The Labor Department Seeks to Update Prevailing Wage Regulations

The Labor Department is taking on the “most comprehensive review” of a contractor construction wage law in 40 years, which would align with the Biden administration's other priorities. 

The department announced on Friday a proposed rule to update the Davis-Bacon and Related Acts, which require contractors and subcontractors that work on federally funded or assisted contracts over $2,000 for construction, alterations, or repairs for public buildings or public works to pay their workers at least the locally prevailing wage and fringe benefits for similar work in the area. 

“Federal dollars should be used to create good jobs in local communities all across our country,” Labor Secretary Marty Walsh said in a statement. “These proposed regulations are good for workers, good for building high-quality infrastructure and for ensuring we have a strong construction industry, as we rebuild America.”

This would be the “most comprehensive review” of the Davis-Bacon Act in 40 years, he said on a call with reporters on Friday. 

The proposed rule would create efficiencies in the prevailing wage update system; make sure that prevailing wage rates keep up with actual wages; return “to the definition of ‘prevailing wage’ used from 1935 to 1983 to ensure prevailing wages reflect actual wages paid to workers in the local community;” update prevailing wage rates periodically; give more authority to adopt state or local wage determinations if certain criteria is met; issue supplemental rates for job classifications that don’t have survey data; update regulatory language to “better reflect modern construction practices” and increase worker protections and enforcements, said the Labor Department. 

“The goal of this entire proposal is to ensure that we are keeping up with local wages that are actually paid to work for construction workers across the country and that we're providing the clarity and transparency for contractors and contracting agencies and workers, so they know what the expectations are when they're bidding on and performing a federally funded construction project,” said Acting Wage and Hour Division Administrator Jessica Looman on the briefing call. “And most importantly, as the secretary said, we are able to build high quality infrastructure across the country and [ensure] that we are creating, maintaining, sustaining, and developing good jobs.”

The Davis-Bacon Act currently doesn’t have explicit protections against retaliation for workers who report they are not being paid the appropriate prevailing wage, she noted. 

Additionally, “this proposed rule actually aligns with a lot of the administration’s priorities around our energy infrastructure development, the worker organizing taskforce, as well as … the [$15] minimum wage executive order,” for covered federal contractors, said Looman, in response to a question from Government Executive on the briefing call. Specifically, on the latter, with the proposed rule we are “making sure that we are regularly updating wages so that in the interim between wage determination surveys, that we're doing regular updates, so that we don't fall behind local wages, including falling behind that $15 an hour minimum wage requirements under the executive order.” 

To develop the proposed rule, the department conducted over 23 listening sessions with contractors, contracting agencies, trade associations, unions and worker advocates, which provided “significant insights,” said Looman.

Public comments on the proposed rule are due 60 days after the proposed rule is published in the Federal Register. 

“In its current form, Davis-Bacon needlessly raises taxpayer-funded construction costs, stifles job creation, undermines productivity and discourages competition from small businesses interested in pursuing federal and federally assisted construction projects,” said Ben Brubeck, vice president of regulatory, labor and state affairs for the Associated Builders and Contractors, said in a statement. “For years, [the association] has called for reforms to confusing DOL compliance rules and enforcement policies which—coupled with a dysfunctional wage determination process—have resulted in a broken system.” 

At noon on Friday, the association was still reviewing the over 400-page rule, but “it appears the DOL missed an opportunity for meaningful Davis-Bacon reform,” Brubeck said. “For example, the proposed rule reverts back to 1983 regulations that do not result in actual prevailing rates, as required by statute. Reversing course by 40 years is not modernization. Instead, it is even worse public policy catering to special interests embedded in the Biden administration that benefit from the broken status quo.”

Brian Turmail, vice president of public affairs and strategic initiatives for the Associated General Contractors of America told Government Executive, the association agrees the Davis Bacon rules need updates and have made suggestions to the Labor Department on how to do so, but “unfortunately, the administration’s proposal to modernize these rules is more like Back to the Future,” the 1985 movie. 

“It is hard to see how replacing 40-year-old regulations with significantly older guidance will streamline the process,” he said. “Worse, the proposal would discourage efficiencies and innovation in federal construction by expanding Davis-Bacon rules to cover off-site prefabrication facilities. These facilities rarely only assemble products for federally funded clients, and this proposal would simply discourage contractors from using time-saving and less costly pre-fabricated products on federal projects.” 

Rep. Virginia Foxx, R-N.C., ranking member of the House Education and Labor Committee, impugned the proposal, arguing it “will drastically increase the cost of federal construction—thereby slowing American growth,” and not create good jobs. She also said, “prevailing wage rates, determined by a completely unscientific wage survey process, are notoriously inaccurate, unfairly favor unions, and levy huge costs on American taxpayers.” 

Meanwhile, Liz Shuler, president of the AFL-CIO, said the White House and Walsh “continue to deliver wins for working people” as “today’s proposed amendments under the Davis-Bacon & Related Acts will modernize [and] strengthen prevailing wage laws to protect 1000s of workers on federal construction projects from rampant wage theft.” 

Sean McGarvey, North America’s Building Trades Unions president, also applauded the move, saying the proposed rule “will restore the [Davis-Bacon Act’s] intended bipartisan purpose to protect the hard-earned wages of construction workers, and in doing so, shield them from exploitation.”