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Infrastructure Wage Overhaul Advanced by Labor Department (2)

March 11, 2022, 3:00 PMUpdated: March 11, 2022, 5:23 PM

The U.S. Department of Labor is looking to update its rules governing how contractors are paid when working on federally funded construction projects in what would amount to the largest overhaul of Davis-Bacon Act regulations in four decades.

The proposal announced Friday would change how the agency enforces the 1931 law that requires workers to receive “prevailing wages,” or pay and benefits equal to local rates for similar jobs, when working on projects funded by the federal government.

“The goal of course with this is to make sure that the Davis-Bacon regulations are reflecting our modern construction industry and our modern construction needs,” Acting Wage and Hour Division Administrator Jessica Looman said in an exclusive interview Thursday ahead of the rulemaking announcement. The DOL also is “making sure that the prevailing wages that are paid to construction workers on federal construction projects are aligned with the local construction wages in the communities where federal construction projects are occurring.”

The proposal, if finalized, would result in higher wages for an estimated 1.2 million U.S. construction workers on these projects which, in turn, will attract more workers to the construction industry, Labor Secretary Marty Walsh said during a press conference Friday.

“The Davis-Bacon rule will help us make sure our skilled workers and wages can’t be undercut and we want to provide more opportunity for workers interested in working in new innovative construction projects like energy infrastructure buildings, and also I think this role will help us attract more people into the industry. As you all know, we’re in need of construction workers all across America,” Walsh said.

DOL calculates the “prevailing wage” through a survey process and designates a rate as “prevailing” if more than 50% of workers in a certain area are paid at that amount. If DOL doesn’t receive enough responses, the agency averages the rates for a particular job in a specific area, and requires construction contractors to use what is called a “blended rate.”

Looming Opposition

Notably, the new Biden administration proposal would return to the definition of “prevailing wage” used from 1935 to 1983, a standard that set the prevailing wage at the rate paid to at least 30% of the workers doing a particular job in an area.

The change “allows us to better utilize the survey data that we receive from construction industries, from construction employers, so that we can have a prevailing wage rate more often for workers on construction projects,” Looman said, as opposed to using the average rate, which she said DOL has come to “over” rely upon in recent years.

Industry groups who have long criticized the determinations as based off inaccurate survey data and skewed in favor of union rates, will likely oppose the provision.

Building trades unions, however, will likely applaud the Biden administration’s move and have called on DOL to strengthen its enforcement of the Davis-Bacon Act, particularly over how employers calculate prevailing wages.

“Davis-Bacon provisions are an essential protection for working families across the United States as they guarantee fair wages on the job,” said Mark McManus, general president of the United Association of Union Plumbers and Pipefitters. “We are glad to see the Department of Labor taking action today to fulfill President Biden’s promise to working families.”

The Biden administration proposal also includes new anti-retaliation provisions, as well as a proposal to update local wage rates periodically between survey periods. The DOL is also seeking input on whether it should revise the data it uses when calculating wage rates on building and residential construction projects.

The agency will be accepting comments on the proposal for 60 days after it is published in the Federal Register, which is expected to occur next week.

(Updated with additional details and reaction throughout.)

To contact the reporter on this story: Rebecca Rainey at rrainey@bloombergindustry.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com