This month, the U.S. Department of Labor (DOL) issued its final rule to update regulations implementing the Davis-Bacon Act and the Davis-Bacon and Related Acts (Davis Bacon Act). According to the DOL, these updates better reflect the needs of construction workers on federal contracts. The final rule follows a 2022 proposed rule that received comments from stakeholders in the construction industry and federal contract labor. The DOL predicts a significant increase in the amount of federally contracted construction workers coinciding with historic investments in government-funded construction projects. In February 2023, the DOL replaced its 2020 federal contractor religious exemption rule, returning to its previous standard more in-line with religious exemptions under Title VII of the Civil Rights Act of 1964.
Overview of the Davis Bacon Act and Related Acts
Under the Davis-Bacon Act, the DOL determines prevailing wages, issues regulations and standards for awarding or funding projects subject to Davis-Bacon labor standards, and enforces such labor standards. Specifically, the Davis-Bacon Act applies to federal contractors and subcontractors under contracts in excess of $2,000 for construction, alteration, or repair of public buildings and works. The Davis-Bacon Act also applies to contractors and subcontractors working on District of Columbia contracts.
Under the law, covered contractors and subcontractors must pay contracted laborers no less than the local prevailing wage and fringe benefits for similar projects in the area. The DOL determines the locally prevailing wage rates for specific projects. Under laws related to the Davis-Bacon Act, contractors and subcontractors with prime contracts over $100,000 must pay laborers and mechanics at least one-and-one-half their regular rate of pay for all hours worked over 40 in a workweek. Meanwhile, overtime rules under the Fair Labor Standards Act (FLSA), one of five employment laws businesses should know, may also apply to Davis-Bacon Act-covered contracts.
Final Rule to Update Davis Bacon Act Regulation
Overall, the DOL’s final rule, “Updating the Davis-Bacon and Related Acts Regulations,” strengthens and streamlines how the DOL sets and enforces wage rates on federally contracted construction projects according to the Davis-Bacon Act. The final rule’s changes include the following:
- new efficiencies in the prevailing wage update system to ensure prevailing wages keep up with actual wages over time;
- returning to the previous definition of “prevailing wage” to reflect actual wages for workers in the local community;
- updating prevailing wage rates periodically to address outdated wage determinations;
- broader authority to adopt state or local wage determinations under specific criteria;
- supplemental rates for key job classifications for which no survey data exists;
- changes to the law’s language to better reflect the modern construction industry; and
- strengthening protections and regulatory enforcement, including debarment and anti-retaliation provisions.
The DOL also published a series of Frequently Asked Questions on the Davis-Bacon Act final rule to inform federal contractors and other stakeholders about these changes. As of August 10th, 2023, the final rule is on public inspection. The final rule will be published in the Federal Register on August 23rd, 2023. Subsequently, it will go into effect 60 days following publication.