DOL Announces Wage Compliance Seminars
The U.S. Department of Labor’s Wage and Hour Division recently announced that it will be providing online compliance seminars for contracting agencies, contractors, unions, workers and other stakeholders on the requirements governing payment of prevailing wages on federally funded construction and service contracts.
The seminars, presented by the Department’s Wage and Hour Division, are part of the DOL’s ongoing effort to increase awareness and improve compliance with federal prevailing wage requirements.
“With the Biden-Harris administration’s unprecedented investments in the nation’s infrastructure, the Wage and Hour Division wants to ensure that employers understand the importance of compliance with the Davis-Bacon and Service Contract acts and other laws we enforce,” said Principal Deputy Wage and Hour Administrator Jessica Looman.
“Our efforts are intended to help create good jobs and support responsible employers by providing useful opportunities for contractors, workers and contracting agencies to understand the laws that govern wages and benefits on federal contracts better.”
The live Davis-Bacon Act compliance session is scheduled for Sept. 13 and the live session on the McNamara-O’Hara Service Contract Act compliance is scheduled for Sept. 14.
In addition to the recorded videos, the division is also planning to offer a live, online question and answer session from 1:30-3:30 p.m. EDT.
The virtual events are free to attend, however, registration is required and can be completed here. Additional information regarding the events, dates for the Q&A sessions, and more are expected to be released to registrants in the coming weeks.
About Davis-Bacon & Related Acts
According to the DOL, the Davis-Bacon and Related Acts (DBRA) require payment of locally prevailing wages to construction workers performing work on federally funded construction projects. The prevailing wage is a combination of the basic hourly wage rate and any fringe benefits rates listed for a specific classification determined by the DBA.
Wage Determinations are issued for four types of construction categories:
The DBA applies to each federal government or District of Columbia contract more than $2,000 for the construction, alteration or repair (including painting and decorating) of public buildings or public works and requires that contractors and subcontractors pay their laborers and mechanics employed under such contracts no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area.
The prevailing wage provisions also apply to “Related Acts,” meaning when a federal agency assists construction projects through grants, loans, loan guarantees and insurance.
In March, for the first time in 40 years, the DOL proposed a rulemaking for the DBRA to better reflect the needs of today’s construction industry and planned federal construction investments.
The Notice of Proposed Rulemaking was published by the department’s Wage and Hour Division in the Federal Register on March 11.
According to reports, the DOL aims to return to how the DBRA was used from 1935-1983 to ensure prevailing wages reflect actual wages paid to workers in the local community.
During that time, a prevailing wage was determined by the 51% threshold. If the threshold wasn’t met, however, the new rule would allow just 30% of same or similar wages to be used. And, if that bar couldn’t be achieved, a weighted average would then be used.
Other proposed changes include:
About McNamara-O’Hara Service Contract Act
According to the DOL, the McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement.
The DOL issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies, which are then incorporated into the contract.
For contracts equal to or less than $2,500, contractors are required to pay the federal minimum wage as provided in Section 6(a)(1) of the Fair Labor Standards Act.
For contracts more than $100,000, contractors and subcontractors must also, under the provisions of the Contract Work Hours and Safety Standards Act, as amended, pay laborers and mechanics, including guards and watchmen, at least one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.
The overtime provisions of the Fair Labor Standards Act also apply to SCA-covered contracts.
Industry Response to Proposed DBRA Changes
Following the publication of the DBRA proposed rulemaking in the Federal Register, the Beacon Hill Institute issued a report on the changes and how they might affect the industry. In its analysis of the released data, the Associated Builders and Contractors issued a public announcement that it was not in support of the proposal.
According to BHI’s report, “The Federal Davis-Bacon Act: Mismeasuring the Prevailing Wage,” the current method used by the federal government to calculate “prevailing wages” under the 91-year-old Davis-Bacon Act adds at least 7.2% to the cost of federal and federally assisted construction projects and inflates wages by 20.2% compared to local market averages.
The report also found that the DOL’s methodology produces government wage determinations that do not reflect local area standards and are not statistically accurate.
To assemble the report, BHI examined the DOL Wage and Hour Division’s methodology that determines how much contractors are required to pay to construction workers on taxpayer-funded projects subject to DBA regulations.
“The DBA turns federal construction spending into a costly welfare system for union workers in some markets,” according to the report. “The DBA gets periodic attention from Congress and various critics as an archaic policy resulting in waste, favoritism and reduced competition for government contracts.”
In further research, BHI found that its findings were consistent with reports critical of the DOL’s methodology by the DOL Office of Inspector General, the Government Accountability Office and think tanks published over the last 50 years.
“There is a general unawareness of the arcane statistical calculations undertaken by the U.S. DOL WHD that inflate costs. Since the law is intended to reduce wage competition, the government authorities responsible for calculating the prevailing wage are under pressure to use archaic methods for calculating a wage that is biased toward requiring union-scale wages instead of an average or even true prevailing wage,” BHI wrote.
“In addition, the DOL occupational classifications and rate of pay are not based on qualifications, experience, safety record or skills but rely only on the type of work performed on a project.”
In a press release, Ben Brubeck, ABC Vice President of Regulatory, Labor and State Affairs stated, “This anti-competitive and costly proposal couldn’t come at a worse time for taxpayers following the passage of the Infrastructure Investment and Jobs Act, which over the next 10 years invests $550 billion of new federal money into infrastructure above baseline spending.
“The construction industry is facing unprecedented inflationary headwinds driven by supply chain disruptions, materials price escalation and a skilled labor shortage of nearly 650,000 in 2022. This rulemaking will result in more inflation and the construction of fewer roads, bridges, schools, transportation systems and utilities funded by taxpayers.”
Repeal of the DBA is likely to save taxpayers at least $217 billion over the next 10 years, according to BHI. A copy of the full report can be read here.