DOL Asks Court to Toss Davis-Bacon Challenge

MONDAY, FEBRUARY 12, 2024


Last week, the U.S. Department of Labor asked a Texas federal judge to throw out a lawsuit from the Associated Builders and Contractors of America seeking to block the Biden Administration’s new regulations under the Davis-Bacon Act.

About the Ruling

In March of 2022, 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 latest updates are described to be the “most comprehensive in decades.”

Although worker groups and unions were reportedly in favor of the proposed changes, construction employer groups were in disagreement. In the wake of a report issued by the Beacon Hill Institute, the Associated Builders and Contractors spoke out against the DBRA.

Then, in August last year, the DOL issued the final rule to update regulations to provide greater clarity and enhance effectiveness in the modern economy.

The “Updating the Davis-Bacon and Related Acts Regulation” reportedly strengthens and streamlines the process for setting and enforcing wage rates on federally funded construction projects to make sure that federal government infrastructure investments are also investments in U.S. workers.

The final rule’s regulatory changes improve the department’s ability to administer and enforce DBRA labor standards more effectively and efficiently. These changes include the following:

  • Creating new efficiencies in the prevailing wage update system and making sure prevailing wage rates keep up with actual wages which, over time, would mean higher wages for workers;
  • Returning 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;
  • Periodically updating prevailing wage rates to address out-of-date wage determinations;
  • Providing broader authority to adopt state or local wage determinations when certain criteria are met;
  • Issuing supplemental rates for key job classifications when no survey data exists;
  • Updating the regulatory language to better reflect modern construction practices; and
  • Strengthening worker protections and enforcement, including debarment and anti-retaliation provisions.

According to the release, the DBRA requirements apply to an estimated tens of billions of dollars in federal and federally assisted construction spending each year and provide minimum wage rates for hundreds of thousands of U.S. construction workers.

The department also expects a significant increase in the numbers of industry workers due to investments in federally funded construction projects made possible by legislation such as the Infrastructure Investment and Jobs Act.

The final rule was effective 60 days after its publication in the Federal Register. 

Lawsuit Challenges

In November, both the Associated General Contractors of America and the ABC filed lawsuits in federal court to block the new regulations in the U.S. District Court for the Northern District of Texas and Eastern District of Texas, respectively.

According to AGC, the administration “lacks the legal authority to expand the law to cover manufacturing facilities miles away from projects, or to retroactively impose the measure on already-executed contracts, among other concerns.”

The AGC has also reportedly challenged the Biden administration rule for asserting that Davis-Bacon rules can be retroactively imposed on qualifying contracts that omitted inclusion of the Davis-Bacon requirements.

They noted the Davis-Bacon Act requires that public contracts contain the Davis-Bacon stipulations for them to be applied. The lawsuit noted that the administration reportedly lacks the legal authority, or legal precedent, to retroactively impose Davis-Bacon stipulations on executed contracts that omitted them when signed.

“Far from ‘updating’ the DOL’s enforcement of the Davis-Bacon Act, the final rule returns to failed policies of the 1970s and unlawfully expands coverage of prevailing wage requirements onto new projects and industries and increases its regulatory burden on small construction contractors working on federally funded contracts,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, at the time.

However, in a motion filed last Wednesday (Feb. 7), the DOL said that the groups do not have standing to bring the lawsuit because they could not explain how the rule will negatively affect them or their members.

“They have not met the basic requirement of explaining how the rule causes them to expend resources in a way that differs from their usual activities and impairs their respective abilities to carry out their missions,” the DOL argued in the dismissal bid.

Additionally, the department says, the groups did not point to any of their members who do have standing to challenge the rule or prove if any of its member companies will face any harm, saying the groups’ theories of injury are vague and based on speculation.

The ABC's complaint supposedly discusses the alleged negative impact the rule will have on unnamed construction contractors, but nothing more concrete, the DOL wrote.

The department adds that no government contractors are facing “imminent harm” as a result of the rule's passage, the DOL said, because the methodology it includes has not yet been used to determine any prevailing wage rates and likely will not be anytime soon.

If the prevailing wages did rise, they explain, those costs would be covered by the contracting agency, as contractors can factor any new wage rates into bids or negotiations on future contracts.

In the event that the court declines to fully dismiss the case, the DOL has asked it to transfer it to a proper venue, as ABC Southeast Texas is reportedly the only entity within the court's jurisdiction.

If the court chooses not to dismiss the complaint, the department has requested the judge to dismiss the group's Regulatory Flexibility Act and appointments clause claims, saying it had met its RFA requirements in promulgating the rule and that the labor secretary has the power to prescribe such regulations.

   

Tagged categories: Associated Builders and Contractors; Associated Builders and Contractors Inc. (ABC); Business management; Contractors; Department of Labor; Good Technical Practice; Government; Labor; Laws and litigation; Lawsuits; NA; North America; Program/Project Management; Regulations; Workers

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