US construction groups sound warning over changes to regulations applying to workers’ wages

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The US Department of Labor (DOL) has announced a final rule to update labour regulations that apply to federal and federally assisted construction projects, arguing that it would result in better wages for workers.

However, groups representing US construction companies have sounded a warning over the move.

The DOL said it was updating the regulations that implement the Davis-Bacon Act and Davis-Bacon and Related Acts.

The 1931 Davis-Bacon Act and related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects of $2,000 or more to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers.

The regulations apply to an estimated $217 billion in federal and federally assisted construction spending per year.

The Department of Labor claimed that the move would “reflect better” the needs of construction workers on federal construction investments.

The changes include:

• Returning to the definition of “prevailing wage” used from 1935 to 1983.
• Periodically updating prevailing wage rates to address out-of-date wage determinations.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 reflect modern construction practices.
• Strengthening worker protections and enforcement, including debarment and anti-retaliation provisions.

The Department of Labor said that the changes would improve efficiencies in the prevailing wage update system and claimed that it would ensure prevailing wage rates keep up with actual wages which, over time, would mean higher wages for workers.

Acting secretary of Labor Julie Su said, “Modernising the Davis-Bacon and Related Acts is key to making sure that the jobs being created under the Biden-Harris administration’s Investing in America agenda are good jobs, and that workers get the fair wages and benefits they deserve on federally funded constructions projects across the nation.”

But groups representing contractors argued that the changes would mean poorer value for taxpayers on federal construction projects.

Associated Builders and Contractors (ABC) vice president of regulatory, labor and state affairs Ben Brubeck said, “Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation.

“Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established nearly 40 years ago, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.”

He argued that the rule made it more likely that the Department of Labor would adopt union wage scales at the prevailing wage “at a greater frequency than in current practice”.

He also warned that the final rule came against the backdrop of challenging conditions for construction including high material costs and a skilled labour shortage.

ABC submitted nearly 70 pages of comments on the Department of Labor’s proposed rule and urged it to withdraw the proposal.

Meanwhile, the Associated General Contractors of America’s (AGC) chief executive officer, Stephen E. Sandherr said, “AGC holds that the DOL’s almost exclusive reliance on voluntary surveys to produce and update wage determinations has created a compensation system for Davis-Bacon covered construction that poorly reflects the construction labour market in many parts of the country.

“AGC recommended the DOL should instead focus on how to collect more accurate data, instead of being able to rely on less, or even at times inappropriate data, to determine wages that are truly prevailing.

“While we look forward to working with the DOL on implementation of the rule, we will continue to evaluate all our options on behalf of our members.”