Davis-Bacon Rule Update
November 22, 2023
The U.S. Department of Labor (DOL) has ushered in significant changes to the Davis-Bacon and Related Acts (DBRA) standards. This final rule, effective October 23, 2023, comprised of hundreds of pages, is poised to impact over one million construction workers. Alongside the comprehensive revisions, the DOL has released a set of Frequently Asked Questions to guide stakeholders through the intricacies of the updated regulations.
The DOL justifies these updates as a response to the surge in federally funded projects and a necessity to provide clarity to contracting agencies, contractors, and workers. The aim is to enhance the overall effectiveness and consistency of administering and enforcing the DBRA.
The DBRA, which applies to federal contractors and subcontractors engaged in projects exceeding $2,000 for the construction, alteration, or repair of public buildings or public works, mandates that employees receive no less than prevailing local wages and fringe benefits. While the final rule doesn’t alter the types of projects subject to DBRA standards, the key revisions include:
The DOL has redefined the term “prevailing wage,” introducing a three-step process for its determination. This change is anticipated to result in higher pay for employees, aligning with the majority rate, wage rates paid to at least 30% of workers, and the weighted average rate in the classification.
A provision for periodically adjusting certain non-collectively bargained rates has been added, based on total compensation data from the Employment Cost Index. These adjustments can occur no more than once every three years, providing a mechanism for keeping rates in line with economic changes.
The DOL now has the authority to adopt wage rates set by state and local governments under specific conditions, ensuring alignment with the DOL administrator’s criteria for wage determinations.
The final rule codifies the requirement that fringe benefits should be annualized, preventing contractors from using contributions attributable to private projects to meet prevailing wage obligations.
Enhanced recordkeeping requirements mandate the maintenance of payroll and other essential records for at least three years after completing work on the prime contract, including detailed worker information.
The final rule introduces anti-retaliation provisions aimed at strengthening DOL enforcement mechanisms. Remedies for retaliation resulting from a DBRA complaint include reinstatement, front pay, back pay, interest, compensatory damages, and the posting of a notice to workers outlining the contractor’s commitment to DBRA compliance.
For contracts initiated on or before October 23, 2023, the current wage determinations will remain applicable. However, modifications that include substantial additional work or time obligations necessitate the incorporation of the most recent applicable wage determinations.
By Linda Olejniczak, courtesy of SBAM-approved partner, ASE