Significant Changes for Federal Contractors Likely Coming Soon
By: Amy C. Bender
The U.S. Department of Labor has proposed the most sweeping changes to the regulations implementing the Davis-Bacon Act and Related Acts in 40 years. The Davis-Bacon Act requires the payment of locally prevailing wage rates and fringe benefits to all laborers and mechanics on contracts entered into with federal agencies and the District of Columbia for more than $2,000 and for the construction, alteration, or repair of public buildings or public works. These requirements also apply to more than 70 other statutes under which federal agencies assist construction projects through methods such as grants, loans, and insurance (the “Related Acts”).
The proposed revisions to the regulations focus on two primary issues, wage determinations and enforcement tools.
The suggested changes, which are aimed at making wage rates more informed and current and at making the wage determination process more efficient, include the following:
- A new methodology permitting adoption of state or local wage determinations as the Davis-Bacon prevailing wage in certain circumstances;
- Changes to the definition of “prevailing wage” and to the scope of data considered to identify the prevailing wage in a given area;
- A new procedure to identify and list on the wage determination wage and fringe benefit rates for certain classifications with insufficient data from surveys; and
- A new mechanism to regularly update certain prevailing wage rates.
The proposed rule also seeks to enhance enforcement efforts and tools, such as through these methods:
- Designating the Davis-Bacon and Related Acts contract clauses and applicable wage determinations as effective by “operation of law” even if those provisions are not explicitly included in a covered contract;
- Introducing new anti-retaliation provisions to ensure that workers who complain about payment practices or participate in investigations are protected from termination or other adverse employment actions;
- Clarifying and strengthening “cross-withholding” for recovering back wages, whereby payments due on contracts at times may be withheld by agencies other than the agency that awarded the contract in the event of a violation;
- Harmonizing “debarment” standards so that the same conduct will warrant debarment (prohibition from participating in future covered contracts) under both Davis-Bacon Act projects and Related Acts projects, a 3-year debarment will be mandatory under both the Davis-Bacon Act and Related Acts, and the current provision allowing early removal from the debarment list under the Related Acts will be eliminated;
- Reinforcing that Davis-Bacon labor standards requirements apply when workers are either independent contractors or employees; and
- Clarifying that funds may be suspended when a contractor has refused to submit certified payroll or provide required records.
The Department of Labor is accepting comments on the proposed rule through May 17, 2022. If the rule is adopted, covered contractors may get needed clarity on the wage rates they must pay their workers but also face more robust oversight and penalties for violations.
In our firm’s experience, the Department of Labor is focusing its investigation, auditing, and enforcement efforts on the construction industry in numerous wage-hour areas, including Davis-Bacon Act and Fair Labor Standards Act issues. Covered contractors are advised to stay abreast of these laws’ requirements and any coming changes.
For more information, contact Amy Bender at [email protected].