✔️This Is An Important Update: Davis-Bacon Act Final Rule

For the first time in almost 40 years, the Department of Labor (DOL) has revised Davis-Bacon and Related Acts (DBA) regulations. This Davis-Bacon Act Final Rule went into effect on Oct. 23, 2023, and was designed to “promote compliance, provide appropriate and updated guidance, and enhance usefulness in the modern economy.”

What does that jargon mean for you? Ideally, it means the DOL answered a few nagging questions contractors have puzzled over for years.

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Just a few of the amendments are detailed below, but this is not the legal language or entire text of the “Final Rule”, or even the entire list of modifications since nearly every area of the DBA was examined. However, it does provide a brief synopsis of how you may be affected.

Re-Defining Davis-Bacon and “Prevailing Wage”

The Davis-Bacon Act final rule re-implements the “three-step process” that was previously in effect before 1983. It means:

1. If the majority of workers in the same classification in the area are paid the same rate, that amount becomes the prevailing wage.
2. If there is no majority, then the prevailing wage equals the wage paid to at least 30 percent of workers in the classification in the area.
3. If there is no 30 percent majority, then the weighted average becomes the prevailing wage.

State and Local Davis-Bacon Wage Rates

The WHD (Wage and Hour Division) Administrator can now determine DBA wage rates by adopting rates set by state and local governments. Provisions for this amendment:

• The state or local government must collect relevant data via a survey process.
• The wage rate must also reflect both the basic hourly rate of pay and any prevailing bona fide fringe benefits.
• Laborers and Mechanics must be classified by the state or local government in a manner recognized in the field of construction.
• The criteria for setting prevailing wage rates must be substantially similar to those the administrator uses in making wage determinations.

Fewer Conformance Requests

To reduce the need for annoying conformance requests, the WHD will now identify more wage and fringe benefit rates without waiting for survey data or multiple requests. The WHD will list the classifications, wages, and fringes on wage determinations ahead of time so the wage and benefit information will be available before the project starts.

However, questions or concerns about how particular work should be classified can still be clarified by submitting a conformance request.

Davis-Bacon Determination Factors

In the past, the default area for the majority of wage determinations was the county of work. Now, the WHD may issue multi-county project wage determinations with a single wage rate per classification, or they may use state highway districts or similar state geographic subdivisions as the area for a highway project.

While most wage determinations will still apply for the life of the contract, the final rule clarifies that modifications to the contract for additional, substantial construction, and alteration. and or repair work that was not in the original scope of work applies to the most recent wage determination.

If a construction contract includes work in more than one “area” and there is no applicable multicounty wage determination, the determinations for each area must be incorporated into the contract.

Multiple determinations are also applicable when a project has more than one type of construction (residential, building, highway, or heavy). In that case, the contracting agency must incorporate the applicable wage determination for each type of construction into the contract.

Recordkeeping Best Practices

Recordkeeping requirements were revised to clarify that all payrolls and other basic records, including a worker’s last known phone number and email address, must be kept for at least three years. Also saved should be records of each worker’s correct classification(s) and hours worked in each classification, and all DBA contracts, subcontracts, and related documents.

Fringe Benefits and Davis-Bacon Credit

• Fringe benefits should be annualized, which is the method of converting annual fringe benefit payments to an hourly amount to determine compliance.
• The cost of apprenticeship programs may be credited against the fringe benefit obligations.
• Unfunded plans must be approved in writing by the Secretary of Labor to qualify as a bona fide fringe benefit plan.
• Contractors may not take DBA credit for administrative expenses incurred in connection with the administration of a fringe benefit plan. However, credit for costs incurred by the insurance carrier, third-party trust fund, or other third-party administrator may be eligible for credit with WHD approval.

Other Key Takeaways for the Davis-Bacon Act Final Rule

• The DOL can now adjust certain non-collectively bargained rates based on the Employment Cost Index. This can be done periodically, but no more than every three years.
• DBA standards will now apply at a “secondary construction site,” or any site where a significant portion of the building or work is constructed. This is defined as one or more entire portions or modules of the building or work, not as prefabricated parts.
• Agencies using wage determinations under the DBA must submit annual reports to the WHD outlining proposed projects for the next three fiscal years.
• Solar panels, wind turbines, broadband installation, and installation of electric car chargers are now definitely subject to DBA standards if built as part of a contract with a federal agency.
• While DBA requirements for flaggers on heavy and highway projects were previously a gray area, the final rule states that these workers do indeed fall under the DBA.
• Truck drivers must be paid DBA wages for onsite time related to offsite delivery if such time is not “de minis” (insignificant). The entire time a driver spends on the worksite during a day or work week is considered, not just the amount of time taken for delivery.
• Material suppliers do not fall under DBA standards and do not constitute construction activity.
• Electronic signatures and electronic certified payroll submission methods are permitted.
• Compliance with apprentice wage and ratio standards of the locality where work is performed is now required.

If you’re curious about the Davis-Bacon Act (DBA) Final Rule and what it means for your business, visit the Department of Labor’s website to read the entire executive summary at Federal Register:: Updating the Davis-Bacon and Related Acts Regulations.

Comparison charts detailing previous rules and changes under the Davis-Bacon Act final rule can be found here https://www.dol.gov/agencies/whd/government-contracts/construction/rulemaking-davis-bacon/dba-comparison-charts.

The DOL’s Frequently Asked Questions can also help break down key information at Frequently Asked Questions: Updating the Davis-Bacon and Related Acts Regulations Final Rule | U.S. Department of Labor (dol.gov).

FAQ for the Davis-Bacon Act Final Rule: Simplified Answers to Key Changes

Additional Resources

• Ultimate Certified Payroll & Prevailing Wage FAQ
• Types of Construction Wage Determinations
• Four Things You Should Know About Fringe Benefits
• California Prevailing Wage Page
• Arizona Prevailing Wage Page

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.