On August 23, 2023, the U.S. Department of Labor (USDOL) issued a Final Rule that brings the most significant updates to the Davis-Bacon and Related Acts (DBRA) in nearly 40 years. These updates went into effect on October 23, 2023, and mark critical changes in prevailing wage regulations for federally funded construction projects. Below are some key highlights of the updates.
1. Regular Updates to Non-Collectively Bargained Prevailing Wage Rates
Previously, non-collectively bargained prevailing wage rates were updated infrequently, unlike collectively bargained rates submitted by unions.
New Rule:
The USDOL can now periodically adjust outdated non-collectively bargained wage rates using data from the Bureau of Labor Statistics’ Employment Cost Index (ECI). Adjustments can occur no more frequently than once every three years, starting three years after the rates are published.
2. Return to the “Three-Step” Method for Determining Prevailing Wages
Since 1983, prevailing wages were determined by a two-step process, but the Final Rule reverts to the pre-1983 three-step process:
- Majority Rule: If over 50% of workers in a classification earn the same rate, that becomes the prevailing wage.
- 30% Rule: If no majority exists, the wage rate earned by at least 30% of workers is used as the prevailing wage.
- Weighted Average: If no rate is earned by 30% or more, a weighted average is used.
The USDOL also allows for consideration of “functionally equivalent” rates, such as those with escalator clauses or night-shift differentials.
3. Authority to Adopt State or Local Prevailing Wages
Previously, the Wage and Hour Division (WHD) could only consider state or local prevailing wage rates.
New Rule:
The WHD is now explicitly authorized to adopt state or local prevailing wage rates, provided the state or local methodology aligns with federal standards for determining prevailing wages and bona fide fringe benefits.
4. Reduced Need for Conformance Requests
Previously, contractors needed to submit conformance requests via the SF-1444 form when worker classifications were missing from wage determinations.
New Rule:
The USDOL will now pre-list frequently requested classifications and corresponding wage rates on wage determinations when sufficient data is unavailable through the wage survey program.
5. Broader Definition of Covered Projects
Clarity was needed regarding which types of projects fall under DBRA.
New Rule:
The rule explicitly includes projects like solar panel installation, wind turbines, broadband installation, and electric vehicle chargers under DBRA if they involve federal contracts or related acts. Even partial construction projects are covered.
6. Enhanced Definitions for Worker Classifications and Sites of Work
Clarification was required for terms like “site of work” and “material supplier.”
New Rule:
- The USDOL can issue multi-county wage determinations with a single rate per classification.
- The definition of “material supplier” excludes entities that only haul materials away.
- DBRA standards now apply to secondary construction sites, provided the site is dedicated to the project.
7. Strengthened Worker Protections and Enforcement
The Final Rule bolsters existing worker protections and debarment regulations.
New Rule:
- Anti-retaliation provisions discourage interference with investigations.
- Cross-withholding is now permitted across contracts held by the same contractor.
- Debarment standards under DBRA and Related Acts are aligned for consistency.
Conclusion
These updates modernize the Davis-Bacon Act, ensuring prevailing wages are more frequently adjusted, worker protections are strengthened, and compliance is more clearly defined. Contractors and subcontractors involved in federally funded projects should review these changes carefully to ensure adherence to the new standards and avoid potential penalties.
