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Addressing Commentor Concerns
The Department of Labor received several comments in response to the proposal for changes to the Davis-Bacon Act. Many commenters expressed support for the proposal while others provided suggestions for improvement. These suggestions included ensuring that classifications reflect industry standards, revising the wage survey process, and involving stakeholders in the decision-making process. The Department responded to these comments by stating that they will take into account all relevant factors when addressing questions about classifications. They also mentioned that the conformance process is designed to address the concerns raised by commenters.
One particular concern raised by commenters was the elimination of contractors' rights to dispute a proposed classification and wage rate. The Department clarified that interested parties still have the right to dispute these classifications and wage rates before a contract is awarded. The agency also discussed conformance requests, noting that while they are not frequent, the Wage and Hour Division may publish a pre-approved conformed wage rate in certain cases.
The Department adopted the proposed changes to part 3, along with additional conforming changes to reflect revisions to part 5. The requirements listed in part 3 were deemed effective as a matter of law. One argument made by ABC was that the Department should use Bureau of Labor Statistics (BLS) data to calculate prevailing wage rates that were missing. However, the Department decided not to adopt this suggestion. Another comment suggested consolidating definitions in a single regulatory section, but the Department declined to make this change.
The regulations at 29 CFR part 5, which establish rules for the payment of minimum wages and fringe benefits to covered workers, were discussed by the Department. They stated that they do not believe any additional language or changes are necessary and adopted §5.5(a)(1)(ii) and new §1.3(f) as proposed.
Some minor technical revisions were proposed to §5.1, and a new paragraph was added to refer to the Wage and Hour Division's website. The agency also discussed the "Anti-kickback" and payroll submission regulations under the Copeland Act, which can be found in 29 CFR part 3. Several revisions were proposed for various sections in part 3, including the removal of §3.5(e) and simplification of language in §3.5(g). Definitions were revised to reflect the role of State and local agencies in implementing Davis-Bacon requirements. Additionally, the District of Columbia was proposed to be added to the definition of "Federal agency." The definition of "building or work" was also proposed to be modernized to include green energy projects such as solar panels, wind turbines, broadband installation, and electric car charger installation.
Comments were received regarding these proposed additions, with some in support and others in opposition. Wage and Hour argued that these green energy projects already fit within the existing definition of "building or work," and the proposed changes were simply meant to clarify this. The Department proposed adding language to the definitions of "building or work" and "public building or public work" to further clarify that these definitions can be met even when construction activity only involves a part of an overall building, structure, or improvement. The Department argued that these proposed changes align with the Davis-Bacon Act and their longstanding policy. Ultimately, the Department adopted the revisions as proposed, despite receiving comments from both supporters and opponents of the changes.
Commentors suggest more language to clarify the definition of “public building or public work.”
The proposed changes to the Davis-Bacon Act (DBA) regulations have elicited mixed opinions from commenters. Some express support for the changes, emphasizing that they clarify the scope of DBA coverage beyond federal government ownership. However, there are also dissenting voices who argue that these changes contradict the decision in District of Columbia v. Dep't of Labor (CityCenterDC) case, a conflict that Wage and Hour refutes by highlighting the distinctions. Additionally, there is disagreement regarding the suggestion to introduce a threshold for the amount of work required to trigger DBA requirements, a proposal that Wage and Hour disagrees with.
The Department of Labor (DOL) delves into the definitions of "building or work" and "public building or public work" in the context of DBA regulations. Despite suggestions to include a size or dollar threshold in the definition of "public building or public work," DOL maintains that the DBA already imposes a dollar threshold for coverage and therefore does not agree with this suggestion. Similarly, DOL declines to adopt a proposal to amend the definition of "building or work" by incorporating references to "site of the work" elements. Furthermore, DOL discusses the inclusion of a subdefinition for the term "construction, prosecution, completion, or repair" to clarify the coverage of demolition and similar activities under the DBA. DOL asserts that while standalone demolition work is rarely covered, certain circumstances warrant its inclusion, which are elaborated upon. While some commenters support the proposed revisions, opposing viewpoints argue that it expands the DBA. DOL, however, asserts that the revisions are not an expansion but rather a clarification of existing policy.
In terms of the definition of "contract" under the DBRA regulations, DOL is considering expanding it to align with definitions used in other Department regulations. Currently, the broad interpretation of "contract" encompasses various types of agreements that meet the common law definition. Additionally, DOL proposes a new definition of "contractor," applying it to both prime contractors and subcontractors, with the potential inclusion of sureties as "contractors" as well. DOL also suggests a new definition of "prime contractor" that encompasses the entity's contractual relationship with the government, control over the entity holding the prime contract, or the delegated duties. While there is support for these proposed definitions from several commenters, one seeks clarification on the status of "business owners" within them. DOL responds that the "business owner" exemption pertains to determining if an individual is a "laborer or mechanic" rather than a “contractor.”
proposed definition of "prime contractor"
Wage and Hour delves into the proposed definition of "prime contractor" and the reception it has received from commenters. Commenters believe that this definition will effectively address violations on DBRA contracts and enhance the Department's capacity to recover back wages. They emphasize the prevalence of labor violations in the construction industry and the need for more rigorous enforcement. The proposed definition aligns with the existing definition of "contractor" in the Federal Acquisition Regulation (FAR) part 9 regulations. It encompasses controlling shareholders or members of entities that hold prime contracts, joint ventures or partners, and contractors that have been delegated significant responsibilities for overseeing and performing construction work. Wage and Hour recognizes that multiple entities on a contract can be considered "prime contractors" for the purpose of cross-withholding.
Wage and Hour provides an overview of the definition of "prime contractor" and the feedback it has elicited. While some commenters support the definition, citing its potential to address wage violations and enhance compliance with the DBRA, others oppose it, arguing that it could impose excessive burdens on contractors and discourage their participation in DBRA contracts. Counter to these objections, Wage and Hour maintains that the definition will bring clarity to the entities responsible for compliance and create incentives for them to ensure subcontractors' adherence to regulations. Addressing concerns about the definition of "subcontractor," Wage and Hour clarifies that an individual can simultaneously function as a subcontractor and a laborer or mechanic.
Wage and Hour examines the definition of "laborer or mechanic" and the exemption for "business owners" under the FLSA regulations. It clarifies that an individual must satisfy the "bona fide" executive capacity criteria outlined in the FLSA part 541 regulations to be exempt from the DBRA. Wage and Hour also explores the "business owner" exemption provided by the FLSA regulations, which enables an employee to fall under the executive exemption if they possess at least a 20% equity interest in the enterprise and are actively engaged in its management. The department addresses the proposed revision to the definition of "apprentice and helper" which eliminates references to trainees, as the ETA no longer reviews or approves on-the-job training programs. Wage and Hour responds to comments regarding this proposal, assuring that the change will not impact student trainees who are enrolled in programs certified by the Secretary of Transportation. Furthermore, the agency elucidates the definition of "laborer or mechanic" with regards to survey crew members, emphasizing that their coverage under the Davis-Bacon labor standards hinges on their actual duties performed and is thus a factual determination.
duties of survey crew members
Wage and Hour's discussion on the duties of survey crew members highlights different perspectives regarding the nature of their work. Some commentators emphasize the physical and manual aspects, while others focus on the intellectual requirements. It is clarified that only survey crew members employed by contractors or subcontractors on a project may be covered as laborers or mechanics.
Additionally, Wage and Hour recognizes that survey work performed "immediately prior to or during construction in direct support of construction crews" may differ from survey work done in other contexts. Duties performed off-site are not considered integral to determine whether survey crew members are considered laborers or mechanics.
Commentators raise objections to Wage and Hour's stance that survey crew members spending most of their time on a covered project taking measurements would likely be considered laborers or mechanics, arguing that it contradicts AAM 39. Wage and Hour responds by stating that AAM 39 is not controlling, as the duties performed by survey crew members today are significantly different.
The Department further discusses the definition of "laborer or mechanic" and the "learned professional" exclusion according to 29 CFR 5.2(m). Some argue that surveyors should be classified as "learned professionals" and excluded from the definition. The Department acknowledges that licensed surveyors may sometimes fall under this exclusion, but it depends on state licensing requirements. Unlicensed survey crew members, on the other hand, are rarely considered "learned professionals."
Wage and Hour also addresses the "site of the work" requirement and the Department's proposed revisions to it. The final rule will include revisions such as limiting coverage of secondary worksites, clarifying the exemption for material suppliers, and providing clarity on coverage of truck drivers.
The "site of the work" requirement is further discussed, including the definition of "construction, prosecution, completion, or repair" in 29 CFR 5.2(j)(1).
the "material supplier exception"
The Department of Labor acknowledges the importance of the Davis-Bacon and Related Acts (DBA) in ensuring fair wages for construction workers. To provide better clarity and understanding, the Department has made regulatory revisions in 1992 and 2000 that have significantly influenced the interpretation of the DBA. These revisions have specifically addressed the geographic scope of the "site of the work" and expanded the definition to include offsite locations where a substantial amount of construction takes place.
Within the discussion of the DBA, the Department highlights the "material supplier exception" that excludes employees of bona fide "material suppliers" or "materialmen" from coverage under the DBA. This exception aims to ensure that the focus of the legislation remains on protecting the wages and rights of construction workers.
The Department further strengthens its arguments by referencing prominent court cases that have played a crucial role in shaping the interpretation of the DBA's requirements. Notable cases such as Ball, Ball & Brosamer, Inc. v. Reich, L.P. Cavett Company v. U.S. Department of Labor, and Building & Construction Trades Dep't, AFL-CIO v. U.S. Dep't of Labor Wage Appeals Bd. (Midway) have provided valuable legal precedent and guidance.
Recognizing the impact of technological advancements in construction practices, the Department proposes an expansion of the "site of the work" definition. This expansion would encompass secondary construction sites where a significant portion of the building or work is conducted offsite. Technological developments have allowed construction companies to efficiently construct entire components of public buildings or works away from the primary site. This proposed update acknowledges this trend and ensures comprehensive coverage under the DBA.
In response to the proposal, the Department received a mix of opinions from stakeholders. Most labor unions and organizations representing union-affiliated employers expressed their support, recognizing the positive impact it would have on boosting wages and worker protections. In contrast, employer groups voiced their opposition, arguing that the proposed expansion goes beyond the statutory restrictions of the DBA's coverage.
The concerns raised by commenters varied. Some argued that the proposal may exceed the interpretative boundaries set by the Midway, Ball, and L.P. Cavett cases, which define the limitations of coverage under the DBA. Alternatively, there were concerns regarding the potential increase in costs associated with modular construction projects, which could impact the modular industry and its workforce.
In response to the feedback received, the Department carefully considered the concerns expressed and made modifications to the proposal. These modifications aim to strike a balance, ensuring fair wages and worker protections while also addressing the potential impact on costs in modular construction projects. By narrowing the scope of coverage at secondary construction sites, the Department aims to address the concerns raised without compromising the core objectives of the DBA.
definition of "site of the work"
The Department recognizes the importance of the Davis-Bacon Act in ensuring fair wages for workers involved in federal construction projects. In its discussions, the Department addresses the need to define the "site of the work" in light of the growing trend of offsite construction. The final rule expands the coverage of the Act to include secondary construction sites that are dedicated exclusively or nearly exclusively to a single DBRA-covered project. This expansion is prompted by concerns that offsite construction may result in fewer workers receiving Davis-Bacon wages.
However, the Department acknowledges the need for further analysis to fully understand the potential economic impact of the proposed rule. It is important to assess how offsite construction may affect wages and the labor market. The Department also takes into account the potential legal uncertainty surrounding this issue, recognizing the importance of providing clear guidelines to ensure compliance.
To address concerns raised by commenters, the Department has refined the scope of the final rule. By narrowing its focus, the Department aims to minimize disruptions in the construction industry while still upholding the principles of the Davis-Bacon Act. The Department believes that the final rule strikes a balance between ensuring worker protections and considering the practical implications for contractors and other stakeholders.
Furthermore, the Department discusses its proposal to clarify the definition of the "site of the work" to include flaggers who work adjacent to or in close proximity to the primary construction site. Supporters of this proposal argue that including flaggers under Davis-Bacon protections aligns with the Act's original purpose of safeguarding workers' wages. They emphasize that flaggers play an integral role in ensuring safety and smooth construction operations.
However, opponents of the proposal express concerns about the potential expansion of DBA coverage to flaggers who are not physically located on the primary construction site. They argue that this could impose additional regulatory burdens and increase costs, particularly for new industries and unique projects. In response, the Department asserts that flaggers should be considered as laborers, as their work is closely tied to the construction activities at the site. By including flaggers within the scope of the Act, the Department aims to provide consistent wage protections for all workers involved in construction projects.
Additionally, the Department clarifies the distinction between subcontractors and "material suppliers" in the Davis-Bacon regulations. The Department emphasizes that employees of material suppliers are not automatically covered by the DBA unless they spend a substantial amount of time on the work site. This distinction aims to provide clarity and ensure that the Act's provisions are properly applied.
In its endeavor to enhance clarity, the Department proposes a revision to the definition of "material supplier." The proposed criteria include an employer's sole obligation being the delivery of materials for the contract or project, the employer also supplying materials to the general public, and the employer's manufacturing facility being located off the site of the work. While some commenters express concerns about the requirement to supply products to the "general public," citing ambiguity, the Department maintains that these proposed revisions primarily aim to clarify and align with existing coverage principles.
By considering these various perspectives, the Department strives to strike a balance between protecting worker wages and addressing the practical implications for different stakeholders in the construction industry. The final rule and proposed revisions aim to ensure fair and consistent wage standards while promoting economic stability and growth.
eliminating the criterion that the employer must supply materials to the "general public"
"The Department is making several clarifications and revisions to the Davis-Bacon and Related Acts (DBRA) to ensure fair labor standards and worker protections in federally funded construction projects. First, they are eliminating the requirement for employers to supply materials to the general public in order to be considered a material supplier, thus ensuring a level playing field for all contractors. Instead, the employer's facility must have been established before the opening of bids or, if it was established after bid opening, it cannot be dedicated exclusively to the performance of a covered contract. Additionally, the Department is clarifying that activities such as loading, unloading, and pickup, which are incidental to material supply, would not be considered construction activity that would make the material supply exemption inapplicable, effectively streamlining the process for material suppliers. Moreover, the Department is removing the 20-percent threshold for distinguishing between material suppliers and subcontractors, reducing uncertainty and providing more accurate wage determinations in line with prevailing wage rates."
"The Department is also addressing the coverage of truck drivers under the DBRA, recognizing their crucial role in the construction industry. They propose amending the definition of "construction, prosecution, completion, or repair" to explicitly include "transportation" in five specific circumstances, ensuring that truck drivers are properly compensated for their work. In addition, the Department is doing away with the 20-percent threshold for material suppliers' drivers who engage in onsite construction work, acknowledging the valuable contributions they make to construction projects. Although there are concerns raised by some commenters that this proposed rule contradicts the D.C. Circuit's decision in Midway, the Department stands firm in their commitment to enforcing fair labor standards for all workers. They also assert that cases interpreting the National Labor Relations Act (NLRA) do not create exceptions to the coverage of onsite time for delivery drivers employed by contractors or subcontractors, reinforcing the need for consistent and equitable treatment of workers across the construction industry."
clarifying coverage of truck drivers
The Department is revising the regulations to provide clarity regarding the coverage of truck drivers under the Davis-Bacon Act (DBRA), a related act that establishes wage standards for federal construction projects. While some commenters argue that the proposed rule contradicts the D.C. Circuit's decision in Midway, the Department maintains its stance. Additionally, the Department disagrees with the notion that cases interpreting the National Labor Relations Act (NLRA) create exceptions to the coverage of onsite time for delivery drivers employed by contractors or subcontractors.
In regards to compensation for onsite time related to offsite delivery, the Department has decided not to adopt the NPRM's proposal. Instead, the current guidance is being codified, requiring contractors and subcontractors to pay Davis-Bacon wages, which are determined through prevailing wage rate surveys, to delivery drivers for such onsite time, unless it is deemed de minimis. This ensures that construction workers are provided fair wages for their services. The evaluation of what is considered de minimis will be done on a case-by-case basis, taking into account factors such as actual wages and the nature of the work.
The Department has also rejected the suggestion, put forth by the Associated General Contractors (AGC), to expand the de minimis principle beyond the context of truck drivers. This decision is in line with the Department's focus on maintaining worker protections and upholding the prevailing wage provisions of the DBRA.
Furthermore, the Department intends to define the term "development statute" and make corresponding changes to § 5.5. This new term will provide clarity and ensure consistent interpretation of the regulations in the context of federal construction projects. Another proposal involves amending § 5.2 to use the term "secondary construction sites" to describe the covered locations where "significant parts" of public buildings and works are involved. This term will be used if all previously discussed conditions are met. Conversely, the term "primary construction sites" will describe the place where the building or work will remain, indicating the primary focus of the construction project.
Lastly, the Department plans to remove the citation to Midway from the definition of the term "construction (or prosecution, completion, or repair)." This step is aimed at streamlining the regulations and ensuring clarity in the interpretation of the term within the context of the DBRA and related acts and regulations. Through these revisions, the Department aims to uphold worker protections, promote fair wages, and ensure compliance with federal labor standards in federally funded construction projects.
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