DOL Issues Final Rule Regarding David-Bacon Act

By Corie J. Anderson - Peters, Revnew, Kappenman & Anderson, P.A.

January 11, 2024

Another DOL flip-flop. And a picture of bacon. What can I say…I’m from Iowa. We like our bacon. If you’re a federal contractor, you should be aware that on October 23, 2023, the U.S. Department of Labor (DOL) issued new regulations related to the Davis-Bacon and Related Acts (DBRA), for the first time in nearly 40 years. Importantly, the revisions bring more workers under the DBRA’s purview.

What has Changed – The Highlights:

The most notable change involves redefining “prevailing wage,” by resurrecting the “three-step” method (also known as the 30% rule) that was used until 1983.  Under this approach, if a wage rate isn’t the standard for a majority of workers, a rate will be recognized as “prevailing” if at least 30% of the workers within a specific job classification in an area earn that rate.

In addition, the definition of “building or work” now includes solar panels, wind turbines, broadband installations, and electric vehicle charger installations.

The term “material supplier” is now expressly defined in the regulations, and is excluded from the definition of the term “contractor.”  A material supplier now includes entities whose responsibility is restricted to the delivery of materials and supplies and activities related to those tasks.  An entity that engages in other construction work at the site is considered a contractor or subcontractor.

The regulations now state that that demolition activities consisting of construction, alteration, or repair are covered under DBRA.  Also, demolition activities at sites with anticipated construction under DBRA are now covered.

The definition of “site of the work” now includes any site where “significant portions” of a project are produced.

The DOL has specified that flaggers and traffic operators are regarded as working on the site of work, even if they are working several blocks away or further down the highway from the actual construction site.

Compliance and Enforcement Changes – Contractors Are Responsible for Wages for Subcontractors’ Violations

Contractors and subcontractors are required to retained DBRA-related documents and worker contact information for at least 3 years following completion of the contract.

Upper-tier contractors and subcontractors are liable for lower-tier subcontractors’ violations. Both groups are liable for owed back wages on behalf of lower-tier subcontractors.

When dealing with back wages, any interest will be determined based on the rate set by the IRS (26 U.S.C. § 6621).  This interest will be compounded daily.

The regulations incorporate the Davis-Bacon Act’s broader “disregard of obligations” standard into the Related Acts.  This broadens the scope of potential actions by employers that could lead to debarment, because historically the triggering factors for debarment under the Related Acts were rooted in instances of “willful or aggravated” violations.

Notably, the regulations clarify that funds can be cross-withheld from any contract falling under the same prime contractor, if violations occur.  This holds true even if the contract was awarded or supported by a different agency than the contract where violations had taken place.

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