DOL Issues Final Rule Updating Davis-Bacon and Related Acts

At a Glance

• The Department of Labor announced new regulations designed to update the Davis-Bacon and Related Acts, which require payment of locally prevailing wages and fringe benefits on federal contracts for construction. 
• The Rule, which will go into effect 60 days after it is entered into the Federal Register, will raise the wage standards of construction workers working on federally funded or assisted construction projects.

For the first time in almost 40 years, the Department of Labor (DOL) announced the issuance of regulations designed to update and modernize the Davis-Bacon and Related Acts (DBRA), which require the payment of locally prevailing wages and fringe benefits on federal contracts for construction. The aptly-named final rule, Updating the Davis-Bacon and Related Acts Regulations (the Rule) will  go into effect 60 days after its publication in the Federal Register. 

Overall, the Rule raises the wage standards of construction workers working on federally funded or assisted construction projects. Specifically, it redefines “prevailing wage” to make it equivalent to the wage paid to at least 30% of workers in a given trade in a locality. This change will increase wages for construction workers working on federally funded or assisted construction projects, and federal construction contractors should expect to see an increase in their labor costs as a result. 

Additionally, in an effort to ensure that wage determinations are updated more frequently, the Rule streamlines the DOL’s process for updating prevailing wages by expanding the Wage and Hour Division (WHD) Administrator’s authority to adopt prevailing wages that have been already determined by state and local governments. It also requires there to be more frequent wage determination updates after contact award, requiring an update whenever a contract is modified or continues beyond the original contract period. Likewise, the Rule requires wage determination updates annually for contracts without schedule completion dates and along with every task order for contracts with indefinite deliveries or quantities. 

Federal construction contractors also should be aware that the Rule heightens contractors’ record-keeping requirements and strengthens the DOL’s enforcement power. Under the Rule, federal construction contractors must keep payrolls and a record of a worker’s correct classification, last known telephone number, and email address for at least three years after all work on the prime contract is completed. As for strengthening the DOL’s enforcement power, the Rule finalizes new anti-retaliation provisions meant to ensure that workers who raise concerns about payment practices or assist agencies or the DOL in investigations are protected from termination or other adverse employment actions. The Rule also ensures that certain DBRA contract clauses and applicable wage determinations are effective by “operation of law” even when omitted from a contract. Importantly, the Rule also clarifies that prime contractors and upper-tier subcontractors are liable for lower-tier subcontractors’ violations of the Rule and can face debarment for such violations. According to the Rule, this language is intended to “place liability not only on the lower-tier subcontractor that is directly employing the worker who did not receive required wages, but also on the upper-tier subcontractors that may have disregarded their obligations to be responsible for compliance.” Finally, the Rule ensures the enforcement of remedies by permitting “cross-withholding” procedures, thereby allowing back wages to be recovered on contracts other than the agency that awarded the contract.

Considering the recent increase in federal spending on infrastructure and construction projects, this Rule is sure to have a substantial impact on federal construction contractors, including an increase in contractors’ labor costs. Faegre Drinker will continue to monitor this Rule’s implementation and is ready to support federal construction contractors as they prepare to comply with these new requirements.