New Department of Labor Final Rule: Davis-Bacon Act Regulations Overhauled

The U.S. Department of Labor (DOL) has issued its long-awaited Final Rule to revise the Davis-Bacon Act (DBA) regulations. The Final Rule will be effective 60 days after the date of publication in the Federal Register, which currently is scheduled for August 23rd.

While we are still analyzing all the regulatory changes in the 812 pages Final Rule, it is clear (like the DOL’s Notice of Proposed Rulemaking (NPRM) issued March 18, 2022) that the Final Rule contains only a few changes that will be beneficial to contractors, while most of the changes heavily favor workers and unions and enhance the DOL’s enforcement tools.

Examples of key changes in the latter category include:

  • Changing the way wage and fringe rates are developed in wage determinations to favor adoption of union rates which will result in higher wage and benefits
  • Broadening the definition of “site of the work” to include locations where “significant portions” of a project (such as prefabricated materials manufacturing facilities) are produced
  • Expanding DBA coverage of truck drivers and material suppliers
  • Making DBA contract clauses and applicable wage determinations effective by “operation of law” even where a contracting agency fails in include them in a contract or funding agreement
  • Requiring DOL approval of vacation and holiday plans for fringe credit
  • Requiring contractors to consent to cross withholding for back wages owed on contracts held by different but related legal entities (those controlled by the same controlling shareholder or entities that are joint venturers or partners on a federal contract)
  • Expanding record-keeping obligations

These changes in the DBA regulation will impact not only DBA contracts, but also the DBA requirements in over 70 statutes (DBA Related Acts). As a result, federal agencies provide funding assistance for construction projects primarily through direct funding, grants, loans, loan guarantees, or insurance.

Also impacted, at least in part, will be the prevailing wages requirements of the Inflation Reduction Act, which provides enhanced tax credits for certain clean energy projects in exchange for compliance with prevailing wage and apprenticeship requirements.

We anticipate multiple legal challenges to the Final Rule by construction trade associations and other interested parties, and that these court filings will be accompanied by requests for temporary injunctions of the Final Rule.

Construction contractors and other impacted parties should start gearing up now for compliance with the Final Rule.

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