DOL asserts priority over competing claims
Davis-Bacon Act
The Department of Labor's (DOL) priority regarding funds withheld for violations of the Davis-Bacon Act (DBA) and the Contract Work Hours and Safety Standards Act (CWHSSA) is a key focus of discussion. It is clarified by the DOL that they have precedence over other claims to withheld funds, such as those from a contractor's surety, contracting agency, trustee, assignee, successor, or claims under the Prompt Payment Act. Wage and Hour emphasizes that withholding encompasses unpaid wages, monetary relief, and is broad in scope. Furthermore, the agency highlights that fund suspension may occur when a contractor fails to submit certified payroll or provide the required records. In the interest of clarity and precision, Wage and Hour introduces changes to the proposed rule, including edits to the withholding contract clauses and the addition of language specifying that fund suspension should continue until necessary funds are withheld.
The agency also justifies the DOL's priority to withheld funds, stating that it would be unjust and contrary to public policy to allow other claims to take precedence. Wage and Hour cites various court cases that support the DOL's stance, including those that demonstrate withheld funds are not considered part of the contractor-debtor's bankruptcy estate. The department further discusses the proposed changes to the contract clause, which aim to prioritize the DOL's claims over competing claims. It is important to note that the final rule adopts these proposed changes.
One notable addition in the discussion is the introduction of a new section called "Severability" under subpart C. This addition includes a new provision, § 5.40, which focuses on severability. The purpose of this addition is to highlight the agency's belief that the provisions within part 1 and part 5 can operate independently of each other, thus supporting the Department of Labor's stance on the matter. In order to ensure clarity and inclusivity, the Wage and Hour division emphasizes the importance of using plain language and gender-neutral terminology in the final rule. Furthermore, the department specifies that the final rule will generally apply only to contracts that are entered into after the effective date of the rule.
New rules will generally apply only to new contracts entered into after the effective date of October 23, 2023
The Wage and Hour department addresses the applicability date of the final rule, specifying that it generally applies to new contracts entered into after the effective date of October 23, 2023. However, there are exceptions to this rule. For instance, contracts that undergo significant changes to include covered work, contracts where an option to extend the term is exercised, and certain ongoing contracts may also be subject to the rule. The department also acknowledges the Paperwork Reduction Act of 1995, highlighting the Department's responsibility to consider the impact of paperwork and information collection requirements on the public.
Regarding information collection, the agency outlines the Department's specific requirements, such as the Davis-Bacon Certified Payroll and Requests to Approve Conformed Wage Classifications and Unconventional Fringe Benefit Plans. Furthermore, the department discusses the final rule's modifications to § 5.5(a)(1) and § 5.28, emphasizing the obligation for contractors and subcontractors to retain and preserve Davis-Bacon contracts, subcontracts, and related documents for a period of 3 years after completing all work on the prime contract.
Department of Labor's (DOL) information collection requirements
The Wage and Hour division of the Department of Labor (DOL) is responsible for managing information collection requirements related to the Davis-Bacon and Related Acts (DBRA) regulations. This includes two specific information collections: the Davis-Bacon Certified Payroll and Requests to Approve Conformed Wage Classifications and Unconventional Fringe Benefit Plans. Contractors and subcontractors are required to maintain records pertaining to contracts and subcontracts, such as bids, proposals, amendments, changes, and extensions. Accurate recordkeeping is essential for promoting transparency and accountability in the construction industry.
In an effort to enhance recordkeeping practices, the DOL proposes a new requirement to include telephone numbers and email addresses in the records, ensuring accessibility to the DOL and contracting agencies upon request. Additionally, the proposed rule seeks to eliminate the use of conformances that aim to evade the application of listed classifications in the wage determination. Feedback on the proposed changes varied, with some supporting the revisions and others expressing concerns over potential burdens on contractors.
In response to the comments received, the DOL has decided to adopt the changes as proposed in the final rule. This will result in a slight increase in paperwork burden for the Davis-Bacon Certified Payroll, while leaving the burden for Requests to Approve Conformed Wage Classifications and Unconventional Fringe Benefit Plans unchanged. The DOL has determined that the final rule constitutes a "significant regulatory action" as defined in section 3(f)(1) of Executive Order 12866.
Furthermore, the DOL has updated the DBRA regulations in line with Executive Order 13563, which requires agencies to consider costs and benefits when making regulatory changes. As part of these updates, the DOL has decided to revert to the "three-step" method for determining prevailing wages. They have also revised § 1.6(c)(1) to establish a mechanism for regular updates to non-collectively bargained prevailing wage rates based on the Employment Cost Index (ECI). The impact of the rule is expected to affect only a subset of firms, with contractors and workers being the primary focus.
In terms of costs and benefits, the DOL estimates that implementing the rule will incur an initial cost of $39.3 million, followed by an annual cost of $7.3 million over the course of the first ten years. These considerations align with Executive Order 13563's requirement to assess the economic implications of regulatory actions.
DOL’s goal of returning to the definition of "prevailing wage" used from 1935 to 1983 92,800 firms and 1.2 million workers could be affected
Wage and Hour has outlined the goals of the Department in updating the regulations for the Davis Bacon Act (DBRA). These goals include providing clarity, enhancing usefulness, and addressing existing challenges. The agency has highlighted specific changes to the DBRA regulations, such as reverting to the original definition of "prevailing wage" used from 1935 to 1983, revising the delineation of wage survey data, and reducing the need for "conformances."
In order to strengthen enforcement, the Department has made the decision to ensure that any omitted contract clauses or wage determinations become effective. This will help protect workers' rights and uphold fair labor standards.
The rule has the potential to impact a significant number of firms and workers. The Department estimates that approximately 92,800 firms and 1.2 million workers could be affected by the new regulations. To estimate the number of potentially affected workers, the Department has adopted the same approach used in the 2021 final rule "Increasing the Minimum Wage for Federal Contractors." In addition, the Department estimates that between 152,900 and 184,500 firms could be affected by the Related Acts, and approximately 883,900 workers may be impacted.
The demographics of the construction industry are also discussed by Wage and Hour. The majority of workers in this industry are male and Hispanic. When looking specifically at registered apprentices, most of them are male and white.
In terms of costs, the Department estimates that the total costs associated with implementing the final rule will amount to $7.3 million over the first ten years. Additionally, it is estimated that an average of four hours will be required for a human resources staff member to review the rule for regulatory familiarization. The implementation costs are also higher than initially proposed due to a larger estimate of the time required to review the regulation.
Overall, the Department's update to the DBRA regulations aims to bring about greater clarity, enforce wage and labor standards, and ensure fairness for workers in the construction industry.
DOL will publish new wage rates from an average of 7.8 wage surveys per year
The implementation costs associated with frequently updated wage rates are discussed by Wage and Hour. The Department of Labor (DOL) is expected to publish new wage rates based on an average of 7.8 wage surveys per year. However, some firms will not incur additional implementation costs as they already regularly pay updated prevailing wage rates.
Wage and Hour also addresses the regulatory familiarization costs related to the final rule. The department estimates that it will take approximately four hours for a human resources staff member to review the rule. Furthermore, the agency highlights that the implementation costs of the final rule are higher compared to the proposed rule due to increased time required for regulation review.
Regarding construction costs and inflation, Wage and Hour notes that the impact on wages will be minimal and the direct costs for employers will be manageable. The department also discusses other provisions of the rule, including the adoption of state and local government prevailing wage rates, as well as clarifications on the scope of coverage under the Davis-Bacon and Related Acts (DBRA).
Additionally, Wage and Hour mentions provisions that allow the DOL to combine rural and metropolitan county data for determining prevailing wage rates, publish rates even with limited data, and adopt state and local rates under certain conditions. The agency also provides clarification on existing policies such as the definitions of "building or work" and "public building or public work." Furthermore, there are provisions to expand the definition of "site of the work" to include certain secondary worksites and require effective contract clauses and wage determinations.
The potential impact of revising the definition of "prevailing wage" and the provision to update outdated wage rates using the Employment Cost Index (ECI) are discussed by Wage and Hour. The department acknowledges the potential administrative burden on agencies but expects the overall time involved to be insignificant. Furthermore, the agency addresses the potential for limited income transfers to workers in the form of increased wages.
Wage and Hour provides detailed tables that depict the prevalence of calculated prevailing wages based on publication rule, classification, and construction type. For instance, Table 6 showcases the changes in fringe benefit rates for various crafts such as cement masons, laborers, plumbers, roofers, bricklayers, and electricians. Table 7 presents the prevalence of calculated prevailing wages categorized by construction types such as heavy, highway, residential, and building construction. These tables are accompanied by discussions on the impact of transitioning from the current definition of "prevailing" to the new definition on wage rates and fringe benefit rates.
The potential income transfers to workers resulting from the update of outdated prevailing wage and fringe benefit rates on Davis-Bacon projects are also addressed. Wage and Hour references the Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OEWS) data as a general wage estimate for certain worker categories. The use of the BLS Employment Cost Index (ECI) to update wage rates is discussed, and Table 10 provides summary statistics on the per hour income transfers to workers that may occur due to updating non-collectively bargained Davis-Bacon wage rates. The agency also highlights potential cost savings for contractors and the Federal Government as a result of the rule.
Proposed benefits include improved government services, increased productivity, and reduced turnover
The Department of Wage and Hour highlights the potential advantages of the rule, such as enhanced government services, improved productivity, and decreased turnover. Additionally, it makes reference to several studies that indicate that the implementation of living wage ordinances in municipal contracts does not negatively impact competitiveness, and in some cases, even improves it. The department also emphasizes the importance of clarifications made throughout the rule to clearly identify the contract workers covered under the Davis-Bacon and Related Acts (DBRA). Moreover, it cites various studies suggesting that union workers tend to be more productive than their non-union counterparts and that higher wages can contribute to increased productivity. While acknowledging that the specific studies do not directly address changes in DBRA prevailing wages, the department argues that the general findings may still be applicable.
Wage and Hour does not have the needed data to measure impact on small businesses
While the cited literature may not directly address changes in prevailing wages under the Davis-Bacon Act (DBRA), the Department acknowledges its potential relevance to the topic. The agency emphasizes the importance of rulemaking and outlines the objectives of the final rule, which aim to modernize and update the regulations outlined in 29 CFR parts 1, 3, and 5. In line with the Regulatory Flexibility Act of 1980 (RFA) and the Small Business Regulatory Enforcement Fairness Act of 1996, the Wage and Hour division references the obligation of Federal agencies to consider the impact of their proposals on small entities. Recognizing the potential effects on small businesses, the Department acknowledges that it lacks data to quantify the number of firms that may experience changes in payroll costs. The agency also addresses comments from the Small Business Administration (SBA) and other small business representatives, stating that the Department has extended the estimated time for rule familiarization.
New rule not applicable to prefabrication companies, material suppliers, or truck drivers
Wage and Hour's discussion revolves around various aspects of the rule regarding the Davis-Bacon Act (DBRA). They address the decision to not extend coverage to prefabrication companies, material suppliers, or truck drivers, but rather codify existing policy with minor modifications. The agency also provides estimates on the number of potentially affected small businesses, ranging from 101,700 to 127,800.
Furthermore, Wage and Hour highlights the impact of the rule on small businesses, projecting direct employer costs of $39.3 million in Year 1, with average annualized costs of $7.3 million over a 10-year period. Recordkeeping requirements are also addressed, including a longer retention period and the obligation to maintain worker contact information such as telephone numbers and email addresses.
The agency delves into the rule's clarifications on existing policies, such as the definitions of "building or work" and "public building or public work," the applicability of the "material supplier" exemption, and the inclusion of demolition activities under DBRA coverage. Additionally, revisions are made to the definition of "site of the work" to encompass certain secondary worksites, potentially increasing the number of small firms subject to Davis-Bacon labor standards.
Wage and Hour acknowledges the Department of Labor's decision to enhance clarity in the DBRA regulations when discussing alternatives to the rule. Despite the potential impact on small businesses being minimal and no significant expansion of Davis-Bacon coverage, the agency narrows the scope of coverage at secondary construction sites to address cost concerns of small businesses. While alternatives such as relaxing recordkeeping requirements were considered, effective compliance and enforcement were prioritized, leading to their rejection.
The agency assures compliance with the Unfunded Mandates Reform Act of 1995, noting that the rule is not expected to surpass the threshold for an unfunded Federal mandate. Similarly, it confirms compliance with Executive Order 13132, which pertains to federalism implications, and Executive Order 13175, which involves Tribal implications. The discussion also includes two appendices, one listing surveys in the prevailing wage demonstration and the other outlining the Department's wage determination protocols.
Lastly, Wage and Hour commences by defining key terms such as "area," "construction type," and "United States or the District of Columbia." It goes on to explain the process of determining wage rates and fringe benefits, utilizing data from contractors, labor organizations, and public officials. The agency outlines the procedure for obtaining and consolidating wage rate information, specifying the criteria considered by the Administrator. Additionally, it addresses the Administrator's authority to adopt State or local wage rates under specific circumstances and the requirement for Federal agencies to annually report their construction programs to the Administrator.
contracting agencies to identify and incorporate wage determinations into bid solicitations and contract specifications
The Wage and Hour division addresses several key aspects related to wage determinations under the Davis-Bacon Act. First, it emphasizes the importance of submitting a comprehensive request for a project wage determination, which should include detailed information about the project and the required job classifications. It also highlights that general wage determinations remain valid until they are revised, superseded, or canceled.
The division further explains the process for revising wage determinations, which can be done to reflect changes in prevailing wage rates or to ensure their currency. It emphasizes the responsibility of contracting agencies to incorporate the most recent wage determinations into contracts on the anniversary date of their award, unless an exception is granted by the Department of Labor.
To correct any clerical errors, contracting agencies are required to make necessary amendments to wage determinations. Additionally, the division outlines the steps for incorporating a wage determination after contract award or during ongoing construction, in cases where the determination was not initially included or an incorrect determination was used.
The division also discusses the consequences for noncompliance with wage determinations. If a recipient or sub-recipient of federal assistance fails to incorporate the required wage determination, the agency may terminate the contract or withhold funds.
In situations where current wage data is unavailable, the division provides guidance on the process for making wage determinations. It also explains the procedure for requesting reconsideration of a determination or a decision made by the Administrator.
Furthermore, the division addresses the "anti-kickback" regulations under the Copeland Act, noting their applicability to contracts subject to federal wage standards. Definitions for terms such as "building or work," "construction, prosecution, completion, or repair," "public building or work," and "agency" are provided for clarity.
Finally, the division highlights the obligation of contractors and subcontractors to submit weekly statements regarding wages paid and outlines the circumstances and procedures for payroll deductions.
contractors and subcontractors to preserve payroll records for three years
The agency provides clear guidelines on permissible methods of payment and emphasizes the importance of contractors and subcontractors preserving payroll records for a minimum of three years. Exceptions to these requirements are also addressed, such as contracts under $2,000 or cases where the Secretary of Labor grants an exemption. Furthermore, the agency defines key terms including "Administrator," "agency," "Federal agency," "Agency Head," "apprentice," and "helper." The regulations highlight the need for contracts to incorporate these requirements, even though they are legally binding regardless of inclusion. The process for seeking approval from the Secretary of Labor to make payroll deductions is also outlined. To enhance clarity, part 5's authority citation is revised, and § 5.1 is modified to provide a clearer purpose and scope of the regulations. Additionally, § 5.2 is revised to define important terms such as "building or work," "construction, prosecution, completion, or repair," and "contract." Essential definitions of "contracting officer," "contractor," and "Davis-Bacon labor standards" are provided as well.
Wage and Hour division further expands the list of defined terms to include "development statute," "site of the work," "material supplier," "prime contractor," "laborer or mechanic," and "public building or public work." The definition of "wage determination" is discussed, and its application under § 1.6 is clarified. Updates are made to § 5.5, introducing new contract clauses that encompass minimum wages, wage rates, and fringe benefits, along with often recurring classifications. The definition of "subcontractor" is revised, and the term "wages" is further clarified. Additionally, the regulations elaborate on the process for withholding funds from a contractor to settle wage violation liabilities. Criteria for the conformance of an additional classification and wage rate are outlined, and a procedure is established for referring questions to the Administrator for determination. The requirements for record-keeping and certified payrolls are addressed, including the necessary information and timeframes for record retention. Finally, the regulations cover the obligations related to fringe benefits and apprenticeship programs in detail.
ratio of apprentices to journey workers
The agency addresses several important aspects of the Davis-Bacon Act and related acts. Firstly, it focuses on the permissible ratio of apprentices to journey workers on a job site, as well as the corresponding wage rates. It provides a clear outline of the process contractors need to follow when submitting records to the Department of Labor and highlights the potential consequences for failing to fulfill this obligation.
Additionally, the content emphasizes the requirements for equal employment opportunity and the potential sanctions that can be imposed for non-compliance. It also delves into the subcontracting process and clarifies the responsibilities that fall upon the prime contractor.
Lastly, the content explores the anti-retaliation provisions of the Davis-Bacon and Related Acts, along with the Contract Work Hours and Safety Standards Act. It effectively conveys that wage and hour records must be maintained by contractors for a minimum of three years following the completion of a contract. These records must include essential information such as worker classification, hours worked, and wages paid. The Department of Labor reserves the right to inspect these records to ensure compliance.
Moreover, the content emphasizes the requirement for agencies to include the clauses prescribed by § 5.5 in contracts and underscores the potential repercussions should they fail to meet this requirement.
confidentiality requirements for workers who make complaints or provide information during investigations
The agency's discussion begins by highlighting the critical enforcement responsibilities of federal agencies in ensuring compliance with labor standards provisions. This includes thorough investigations of contracts and interviews with workers. Additionally, the agency emphasizes the procedure for suspending or withholding funds from contractors who fail to comply with the established standards. It further addresses the confidentiality requirements for workers who come forward with complaints or provide information during investigations.
Moving on, the agency outlines the process for resolving wage payment disputes, elaborating on different methods to initiate such disputes. It sheds light on the potential of cross-withholding funds from multiple contracts held by the same contractor. Additionally, the agency provides clarity on requesting a hearing to contest the Administrator's findings, emphasizing the associated procedures. Additionally, it covers the process for restitution in cases where workers have been underpaid or incurred monetary damages. Furthermore, the agency delves into the topic of debarment proceedings, including the standards and procedures for initiating such actions and requesting a hearing. Lastly, the agency addresses the consideration of whether a debarred party has an interest in another firm.
Shifting focus, the agency firstly discusses the process of seeking rulings and interpretations related to wage determinations and rules. It then elucidates the process of requesting reconsideration of a ruling or interpretation. The agency provides comprehensive information on the limitations, variations, tolerances, and exemptions outlined in the Contract Work Hours and Safety Standards Act. It subsequently outlines the steps to address retaliation against workers or job applicants. Furthermore, the agency highlights the scope and significance of Davis-Bacon fringe benefit provisions, along with their impact. It explains the calculation of contribution or cost for fringe benefits and the specific requirements for unfunded plans.
Delving deeper, the agency clarifies the definition of fringe benefits under the Davis-Bacon and Related Acts, in addition to the prerequisites for unfunded plans. It outlines the procedure for seeking approval of an unfunded plan from the Secretary of Labor. Additionally, the agency provides insights into wage determinations and the manner in which fringe benefits may be listed. It further details how contractors or subcontractors can fulfill their wage determination obligations. Moreover, the agency sheds light on the administrative expenses incurred by contractors or subcontractors and identifies which costs qualify as creditable towards their wage obligations. Finally, the agency includes a severability clause as part of its comprehensive coverage.
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