Associated General Contractors of America, Associated General Contractors of Texas, the Lubbock Chamber of Commerce, and J. Lee Milligan, Inc. sought a preliminary injunction in the United States District Court for the Northern District of Texas after the Department of Labor issued the 2023 Final Rule updating Davis-Bacon Act regulations. The district court reviewed the procedural history, the witnesses who testified, and the challenged portions of the Final Rule. The ruling described the evidence presented at the injunction hearing and the statutory framework governing Davis-Bacon requirements.
The organizations filed their complaint in November 2023 and later amended it. They sought to block enforcement of specific portions of sections 5.2 and 5.5(e) of the Final Rule. A hearing took place on June 10, 2024. The plaintiffs presented testimony from several witnesses, including representatives of national and regional contracting associations and contractors involved in federally assisted construction projects.
At the hearing, witnesses described the types of projects their organizations completed, the extent to which those projects were subject to Davis-Bacon requirements, and the administrative steps required to comply. Contractors testified about the need to review bid specifications to determine applicability, to maintain certified payrolls, and to ensure subcontractor compliance.
Several witnesses described how federal funds had expanded into programs that did not traditionally include Davis-Bacon requirements, including education-related funding streams and renewable energy incentives. They explained that some state and local project owners were unaware that Davis-Bacon requirements applied and therefore omitted them from bid specifications. Witnesses described difficulties that occurred when Davis-Bacon provisions were added after work had begun.
The court reviewed the statutory background, noting the Davis-Bacon Act required contract specifications to include minimum-wage provisions for mechanics and laborers employed directly on federal construction projects. The Final Rule introduced changes involving three areas the plaintiffs challenged: incorporation of Davis-Bacon requirements by operation of law, trucking provisions relating to work at the site of the project, and material supplier classifications.
Section 5.5(e) of the Final Rule provided that Davis-Bacon contract clauses and wage determinations would be treated as part of a contract even if omitted. Witnesses testified that this created uncertainty, especially in competitive bidding environments where contractors needed clarity about wage obligations before submitting bids.
The revised trucking provision required contractors to track on-site time spent by drivers delivering materials whenever that time exceeded a de minimis threshold. Witnesses described concerns related to increased administrative obligations and challenges identifying what constituted de minimis time.
The material supplier provision excluded bona fide material suppliers from Davis-Bacon requirements. Witnesses described how contractors who operated their own supply divisions could face competitive disadvantages because their drivers could become subject to Davis-Bacon obligations while outside suppliers would not.
The testimony addressed the administrative burdens imposed by the Final Rule. Contractors described the difficulty of recreating certified payroll records after subcontractors had completed work when Davis-Bacon provisions were not included in initial bid documents. Some witnesses described having to retroactively issue restitution payments, incur administrative time, and manage subcontractor compliance.
Several witnesses from smaller businesses described the cost of recordkeeping software, the time required to prepare certified payrolls by hand, and concerns about meeting new requirements. They testified that the Final Rule could create additional financial and administrative burdens that could not be recovered later.
The district court noted that evidence presented addressed small-business impacts, competitive effects, and administrative consequences. Some witnesses described how final rule changes would affect bidding practices, procurement decisions, and relationships between contractors and subcontractors.
The district court outlined applicable principles for evaluating a preliminary injunction. It examined whether plaintiffs had shown a likelihood of success on the merits, a substantial threat of irreparable harm, that the balance of hardships favored them, and that an injunction would not disserve the public interest.
The court reviewed the statutory requirements of the Davis-Bacon Act, emphasizing that Congress required wage provisions to be included in advertised specifications and contracts. It compared this language to the operation-of-law clause in the Final Rule. It also reviewed case law addressing coverage of truck drivers and material suppliers.
In its analysis, the court considered whether the Final Rule exceeded statutory authority, whether it conflicted with established judicial interpretations of the Davis-Bacon Act, and whether the rule introduced obligations not authorized by Congress.
The court found that the plaintiffs presented evidence indicating a likelihood of success on multiple claims. It noted that the operation-of-law provision conflicted with statutory requirements that wage obligations appear in advertised specifications. It also found that the trucking provision extended Davis-Bacon coverage beyond mechanics and laborers working directly on the site of the work. Regarding material suppliers, it found that the Final Rule altered classifications in a manner inconsistent with statutory language.
The ruling also found a likelihood of success on claims related to the Regulatory Flexibility Act. The court noted that the plaintiffs had presented evidence showing the Final Rule imposed administrative burdens on small businesses and that the record did not sufficiently account for these impacts.
The court concluded that compliance costs could not be recovered due to sovereign immunity and therefore constituted irreparable harm. It found that the threatened injury outweighed potential harm to the Department of Labor and that the injunction would not disserve the public interest.
The district court granted the preliminary injunction. It enjoined enforcement of the challenged portions of sections 5.2 and 5.5(e) of the Final Rule nationwide while the litigation continued.
If you have questions about Davis-Bacon requirements, wage determinations, or federal contracting obligations, our team at Whitcomb Selinsky PC assists businesses navigating compliance matters. To learn how we can support your contracting needs, visit our Davis-Bacon Act page at Whitcomb Selinsky PC.