On August 8, 2023, the U. S. Department of Labor (“DOL”) issued a final rule revamping its procedures for determining prevailing wages under the Davis-Bacon and Related Acts (collectively, DBRA). This is the first time in forty years that DOL has revisited this process.
The DBRA requires payment of locally prevailing wages and fringe benefits for various classifications of workers on most federally funded or assisted contracts for the construction, alteration, or repair of public buildings or public works. See 40 U.S.C. sec. 3141 et seq.
Previously, a rate was considered the “prevailing” rate in a geographic area “only if it [was] paid to a majority of the workers in a classification on the wage survey, otherwise a weighted average [was] used.” The White House summary of the rule observed that the “average can pull down the prevailing wage if some employers pay very little.” In revising how the prevailing rate should be calculated, the DOL analyzed 19 recent wage surveys – from 2015 or later – and found that the reliance on average rates had increased significantly, accounting for 63% of wage determinations. This is inconsistent with the Congress’s use of “prevailing” in the Davis-Bacon Act. Indeed, the DOL’s statements in the preamble to its 1982 rule defined “prevailing” wage as “the most widely paid rate that is actually paid to workers in the relevant locality.”
The final rule returns to the pre-1983 three-step process and reinstates the definition of prevailing wage as wages “equivalent to those paid to at least 30% of workers.” In other words, the prevailing wage is the wage paid to at least 30% of workers in a particular trade in a locality. This “makes it more likely that the workers are paid a true prevailing wage,” according to the White House, and will build the economy from the “bottom up and middle out – not the top down.”
The DOL predicts that the final rule will enhance the modern economy and provide better wages and benefits to 1.2 million construction workers.
Additionally, the final rule also allows the DOL to update its prevailing wage rate more quickly and efficiently by relying on state and local wage determinations, and strengthens worker protection and enforcement rights through new anti-retaliation provisions.
The final rule will be effective 60 days after its publication in the Federal Register.
The DOL received numerous comments in favor of and in opposition to the final rule. The Leadership Conference on Civil and Human Rights, the National Women’s Law Center, Oxfam America and other civil rights and worker advocacy organizations commented that “the choice of the 30-percent threshold appropriately aligns the rate selected with the actual wages paid to ‘significant shares’ of workers in a covered job classification.”
Others, like the Associated Builders and Contractors, and Modular Building Institute objected to the rule, arguing that the 30-percent rule would result in rates that are less likely to reflect the actual wage and fringe benefit rates in a locality.
Ballard Spahr Labor & Employment Group frequently advises employers on matters relating to the broad spectrum of labor and employment issues, including developments in the wage and hour arena.