The Davis-Bacon Act: 2022 Proposed Rule

The Davis-Bacon Act: 2022 Proposed Rule

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August 16, 2022
The Davis-Bacon Act: 2022 Proposed Rule
Introduction
persons or firms appearing on the list or to any firm,
Beginning in the 1930s, Congress has enacted multiple
corporation, partnership, or association in which such
statutes that establish minimum labor standards for various
persons or firms have an interest until three years after the
classes of workers. Some of these standards (e.g., the Fair
list’s publication date (40 U.S.C. §3144(b)(2)).
Labor Standards Act and the National Labor Relations Act)
apply broadly to most employers, while others apply more
Besides the DBA, there are numerous statutes that authorize
narrowly to private employers that enter into contracts with
federal financial assistance for construction projects
the federal government. This In Focus examines the federal
through grants, loans, and other funding mechanisms to
law that prescribes labor standards for federal construction
which Congress has added prevailing wage provisions.
contracts—the Davis-Bacon Act (DBA)—and a recently
These laws, described as Davis-Bacon related acts (DBRA)
proposed rule that would substantively amend DBA
because of their prevailing wage requirements, involve
regulations for the first time since 1982.
construction in areas such as transportation, housing, air
and water pollution reduction, and health. The related acts’
The Davis-Bacon and Related Acts
prevailing wage requirements apply when federal financial
The Davis-Bacon Act (DBA), 40 U.S.C. §§3141-3148,
assistance is provided for construction but the federal
requires government contractors to pay locally prevailing
government is not a contracting party or a public building
wages to laborers and mechanics employed on certain
or public work is not involved.
federally funded construction projects. Enacted in 1931, the
DBA reflects Congress’s interest in giving the government
Proposed Changes to DBA Regulations
“the power to require its contractors to pay their employees
The U.S. Department of Labor’s Wage and Hour Division
the prevailing wage scales in the vicinity of the building
(WHD), which administers the DBA, published a Notice of
projects.” (S. Rep. No. 71-1445, at 1-2 [1931]). Under the
Proposed Rulemaking (NPRM) in March 2022 (“Updating
DBA, the Secretary of Labor calculates prevailing wages by
the Davis-Bacon and Related Acts Regulations,” 87
reviewing wages paid to corresponding classes of laborers
Federal Register 15698, March 18, 2022) to provide the
and mechanics employed on projects of a similar character
“first comprehensive regulatory review” of DBA and
in the civil subdivision of the state in which the work is
DBRA regulations since 1982. The comment period for the
performed (40 U.S.C. §3142(b)). The DBA defines wages
NPRM closed on May 17, 2022.
to include not only a basic hourly rate of pay, but also
amounts related to health, retirement, and other fringe
Prevailing Wage Methodology
benefits (40 U.S.C. §3141(2)(A)-(B)).
The DBA defines the minimum wages to be paid to laborers
and mechanics as those that the Secretary of Labor
The DBA requires government contractors to pay locally
determines to be prevailing for corresponding workers in
prevailing wages when the following conditions exist: (1)
the civil subdivision of the state in which the covered
there is a contract in excess of $2,000; (2) the United States
construction work is to occur. WHD surveys construction
or the District of Columbia is a party to the contract; and (3)
contractors and, since 1935, has used a selection among the
the contract is for construction, alteration, or repair,
following three methods to determine prevailing wage
including painting and decorating, of public buildings or
rates:
public works of the United States or the District of
 the 50% rule—wage rate paid to the majority of
Columbia within the geographical limits of the United
workers;
States or the District of Columbia (40 U.S.C. §3142(a)).
 the 30% rule—wage rate paid to at least 30% of
Contractors are generally required to pay locally prevailing
workers; and
wages to laborers and mechanics when a construction
 the weighted average rate.
project satisfies these three conditions. The government
may terminate a contract if it discovers that a contractor has
The NPRM would amend the procedure that has been in use
not paid the required prevailing wages (40 U.S.C. §3143).
since a 1982 rulemaking changed the process that had been
Following termination, the government may contract to
in effect since the enactment of the DBA in 1935.
complete the work and hold the original contractor liable
for any excess costs incurred.
As shown in Table 1, WHD used a three-step process for
determining prevailing wages from 1935 until 1982. If a
The Comptroller General of the United States must
majority wage rate existed, that rate became the prevailing
distribute to all federal agencies a list of individuals or
wage. If not, the wage rate paid to at least 30% of workers
firms that have failed to pay laborers and mechanics a
prevailed. If no single rate exceeded the 30% of workers
prevailing wage under the DBA (40 U.S.C. §3144(b)(1)).
threshold, the weighted average rate prevailed. The 1982

The federal government may not award a contract to the
rulemaking eliminated the 30% rule, thus creating a two-
step process for determining the prevailing rate: the wage
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The Davis-Bacon Act: 2022 Proposed Rule
rate paid to the majority of workers; if none, then the
rural labor markets. In some cases, this bar meant that
weighted average rate.
WHD would mix wage data from a metropolitan county in
one part of the state with data from another nonadjacent
The proposed rule would return the prevailing wage
metropolitan county. The NPRM proposes two changes in
determination to the three-step process in use 1935 through
the geographic scope for wage data:
1982. In justifying a return to the three-step process, WHD
explains that the original fallback method—weighted
 Removing the ban on allowing WHD to mix wage data
averages—has become the dominant wage determination
between rural and metropolitan counties when the
method. WHD argues that current practice has resulted in
geographic scope is expanded beyond a single county.
an “overuse” of average rates that are “artificial,” as they
WHD argues that this rural-metropolitan distinction
are not “actually paid” to workers for whom prevailing
does not capture actual construction labor markets,
wages are calculated (87 Federal Register 15700).
which tend to be geographically large and are not
aligned with county borders.
Table 1. DBA Prevailing Wage Methodology
 Clarifying the definition of surrounding counties to
Period
First Step
Second Step
Third Step
reduce ambiguity about which counties may be part of a
1935–
multi-county grouping for prevailing wage
50% rule
30% rule
Average
1982
determinations.
1983–
Periodic Adjustments
50% rule
Average
n/a
present
As noted in the NPRM, under the current 50% rule for
NPRM
50% rule
30% rule
Average
determining prevailing wage, majority wage rates for DBA
classifications are typically rates from collective bargaining
Source: CRS review of U.S. Department of Labor, Wage and Hour
agreements (CBAs). WHD updates the CBA-determined
Division, “Updating the Davis-Bacon and Related Acts Regulations,”
prevailing rates based on periodic wage and benefit
87 Federal Register 15698, March 18, 2022.
increases in the CBA. If, however, a prevailing wage rate is
based on a weighted average or the majority rate is from
Notes: Under the DBA, average wages are calculated as the
non-CBA rates, there is no mechanism to adjust these rates
weighted average of wage rates for each employee in each
without updated construction wage surveys. Although
occupational classification.
WHD has a goal of conducting wage surveys in each area
every three years, in practice this does not happen, and
Use of State and Local Data
many area wage determinations are more than three years
Under current regulations, WHD may “consider” wage
old. In some cases, the determinations may be more than 10
rates calculated for public construction projects by states or
years old. Thus, out-of-date wage surveys may lead to wage
localities as part of the determination process. The proposed
determinations that are lower than the current prevailing
rule would clarify that WHD may adopt state or local
construction wages in a local area.
prevailing rates, even if the state or local definition of
prevailing differs from the WHD definition. To adopt these
To address out-of-date, non-CBA-determined prevailing
rates, WHD would have to determine that the prevailing
wage rates, WHD proposes in the NPRM to update this
wage rate methodology used by states or localities meets
class of rates by adjusting them with the Bureau of Labor
certain criteria, including a survey process that
Statistics Employment Cost Index (ECI) data, which tracks
encompasses all relevant stakeholders, an occupational
data on wages and benefits. Specifically, WHD would use
classification system recognized within the construction
ECI data to update existing non-CBA rates from the date
industry, and a wage methodology “substantially similar” to
the rate was published to their present value. Going
that used by WHD. By adopting this proposed change,
forward, non-CBA rates or weighted average rates would
WHD argues the timeliness and currency of prevailing
be adjusted in accordance with ECI data if WHD has not
wage rates would improve.
updated these rates within three years after publication.
Geographic Scope
Anti-retaliation
The DBA specifies that the geographic area for which
Currently, WHD can debar contractors and seek back
prevailing wages should be determined is the “civil
wages for laborers and mechanics who have been retaliated
subdivision of the State in which the work is to be
against for cooperating with WHD investigations or
performed” (40 U.S.C. §3142(b)). In practice, WHD has
reporting potential violations of the DBA. The NPRM
used the county as the default area for wage determinations.
proposes to broaden the scope of protected activities for
If data at the county level are not sufficient to determine
workers and authorize “make-whole relief” and other
prevailing wages for corresponding classes of laborers and
remedial actions, including reinstatement, promotion, and
mechanics, WHD progressively expands the geographic
the expungement of reprimands that are unavailable under
scope of data collection to a group of surrounding counties,
current law.
then to supergroups of counties, and finally to the state as a
whole. The 1982 regulations barred the mixing of “rural”
David H. Bradley, Specialist in Labor Economics
and “metropolitan” county wage data for determining
Jon O. Shimabukuro, Legislative Attorney
prevailing wages based on the rationale that importing
higher wages from metropolitan counties would disrupt
IF12196
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The Davis-Bacon Act: 2022 Proposed Rule

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