Construction association sues to block major changes to US construction labour regulations
08 November 2023
Image: Sergey Novikov via AdobeStock - stock.adobe.com
The Association of General Contractors (AGC) has launched a legal action to block the US government from making a major update to construction labour regulations.
The US Department of Labor (DOL) issued its Final Rules updating certain requirements under the Davis-Bacon Act to the way in which workers are paid on federally funded projects earlier this summer.
One of the key changes to the Davis-Bacon Act, a Depression-era law intended to protect local jobs, is a revival of what is called the ‘30% rule’ in relation to workers’ wages (see below).
But the AGC has filed a suit in federal court to block the expansion of the reach of the Davis-Bacon Act, which it said was “unlawful”.
The AGC argues that the Biden administration lacks the legal authority to expand the law to cover manufacturing facilities miles from projects, or to retroactively impose the measure on already-executed contracts.
Stephen E. Sandherr, the outgoing chief executive officer of the AGC, said, “As an industry that largely pays above existing Davis-Bacon rates, our concerns are with the administration’s unconstitutional exercise of legislative power and not with the wage rate themselves.
“But we are challenging the fact president’s unlawful efforts to expand a construction wage law to cover a wide range of manufacturing and shipping operations.”
The association filed its lawsuit in the U.S. District Court for the Northern District of Texas in response to the U.S. Department of Labor’s final rule proposing significant changes to the Davis-Bacon Act, which was first enacted in 1931.
In its legal filing, the association noted that the Davis-Bacon Act is specifically limited only to “mechanics and laborers employed directly upon the site of the work.”
It also noted in an amended version of the Act passed in 1935 that Congress clarified that the Davis-Bacon law does not apply to materials suppliers.
And it argued that expanding the act to delivery truck drivers is “impermissible” because the are not mechanics or labourers and spend an undefined amount of time on the jobsite.
The association is seeking to have the court order the administration to roll back its efforts to expand Davis-Bacon requirements to categories of work that were excluded in the initial legislation.
It is also urging the court to block the administration from retroactively imposing Davis Bacon requirements on executed contracts that did not include the provisions.
But it said it was not challenging the Biden Administration’s efforts to revert to an earlier process for determining the prevailing wage rates for federally funded construction projects.
What is the 30% rule?
The Davis-Bacon Act is a Depression-era law intended to protect local jobs.
The Act protected local construction companies and their workers from being under-bid by non-local companies that sought to utilize non-local workers who were paid a lower wage.
After the passage of the Davis-Bacon Act, the DOL applied the “30%” rule to determine prevailing wages, including benefits.
Under that rule, the DOL first attempted to find a wage rate including benefits paid to the majority of workers in that job classification in that area.
If the DOL could not find a majority wage rate, then it would use the wage rate paid to 30% of workers.
If the DOL could not find a wage paid to 30% of workers, then the Department would use a weighted average of the wage rates to establish the required prevailing wage rate paid on federally funded construction projects.
In response to criticism that Davis-Bacon wage rates were too high thereby driving up the cost of government funded construction projects, in 1983 the DOL stopped using the 30% rule.
The latest Final Rules revive the 30% rule.
For a full explainer on what the Davis-Bacon Act is and how it is changing, click here.
STAY CONNECTED
Receive the information you need when you need it through our world-leading magazines, newsletters and daily briefings.
CONNECT WITH THE TEAM
