DOL proposes new Davis-Bacon rules

Diving Brief:

  • Labor Secretary Marty Walsh deployed new regulatory proposals for the first time in nearly 40 years to change the Davis-Bacon Act, which sets the prevailing wages that contractors must pay workers on federal projects.
  • While a association of construction employers said the changes represent “more special-interest pork” for unions, which President Joe Biden supports, Walsh claimed the changes would do the exact opposite. “This action is an example of the federal government being a good steward of taxpayers’ money,” Walsh said on a conference call Friday. “As President Biden said during the State of the Union, when we invest in our workers, we build an economy from the bottom up and the middle.”
  • Labor groups and unions applauded the announcement, saying it would be pprotect the wages of construction workers and protect them from exploitation.

Overview of the dive:

The Davis-Bacon Act, originally passed in 1931, uses salary surveys administered by the DOL to set the prevailing salary in the location of a federally funded project. It affects $217 billion in federal spending a year and 1.2 million construction workers.

But the process can be complicated and time-consuming for contractors and has raised concerns that it distorts wage rates.

Under the current process, at least 51% of surveyed salaries must fall within an “same or similar” range. If they are not, the weighted average – as opposed to a simple average – of all salaries is used. This means that more frequent occurrences of low wages could lower the overall rate.

“The problem … is that these weighted averages don’t reflect the actual wages paid to actual workers on actual construction projects in this local community,” said Jessica Looman, acting administrator of the DOL’s Wage and Hour Division during of the briefing.

To remedy this, the DOL’s proposal would revert to the system used until 1983, when the last changes to the law were made under the first administration of President Ronald Reagan. At that time, the redesign was considered a blow to organized labor.

Under the proposed unique configuration, if the 51% threshold is reached, this is the salary in effect, as now. But if not, the new rule would allow only 30% of the same or similar salaries to be used. If this bar cannot be reached, then a weighted average will be used.

And this is where construction employer groups have called fault.

“The process for determining what a going wage rate is is already archaic, and this proposal dates back 40 years,” said Ben Brubeck, vice president of regulatory, labor and state affairs at Associated Builders. and Contractors, in an interview.

Brubeck said ABC, the majority of whose 16,000 contract members are non-union stores, has been advocating for Davis-Bacon reform for years, the current proposal unfairly favoring unionized work.

“Under the 30% rule, union rates will prevail more often,” Brubeck said. “When this happens, unionized contractors are more competitive. But if the government determines that the wage is below the union rate, that’s a problem for them, because they can’t compete on wages, because they’re locked into a union contract.

Instead, Brubeck suggested using data from the Bureau of Labor Statistics to determine prevailing wages for a given position and location.

“We’ve been suggesting for decades to go do something that’s scientifically modern and can be done more frequently, and that will result in higher wages for workers around the world,” Brubeck said.

Comment period

Labor and union groups hailed the potential rule change.

“NABTU commends the Biden administration for today’s proposal to bring the 41-year-old Davis-Bacon Act regulations into the 21st century,” said Sean McGarvey, president of the Trades Unions Group. of North America, in a press release. “The proposed updates to the regulations will restore the law’s bipartisan goal of protecting the hard-earned wages of construction workers and, in doing so, protect them from exploitation.”

An anti-retaliation clause was also included that would protect workers who report employers for non-compliance. DOL said it was opening a 60-day comment period for comments on the new rules.

At ABC, Brubeck said the group would fight longer, while opposing floating rules in their current form.

“A 60-day comment period is too short for the first major reform in 40 years,” Brubeck said. “We will ask for an extension.”

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