Revisions Are Coming to Davis – Bacon Act Regulations

Snell & Wilmer

Snell & WilmerBig changes are coming to the Davis – Bacon Act prevailing wage regulations. Some say they are the biggest changes since the administration of President Ronald Reagan. The proposed changes impact the manner in how prevailing wages are calculated and determined in a specific region, i.e., county. Prevailing wages are typically ascertained by performing wage surveys. Critics of the new proposal assert that unions will have an outsized role in determining a particular geographic area’s wage rates. Critics also claim the proposed rule changes revert to a decades-old definition of prevailing wage, rewarding the administration’s “Big Labor allies.”

The Department of Labor's proposed plan is to go back and use the so-called 30 percent rule, which looks at wages earned by one third of the workers in the county instead of the current designated protocol, which uses a 50 percent measuring rod, when 50 percent does not yield good data. Critics assert that “lowering the threshold for what is considered prevailing to less than a majority response is nonsensical and clearly aimed at making it easier for union wage rates to prevail because collective bargaining agreements often set a uniform wage for an entire group of workers.”

Obviously, construction labor unions welcome the proposed changes. The proposed changes also strengthened the law by holding the general contractor liable and the agency will be able to go against the company and/or its shareholders. Proponents of the changes applaud the rules addressing that anyone working on a project, even if an “independent contractor,” is entitled to the prevailing wage. It is likely that the rule changes will be adopted. Thus, “prevailing” will be subject to a 30 percent threshold, not 50 percent. One would think that 50 percent or more would mean prevailing, but that’s not the way the government works.

New Requirements PLAs for Large Construction Projects

President Biden executed an Executive Order mandating U.S. agencies to require the use of project labor agreements (PLAs) on large federal construction projects. PLAs are collective bargaining agreements setting terms of employment on a specific contract. Once the contract is awarded, the terms of the PLAs apply to all workers, including employees and contractors and subcontractors. In addition, the PLAs will supersede current or former collective bargaining agreements.

The Executive Order, which Biden signed into law, applies to contracts worth over $35 million. The White House claims the move will affect $262 billion in federal government construction contracts and over 200,000 workers. This action follows a 2009 Executive Order signed by President Obama which encouraged, but did not require, federal agencies to consider using PLAs on large construction contracts.

Critics have attacked the Order as anticompetitive and favoring unionized contractors to the exclusion of nonunion contractors which tend to be more local. Critics also make a point that the Order will result in increased project costs ultimately resulting in fewer projects being funded. Proponents claim costs are reduced when rules, compensation and settlement procedures are standardized. One has to wonder whether this Order will further fuel inflation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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