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Changes to Wage Determinations: Enhancing Efficiency and Accuracy

Davis-Bacon Act | Rule Changes | Enhancing Efficiency and Accuracy

definition of "area" to include multi-county project

Davis-Bacon Act

The Department of Labor is currently engaged in discussions regarding proposed changes to the definition of "area" for multi-county project wage determinations and State highway districts. Despite opposition from certain U.S. Senators, the Department maintains its stance that the previous definition needs to be updated. Another proposal under consideration is the definition of "type of construction," with the aim of establishing a general category for wage determinations. While no comments were received regarding the proposal to remove paragraph designations of defined terms, opting instead for an alphabetical listing.

Regarding the use of survey data from Federal or federally assisted projects, the Department is contemplating revising § 1.3(d) for building and residential construction wage determinations. Stakeholders have provided comments on the definition of construction types, but the Department intends to address this issue through subregulatory guidance. Additionally, the proposal to switch the order of § 1.3(b)(4) and (5) did not receive any comments. Despite suggestions by the Iron Workers to codify Fry Brothers in § 1.3(b)(2), the Department has decided against adopting this recommendation.

The revised § 1.3(d), which would allow for broader use of Federal project data in establishing prevailing wage rates for building and residential construction, has garnered both support and opposition from stakeholders. Supporters argue that it aligns with the purpose of the Davis-Bacon Act (DBA) and increases the availability of usable data. On the other hand, opponents contend that it could lead to inflated prevailing wages and violate the DBA's purpose.

In light of these concerns, the Department has decided not to revise § 1.3(d) and instead will consider submitted Federal project data for calculating prevailing wage rates for heavy and highway construction. The Department asserts that the current regulatory text provides sufficient guidance for the use of Federal project data and will continue to solicit and use such data in Davis-Bacon wage surveys when private data is insufficient.

The Department has rejected alternative proposals presented by stakeholders, emphasizing that the current text of § 1.3(d) already allows for the consideration of Federal project data. Additionally, the Department addresses proposed changes to § 1.3(f) regarding the publication of rates for labor classifications that regularly receive conformance requests. To facilitate the determination of Davis-Bacon wage rates, the Department suggests the inclusion of new paragraphs within § 1.3, which would allow for the adoption of prevailing wage rates set by State and local governments. The Department also outlines specific criteria that must be met for the Administrator to adopt State or local prevailing wage rates. Lastly, the agency provides updates relating to the regulations of the Davis-Bacon and Related Acts (DBRA).

proposal to let the Administrator adopt State or local wage rates 

Led by Amy Debisschop, the Director of the Division of Regulations, Legislation, and Interpretation, the Department of Labor's Wage and Hour Division (WHD) is responsible for proposing a rule that would allow the Administrator to adopt State or local wage rates in certain situations. Many commenters support this proposal as they believe it would maintain current Davis Bacon Act (DBRA) wage rates and improve efficiency. However, some express concerns about the possibility of adopting excessively high or low rates. Despite these concerns, the Department ultimately adopts the proposal and implements safeguards to prevent the adoption of inappropriate wage rates.

Addressing concerns regarding limitations on the Department's discretion in adopting State or local rates, the Administrator is entrusted with making the final determination on whether to adopt such rates. The Department disagrees with suggestions to prohibit the adoption of State or local rates when a Federal rate is applicable. It also rejects imposing restrictions based on rate determination methods or implementing a categorical prohibition on adopting State or local rates lower than Federal rates. Instead, the Department believes that the criteria outlined in new § 1.3(h) will serve as a safeguard against inappropriate rates.

To address the concern that expanding WHD's ability to adopt State or local rates may hinder its Federal wage surveys, the Department introduces changes to § 1.4. Federal agencies are now required to submit annual reports on proposed construction programs, with a focus on areas where updated wage determinations will have significant impacts. The Department suggests removing the language that limits reporting to situations deemed possible and advises including notification of any significant changes to previously reported construction programs.

Streamlining the process, the Department proposes changing the due date for reports to April 10 and specifies that reports should be based on existing information. To clarify the applicability of general wage determinations and project wage determinations, the Department suggests deleting references to the terminated Interagency Reports Management Program in § 1.5. Additionally, the Department proposes adding language to § 1.5 to explain that a general wage determination includes wage rates for different labor and mechanic classifications. Agencies would also have the flexibility to request project wage determinations through means other than mail. Finally, the Department emphasizes the importance of agencies providing all requested information in the Standard Form (SF) 308.

Overall, the Department believes that implementing these proposals and changes will enhance the effectiveness and efficiency of wage determinations while ensuring appropriate safeguards and considerations are in place.

use and effectiveness of wage determinations

The Wage and Hour division is taking steps to improve the clarity and effectiveness of § 1.6 by proposing changes to wage determinations under the Davis-Bacon Act. Their aim is to ensure that this section is better understood by reorganizing and rephrasing it, as well as updating the terminology to align with current practices. A key focus is clarifying the use of inactive wage determinations and providing clear guidance on when multiple determinations should be included in a contract.

Another aspect addressed by Wage and Hour is the application of multiple wage determinations in cases where a construction contract involves work in different areas or types. They propose that the contract should specify the applicable wage determination for each area or type, particularly when the work in that specific area or type is significant. Feedback on these proposed changes is encouraged.

Based on the comments received, Wage and Hour has incorporated the proposed language regarding the application of different determinations. However, they have decided against exempting multifamily housing projects from the requirement to include wage determinations from multiple categories. To further clarify the responsibilities of contracting agencies, contractors, and subcontractors in relation to wage determinations, Wage and Hour suggests adding language to § 1.6(b). They also aim to revise the existing language in § 1.6(b) concerning "area practice" when resolving questions about wage rate schedules.

One notable proposal from Wage and Hour is the revision of the language in § 1.6(b) to state that the Administrator may consider other relevant factors, in addition to area practice, when determining wage rates. This revision is intended to align with the Federal Acquisition Regulation (FAR). Wage and Hour also suggests that if the Administrator provides written notice of an error in the wage determination, it should not be used for the contract. Furthermore, contracting agencies are advised to incorporate the most up-to-date wage determination annually on the contract's anniversary date. If a contract is modified to include additional work or extend its term, the most recent wage determination must be incorporated as clarified by Wage and Hour.

most up-to-date wage determination must be included in each task order or purchase order

The Wage and Hour division of the Department has introduced a proposal that requires the inclusion of the most current wage determination in every task order or purchase order. Notably, there were no comments received regarding certain proposed revisions, so these changes have been implemented as initially proposed. In response to concerns raised by CC&M and MnDOT about potential costs and administrative burden, Wage and Hour suggests that contracting agencies can address the timing of updated wage determinations by incorporating appropriate language into procurement policies and bid documents. However, there have been several commenters who have expressed support for the proposed changes. The UA has recommended a clarification to ensure that the requirement applies to both one-sided and mutual exercise of options.

After making some minor revisions and clarifications, the Department has accepted the proposed changes. While FTBA and NAVFAC SW have proposed revisions to the changes, these suggestions have not been adopted as they are outside the scope of the rulemaking. Similarly, despite MBA's proposal to reduce disruptions to multifamily housing projects in § 1.6(c)(2)(ii), the Department has not adopted this suggestion as it would compromise worker protections. Additionally, the Department has made minor revisions to the proposed regulatory text, allowing for alternative updating processes in appropriate circumstances. Lastly, the Department emphasizes the importance of annual updates to wage determinations, even if an option is exercised.

inclusion of collectively bargained prevailing wage rates

The Department has proposed an expansion of the Wage and Hour Division's practice regarding prevailing wage rates under the Davis-Bacon Act. This expansion includes updating both collectively bargained and non-collectively bargained rates. The responsibility for incorporating these updated wage determinations into contract instruments falls on the contracting agency. To prevent outdated prevailing wage rates, the Department emphasizes the importance of conducting surveys every three years. These proposed regulatory changes have been adopted with minor clarifications.

The Department justifies the proposal to update non-collectively bargained rates by pointing to its consistency with current regulations. The purpose is to ensure that these rates remain current between surveys. To substantiate this argument, the agency includes tables displaying annual union and non-union construction wage increases in the United States, as well as changes in the Employment Cost Index (ECI) from 2001 to 2020. The Department explains its use of the ECI, which tracks both wages and fringe benefits, instead of the Consumer Price Index (CPI), which solely considers changes in prices.

To implement the proposal, the Department plans to include language that permits changes to non-collectively bargained rates based on ECI data, with a maximum frequency of once every three years. The Department anticipates issuing modifications to general wage determinations for this purpose. The majority of comments received by the Department expressed support for the proposal, with some suggesting alterations such as using the ECI solely for rate increases or requiring updates more frequently. However, opposing viewpoints were also voiced, particularly regarding the use of nationwide data for rate adjustments.

Proposed Changes to Section 1.7: Combining Wage Data from Rural and Metropolitan Areas

The Department, despite receiving suggestions to limit or increase the frequency of updates, has decided not to adopt these recommendations. They maintain that the use of the Employment Cost Index (ECI) for rate adjustments is still appropriate, as it has consistently demonstrated an increase over time. They also assert that they have the authority granted by the Davis-Bacon Act (DBA) to adjust flawed wage rates. The Department acknowledges that the ECI data is nationwide but argues that it aligns with the DBA.

Regarding the suggestion made by LIUNA, the Department agrees that ECI data should only be used for the specific purpose outlined in the proposed rule. They note that some commenters opposed the proposal and recommended using data from the Bureau of Labor Statistics (BLS) instead of the WHD's wage survey program to determine prevailing wages. However, the Department has chosen not to adopt this suggestion.

Furthermore, the Department discusses the regulations in § 1.7, which pertain to the default "area" for wage determinations and the process for expanding the geographic scope of survey data when there is insufficient data available. The Department established the county as the default area for wage determinations in 1981-1982. If there is insufficient data for a specific county, the WHD will progressively broaden the geographic scope, including surrounding counties, larger groups of counties, and eventually statewide data.

Proposed changes to § 1.7 have been put forth by the Department to describe WHD's process for expanding the geographic scope of survey data. Additionally, they aim to remove the current restriction on combining wage data from "metropolitan" and "rural" counties. By removing this restriction, the Department argues that WHD can consider actual construction labor market patterns and publish more wage rates for various classifications overall.

Lastly, the agency addresses § 1.6(f), which pertains to post-award determinations that identify a wrongly omitted wage determination from a contract.

The Benefits of Streamlining Wage Determinations through Combined Data

The Department is proposing a change to enhance the accuracy of wage determinations in the construction industry by eliminating the strict prohibition on combining wage data from rural and metropolitan areas. The proposed options for defining "surrounding counties" are discussed, including maintaining the current group description, limiting it to bordering counties, or grouping counties within the same labor market.

Commenters have expressed both support and opposition to this proposal. Supporters, such as FTBA, MCAA, and NABTU, argue that it would lead to improved wage determinations. On the other hand, opponents like ABC, NAHB, and IEC have raised concerns about potential inflated wages in rural counties. However, Wage and Hour counters these criticisms, stating that removing the strict prohibition would result in more accurate wage determinations.

The Department also addresses the inclusion of micropolitan counties in the surrounding-counties groupings. It addresses the criticism from NAHB and cites academic papers supporting the idea that construction labor markets extend beyond average occupation labor markets.

Furthermore, the Department dismisses arguments against the proposal, including concerns about labor disruption and the potential exclusion of bidders due to higher prevailing wage rates in rural counties. It emphasizes that all bidders must adhere to the same wage rate and clarifies that prevailing wage rates do not act as a maximum rate. The Department highlights the D.C. Circuit's decision in Donovan, which upheld the strict prohibition, but notes that it does not prevent the Department from taking a different stance now.

In conclusion, the Department is proposing to relax the strict prohibition on cross-consideration of metropolitan and rural wage data. It believes that this change aligns with the Act's legislative history and historical practices, and is likely to result in more accurate wage determinations.

Options for Defining "Surrounding Counties" Under the Davis-Bacon Act 

The Department dives into a comprehensive discussion of the options presented in the NPRM regarding the definition of "surrounding counties." It's worth noting that commenters have shown a preference for either Option 1, which suggests retaining the existing description, or Option 3, which proposes incorporating a regulatory definition of "surrounding counties" as a "contiguous local construction labor market." Taking into account the purpose of the Act, Wage and Hour emphasizes the importance of maintaining flexibility in the wage determination process to effectively account for the distinct characteristics of "rural counties."

The Department also dedicates attention to its proposal aimed at providing clarity in the use of intermediate and statewide county groupings outlined in § 1.7(c). Some commenters express their dissatisfaction with the lack of transparency in the proposal. To address this concern, the Department asserts that the proposed modifications to § 1.7(c) are intended to offer clarifications rather than introducing substantial changes. Moreover, they emphasize that the current regulation implicitly permits the use of super groups.

Another aspect under discussion is the Department's proposal to officially codify the practice of allowing the Administrator to reconsider decisions made by an authorized representative. In this regard, the Department suggests amending § 1.8 and § 5.13 to enable the Administrator to rethink rulings and interpretations issued by an authorized representative. Commenters present two noteworthy suggestions: explicitly incorporating a review process prior to the Administrator's involvement and ensuring that this intermediate review is conducted by an impartial individual not associated with the initial decision. Taking these suggestions into account, the Department maintains the proposed language, which allows for an intermediate review without making it a mandatory requirement. They further decide that both agency staff members involved and those not involved in the original decision-making process can assess reconsideration requests.

The Importance of Online Wage Determinations

The Department addresses various proposals in the revision of §§ 1.2, 1.5, and 1.6 to reflect online maintenance of wage determinations. These changes were implemented as part of the Integrated Award Environment (IAE), with the Department opting for the use of the broader term "Department of Labor-approved website" to avoid referencing specific outdated domains. Feedback from stakeholders calls for a centralized website housing all DBRA relevant information, with the request for free and unrestricted access to wage determinations. While this suggestion goes beyond the scope of the rulemaking, the Department intends to retain the features of the SAM website.

As part of the proposed revisions, the Department introduces a new § 1.10 titled "Severability," emphasizing that each provision can function independently of one another. There were no comments received regarding this proposal, and it is thus adopted without modification. Additionally, revisions to §§ 1.3 and 5.5 allow for the inclusion of wage and fringe benefit rates on wage determinations even when WHD lacks sufficient data from its wage survey process. For key classifications or those regularly subject to conformance requests, the Administrator has the discretion to list the classification along with "reasonable relationship" wage and fringe benefit rates.

To further reinforce the integrity of wage determinations, the Department proposes adding language to § 5.5(a)(1) specifying that the conformance process cannot be utilized to split or subdivide classifications listed in the wage determination. A single comment expressing support for the Department's approach was received, prompting the adoption of the change as initially proposed. Furthermore, the Department considers amendments to the Davis-Bacon and Related Acts regulations, particularly §§ 1.3 and 5.5. These amendments aim to include contract clauses at § 5.5(a)(1)(vi), (a)(6), and (b)(4), emphasizing the obligation to pay interest on any underpayment of wages or monetary relief.

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