Court Upheld Department of Labor’s 2023 Davis-Bacon Act Final Rule

Employer groups challenged Davis-Bacon Act final rule

In 2023, Associated Builders and Contractors of Southeast Texas and its trustees filed a lawsuit in the U.S. District Court for the Eastern District of Texas challenging the U.S. Department of Labor’s (DOL) final rule revising Davis-Bacon Act (DBA) regulations. The plaintiffs alleged that the DOL exceeded its statutory authority and violated the Administrative Procedure Act (APA) in updating prevailing wage rules for federal construction contracts.

The DBA requires contractors on federal public works projects to pay workers no less than locally prevailing wages and fringe benefits for corresponding work on similar projects. The DOL’s final rule, issued in 2023, amended regulations at 29 C.F.R. Part 1 and Part 5 to expand coverage, revise the wage determination methodology, and broaden enforcement tools.

Key provisions challenged

Plaintiffs contested several provisions, including:

• The return to the "three-step" wage calculation method, which had been abandoned in 1983. This method counts a majority wage rate if more than 50% of workers in a classification are paid the same rate. If no majority exists, the rule uses the rate paid to at least 30% (the "30% rule").

• The expansion of DBA coverage to certain types of non-federal or federally assisted projects.

• The treatment of site-of-work and material supplier classifications.

• The DOL’s interpretation of "prevailing" and delegation of wage determination authority.

Plaintiffs argued that the final rule was arbitrary and capricious under the APA, and that the DOL’s reliance on outdated data and inconsistent policy reasoning violated procedural and substantive requirements.

Court upheld rule’s validity and DOL’s authority

The court reviewed the rule under Chevron deference, which governs judicial review of agency interpretations of statutes. It found that the Davis-Bacon Act did not unambiguously define "prevailing," and that the DOL’s interpretation of the term through the three-step methodology was permissible.

The court determined that the return to the 30% rule was supported by the statute and was not arbitrary. It also found the DOL had adequately explained its policy shift and addressed comments in the rulemaking record. The court ruled that the rule’s expansion of coverage and wage determination procedures did not exceed statutory limits.

On the issue of data and methodology, the court concluded that the DOL used rational processes and responded to stakeholder concerns. It held that the rule’s wage determination process, enforcement measures, and coverage provisions complied with both the Davis-Bacon Act and the APA.

Final outcome

The district court rejected the plaintiffs’ motion for summary judgment and granted summary judgment for the Department of Labor. It upheld the 2023 final rule revising Davis-Bacon Act regulations.

Help with Davis-Bacon Act compliance and disputes

If your construction company is navigating prevailing wage requirements or regulatory challenges under the Davis-Bacon Act, Whitcomb, Selinsky PC handles DBA compliance, wage determinations, and federal contract issues. Reach out to schedule a consultation and learn how our team can assist with your case.