Suggested linguistic changes to improve clarity and readability

Davis-Bacon Act

The Department proposes to make several linguistic changes to defined terms in § 5.2 to improve clarity and readability. It further proposes to amend § 5.2 to remove paragraph designations of defined terms and instead to list defined terms in alphabetical order. The changes discussed proposed revisions to § 5.5(a)(3) to enhance Davis-Bacon compliance and enforcement by clarifying and supplementing existing recordkeeping requirements. The Department proposes to remove the table at the end of § 5.5 related to the display of OMB control numbers. Many comments support the proposed changes, while some contractor associations express concern that the changes are burdensome. The Department proposes to require contractors to maintain records of worker telephone numbers and email addresses. The final rule includes technical changes and minor revisions to § 5.5, including clarification that the FAR requirement is to incorporate contract clauses by reference.

The Department proposes to clarify that contractors must maintain and preserve basic records and information, as well as certified payrolls. The Department proposes to clarify that contractors must keep records of each worker's correct classification or classifications of work actually performed and the hours worked in each classification. The final rule updates the § 5.5(b) contract clauses by adding a reference to the new anti-retaliation provision and using gender neutral terminology. The final rule also updates § 5.5(b)(2) to reflect the Department's Civil Penalties Inflation Adjustment Act Annual Adjustment for 2023. The Department proposes to clarify that records must be preserved for at least 3 years after all the work on the prime contract is completed.  

The department discusses the importance of maintaining records of workers' telephone numbers and email addresses for enforcement purposes. The Department argues against letting subcontractors maintain records for a shorter period, as this would impede enforcement. The agency clarifies that contractors must keep records for all workers, even if they are classified as independent contractors. The Department proposes to revise § 5.5(a)(3)(ii) to clarify that the requirement to submit weekly payrolls applies to all entities responsible for maintaining the payrolls. The Department also proposes to revise § 5.5(a)(3)(ii) to clarify that compliance actions can be done by various means, not just by an investigation or audit. The Department proposes to add language to § 5.5(a)(3)(ii)(A) to allow for electronic submission of certified payrolls. The Department proposes to clarify that a valid electronic signature is enough for compliance with the Copeland Act.

Commentors suggest requiring payroll software

The Department of Labor has considered various suggestions for further revisions to the Davis-Bacon Act, one of which involves requiring electronic payroll software providers to grant access to archived certified payrolls. In response to these comments, the Department has decided to include language in § 5.5(a)(3)(ii)(A) that ensures certified payrolls remain accessible for at least 3 years after the completion of work on the prime contract.

Recognizing the significance of certified payrolls, the Department emphasizes the need for contractors to submit them on a weekly basis. Importantly, the Department clarifies that electronic submission via email is acceptable as long as the payroll contains a legally valid electronic signature. To safeguard the integrity of records, a new paragraph in § 5.5 stipulates that all contractors and subcontractors must preserve their certified payrolls for 3 years after the prime contract work is finished.

The Department firmly upholds the requirement for contractors to pay prevailing wages and submit certified payrolls no less frequently than weekly, as mandated by statute. In line with this, minor changes have been made to § 5.5(a)(3)(ii)(A) to provide greater clarity regarding the prime contractor's responsibility for subcontractor submissions.

Contrary to some suggestions, the Department decides against mandating the inclusion of addresses and Social Security numbers on electronically submitted certified payrolls. The existing requirement for an individual identifying number is deemed sufficient. With minor edits and additional language about access to electronic certified payroll submission systems, the changes to § 5.5(a)(3) are adopted.

Delving further into the topic of record-keeping, the Department highlights the importance of contractors maintaining accurate records of Davis-Bacon contracts and subcontracts. Contrary to claims that this requirement is burdensome, the Department argues that most contractors already fulfill this obligation for their own business purposes. Additionally, the Department dismisses the notion that prohibiting contractors from introducing records during administrative proceedings is arbitrary or coercive.

Lastly, the agency discusses the proposed mandate for contractors to provide any necessary documents to determine compliance with labor standards. While the specific details of this requirement are not provided, it underscores the Department's commitment to ensuring labor standards are upheld within the construction industry.

changes related to apprentices, rate of pay, fringe benefits, apprenticeship ratios, and reciprocity. 

The Department of Labor argues that verifying compliance with the Davis-Bacon Act is not overly broad, considering the impossibility of listing every necessary record. They address changes to § 5.5(a)(4) regarding apprentices, clarifying the rate of pay, fringe benefits, apprenticeship ratios, and reciprocity. To align with the Act's purpose and ETA regulation 29 CFR 29.13(b)(7), the Department revises § 5.5(a)(4)(i) to make contractors adhere to apprentice wage and ratio standards of the locality. However, the Department rejects CC&M's suggestion for more restrictive standards. For clarity, § 5.5(a)(4)(i) is reorganized.

The Department has received comments supporting the proposal for contractors to follow local apprenticeship standards. If no local program exists, the contractor's registered program's standards apply. Trainee and training program provisions are suggested for removal as ETA no longer reviews or approves on-the-job training programs. Changes to contract clause provisions for the Davis-Bacon Act and CWHSSA specify the prime contractor's responsibility for unpaid wages or violations by subcontractors. Violating the provision may result in debarment for prime contractors.

liability of upper-tier subcontractors for violations committed by lower-tier subcontractors

The Department's proposed changes to various sections of the Davis-Bacon Act (DBA) and relevant regulations have generated significant discussion and feedback. These proposed changes aim to address important aspects such as prevailing wage rates, wage determinations, and worker protections. One key theme that emerges from these discussions is the responsibility and liability of upper-tier subcontractors for violations committed by lower-tier subcontractors. As part of the proposed changes to § 5.5(a)(6) and (b)(4), the Department seeks to clarify that upper-tier subcontractors may indeed be held accountable for violations committed by their lower-tier counterparts.

The proposed changes have sparked a range of opinions. Advocates of the modifications argue that they would enhance compliance, particularly in federally funded construction projects, and provide greater protection for vulnerable construction workers. These comments highlight the significance of ensuring fair wages and maintaining safety standards in the construction industry. However, there are also opposing viewpoints, with some stakeholders asserting that the existing enforcement mechanisms are functioning effectively and should not be altered. This debate underscores the importance of striking a balance between promoting compliance and preserving the status quo.

In response to the comments received, Wage and Hour has made decisions on certain suggestions that were put forward. For example, there were proposals to allow upper-tier contractors to rely on certifications from their lower-tier subcontractors as a defense mechanism or to create a "good faith" provision in cases of potential violations. Despite these suggestions, the Department has chosen not to adopt them, emphasizing the need for clear accountability and uniform standards. As part of their efforts to enhance oversight, the Department has amended the contract clause language of § 5.5(a)(6) to require the flow-down of any DBRA-related contract modifications. This change ensures that changes in prevailing wage rates and other provisions are effectively communicated throughout the subcontracting chain.

Moving on, Wage and Hour delves into other proposed changes that have been put forth. One notable alteration can be found in § 5.5(d), which aims to clarify that contract clauses and wage determinations can be incorporated by reference, streamlining the incorporation process. Similarly, the proposed changes to § 5.5(e) seek to rectify situations where contract clauses or wage determinations were inadvertently omitted from the contract, making them legally effective by law. These adjustments contribute to ensuring consistency and accuracy in the implementation of wage standards within federal contracts.

Shifting focus to agency obligations, Wage and Hour discusses the proposed changes to § 5.6(a)(1), which would make it explicit that Federal agencies must incorporate the required Davis-Bacon labor standards clauses if they were not originally included in the contract. By clarifying this requirement, the Department aims to prevent any gaps in the enforcement of wage standards on federal construction projects. Additionally, the proposed changes to § 5.6(a)(2) highlight the Department's intentions to have the authority to request certified payrolls from contractors even during ongoing investigations or other compliance actions. This step reinforces the Department's commitment to transparency and accountability in ensuring that workers receive their rightful wages.

To further strengthen investigations, the department examines the proposed changes to § 5.6(a)(3) that provide specific guidance to contracting agencies regarding the records and information they should include in their DBRA investigations. These changes lay the groundwork for more comprehensive examinations and data collection, facilitating a thorough assessment of prevailing wage compliance.

With regards to confidentiality, Wage and Hour addresses the proposed changes to § 5.6(c) that seek to safeguard the identity of workers and informants who provide crucial information during complaints or investigations. This measure recognizes the value of anonymity in encouraging individuals to come forward and report potential violations, allowing for more effective enforcement of labor standards. The decision to reject suggested qualifications from the National Federation of Independent Business (NFIB) in §§ 5.6(b)(2) and 5.6(a)(5) underscores the department's commitment to upholding existing protections and maintaining the integrity of the investigative process.

Lastly, the agency sheds light on the Department's proposal to include references to monetary relief and interest in the description of restitution in § 5.10. By incorporating these elements, the Department aims to provide a more comprehensive framework for addressing wage theft and ensuring that workers are justly compensated for any losses they may have incurred.

clarity of communication between the Administrator and contractors 

The Department's proposal aims to improve communication between the Administrator and contractors regarding investigation findings by implementing alternative means of notification, in addition to registered or certified mail. Furthermore, the Department seeks to correct a typographical error related to the citation of the Portal-to-Portal Act of 1947. Another revision involves updating a reference from § 5.12 to § 5.13, ensuring accuracy in the document.

Regarding § 5.25, the Department proposes the addition of a new paragraph (c) to codify the principle of annualization, ensuring consistent application of this principle across the board. A significant proposal involves the rescission and reservation of § 5.16, which currently allows contractors to employ trainees on Federal and federally assisted construction projects without acquiring further approval from the Department. Additionally, minor technical and non-substantive changes to § 5.23 are being considered.

The Department also discusses the intention to rescind and reserve § 5.17, which pertains to the withdrawal of approval for a training program. In order to enforce the annualization principle, contractors will be prohibited from using fringe benefit plan contributions from private projects to fulfill their prevailing wage duty for DBRA-covered work. However, exceptions will be made for specific fringe benefit plans that meet the defined criteria.

After reviewing comments on the proposal, the Department acknowledges support for the annualization principle but recognizes the need for revisions to strengthen its requirements. Concerns have been raised regarding the proposed administrative exception process, with commenters finding it burdensome and unnecessary. Additionally, there have been suggestions to limit the exception exclusively to defined contribution pension plans (DCPPs). In response, the Department has amended the proposed rule to exempt DCPPs from the administrative exception process, provided they meet the exception criteria. It is important to clarify that the administrative exception process only applies to non-DCPP fringe benefit plans seeking exemption from the annualization requirement.

the annualization principle

The Department in its discussion addresses the annualization principle and responds to comments on the proposed rule. It makes it clear that the requirement for annualization applies to both funded and unfunded plans. Additionally, the department emphasizes that the exception to annualization pertains to contributions made to fringe benefit plans, rather than the plans themselves. To provide further clarity, the Department revises the proposed rule and offers a more detailed explanation of the criteria for an exception to annualization.

Regarding the vesting requirements for fringe benefit plans, the Department chooses not to adopt recommendations for change. Furthermore, § 5.28 is revised by the Department to explicitly state that unfunded plans must obtain approval from the Secretary to be considered bona fide fringe benefits. To ensure accuracy, the Department makes various non-substantive technical corrections to § 5.26 and § 5.28.

In another discussion, Wage and Hour addresses comments received in response to proposed revisions to § 5.28, which would necessitate preapproval for unfunded plans. Some commenters express concern about the potential burden this could place on contractors and potential conflicts with the authority of the Employee Benefits Security Administration (EBSA) under the Employment Retirement Income Security Act (ERISA). However, the Department clarifies that the revisions do not establish new substantive requirements and that the approval process aligns with ERISA. The Department argues that the approval process benefits both contractors and workers.

Wage and Hour also considers proposed revisions to § 5.29, aiming to clarify when a contractor can be credited for the costs of an apprenticeship program. The department receives mostly supportive comments, but one commenter suggests that the rule should allow for contributions negotiated within a collectively bargained agreement.

greater flexibility in determining whether contributions to apprenticeship plans are creditable.

The Department has chosen not to accept the suggestion presented, however, they have made changes to the rule to allow for more flexibility in determining the eligibility of contributions to apprenticeship plans. Additionally, revisions to section 5.30 have been discussed, with the aim of updating the wage determination examples to align with the current format. The proposal received no comments and the changes have been adopted as initially proposed.

In the same vein, the Department addresses proposed modifications to section 5.31 in order to align with the updated illustration in section 5.30(c). Several comments were received by Wage and Hour regarding proposed section 5.33, which seeks to enshrine the long-standing principle that contractors and subcontractors cannot count their own administrative expenses as creditable. While commenters generally agree with the proposal, they express concerns about the Department's request for input on handling administrative functions performed by third parties. The Department clarifies that its intention was not to make all third-party expenses noncreditable, and reassures contractors that they can still receive credit for third-party expenses directly related to the administration and delivery of fringe benefits. With revisions to clarify intent and address commenter concerns, the Department adopts section 5.33.

contractor may take credit for fees paid to a third-party administrator

The Department addresses the provisions of § 5.33(a) in the context of the Davis-Bacon and Related Acts (DBRA). This section allows contractors to receive credit for fees paid to third-party administrators who handle tasks related to benefit administration and delivery. However, the Department clarifies that the analysis for creditable expenses under the DBRA differs from that of the Fair Labor Standards Act (FLSA) and Service Contract Act (SCA) regulations.

According to the Department, a contractor's own administrative costs cannot be considered part of its workers' wages. This aligns with the FLSA and SCA regulations, which explicitly prohibit contractors from taking credit for their business expenses. In line with this stance, the final rule codifies the policy that contractors are not allowed to claim credit for their own administrative costs. The Department even provides examples of expenses that are deemed noncreditable.

The rationale behind the final rule is to establish a clear distinction between creditable and noncreditable expenses, based on whether they are inherent business expenses of the contractor. This differentiation serves to promote fairness and prevent contractors from engaging in practices that may exploit the system.

Additionally, the Department introduces proposed anti-retaliation provisions, which are aimed at discouraging contractors from engaging in unscrupulous business practices. This authority is derived from 40 U.S.C. 3145 and Reorganization Plan No. 14 of 1950, giving the Department the power to implement measures that protect workers from retaliatory actions.

By discussing these various aspects, the Department provides clarity and guidance on the application of § 5.33(a) within the DBRA framework, while also emphasizing the need for fair and ethical practices in the contractor industry.

Contractor debarment for retaliatory conduct 

The Department is taking action to address instances where contractors have faced penalties for retaliatory behavior and obstructing investigations conducted by the Wage and Hour Division (WHD). One notable case mentioned is the legal action taken against the owner and supervisor of Enviro & Demo Masters, Inc. for tampering with witnesses and conspiring to do so. In order to strengthen enforcement and provide compensation to affected workers, the Department is proposing new provisions against retaliation that would apply to all contracts falling under the Davis-Bacon Act (DBA) or Related Acts. These proposed provisions would protect activities such as reporting violations, filing complaints, and cooperating with investigations.

To further combat unlawful behavior, the Department also highlights the Copeland Anti-Kickback Act, which makes it illegal to coerce employees into giving up their rightful compensation. In addition to the anti-retaliation provisions, the Department is introducing two new regulatory measures and revising existing regulations. The solutions for breaches in the proposed anti-retaliation provisions include compensation recovery, benefits, and fair resolutions. The Department acknowledges that feedback on the proposal has been mostly supportive of the anti-retaliation provisions, although a minority has expressed opposition.

Regarding the Department of Labor's enforcement authority, the Wage and Hour document discusses how it derives its power to enforce the Davis-Bacon Act (DBA) and related statutes from Reorganization Plan No. 14 of 1950. The agency cites various court cases that affirm this authority. In the final rule, the agency addresses the anti-retaliation provisions and argues that they are permissible and consistent with other remedies for retaliatory conduct. Commenters who claim that the lack of explicit statutory authority hinders the Secretary from regulating this behavior are disagreed with by Wage and Hour. The document also highlights the need for revisions to address issues with the current regulations on addressing wrongly omitted wage determinations in contracts, as these can cause delays in recovering back wages.

proposed operation-of-law provision

The Department is discussing its proposal to include new language in § 5.5(e) of the Davis-Bacon Act (DBA) regarding the effectiveness of labor standards contract clauses and wage determinations. The aim of this proposal is to ensure that prevailing wages are received by workers on covered contracts, even if there have been errors in omitting these clauses and determinations. The agency draws a parallel between the proposed provision and the Christian doctrine, which allows required contractual provisions to be legally effective even if they were not included in the contract. However, the agency acknowledges that its proposal provides more consideration for contractor equities compared to the Christian doctrine.

To address concerns about incorrect omissions, the Department discusses its efforts to reduce the likelihood of these errors, such as conducting trainings and issuing guidance documents.

In response to the Department's proposal, various stakeholders have raised comments and concerns. Some argue that the Department lacks the authority to implement the rule, pointing to the explicit requirement in the DBA for contracting agencies to include contract clauses in covered contracts. Others express concern that the operation-of-law provision may not provide sufficient notice to contractors about the applicability of DBA requirements, potentially leading to unintentional noncompliance. Some also worry that the provision could increase costs for contractors, which may ultimately be passed on to the government. Wiley Rein partners suggest adopting the approach taken in the Service Contract Act regulation, which states that the operation-of-law provision should be effective only after a determination by the contracting agency or the Department that the DBA applies to the contract. On the other hand, several commenters voice their support for the operation-of-law provision, highlighting its potential to streamline enforcement and protect workers from being underpaid.

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