The U.S. Department of Labor (DOL) is proposing changes to the Davis-Bacon Act (DBA) and Davis-Bacon and Related Acts (DBRA), including changing the definition of “prevailing wage.” This announcement marks the first time in 40 years that rulemaking has been considered for these prevailing wage laws, and if made law it could have a significant impact on the construction industry.
Here’s what happened
On March 11, the DOL published a Notice of Proposed Rulemaking stating that they are considering updating the regulations that govern Davis-Bacon and DBRA. This is the most comprehensive review of these federal prevailing wage laws in four decades.
The DOL states that this update is needed to better reflect the needs of the construction industry today. They also say that the proposed updates will have the following impact:
– Speeding up prevailing wage updates
– Adding efficiencies in how the current system operates
– Working to ensure prevailing wage rates keep up with actual wages
What could be changing
A closer look at the proposed regulatory changes show that they are largely focused on providing the DOL an enhanced ability to administer and enforce prevailing wage laws.
Some of the proposed updates to DBA and DBRA are as follows:
– Returning to the definition of “prevailing wage” that was in use from 1935 through 1983 with the stated goal of making sure that prevailing wages reflect what workers are actually paid in the local community.
– Improving the prevailing wage update system to make sure prevailing wages keep up with actual wages, which over time would result in higher wages for workers.
– Updating regulatory language in order to reflect modern construction practices.
– Strengthening worker protections
– Strengthening enforcement, including in the areas of debarment and anti-retaliation.
Additionally, they propose changes to how and when prevailing wage rates are updated, the issuance of supplemental rates for key roles when no survey data exists and the increased ability to adopt state/local wage determinations in some circumstance. These changes would make it possible for prevailing wage rates to be changed between wage surveys, which are currently used to identify and set new prevailing wage rates.
Changes to the prevailing wage definition
From 1935 through 1983 there was a different process in place to determine what prevailing wages should be. This included a three-step process which helped regulators identify local wage trends for each work classification.
Here is how prevailing wages were set:
- Any wage rate paid to a majority of workers for similar work within an area was the prevailing wage rate.
- If there is no wage rate being paid to the majority of workers, the rate paid to the greatest number of workers becomes the prevailing wage, but only if it was paid to at least 30% of the workers. This became known as the “30% rule”
- If a rate could not be identified using step one or two, the weighted average of wages paid for the role became the prevailing wage rate.
In 1983 the 30% rule was eliminated claiming it was contributing to inflation, but the current proposed changes would bring it back.
In the notice for the proposal to update Davis Bacon regulations, the DOL says that revisions are necessary to keep the law useful and working as intended in light of the modern economy. Their press release, however, focuses on the upcoming infrastructure investments as a motivator:
“Given recent unprecedented investments in our nation’s infrastructure, this comprehensive regulatory review is necessary to ensure employers on federally funded or assisted construction projects pay fair wages to the workers who build our roads, bridges, federal buildings and energy infrastructure,”
– Jessica Looman, Acting Wage and Hour Division Administrator
Regardless of motivation, the proposed changes have the ability to seriously impact the construction industry. According to the DOL, prevailing wage laws currently cover around 1.2 million construction workers, spanning across $217 billion in federal dollars. This means any changes to how prevailing wages are set and regulations are enforced may impact every worker and company trying to operate under the new provisions. This may include adapting to changing wage rates and complying with increased enforcement activities.
We will be watching this issue closely and updating you when new information is available. In the meantime, the DOL Wage and Hour Division is soliciting comments regarding the proposed changes. They provide the following two paths to officially submit comments:
- Submit comments online at Regulations.gov
- Send comments by mail to the following address:
Division of Regulations, Legislation, and Interpretation, Wage and Hour Division
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, DC 20210.
Please note that all submitted comments will become a matter of public record and posted to Regulations.gov.
Learn more about the proposed changes:
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.