The Department of Labor (DOL) has recently issued a Notice of Proposed Rulemaking (NPRM) for the first time in 40 years to revise the Davis-Bacon Act (DBA) regulations. Their hope is that these revisions will modernize the regulations and make them easier to understand.
What is the Davis-Bacon Act?
As defined by the DOL, the Davis-Bacon Act applies to contractors and subcontractors performing federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. The DBA, enacted in 1931, protects communities and workers from non-local contractors underbidding local wage rates. This act helps direct the DOL to determine such locally prevailing wage rates.
What is possibly changing?
According to this article in Small Business Trends, one of the updates is changing the definition of “site of work” to include sites where prefabricated components are produced, and “scope of work” to include energy infrastructure.
Another change the DOL has proposed is the methodology for determining the prevailing wage to help with the enforcement of the minimum wage requirements of the DBA. Congress also added prevailing wage requirements to over 70 statutes, including the $1.2 Trillion Infrastructure Investment and Jobs Act.
As mentioned in The National Law Review, a huge change impacting contractors is that the DBA contract clauses and applicable Wage Determinations/Decisions (WDs) be effective by “operation of law,” notwithstanding their mistaken omission from a contract. If enacted, the DOL will be able to enforce DBA requirements against contractors and demand back pay even where the contractor had no knowledge that the requirements applied or where the agency failed to provide the contractor a WD for the project.
The final major change proposed is returning the definition of “prevailing wage” that was used from 1935 to 1983. Absent a wage rate paid to a majority of workers in a particular classification, a wage rate will be used as the prevailing wage if it is paid to at least 30% of those workers.
Lexology wrote that they believe unions are more likely to participate in surveys for determining prevailing wage than non-union contractors, therefore the new rule will probably push the prevailing wage toward the higher union rates.
Since these new changes benefit unions and employees the most, now is the time to double-check your contracts, ensure you’re compliant, and prepare your business for what may come from this NPRM. AXIM is happy to guide you to better prepare for the future. Please feel free to reach out to our team of experts at (240) 720-0314 or follow us on LinkedIn.