing wage rates for ironworker classifications. We will delve into the intricacies of this case, examining the arguments put forth by each party, and shedding light on the subsequent rulings made by the Administrative Review Board (ARB) and the Secretary of Labor.

Background: Wage Survey and Ironwork Classification in California

In 2013, the Wage and Hour Division (WHD) carried out a survey to determine the prevailing wage for ironworkers on residential construction projects in rural California. During this survey, a total of 18 workers were identified as "Iron Workers" specializing in Structural/Reinforcing/Ornamental work.

To gather more information, WHD reached out to contractors to assess the specific type of ironwork each worker performed. The results showed that three workers were engaged in reinforcing ironwork, while 15 workers were involved in structural ironwork. None of the workers were found to be performing ornamental ironwork.

However, due to insufficient data on wages in these specific ironworker classifications, WHD did not publish a prevailing wage rate for any of the three categories.

In 2016, the District Council of Iron Workers requested a reconsideration of the wage determinations for certain rural counties concerning the ironworker classification. The goal was to obtain a prevailing wage rate for these workers.

Unfortunately, on July 5, 2019, the WHD Administrator denied the District Council's request. The administrator stated that WHD holds broad discretion in conducting wage surveys, defining job classifications, and determining wage rates under the Davis-Bacon Act (DBA).

In response, the District Council petitioned for review before the Administrative Review Board (ARB) on February 25, 2020. They argued that WHD had abused its discretion by not adhering to its own guidelines and relevant case law on proper survey procedures.

By bringing their concerns to the ARB, the District Council seeks a fair evaluation of the WHD's approach to establishing prevailing wage rates for ironworkers in rural counties.

Significance of Job Classifications and DBA's Purpose

The Davis-Bacon Act is a law that applies to "laborers and mechanics" in the construction industry, and the responsibility of analyzing and assessing these job classifications is given to the Wage and Hour Division (WHD) of the Department of Labor. WHD's regulations allow them to consider a wide range of information when conducting surveys to determine the prevailing wage rates.

The D.C. Circuit Court affirmed that job classifications under the Davis-Bacon Act must be based on the prevailing practices in the local area. This means that the wages paid by federal contractors should reflect the wages that are typically paid in the same locality.

The court emphasized the importance of job classifications reflecting the prevailing practices in the area to achieve the goals of the Davis-Bacon Act. WHD, therefore, has the responsibility to ensure that the classifications in the wage determination are comprehensive and supported by the prevailing practices and evidence in the record.

To determine the locally prevailing wage rates for different job classifications, WHD follows a survey process. This process is designed to gather data and information on wages paid in the geographic area. It involves steps outlined in the DBA Manual of Operations, including a step called "Clarify and Analyze Data." During this step, WHD reaches out to contractors to obtain any missing or unclear data on their wage reports (known as WD-10's). They also aim to address any issues regarding area practices.

In some cases, work classifications are established by firms that have collective bargaining agreements with unions. WHD contacts the relevant unions and confirms the information with the management's representative to determine the appropriate work classification.

If there is disagreement between the unions and contractor associations on the proper job classifications, WHD must conduct a survey to determine which classification actually performed the work on similar projects in the area. This helps establish the prevailing practice for that particular work classification.

WHD's Approach to Ironworker Wage Determination and Rationale for Treating Ironworkers as Distinct Classifications

The Wage and Hour Division (WHD) collected data on 18 workers who were involved in ironwork on seven different projects. These workers were all classified as "Iron Workers" and were primarily engaged in "Structural/Reinforcing/Ornamental" work. It is worth noting that most of the contractors who provided wage data were union contractors.

Out of the 18 workers, 17 were paid wages that complied with the applicable labor agreement. To ensure accuracy, WHD contacted the contractors to determine the specific type of ironwork performed by each worker. As a result of this investigation, three separate subclassifications for ironworkers were identified based on the information gathered.

WHD defended their approach to the wage survey by explaining that they have historically treated structural, reinforcing, and ornamental ironworkers as distinct classifications. However, their decision not to consult with the union during the clarification process deviated from their own guidance.

The overall aim of WHD's guidance for conducting surveys is to publish timely, accurate, and comprehensive wage determinations. By deviating from their established procedures without consulting relevant unions and contractor associations, WHD's actions can be considered an abuse of discretion.

Furthermore, this departure from their standard procedures contradicted the central purpose of the Davis-Bacon Act (DBA), which is to provide prevailing wage rates based on local area practices. By dividing the wage data into three separate ironwork subclassifications without consulting the union and contractor association, WHD's decision further violated the purpose of the DBA.

In summary, WHD's deviation from their usual procedures, especially when the wage data indicated that most ironworkers were paid the same rate determined by the collective bargaining agreement, not only contradicted the purpose of the DBA but also constituted an abuse of discretion.

Review and Decision by the Administrative Review Board

In July 2019, the WHD Administrator denied the District Council's request for reconsideration, asserting that their authority allows them to conduct wage surveys, define job classifications, and determine wage rates. In response, the District Council submitted a petition for review to the Administrative Review Board (ARB) in February 2020.

On September 27, 2021, the Administrative Review Board reviewed the case and upheld the decision made by the Wage and Hour Division Administrator. The Board determined that the Administrator's decision to recognize three distinct classifications for ironworkers and refrain from publishing specific wage rates for each category was reasonable, and that the Administrator's exercise of discretion was appropriate in this case.

The ARB upheld the decision of the Administrator based on the fact that the survey responses received did not meet the sufficiency requirement set by the WHD. This requirement states that a minimum of six workers and three employers must be included in the survey data. Since the survey did not meet this criteria for each ironworker classification, the WHD was unable to issue a prevailing wage determination for these classifications. The ARB concluded that the Administrator's decision was justified in light of this insufficiency.

Discretionary Authority: Secretary of Labor's Review and Reversal

In October 2021, the Secretary of Labor exercised his discretionary authority to conduct a thorough review of the ARB's decision and, in July 2022, ultimately reversed the ARB's ruling, stating that the WHD had misapplied its own guidelines for determining wage rates.

The District Council had voiced their concern that the WHD had unfairly disregarded the results of their wage survey. This survey indicated that a single ironworker classification should encompass the work in question, rather than being divided into three separate subclassifications. While the ARB had previously determined that the WHD Administrator had exercised discretion reasonably and within the boundaries of the DBA, the Secretary found that the WHD's violation of its own guidance undermined the very purpose of the law.

It was alleged that the WHD had abused its discretion by neglecting to follow its own Manual and failing to consult the signatories of the Collective Bargaining Agreement in order to establish an appropriate wage rate for the work involved. Consequently, no prevailing wage rate was published for this specific project.

As a result of these concerns, the matter has been remanded back to the Administrative Review Board (ARB) for further proceedings. The purpose of this remand is to ensure a fair and accurate determination of the prevailing wage rate by carefully considering the relevant regulations and guidelines.

Conclusion: Understanding ARB's Decision on DBA Interpretation

The ARB emphasizes the importance of granting the Secretary and the Wage and Hour Division (WHD) the necessary discretion to interpret the Davis-Bacon Act (DBA) and its regulations. This recognition acknowledges that enforcing the DBA requires a nuanced understanding of prevailing wage practices that may vary across different regions. By allowing flexibility in interpretation, the ARB aims to ensure that the DBA is applied appropriately in light of these regional differences.

The ARB's decision was prompted by concerns over the WHD's shift away from established guidance on determining prevailing wage rates. This departure raised questions about the WHD's adherence to the main objective of the DBA, which is to ensure that prevailing wage rates accurately reflect what is customary in a particular area.

The ARB has recognized the need to address these concerns and has made the decision to reverse and remand the case for further proceedings. This entails a thorough review of the interpretation of the DBA, with a focus on preserving the law's original purpose and ensuring the proper determination of prevailing wage rates.

It is important to note that the ARB's ruling does not mark the end of this matter. Rather, it is a step in an ongoing process aimed at upholding the fundamental principles of the DBA and ensuring that prevailing wage rates for ironworker classifications align with local practices.

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