Proposed Rule2022-05346
Updating the Davis-Bacon and Related Acts Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 18, 2022
Issuing agencies
Labor Department
Abstract
The Department of Labor (Department) proposes to amend regulations issued under the Davis-Bacon and Related Acts that set forth rules for the administration and enforcement of the Davis-Bacon labor standards that apply to Federal and federally assisted construction projects. As the first comprehensive regulatory review in nearly 40 years, the Department believes that revisions to these regulations are needed to provide greater clarity and enhance their usefulness in the modern economy.
Full Text
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<title>Federal Register, Volume 87 Issue 53 (Friday, March 18, 2022)</title>
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[Federal Register Volume 87, Number 53 (Friday, March 18, 2022)]
[Proposed Rules]
[Pages 15698-15805]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05346]
[[Page 15697]]
Vol. 87
Friday,
No. 53
March 18, 2022
Part III
Department of Labor
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Office of the Secretary
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29 CFR Parts 1, 3, and 5
Updating the Davis-Bacon and Related Acts Regulations; Proposed Rule
Federal Register / Vol. 87 , No. 53 / Friday, March 18, 2022 /
Proposed Rules
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Parts 1, 3, and 5
RIN 1235-AA40
Updating the Davis-Bacon and Related Acts Regulations
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of Labor (Department) proposes to amend
regulations issued under the Davis-Bacon and Related Acts that set
forth rules for the administration and enforcement of the Davis-Bacon
labor standards that apply to Federal and federally assisted
construction projects. As the first comprehensive regulatory review in
nearly 40 years, the Department believes that revisions to these
regulations are needed to provide greater clarity and enhance their
usefulness in the modern economy.
DATES: Interested persons are invited to submit written comments on
this notice of proposed rulemaking (NPRM) on or before May 17, 2022.
ADDRESSES: You may submit comments, identified by Regulatory
Information Number (RIN) 1235-AA40, by either of the following methods:
<bullet> Electronic Comments: Submit comments through the Federal
eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
instructions for submitting comments.
<bullet> Mail: Address written submissions to: Division of
Regulations, Legislation, and Interpretation, Wage and Hour Division,
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW,
Washington, DC 20210.
Instructions: Response to this NPRM is voluntary. The Department
requests that no business proprietary information, copyrighted
information, or personally identifiable information be submitted in
response to this NPRM. Commenters submitting file attachments on
<a href="https://www.regulations.gov">https://www.regulations.gov</a> are advised that uploading text-recognized
documents--i.e., documents in a native file format or documents which
have undergone optical character recognition (OCR)--enable staff at the
Department to more easily search and retrieve specific content included
in your comment for consideration.
Anyone who submits a comment (including duplicate comments) should
understand and expect that the comment will become a matter of public
record and will be posted without change to <a href="https://www.regulations.gov">https://www.regulations.gov</a>, including any personal information provided. The
Wage and Hour Division (WHD) posts comments gathered and submitted by a
third-party organization as a group under a single document ID number
on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. All comments must be received by 11:59
p.m. on May 17, 2022, for consideration in this rulemaking; comments
received after the comment period closes will not be considered.
The Department strongly recommends that commenters submit their
comments electronically via <a href="https://www.regulations.gov">https://www.regulations.gov</a> to ensure
timely receipt prior to the close of the comment period, as the
Department continues to experience delays in the receipt of mail.
Please submit only one copy of your comments by only one method.
Docket: For access to the docket to read background documents or
comments, go to the Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Amy DeBisschop, Director, Division of
Regulations, Legislation, and Interpretation, Wage and Hour Division,
U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW,
Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-
free number). Copies of this proposal may be obtained in alternative
formats (Rich Text Format (RTF) or text format (txt), a thumb drive, an
MP3 file, large print, braille, audiotape, compact disc, or other
accessible format), upon request, by calling (202) 693-0675 (this is
not a toll-free number). TTY/TDD callers may dial toll-free 1-877-889-
5627 to obtain information or request materials in alternative formats.
Questions of interpretation or enforcement of the agency's existing
regulations may be directed to the nearest WHD district office. Locate
the nearest office by calling the WHD's toll-free help line at (866)
4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time
zone, or log onto WHD's website at <a href="https://www.dol.gov/agencies/whd/contact/local-offices">https://www.dol.gov/agencies/whd/contact/local-offices</a> for a nationwide listing of WHD district and area
offices.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
In order to provide greater clarity and enhance their usefulness in
the modern economy, the Department proposes to update and modernize the
regulations at 29 CFR parts 1, 3, and 5, which implement the Davis-
Bacon Act and the Davis-Bacon Related Acts (collectively, the DBRA).
The Davis-Bacon Act (DBA or Act), enacted in 1931, requires the payment
of locally prevailing wages and fringe benefits on Federal contracts
for construction. See 40 U.S.C. 3142. The DBA applies to workers on
contracts entered into by Federal agencies and the District of Columbia
that are in excess of $2,000 and for the construction, alteration, or
repair of public buildings or public works. Congress subsequently
incorporated DBA prevailing wage requirements into numerous statutes
(referred to as ``Related Acts'') under which Federal agencies assist
construction projects through grants, loans, loan guarantees,
insurance, and other methods.
The Supreme Court has described the DBA as ``a minimum wage law
designed for the benefit of construction workers.'' United States v.
Binghamton Constr. Co., 347 U.S. 171, 178 (1954). The Act's purpose is
``to protect local wage standards by preventing contractors from basing
their bids on wages lower than those prevailing in the area.''
Universities Research Ass'n, Inc. v. Coutu, 450 U.S. 754, 773 (1981)
(quoting H. Comm. on Educ. and Lab., Legislative History of the Davis-
Bacon Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)). By requiring
the payment of minimum prevailing wages, Congress sought to ``ensure
that Government construction and federally assisted construction would
not be conducted at the expense of depressing local wage standards.''
Determination of Wage Rates Under the Davis-Bacon & Serv. Cont. Acts, 5
Op. O.L.C. 174, 176 (1981) (citation and internal quotation marks
omitted).\1\
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\1\ Available at: <a href="https://www.justice.gov/sites/default/files/olc/opinions/1981/06/31/op-olc-v005-p0174_0.pdf">https://www.justice.gov/sites/default/files/olc/opinions/1981/06/31/op-olc-v005-p0174_0.pdf</a>.
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Congress has delegated authority to the Department to issue
prevailing wage determinations and prescribe rules and regulations for
contractors and subcontractors on DBA-covered construction projects.\2\
See 40 U.S.C. 3142, 3145. It has also directed the Department, through
Reorganization Plan No. 14 of 1950, to ``prescribe appropriate
standards, regulations and procedures'' to be observed by Federal
agencies responsible for the administration of the Davis-Bacon and
Related Acts. 5 U.S.C. app. 1, effective May 24, 1950, 15 FR 3176, 64
Stat. 1267. These regulations, which have been updated and revised
periodically over time, are primarily located in parts 1, 3,
[[Page 15699]]
and 5 of title 29 of the Code of Federal Regulations.
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\2\ The DBA and the Related Acts apply to both prime contracts
and subcontracts of any tier thereunder. In this NPRM, as in the
regulations themselves, where the terms ``contracts'' or
``contractors'' are used, they are intended to include reference to
subcontracts and subcontractors of any tier.
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The Department last engaged in a comprehensive revision of the
regulations governing the DBA and the Related Acts in a 1981-1982
rulemaking.\3\ Since that time, Congress has expanded the reach of the
Davis-Bacon labor standards significantly, adding numerous new Related
Act statutes to which these regulations apply. The Davis-Bacon Act and
now 71 active Related Acts \4\ collectively apply to an estimated $217
billion in Federal and federally assisted construction spending per
year and provide minimum wage rates for an estimated 1.2 million U.S.
construction workers.\5\ The Department expects these numbers to
continue to grow as Federal and State governments seek to address the
significant infrastructure needs of the country, including, in
particular, the energy and transportation infrastructure necessary to
mitigate climate change.\6\
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\3\ See 46 FR 41444 (NPRM); 47 FR 23644 (final rule); 48 FR
19532 (revised final rule).
\4\ The Department maintains a list of the Related Acts at [cite
website address].
\5\ These estimates are discussed below in section V (Executive
Order 12866, Regulatory Planning and Review et al.).
\6\ See Executive Order 14008, Tackling the Climate Crisis at
Home and Abroad, Sec. 206 (Jan. 27, 2021), available at: <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/">https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/</a>.
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In addition to the expansion of the prevailing wage rate
requirements of the DBA and the Related Acts, the Federal contracting
system itself has undergone significant changes since the 1981-1982
rulemaking. Federal agencies have dramatically increased spending
through interagency Federal schedules such as the Multiple Award
Schedule (MAS). Contractors have increased their use of single-purpose
entities, such as joint ventures and teaming agreements, in
construction contracts with Federal, State and local governments.
Federal procurement regulations have been overhauled and consolidated
in the Federal Acquisition Regulation (FAR), which contains a
subsection on the Davis-Bacon Act and related contract clauses. See 48
CFR 22.400 et seq. Court and agency administrative decisions have
developed and clarified myriad aspects of the laws governing Federal
procurement.
During the past 40 years, the Department's DBRA program also has
continued to evolve. Where the program initially was focused on
individual project-specific wage determinations, contracting agencies
now incorporate the Department's general wage determinations for the
construction type in the locality in which the construction project is
to occur. The program also now uniformly uses wage surveys to develop
general wage determinations, eliminating an earlier practice of
developing wage determinations based solely on other evidence about the
general level of unionization in the targeted area. In a 2006 decision,
the Department's Administrative Review Board (ARB) identified several
survey-related wage determination procedures then in effect as
inconsistent with the regulatory language that had resulted from the
1981-1982 rulemaking. See Mistick Construction, ARB No. 04-051, 2006 WL
861357, at *5-7 (Mar. 31, 2006).\7\ As a consequence of these
developments, the use of averages of wage rates from survey responses
has increasingly become the methodology used to issue new wage
determinations--notwithstanding the Department's long-held
interpretation that the DBA allows the use of such averages only as a
methodology of last resort.
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\7\ Decisions of the ARB from 1996 to the present are available
on the Department's website at <a href="https://www.dol.gov/agencies/arb/decisions">https://www.dol.gov/agencies/arb/decisions</a>.
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The Department has also received significant feedback from
stakeholders and others since the last comprehensive rulemaking. In a
2011 report, the Government Accountability Office (GAO) reviewed the
Department's wage survey and wage determination process and found that
the Department was often behind schedule in completing wage surveys,
leading to a backlog of wage determinations and the use of out-of-date
wage determinations in some areas.\8\ The report also identified
dissatisfaction among regulated parties regarding the rigidity of the
Department's county-based system for identifying prevailing rates,\9\
and missing wage rates requiring an overuse of ``conformances'' for
wage rates for specific job classifications.\10\ A 2019 report from the
Department's Office of the Inspector General (OIG) made similar
findings regarding out-of-date wage determinations.\11\
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\8\ See Gov't Accountability Office, GAO-11-152, Davis-Bacon
Act: Methodological Changes Needed to Improve Wage Survey (2011)
(2011 GAO Report), at 12-19, available at: <a href="https://www.gao.gov/products/gao-11-152">https://www.gao.gov/products/gao-11-152</a>.
\9\ Id. at 23-24.
\10\ Id. at 32-33.
\11\ See Department of Labor, Office of the Inspector General,
Better Strategies Are Needed to Improve the Timeliness and Accuracy
of Davis-Bacon Act Prevailing Wage Rates (2019) (OIG Report), at 10,
available at: <a href="https://www.oversight.gov/sites/default/files/oig-reports/04-19-001-Davis%20Bacon.pdf">https://www.oversight.gov/sites/default/files/oig-reports/04-19-001-Davis%20Bacon.pdf</a>.
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Ensuring that construction workers are paid the wages required
under the DBRA also requires effective enforcement in addition to an
efficient wage determination process. In the last decade, enforcement
efforts at the Department have resulted in the recovery of more than
$213 million in back wages for over 84,000 workers.\12\ But the
Department has also encountered significant enforcement challenges.
Among the most critical of these is the omission of DBRA contract
clauses from contracts that are clearly covered by the DBRA. In one
recent case, a contracting agency agreed with the Department that a
blanket purchase agreement (BPA) it had entered into with a contractor
had mistakenly omitted the Davis-Bacon clauses and wage determination--
but the contracting agency's struggle to rectify the situation led to a
delay of 8 years before the workers were paid the wages they were owed.
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\12\ Gov't Accountability Office, GAO-21-13, Fair Labor
Standards Act: Tracking Additional Complaint Data Could Improve
DOL's Enforcement (2020) (2020 GAO Report), at 39, available at:
<a href="https://www.gao.gov/assets/gao-21-13.pdf">https://www.gao.gov/assets/gao-21-13.pdf</a>.
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The Department now seeks to address a number of these outstanding
challenges in the program while also providing greater clarity in the
DBRA regulations and enhancing their usefulness in the modern economy.
In this rulemaking, the Department proposes to update and modernize the
regulations implementing the DBRA at 29 CFR parts 1, 3, and 5. In some
of these revisions, the Department has determined that changes it made
in the 1981-1982 rulemaking were mistaken or ultimately resulted in
outcomes that are increasingly in tension with the DBA statute itself.
In others, the Department seeks to expand further on procedures that
were introduced in that last major revision, or to propose new
procedures that will increase efficiency of administration of the DBRA
and enhance protections for covered construction workers. On all the
proposed changes, the Department seeks comment and participation from
the many stakeholders in the program.
The proposed rule includes several elements targeted at increasing
the amount of information available for wage determinations and
speeding up the determination process. In a proposal to amend Sec. 1.3
of the regulations, the Department outlines a new methodology to
expressly give the WHD Administrator authority and discretion to adopt
State or local wage determinations as the Davis-Bacon prevailing wage
where certain specified criteria are satisfied. Such a change would
help improve the currentness and accuracy of wage determinations, as
many states and localities conduct
[[Page 15700]]
surveys more frequently than the Department and have relationships with
stakeholders that may facilitate the process and foster more widespread
participation. This proposal would also increase efficiency and reduce
confusion for the regulated community where projects are covered by
both DBRA and local or State prevailing wage laws and contractors are
already familiar with complying with the local or State prevailing wage
requirement.
The Department also proposes changes, in Sec. 1.2, to the
definition of ``prevailing wage,'' and, in Sec. 1.7, to the scope of
data considered to identify the prevailing wage in a given area. To
address the overuse of weighted average rates, the Department proposes
to return to the definition of ``prevailing wage'' in Sec. 1.2 that it
used from 1935 to 1983.\13\ Currently, a single wage rate may be
identified as prevailing in the area only if it is paid to a majority
of workers in a classification on the wage survey; otherwise a weighted
average is used. The Department proposes to return instead to the
``three-step'' method that was in effect before 1983. Under that method
(also known as the 30-percent rule), in the absence of a wage rate paid
to a majority of workers in a particular classification, a wage rate
will be considered prevailing if it is paid to at least 30 percent of
such workers. The Department also proposes to return to a prior policy
on another change made during the 1981-1982 rulemaking related to the
delineation of wage survey data submitted for ``metropolitan'' or
``rural'' counties in Sec. 1.7(b). Through this change, the Department
seeks to more accurately reflect modern labor force realities, to allow
more wage rates to be determined at smaller levels of geographical
aggregation, and to increase the sufficiency of data at the statewide
level.
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\13\ The 1981-1982 rulemaking went into effect on April 29,
1983. 48 FR 19532.
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Proposed revisions to Sec. Sec. 1.3 and 5.5 are aimed at reducing
the need for the use of ``conformances'' where the Department has
received insufficient data to publish a prevailing wage for a
classification of worker--a process that currently is burdensome on
contracting agencies, contractors, and the Department. The proposed
revisions would create a new procedure through which the Department may
identify (and list on the wage determination) wage and fringe benefit
rates for certain classifications for which WHD received insufficient
data through its wage survey program. The procedure should reduce the
need for conformances for classifications for which conformances are
often required.
The Department also proposes to revise Sec. 1.6(c)(1) to provide a
mechanism to regularly update certain non-collectively bargained
prevailing wage rates based on the Bureau of Labor Statistics
Employment Cost Index.\14\ The mechanism is intended to keep such rates
more current between surveys so that they do not become out-of-date and
fall behind prevailing rates in the area.
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\14\ Available at: <a href="https://www.bls.gov/news.release/eci.toc.htm">https://www.bls.gov/news.release/eci.toc.htm</a>.
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The Department also seeks to strengthen enforcement in several
critical ways. The proposed rule seeks to address the challenges caused
by the omission of contract clauses. In a manner similar to its rule
under Executive Order 11246 (Equal Employment Opportunity), the
Department proposes to designate the DBRA contract clauses in Sec.
5.5(a) and (b), and applicable wage determinations, as effective by
``operation of law'' notwithstanding their mistaken omission from a
contract. This proposal is an extension of the retroactive modification
procedures that were put into effect in Sec. 1.6 by the 1981-1982
rulemaking, and it promises to expedite enforcement efforts to ensure
the timely payment of prevailing wages to all workers who are owed such
wages under the relevant statutes.
In addition, the Department proposes to include new anti-
retaliation provisions in the Davis-Bacon contract clauses in new
paragraphs at Sec. Sec. 5.5(a)(11) (DBRA) and 5.5(b)(5) (Contract Work
Hours and Safety Standards Act), and in a new section of part 5 at
Sec. 5.18. The new language is intended to ensure that workers who
raise concerns about payment practices or assist agencies or the
Department in investigations are protected from termination or other
adverse employment actions.
Finally, to reinforce the remedies available when violations are
discovered, the Department proposes to clarify and strengthen the
cross-withholding procedure for recovering back wages. The proposal
does so by including new language in the withholding contract clauses
at Sec. Sec. 5.5(a)(2) (DBRA) and 5.5(b)(3) (Contract Work Hours and
Safety Standards Act) to clarify that cross-withholding may be
accomplished on contracts held by agencies other than the agency that
awarded the contract. The proposal also seeks to create a mechanism
through which contractors will be required to consent to cross-
withholding for back wages owed on contracts held by different but
related legal entities in appropriate circumstances--if, for example,
those entities are controlled by the same controlling shareholder or
are joint venturers or partners on a Federal contract. The proposed
revisions include, as well, a harmonization of the DBA and Related Act
debarment standards.
II. Background
A. Statutory and Regulatory History
The Davis-Bacon Act, as enacted in 1931 and subsequently amended,
requires the payment of minimum prevailing wages determined by the
Department of Labor to laborers and mechanics working on Federal
contracts in excess of $2,000 for the construction, alteration, or
repair, including painting and decorating, of public buildings and
public works. See 40 U.S.C. 3141 et seq. Congress has also included the
Davis-Bacon requirements in numerous other laws, known as the Davis-
Bacon Related Acts (the Related Acts and, collectively with the Davis-
Bacon Act, the DBRA), which provide Federal assistance for construction
projects through grants, loans, loan guarantees, insurance, and other
methods. Congress intended the Davis-Bacon Act to ``protect local wage
standards by preventing contractors from basing their bids on wages
lower than those prevailing in the area.'' Coutu, 450 U.S. at 773
(quoting H. Comm. on Educ. and Lab., Legis. History of the Davis-Bacon
Act, 87th Cong., 2d Sess., 1 (Comm. Print 1962)).
The Copeland Act, enacted in 1934, added the requirement that
contractors working on Davis-Bacon projects must submit weekly
certified payrolls for work performed on the contract. See 40 U.S.C.
3145. The Copeland Act also prohibited contractors from inducing any
worker to give up any portion of the wages due to them on such
projects. See 18 U.S.C. 874. In 1962, Congress passed the Contract Work
Hours and Safety Standards Act, which, as amended, requires an overtime
payment of additional half-time for hours worked over forty in the
workweek by laborers and mechanics, including watchmen and guards, on
Federal contracts or federally assisted contracts containing Federal
prevailing wage standards. See U.S.C. 3701 et seq.
As initially enacted, the DBA did not take into consideration the
provision of fringe benefits to workers. In 1964, Congress expanded the
Act to require the Department to include an analysis of fringe benefits
as part of the wage determination process. The amendment
[[Page 15701]]
requires contractors and subcontractors to provide fringe benefits
(such as vacation pay, sick leave, health insurance, and retirement
benefits), or the cash equivalent thereof, to their workers at the
level prevailing for the labor classification on projects of a similar
character in the locality. See Act of July 2, 1964, Public Law 88-349,
78 Stat 238.
Congress has delegated broad rulemaking authority under the DBRA to
the Department of Labor. The DBA, as amended, contemplates regulatory
and administrative action by the Department to determine the prevailing
wages that must be paid and to ``prescribe reasonable regulations'' for
contractors and subcontractors. 40 U.S.C. 3142(b); 40 U.S.C. 3145.
Congress also, through Reorganization Plan No. 14 of 1950, directed the
Department to ``prescribe appropriate standards, regulations and
procedures'' to be observed by Federal agencies responsible for the
administration of the Davis-Bacon and Related Acts. 5 U.S.C. app. 1.
The Department promulgated its initial regulations implementing the
Act in 1935 and has since periodically revised them. See U.S.
Department of Labor, Regulations No. 503 (Sept. 30, 1935). In 1938,
these initial regulations, which set forth the procedures for the
Department to follow in determining prevailing wages, were included in
part 1 of Title 29 of the new Code of Federal Regulations. See 29 CFR
1.1 et seq. (1938). The Department later added regulations to implement
the payroll submission and anti-kickback provisions of the Copeland
Act--first in part 2 and then relocated to part 3 of Title 29. See 6 FR
1210 (Mar. 1, 1941); 7 FR 687 (Feb. 4, 1942); 29 CFR part 2 (1942); 29
CFR part 3 (1943). After Reorganization Plan No. 14 of 1950, the
Department issued regulations setting forth procedures for the
administration and enforcement of the Davis-Bacon and Related Acts in a
new part 5. 16 FR 4430 (May 12, 1951); 29 CFR part 5. The Department
made significant revisions to the regulations in 1964, and again in the
1981-1982 rulemaking.\15\
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\15\ See 29 FR 13462 (Sept. 30, 1964); 46 FR 41444-70 (NPRM
parts 1 and 5) (Aug. 14, 1981); 47 FR 23644-79 (final rule parts 1,
3, and 5) (May 28, 1982). The Department also proposed a significant
revision of parts 1 and 5 of the regulations in 1979 and issued a
final rule in 1981. See 44 FR 77026 (NPRM Part 1); 44 FR 77080 (NPRM
part 5); 46 FR 4306 (final rule part 1); 46 FR 4380 (final rule part
5). That 1981 final rule, however, was delayed and subsequently
replaced by the 1981-1982 rulemaking. The 1982 final rule was
delayed by litigation and re-published with amendments in 1983. 48
FR 19532 (Apr. 29, 1983).
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While the Department has made periodic revisions to the regulations
in recent years, such as to better protect the personal privacy of
workers, 73 FR 77511 (Dec. 19, 2008); to remove references to the
``Employment Standards Administration,'' 82 FR 2225 (Jan. 9, 2017); and
to adjust Federal civil money penalties, 81 FR 43450 (July 1, 2016), 83
FR 12 (Jan. 2, 2018), 84 FR 218 (Jan. 23, 2019), the Department has not
engaged in a comprehensive review and revision since the 1981-1982
rulemaking.
B. Overview of the Davis-Bacon Program
The Wage and Hour Division (WHD), an agency within the U.S.
Department of Labor, administers the Davis-Bacon program for the
Department. WHD carries out its responsibilities in partnership with
the Federal agencies that enter into direct DBA-covered contracts for
construction and/or administer Federal assistance that is covered by
the Related Acts to State and local governments and other funding
recipients. The State and local governmental agencies and authorities
also have important responsibilities in administering Related Act
program rules, as they manage programs through which covered funding
flows or the agencies themselves directly enter into covered contracts
for construction.
The DBRA program includes three basic components in which these
government entities have responsibilities: (1) Wage surveys and wage
determinations; (2) contract formation and administration; and (3)
enforcement and remedies.
1. Wage Surveys and Determinations
The DBA delegates to the Secretary of Labor the responsibility to
determine the wage rates that are ``prevailing'' for each
classification of covered laborers and mechanics on similar projects
``in the civil subdivision of the State in which the work is to be
performed.'' 40 U.S.C. 3142(b). WHD carries out this responsibility for
the Department through its wage survey program, and derives the
prevailing wage rates from survey information that responding
contractors and other interested parties voluntarily provide. The
program is carried out in accordance with the program regulations in
part 1 of Title 29, see 29 CFR 1.1 through 1.7, and its procedures are
described in guidance documents such as the ``Davis-Bacon Construction
Wage Determinations Manual of Operations'' (1986) (Manual of
Operations) and ``Prevailing Wage Resource Book'' (2015) (PWRB).\16\
Although part 1 of the regulations provides the authority for WHD to
create project-specific wage determinations, such project wage
determinations, once more common, now are rarely employed. Instead,
nearly all wage determinations are general wage determinations issued
for general types of construction (building, residential, highway, and
heavy) and applicable to a specific geographic area. General wage
determinations can be incorporated into the vast majority of contracts
and create uniform application of the DBRA for that area.
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\16\ The Manual of Operations is a 1986 guidance document that
is still used internally for reference within WHD. The Prevailing
Wage Resource Book is a 2015 document that is intended to provide
practical information to contracting agencies and other interested
parties, and is available at <a href="https://www.dol.gov/agencies/whd/government-contracts/prevailing-wage-resource-book">https://www.dol.gov/agencies/whd/government-contracts/prevailing-wage-resource-book</a>.
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2. Contract Formation and Administration
The Federal agencies that enter into DBA-covered contracts or
administer Related Act programs have the initial responsibility to
determine whether a contract is covered by the DBA or one of the
Related Acts and identify the contract clauses and the applicable wage
determinations that must be included in the contract. See 29 CFR
1.6(b). In addition to the Department's regulations, this process is
also guided by parallel regulations in part 22 of the Federal
Acquisition Regulation (FAR) for those contracts that are subject to
the FAR. See 48 CFR part 22. Federal agencies also maintain their own
regulations and guidance governing agency-specific aspects of the
process. See, e.g., 48 CFR subpart 222.4 (Defense); 48 CFR subpart
622.4 (State); U.S. Department of Housing and Urban Development, HUD
Handbook 1344.1, Federal Labor Standards Requirements in Housing and
Urban Development Programs (2013).\17\
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\17\ Available at: <a href="https://www.hud.gov/sites/dfiles/OCHCO/documents/Work-Schedule-Request.pdf">https://www.hud.gov/sites/dfiles/OCHCO/documents/Work-Schedule-Request.pdf</a>.
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Where contracting agencies or interested parties have questions
about such matters as coverage under the DBRA or the applicability of
the appropriate wage determination to a specific contract, they are
directed to submit those questions to the Administrator of WHD (the
Administrator) for resolution. See 29 CFR 5.13. The Administrator
provides periodic guidance on this process, as well as other aspects of
the DBRA program, to contracting agencies and other interested parties,
particularly through All Agency Memoranda (AAMs) and ruling letters. In
addition,
[[Page 15702]]
the Department maintains a guidance document, the Field Operations
Handbook (FOH), to provide external and internal guidance for the
regulated community and for WHD investigators and staff on contract
administration and enforcement policies.\18\
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\18\ The Field Operations Handbook reflects policies established
through changes in legislation, regulations, significant court
decisions, and the decisions and opinions of the WHD Administrator.
It is not used as a device for establishing interpretive policy.
Chapter 15 of the FOH covers the DBRA, including CWHSSA, and is
available at <a href="https://www.dol.gov/agencies/whd/field-operations-handbook/Chapter-15">https://www.dol.gov/agencies/whd/field-operations-handbook/Chapter-15</a>.
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During the administration of a DBRA-covered contract, contractors
and subcontractors are required to provide certified payrolls to the
contracting agency to demonstrate their compliance with the
incorporated wage determinations on a weekly basis. See generally 29
CFR part 3. Contracting agencies have the duty to ensure compliance by
engaging in periodic audits or investigations of contracts, including
examinations of payroll data and confidential interviews with workers.
See 29 CFR 5.6. Prime contractors have the responsibility for the
compliance of all the subcontractors on a covered prime contract. 29
CFR 5.5(a)(6). WHD conducts investigations of covered contracts, which
include determining if the DBRA contract clauses or appropriate wage
determinations were mistakenly omitted from the contract. See 29 CFR
1.6(f). If WHD determines that there was such an omission, it will
request that the contracting agency either terminate and resolicit the
contract or modify it to incorporate the required clauses or wage
determinations retroactively. Id.
3. Enforcement and Remedies
In addition to WHD, contracting agencies have enforcement authority
under the DBRA. When a contracting agency's investigation reveals
underpayments of wages of the DBA or one of the Related Acts, the
Federal agency generally is required to provide a report of its
investigation to WHD, and to seek to recover the underpayments from the
contractor responsible. See 29 CFR 5.6(a)(1), 5.7. If violations
identified by the contracting agency or by WHD through its own
investigation are not promptly remedied, contracting agencies are
required to suspend payment on the contract until sufficient funds are
withheld to compensate the workers for the underpayments. 29 CFR 5.9.
The DBRA contract clauses also provide for ``cross-withholding'' if
sufficient funds are no longer available on the contract under which
the violations took place. Under this procedure, funds may be withheld
from any other covered Federal contract held by the same prime
contractor in order to remedy the underpayments on the contract at
issue. See 29 CFR 5.5(a)(2), (b)(3). Contractors that violate the DBRA
may also be subject to debarment from future Federal contracts. See 29
CFR 5.12.
Where WHD conducts an investigation and finds that violations have
occurred, it will notify the affected prime contractor and
subcontractors of the findings of the investigation--including any
determination that workers are owed wages and whether there is
reasonable cause to believe the contractor may be subject to debarment.
See 29 CFR 5.11(b). Contractors can request a hearing regarding these
findings through the Department's Office of Administrative Law Judges
(OALJ) and may appeal any ruling by the OALJ to the Department's
Administrative Review Board (ARB). Id.; see also 29 CFR parts 6 and 7
(OALJ and ARB rules of practice for Davis-Bacon proceedings). Decisions
of the ARB are final agency actions that may be reviewable under the
Administrative Procedure Act in Federal district court. See 5 U.S.C.
702, 704.\19\
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\19\ In addition to reviewing liability determinations and
debarment, the ARB and the courts also have jurisdiction to review
general wage determinations. Judicial review, however, is strictly
limited to any procedural irregularities, as there is no
jurisdiction to review the substantive correctness of a wage
determination under the DBA. See Binghamton Constr. Co., 347 U.S. at
177.
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III. Discussion of Proposed Rule
A. Legal Authority
The Davis-Bacon Act, as enacted in 1931 and subsequently amended,
requires the payment of certain minimum ``prevailing'' wages determined
by the Department of Labor to laborers and mechanics working on Federal
contracts in excess of $2,000 for the construction, alteration, or
repair, including painting and decorating, of public buildings and
public works. See 40 U.S.C. 3141 et seq. The DBA authorizes the
Secretary of Labor to develop a definition for the term ``prevailing''
wage and a methodology for setting it based on similar projects in the
civil subdivision of the State in which a covered project will occur.
See 40 U.S.C. 3142(b); Bldg. & Constr. Trades' Dep't, AFL-CIO v.
Donovan, 712 F.2d 611, 616 (D.C. Cir. 1983).
The Secretary of Labor has the responsibility to ``prescribe
reasonable regulations'' for contractors and subcontractors on covered
projects. 40 U.S.C. 3145. The Secretary, through Reorganization Plan
No. 14 of 1950, also has the responsibility to ``prescribe appropriate
standards, regulations and procedures'' to be observed by Federal
agencies responsible for the administration of the Davis-Bacon and
Related Acts ``[i]n order to assure coordination of administration and
consistency of enforcement of the labor standards provisions'' of the
DBRA. 5 U.S.C. app. 1.
The Secretary has delegated authority to promulgate these
regulations to the Administrator of the WHD and to the Deputy
Administrator of the WHD if the Administrator position is vacant. See
Secretary's Order No. 01-2014, 79 FR 77527 (Dec. 24, 2014); Secretary's
Order No. 01-2017, 82 FR 6653 (Jan. 19, 2017).
B. Overview of the Proposed Rule
1. 29 CFR Part 1
The procedural rules providing for the payment of minimum wages,
including fringe benefits, to laborers and mechanics engaged in
construction activity covered by the Davis-Bacon and Related Acts are
set forth in 29 CFR part 1. The regulations in this part also set forth
the procedures for making and applying such determinations of
prevailing wage rates and fringe benefits.
i. Section 1.1 Purpose and Scope
The Department proposes technical revisions to Sec. 1.1 to update
the statutory reference to the Davis-Bacon Act, now recodified at 40
U.S.C. 3141 et seq. The Department also proposes to eliminate outdated
references to the Deputy Under Secretary of Labor for Employment
Standards at the Employment Standards Administration. The Employment
Standards Administration was eliminated as part of an agency
reorganization in 2009 and its authorities and responsibilities were
devolved into its constituent components, including the WHD. See
Secretary's Order No. 09-2009 (Nov. 6, 2009), 74 FR 58836 (Nov. 13,
2009), 82 FR 2221 (Jan. 9, 2017). The Department further proposes to
revise Sec. 1.1 to reflect the removal of Appendix A of part 1, as
discussed further below. The Department also proposes to add new
paragraph (a)(1) to reference the WHD website (<a href="https://www.dol.gov/agencies/whd/government-contracts">https://www.dol.gov/agencies/whd/government-contracts</a>) on which a listing of laws requiring
the payment of wages at rates predetermined by the Secretary of Labor
under the Davis-Bacon Act is currently found.
[[Page 15703]]
ii. Section 1.2 Definitions
(A) Prevailing Wage
The Department proposes to redefine the term ``prevailing wage'' in
Sec. 1.2 to return to the original methodology for determining whether
a wage rate is prevailing. This original methodology has been referred
to as the ``three-step process.''
Since 1935, the Secretary has interpreted the word ``prevailing''
in the Davis-Bacon Act to be consistent with the common understanding
of the term as meaning ``predominant'' or ``most frequent.'' From 1935
until the 1981-1982 rulemaking, the Department employed a three-step
process to identify the most frequently used wage rate for each
classification of workers in a locality. See Regulation 503 section 2
(1935); 47 FR 23644.\20\ This three-step process identified as
prevailing: (1) Any wage rate paid to a majority of workers; and, if
there was none, then (2) the wage rate paid to the greatest number of
workers, provided it was paid to at least 30 percent of workers, and,
if there was none, then (3) the weighted average rate. The second step
is referred to as the ``30-percent rule.''
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\20\ Implemented Apr. 29, 1983. See 48 FR 19532.
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The three-step process relegated the average rate to a final,
fallback method of determining the prevailing wage. In 1962
congressional testimony, Solicitor of Labor Charles Donahue explained
the reasoning for this sequence in the determination: An average rate
``does not reflect a true rate which is actually being paid by any
group of contractors in the community being surveyed.'' Instead, ``it
represents an artificial rate which we create ourselves, and which does
not reflect that which a predominant amount of workers are paid.'' \21\
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\21\ Administration of the Davis Bacon Act: Hearings before the
Spec. Subcomm. of Lab. of the H. Comm. on Educ. and Lab., 87th Cong.
811-12 (1962) (testimony of Charles Donahue, Solicitor of Labor).
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In 1982, the Department published a final rule that amended the
definition of ``prevailing wage'' by eliminating the second step in the
three-step process--the 30-percent rule. See 47 FR 23644. The new
process required only two steps: First identifying if there was a
single wage rate paid to more than 50 percent of workers, and then, if
not, relying on a weighted average of all the wage rates paid. Id. at
23644-45.
In eliminating the 30-percent rule, however, the Department did not
change its underlying interpretation of the word ``prevailing''--that
it means ``the most widely paid rate'' must be the ``definition of
first choice'' for the prevailing wage. 47 FR 23645. While the 1982
rule continued to allow the Department to use an average rate as a
fallback, the Department rejected commenters' suggestions that the
weighted average could be used in all cases. See 47 FR 23644-45. As the
Department explained, this was because the term ``prevailing''
contemplates that wage determinations mirror, to the extent possible,
those rates ``actually paid'' to workers. 47 FR 23645.
This interpretation--that the definition of first choice for the
term ``prevailing wage'' should be an actual wage rate that is most
widely paid--has now been shared across administrations for over 85
years. In the intervening decades, Congress has amended and expanded
the reach of the Act's prevailing wage requirements dozens of times
without altering the term ``prevailing'' or the grant of broad
authority to the Secretary of Labor to define it.\22\ In addition, the
question was also reviewed by the Office of Legal Counsel (OLC) at the
Department of Justice, which independently reached the same
conclusions: ``prevailing wage'' means the current and predominant
actual rate paid, and an average rate should only be used as a last
resort. See 5 Op. O.L.C. at 176-77.\23\
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\22\ See, e.g., Act of Mar. 23, 1941, ch. 26, 55 Stat. 53 (1941)
(applying the Act to alternative contract types); Contract Work
Hours and Safety Standards Act of 1962, Public Law 87-581, 76 Stat.
357 (1962) (requiring payment of overtime on contracts covered by
the Act); Act of July 2, 1964, Public Law 88-349, 78 Stat. 238
(1964) (extending the Act to cover fringe benefits); 29 CFR 5.1
(referencing 57 Related Acts into which Congress incorporated Davis-
Bacon Act requirements between 1935 and 1978).
\23\ See note 1, supra.
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In the 1982 final rule, when the Department eliminated the 30-
percent rule, it anticipated that this change would increase the use of
artificial average rates. 47 FR 23648-49. Nonetheless, the Department
believed a change was preferable because the 30-percent threshold could
in some cases not account for up to 70 percent of the remaining
workers. See 46 FR 41444. The Department also stated that it agreed
with the concerns expressed by certain commenters that the 30-percent
rule was ``inflationary'' and gave ``undue weight to collectively
bargained rates.'' 47 FR 23644-45.
Now, however, after reviewing the development of the Davis-Bacon
Act program since the 1981-1982 rulemaking, the Department concludes
that eliminating the 30-percent rule ultimately resulted in an overuse
of average rates. On paper, the weighted average remains the fallback
method to be used only when there is no majority rate. In practice,
though, it has become a central mechanism to set the prevailing wage
rates included in Davis-Bacon wage determinations and covered
contracts.
Prior to the 1982 rule change, the use of averages was relatively
rare. In a Ford Administration study of Davis-Bacon Act prevailing wage
rates in commercial-type construction in 19 cities, none of the rates
were based on averages because all of the wage rates were
``negotiated'' rates, i.e., based on CBAs that represented a
predominant wage rate in the locality.\24\ The Department estimates
that prior to the 1982 final rule, as low as 15 percent of
classification rates across all wage determinations were based on
averages. After the 1982 rule was implemented, the use of averages may
have initially increased to approximately 26 percent of all wage
determinations.\25\
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\24\ See Robert S. Goldfarb & John F. Morrall, ``An Analysis of
Certain Aspects of the Administration of the Davis-Bacon Act,''
Council on Wage and Price Stability (May 1976), reprinted in Bureau
of Nat'l Affs., Construction Labor Report, No. 1079, D-1, D-2
(1976).
\25\ See Oversight Hearing on the Davis-Bacon Act, Before the
Subcomm. on Lab. Standards of the H. Comm. on Educ. and Lab., 96th
Cong. 58 (1979) (statement of Ray Marshall, Secretary of Labor)
(discussing study of 1978 determinations showing only 24 percent of
classification rates were based on the 30-percent rule); Jerome
Staller, ``Communications to the Editor,'' Policy Analysis, Vol. 5,
No. 3 (Summer 1979), pp. 397-98 (noting that 60 percent of
determinations in the internal Department 1976 and 1978 studies were
based on the 30-percent rule or the average-rate rule). The authors
of the Council on Wage and Price Stability study, however, pointed
out that the Department's figures were for rates that had been based
on survey data, while 57 percent of rates in the mid-1970's were
based solely on CBAs without the use of surveys (a practice that the
Department no longer uses to determine new rates). See Robert S.
Goldfarb & John F. Morrall II., ``The Davis-Bacon Act: An Appraisal
of Recent Studies,'' 34 Indus. & Lab. Rel. Rev. 191, 199-200 & n.35
(1981). Thus, the actual percentage of annual classification
determinations that were based on average rule before 1982 may have
been as low as 15 percent, and the percent based on the average rule
after 1982 would have been expected to be around 26 percent.
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The Department's current use of weighted averages is now
significantly higher than this 26 percent figure. To analyze the
current use of weighted averages and the potential impacts of this
rulemaking, the Department compiled data for select classifications for
17 recent wage surveys--nearly all of the completed surveys that WHD
began in 2015 or later. The data show that the Department's reliance on
average rates has increased significantly, and now accounts for 64
percent of the observed classification determinations in this recent
time period.\26\
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\26\ See below section V (Executive Order 12866, Regulatory
Planning and Review et al.).
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The Department believes that such an overuse of weighted averages
is
[[Page 15704]]
inconsistent with both the text and the purpose of the Act. It is
inconsistent with the Department's longstanding interpretation of
Congress's use of the word ``prevailing'' in the text of the Act--
including the Department's statements in the preamble to the 1982 rule
itself that the definition of first choice for the ``prevailing'' wage
should be the most widely paid rate that is actually paid to workers in
the relevant locality. If nearly two-thirds of rates that are now being
published based on recent surveys are based on a weighted average, it
is no longer fair to say that it is a fallback method of determining
the prevailing wage.
The use of averages as the dominant methodology for issuing wage
determinations is also inconsistent with the recognized purpose of the
Act ``to protect local wage standards by preventing contractors from
basing their bids on wages lower than those prevailing in the area.''
Coutu, 450 U.S. at 773 (internal quotation marks and citation omitted).
Using an average to determine the minimum wage rate on contracts allows
a single low-wage contractor in the area to depress wage rates on
Federal contracts below the higher rate that may be generally more
prevalent in the community--by factoring into (and lowering) the
calculation of the average that is used to set the minimum wage rates
on local Federal contracts.\27\
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\27\ For example, the 2001 wage determination for electricians
in Eddy County, New Mexico was an average rate based on responses
that included lower-paid workers that had been brought in from Texas
by a Texas electrical contractor to work on a single job. As the ARB
noted in reviewing a challenge to the wage determination, the result
was that ``contract labor from Texas, where wages reportedly are
lower, effectively has determined the prevailing wage for
electricians in this New Mexico county.'' New Mexico Nat. Elec.
Contractors Ass'n, ARB No. 03-020, 2004 WL 1261216, at * 8 (May 28,
2004).
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To address the increasing tension between the current methodology
and the purpose and definition of ``prevailing,'' the Department
proposes to return to the original three-step process. The Department
expects that re-introducing the 30-percent rule will reduce the use of
average rates roughly by half--from 63 percent to 31 percent. The data
from the regulatory impact analysis included with this NPRM below in
section V suggests that returning to the three-step process will
continue to result in 36 percent of prevailing wage rates based on the
majority rule, with the balance of 33 percent based on the 30-percent
rule, and 31 percent based on the weighted average.
This estimated distribution illustrates why the Department is no
longer persuaded, as it stated in the 1981 NPRM, that the majority rule
is more appropriate than the three-step process (including the 30-
percent rule) because the 30-percent rule ``ignores the rate paid to up
to 70 percent of the workers.'' See 46 FR 41444.\28\ That
characterization ignores that the first step in the three-step process
is still to adopt the majority rate if there is one. Under both the
three-step process and the current majority rule, any wage rate that is
paid to a majority of workers would be identified as prevailing. Under
either method, the weighted average will be used whenever there is no
wage rate that is paid to more than 30 percent of employees in the
survey response.
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\28\ The 30-percent rule can only be characterized as
``ignoring'' rates because it is a rule that applies a mathematical
``mode,'' in which the only relevant value is the value of the
number that appears most frequently--instead of a mean (average), in
which the values of all the numbers are averaged together. Both the
30-percent rule and the majority rule are modal rules in which the
values of the non-prevailing wage rates do not factor into the final
analysis.
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The difference between the majority and the three-step
methodologies is solely in how a wage rate is determined when there is
no majority, but there is a significant plurality wage rate paid to
between 30 and 50 percent of workers. In that circumstance, the current
``majority'' rule uses averages instead of the rate that is actually
paid to that significant plurality of the survey population. This is
true, for example, even where the same wage rate is paid to 45 percent
of workers and no other rate is paid to as high a percentage of
workers. In such circumstances, the Department believes that a wage
rate paid to between 30 and 50 percent of workers is clearly more of a
``prevailing'' wage rate than an average.
The Department has also considered the other explanations it
provided in 1982 for eliminating the 30-percent rule, including any
possible upward pressure on wages or prices and a perceived ``undue
weight'' given to collectively bargained rates. These explanations are
no longer persuasive for two fundamental reasons. First, the concerns
appear to be unrelated to the text of the statute, and, if anything,
contrary to its legislative purpose. Second, the Department's estimates
of the effects of a return to the 30-percent rule suggest that the
concerns are misplaced.
The concerns about inflation at the time of the 1982 rule were
based in part on a criticism of the Act itself.\29\ A fundamental
purpose of the Davis-Bacon Act was to limit low-bid contractors from
depressing local wage rates. See 5 U.S. O.L.C. at 176.\30\ This purpose
necessarily contemplates an increase in wage rates over what could
otherwise be paid without the enactment of the statute. Moreover, the
effect of maintaining such a prevailing rate can just as easily be seen
as guarding against deflationary effects of the use of low-wage
contractors--instead of resulting in inflation. Staff of the H.
Subcomm. on Lab., 88th Cong., Administration of the Davis-Bacon Act,
Rep. of the Subcomm. on Lab. of the Comm. on Educ. and Lab. (Comm.
Print 1963) (1963 House Committee Report), at 2-3.
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\29\ The GAO issued a report in 1979 urging Congress to repeal
the Act because of ``inflationary'' concerns. See Gov't
Accountability Office, HRD-79-18, The Davis Bacon Act Should be
Repealed, (1979) (1979 GAO Report). Available at: <a href="https://www.gao.gov/assets/hrd-79-18.pdf">https://www.gao.gov/assets/hrd-79-18.pdf</a>. The report argued that even using
only weighted averages for prevailing rates would be inflationary
because they could increase the minimum wage paid on contracts and
therefore result in wages that were higher than they otherwise would
be. The House Subcommittee on Labor Standards reviewed the report
during oversight hearings in 1979, but Congress did not amend or
repeal the Act, and instead continued to expand its reach. See,
e.g., Cranston-Gonzalez National Affordable Housing Act, Public Law
101-625, Sec. 811(j)(6), 104 Stat. 4329 (1990); Energy Independence
and Security Act of 2007, Public Law. No, 110-140, Sec. 491(d), 121
Stat. 1651 (2007); American Recovery and Reinvestment Act, Public
Law 111-5, Sec. 1606, 123 Stat. 303 (2009); Consolidated
Appropriations Act of 2021, Public Law 116-260, Sec. 9006(b), 134
Stat. 1182 (2021).
\30\ See note 1, supra.
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The 1982 final rule contained an economic analysis that suggested
that the elimination of the 30-percent rule could save $120 million (in
1982 dollars) in construction costs per year through reduced contract
costs. However, the Department does not believe that this 40-year old
analysis is reliable or accurate.\31\ For example, the analysis did not
consider labor market forces that could prevent contractors from
lowering wage rates in the short run. The analysis also did not attempt
to address productivity losses or other costs of setting a lower
minimum wage. For these reasons, the Department does not believe that
the analysis in the 1982 final rule implies that the current proposed
reversion to the 30-percent rule would have a significant impact on
[[Page 15705]]
contract costs. Even if the Department were to rely on this analysis as
an accurate measure of impact, such savings (adjusted to 2019 dollars)
would only amount to approximately two-tenths of a percent of total
estimated covered contract costs.
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\31\ The Department has not attempted to assess the relative
accuracy of this estimate over the decades, which would be
challenging given the dynamic nature of the construction industry
and the relatively small impact of even $120 million in savings. The
Department at the time acknowledged that its estimate had been
heavily criticized by commenters and was only a ``best guess''--in
part because it could not foresee how close a correlation there
would be between the wage rates that are actually paid on covered
contracts and the wage determinations that set the Davis-Bacon
minimum wages. 47 FR 23648.
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The Department also does not believe that the proposed reversion to
the 30-percent rule would have any noticeable impact on overall
national inflation numbers.\32\ An illustrative analysis in section
V.D. shows returning to the 30-percent rule will significantly reduce
the reliance on the weighted average method to produce prevailing wage
rates. Under the 30-percent rule, some prevailing wage determinations
may increase and others decrease, but the magnitude of these changes
will, overall, be negligible. Additionally, recent research shows that
wage increases, particularly at the lower end of the distribution, do
not cause significant economy-wide price increases.\33\ The Department
thus does not believe that any limited net wage increase for the
approximately 1.2 million covered workers (less than 1 percent of the
total national workforce) will significantly increase prices or have
any appreciable effect on the macro economy.
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\32\ The 1979 GAO report about the DBA noted that ``minimum wage
rates [such as the Davis-Bacon Act prevailing wage requirements]
tend to have an inflationary effect on . . . the national economy as
a whole.'' 1979 GAO Report, HRD-79-18 at 76, 83-84.
\33\ See, e.g., J.P. Morgan, Why Higher Wages Don't Always Lead
to Inflation (Feb. 7, 2018), available at: <a href="https://www.jpmorgan.com/commercial-banking/insights/higher-wages-inflation">https://www.jpmorgan.com/commercial-banking/insights/higher-wages-inflation</a>; Daniel MacDonald
& Eric Nilsson, The Effects of Increasing the Minimum Wage on
Prices: Analyzing the Incidence of Policy Design and Context, Upjohn
Institute working paper; 16-260 (June 2016), available at <a href="https://research.upjohn.org/up_workingpapers/260/">https://research.upjohn.org/up_workingpapers/260/</a>; Nguyen Viet Cuong, Do
Minimum Wage Increases Cause Inflation? Evidence from Vietnam, ASEAN
Economic Bulletin Vol. 28, No. 3 (2011), pp. 337-59, available at:
<a href="https://www.jstor.org/stable/41445397">https://www.jstor.org/stable/41445397</a>; Magnus Jonsson & Stefan
Palmqvist, Do Higher Wages Cause Inflation?, Sveriges Riksbank
Working Paper Series 159 (Apr. 2004), available at: <a href="http://archive.riksbank.se/Upload/WorkingPapers/WP_159.pdf">http://archive.riksbank.se/Upload/WorkingPapers/WP_159.pdf</a>; Kenneth M.
Emery & Chih-Ping Chang, Do Wages Help Predict Inflation?, Federal
Reserve Bank of Dallas, Economic Review First Quarter 1996 (1996),
available at: https://www.dallasfed.org/~/media/documents/research/
er/1996/er9601a.pdf.
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Further, since the DBA legislates that minimum wages must be paid
to workers on construction projects, the effect of such requirement is
not a permissible basis for departing from the longstanding
interpretation of the plain meaning of the term ``prevailing.'' The
``basic purpose of the Davis-Bacon Act is to protect the wages of
construction workers even if the effect is to increase costs to the
[F]ederal [G]overnment.'' Bldg. & Constr. Trades Dep't, AFL-CIO v.
Donovan, 543 F. Supp. 1282, 1290 (D.D.C. 1982). Congress has considered
cost concerns, and enacted and expanded the DBA notwithstanding them.
Id. at 1290-91; 1963 House Committee Report at 2-3; Reorganization Plan
No. 14 of 1950, 5 U.S.C. app. 1.\34\ Thus, even if concerns about an
inflationary effect on government contract costs or speculative effects
on the national macro economy were used to justify eliminating the 30-
percent rule, the Department does not believe such reasoning now
provides either a factual or legal basis to maintain the current
majority rule.
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\34\ In his message accompanying Reorganization Plan No. 14,
President Truman noted that ``[s]ince the principal objective of the
plan is more effective enforcement of labor standards, it is not
probable that it will result in savings. But it will provide more
uniform and more adequate protection for workers through the
expenditures made for the enforcement of the existing legislation.''
5 U.S.C. app. 1.
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The Department is also no longer persuaded that the 30-percent rule
gives undue weight to collectively bargained rates. The underlying
concern at the time was that identification of a single prevailing wage
could give more weight to union rates that more often tend to be the
same across companies. If this occurs, however, it is a function of the
plain meaning of the statutory term ``prevailing,'' which, as both the
Department and OLC have concluded, refers to a predominant single wage
rate, or a modal wage rate. The same weight is given to collectively
bargained rates whether the Department chooses a 50-percent or 30-
percent threshold. The Department accordingly now understands the
concerns voiced at the time to be concerns about the potential outcome
(of more wage determinations based on union rates) instead of concerns
about any actual weight given to union rates by the choice of the modal
threshold. To choose a threshold because the outcome would be more
beneficial to non-union contractors--as the Department seems to have
suggested it was doing in 1982--does not have any basis in the statute.
Donovan, 543 F. Supp. at 1291, n.16 (noting that the Secretary's
concern about weight to collectively bargained rates ``bear[s] no
relationship to the purposes of the statute'').
Regardless, the Department's regulatory impact analysis does not
suggest that a return to the 30-percent rule would give undue weight to
collectively bargained rates. Among a sample of rates considered in an
illustrative analysis, one-third of all rates (or about half of rates
currently established based on weighted averages) would shift to a
different method. Among these rates that would be set based on a new
method, the majority would be based on non-collectively bargained
rates. Specifically, in the V.D. illustration, Department estimates
that the use of single wage rates that are not the product of
collective bargaining agreements would increase from 12 percent to 36
percent of all wage rates--an overall increase of 24 percentage points.
The use of single wage rates that are based on collective bargaining
agreements will increase from 25 percent to 34 percent--an overall
increase of 9 percentage points.\35\
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\35\ See below section V (Executive Order 12866, Regulatory
Planning and Review et al.). As discussed in the regulatory impact
analysis, the Department found that fringe benefits currently do not
prevail in slightly over half of the classification-county
observations it reviewed--resulting in no required fringe benefit
rate for that classification. This would be largely unchanged under
the proposed reversion to the 3-step process, with nearly half of
classification rates still not requiring the payment of fringe
benefits. Only about 13 percent of fringe rates would shift from no
fringes or an average rate to a modal prevailing fringe rate.
Overall under the estimate, the percentage of fringe benefit rates
based on collective bargaining agreements would increase from 25
percent to 34 percent. The percentage of fringe benefit rates not
based on collective bargaining rates would increase from 3 percent
to 7 percent.
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The Department has also considered, but decided against, proposing
to use the median wage rate as the ``prevailing'' rate. The median,
like the average (mean), is a number that can be unrelated to the wage
rate paid with the greatest frequency to employees working in the
locality. Using either the median or the average as the primary method
of determining the prevailing rate is not consistent with the meaning
of the term ``prevailing.'' Accord 47 FR 23645. The Department is
therefore proposing to return to the three-step process and the 30-
percent rule, and is not proposing as alternatives the use of either
the median or mean as the primary or sole methods for making wage
determinations.
(1) Former Subsection Sec. 1.2(a)(2)
In a non-substantive change, the Department proposes to move the
language currently at Sec. 1.2(a)(2) that explains the interaction
between the definition of prevailing wage and the sources of
information in Sec. 1.3. Under the proposed rule, that language
(altered to update the cross-reference to the definition of prevailing
wage) would now appear in Sec. 1.3.
[[Page 15706]]
(2) Variable Rates That Are Functionally Equivalent
The Department also proposes to amend the regulations on compiling
wage rate information at Sec. 1.3 to allow for variable rates that are
functionally equivalent to be counted together for the purpose of
determining whether a single wage rate prevails under the proposed
definition of ``prevailing wage'' in Sec. 1.2. The Department
generally followed this proposed approach until after the 2006 decision
of the ARB in Mistick Construction. 2006 WL 861357.
Historically, the Department has considered wage rates included in
survey data that may not be exactly the same to be functionally
equivalent--and therefore counted as the same--as long as there was an
underlying logic that explained the difference between them. For
example, some workers may perform work under the same labor
classification for the same contractor or under the same collective
bargaining agreement (CBA) on projects in the same geographical area
being surveyed and get paid different wages based on the time of day
that they performed work--e.g., a ``night premium.'' In that
circumstance, the Department would count the normal and night-premium
wage rates to be the ``same wage'' rate for purposes of calculating
whether that wage rate prevailed under the majority rule that is
discussed in the section above. Similarly, where workers in the same
labor classification were paid different ``zone rates'' for work on
projects in different zones covered by the same CBA, the Department
considered those rates as compensating workers for the burden of
traveling or staying away from home and did not reflect fundamentally
different underlying wage rates for the work actually completed.
Variable zone rates would therefore be considered the ``same wage'' for
the purpose of determining the prevailing wage rate.
In another example, the Department took into consideration
``escalator clauses'' in CBAs that may have increased wage rates across
the board at some point during the survey period. Wages for workers
working under the same CBA could be reported differently on a survey
based on the week their employer used in responding to the wage survey
rather than an actual difference in prevailing wages. The Department
has historically treated such variable rates the same for the purposes
of determining the prevailing wages paid to laborers or mechanics in
the survey area. The Department has also considered wage rates to be
the same where workers made the same combination of basic hourly rates
and fringe rates, even if the basic hourly rates (and also the fringe
rates) differed slightly.
In these circumstances, where the Department has treated certain
variable rates as the same, it has generally chosen one of the variable
rates to use as the prevailing rate. In the case of rates that are
variable because of an escalator-clause issue, it uses the most current
rate under the collective bargaining agreement. Similarly, where the
Department identified combinations of hourly and fringe rates as the
``same,'' the Department identified one specific hourly rate and one
specific fringe rate that prevailed, following the guidelines in 29 CFR
5.24, 5.25, and 5.30.
In 2006, the ARB strictly interpreted the regulatory language of
Sec. 1.2(a) in a way that has limited some of these practices. See
Mistick Constr., 2006 WL 861357, at *5-7. The decision affirmed the
Administrator's continued use of the escalator-clause rule, but found
the use of the same combination of basic hourly and fringe rates did
not amount to exactly the ``same'' wage and thus violated the use of
the term ``same wage'' in Sec. 1.2(a). The ARB also viewed the
flexibility shown to collective bargaining agreements as inconsistent
with the ``purpose'' of the 1982 final rule, which the Administrator
had explained was in part to avoid giving ``undue weight'' to
collectively bargained rates. The ARB held that the Administrator could
not consider variable rates under a collective bargaining agreement to
be the ``same wage'' under Sec. 1.2(a) as written--and therefore, if
there was no strictly ``same wage'' that would prevail under the
majority rule, the Administrator would have to use the fallback
weighted average on the wage determination.
The ARB's conclusion in Mistick--particularly its determination
that even wage data reflecting the same aggregate compensation but
slight variations in the basic hourly rate and fringe benefit rates did
not reflect the ``same wage'' as that term was used under the current
regulations--could be construed as a determination that wage rates need
to be identical ``to the penny'' in order to be regarded as the ``same
wage,'' and that nearly any variation in wage rates, no matter how
small and regardless of the reason for the variation, might need to be
regarded as reflecting different, unique wage rates.
The ARB's decision in Mistick limited the Administrator's
methodology for determining a prevailing rate, thus contributing to the
increased use of weighted average rates. As noted above, however, both
the Department and OLC have agreed that averages should generally only
be used as a last resort. As the OLC opinion noted, the use of an
average is difficult to justify ``particularly in cases where it
coincides with none of the actual wage rates being paid.'' 5 Op. O.L.C.
at 177 (emphasis in original).\36\ In discussing those cases, OLC
quoted from the 1963 House Report summarizing extensive congressional
oversight hearings of the Act. The report had concluded that ``[u]se of
an average rate would be artificial in that it would not reflect the
actual wages being paid in a local community,'' and ``such a method
would be disruptive of local wage standards if it were utilized with
any great frequency.'' Id.\37\ To the extent that an inflexible, ``to
the penny'' approach to determining if wage data reflects the ``same
wage'' promotes the use of average rates even when wage rate variations
are exceedingly slight and are based on practices reflecting that the
rates, while not identical, are functionally equivalent, such an
approach would be inconsistent with these authorities and the statutory
purpose they reflect.
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\36\ See note 1, supra.
\37\ See 1963 House Committee Report, supra, at 7-8.
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For these reasons, and particularly because a mechanical, ``to the
penny'' approach ultimately undermines rather than promotes the
determination of actual prevailing wage rates, the Department believes
that it is consistent with the language and purpose of the statute to
treat slight variations in wages as the same rate in appropriate
circumstances.
As reflected in Mistick, the existing regulation does not clearly
authorize the use of functionally equivalent wages to determine the
local prevailing wage. See 2006 WL 861357, at *5-7. Accordingly, the
Department proposes to amend Sec. 1.3 to include a new paragraph at
Sec. 1.3(e) that would permit the Administrator to count wage rates
together--for the purpose of determining the prevailing wage--if the
rates are functionally equivalent and the variation can be explained by
a CBA or the written policy of a contractor.
Such flexibility would not be unlimited. Some variations within the
same CBA clearly amount to different rates. For example, when a CBA
authorizes the use of ``market recovery rates'' that are lower than the
standard rate in order to win a bid, under certain circumstances those
rates may not be appropriate to combine together with the CBA's
standard rate as ``functionally equivalent'' because frequent use of
such a rate could suggest (though does
[[Page 15707]]
not necessarily compel) a conclusion that the CBA's regular rate may
not be prevailing in the area.
The Department welcomes comments on all aspects of this proposal
regarding proposed changes to the definition of ``prevailing wage'' in
Sec. 1.2 and to the regulation governing the obtaining and compiling
of wage rate information in Sec. 1.3.
(B) Area
The core definition of ``area'' in Sec. 1.2 largely reproduces the
specification in the Davis-Bacon Act statute, prior to its 2002 re-
codification, that the prevailing wage should be based on projects of a
similar character in the ``city, town, village, or other civil
subdivision of the State in which the work is to be performed.'' See 40
U.S.C. 276a(a) (2002).
The rule's geography-based definition of area applies to federally
assisted projects covered by the Davis-Bacon Related Acts as well as
projects covered by the DBA itself. Some of the Related Acts have used
different terminology to identify the appropriate ``area'' for a wage
determination, including the terms ``locality'' and ``immediate
locality.'' \38\ However, the Department has long concluded that these
terms are best interpreted and applied consistent with the methodology
for determining the area under the original DBA. See Virginia Segment
C-7, METRO, WAB 71-4, 1971 WL 17609, at *3-4 (Dec. 7, 1971).\39\
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\38\ See, e.g., National Housing Act, 12 U.S.C. 1715c(a)
(locality); Housing and Community Development Act of 1974, 42 U.S.C.
1440(g), 5310(a) (locality); Federal Water Pollution Control Act, 33
U.S.C. 1372 (immediate locality); Federal-Aid Highway Acts, 23
U.S.C. 113(a) (immediate locality).
\39\ The Wage Appeals Board (WAB) was the Department's
administrative appellate entity from 1964 until 1996, when it was
eliminated and the Administrative Review Board was created and
provided jurisdiction over appeals from decisions of the
Administrator and the Department's Administrative Law Judges (ALJs)
under a number of statutes, including the Davis-Bacon and Related
Acts. 61 FR 19978 (May 3, 1996). WAB decisions from 1964 to 1996 are
available on the Department's website at <a href="https://www.dol.gov/agencies/oalj/public/dba_sca/references/caselists/wablist">https://www.dol.gov/agencies/oalj/public/dba_sca/references/caselists/wablist</a>.
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The Department proposes to revise the definition of area to address
projects that span multiple counties and to address highway projects
specifically. Under WHD's current methodology, if a project spans more
than one county, the contracting officer is instructed to attach wage
determinations for each county to the project and contractors may be
required to pay differing wage rates to the same employees when their
work crosses county lines. This policy was reinforced in 1971 when the
Wage Appeals Board (WAB) found that, under the terms of the then-
applicable regulations, there was no basis to provide a single
prevailing wage rate for a project occurring in Virginia, the District
of Columbia, and Maryland. See Virginia Segment C-7, METRO, 1971 WL
17609.
Critics of this policy have pointed out that workers are very often
hired and paid a single wage rate for a project, and--unless there are
different city or county minimum wage laws--workers' pay rates often do
not change as they move between tasks in different counties. The 2011
report by the GAO, for example, quoted a statement from a contractor
association representative that requiring different wage rates for the
same workers on the same multi-county project is ``illogical.'' See
2011 GAO Report at 24.\40\
---------------------------------------------------------------------------
\40\ See note 8, supra.
---------------------------------------------------------------------------
While requiring different prevailing wage rates for work by the
same worker on the same project may be consistent with the current
regulations, the DBA and Related Act statutes themselves do not address
multi-jurisdictional projects. Issuing and applying a single project
wage determination for such projects is not inconsistent with the text
of the DBA. Nor is it inconsistent with the purpose of the DBA, which
is to protect against the depression of local wage rates caused by
competition from low-bid contractors from outside of the locality.
Accordingly, the Department proposes adding language in the
definition of ``area'' in Sec. 1.2 that would expressly authorize WHD
to issue project wage determinations with a single rate for each
classification, using data from all of the relevant counties in which a
project will occur. The Department solicits comments on whether this
procedure should be mandatory for multi-jurisdictional projects or
available at the request of the contracting agency or an interested
party, if WHD determines that such a project wage determination would
be appropriate.
The Department's other proposed change to the definition of
``area'' in Sec. 1.2 is to allow the use of State highway districts or
similar transportation subdivisions as the relevant wage determination
area for highway projects. Although there is significant variation
between states, most states maintain civil subdivisions responsible for
certain aspects of transportation planning, financing, and
maintenance.\41\ These districts tend to be organized within State
departments of transportation or otherwise through State and County
governments.
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\41\ See generally Am. Assoc. of State Highway and Transp.
Offs., Transportation Governance and Financing: A 50-State Review of
State Legislatures and Departments of Transportation (2016),
available at: <a href="https://www.financingtransportation.org/pdf/50_state_review_nov16.pdf">https://www.financingtransportation.org/pdf/50_state_review_nov16.pdf</a>.
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Using State highway districts as a geographic unit for wage
determinations would be consistent with the Davis-Bacon Act's
specification that wage determinations should be tied to a ``civil
subdivision of a State.'' State highway districts were considered to be
``subdivisions of a State'' at the time the term was used in the
original Davis-Bacon Act. See Wight v. Police Jury of Par. of
Avoyelles, La., 264 F. 705, 709 (5th Cir. 1919) (describing the
creation of highway districts as ``governmental subdivisions of the
[S]tate'').
In identifying the appropriate geographic area of a wage
determination, the Federal-Aid Highway Act of 1956 (FAHA), one of the
Related Acts, uses the term ``immediate locality'' instead of ``civil
subdivision.'' 23 U.S.C. 113. However, the FAHA requires the
application of prevailing wage rates in the immediate locality to be
``in accordance with'' the DBA, id., and, as noted above, WHD has long
applied these alternative definitions of area in the Related Acts in a
manner consistent with the ``civil subdivision'' language in the
original Act.
The Department also notes that Congress, in enacting the FAHA,
envisioned that the Federal aid would be provided in a manner that
sought to complement and cooperate with State departments of
transportation. See Frank Bros. v. Wisconsin Dep't of Transp., 409 F.3d
880, 887-89 (7th Cir. 2005). As State highway or transportation
districts often plan, develop, and oversee federally financed highway
projects, the provision of a single wage determination for each
district would simplify the procedure for incorporating Federal
financing into these projects.
As such, the Department proposes to authorize WHD to adopt State
highway districts as the geographic area for determining prevailing
wages on highway projects, where appropriate.
(C) Type of Construction (or Construction Type)
The Department proposes to define ``type of construction'' or
``construction type'' to mean the general category of construction as
established by the Administrator for the publication of general wage
determinations. The proposed language also provides examples of types
of construction,
[[Page 15708]]
including building, residential, heavy, and highway, consistent with
the four construction types the Department currently uses in general
wage determinations, but does not exclude the possibility of other
types. The terms ``type of construction'' or ``construction type'' are
already used elsewhere in part 1 to refer to these general categories
of construction, as well as in wage determinations themselves. As used
in this part, the terms ``type of construction'' and ``construction
type'' are synonymous and interchangeable. The Department believes that
including this definition would provide additional clarity for these
references, particularly for members of the regulated community who
might be less familiar with the term.
(D) Other Definitions
The Department proposes additional conforming edits to 29 CFR 1.2
in light of proposed changes to 29 CFR 5.2. As part of these conforming
edits, the Department proposes to revise the definition of ``agency''
(and add a sub-definition of ``Federal agency'') to mirror the
definition proposed and discussed below in Sec. 5.2. The Department
also proposes to add to Sec. 1.2 new defined terms also proposed in
parts 3 and 5, including ``employed'', ``type of construction (or
construction type),'' and ``United States or the District of
Columbia.'' For further discussion on these proposed terms, see the
corresponding discussion in Sec. 3.2 and 5.2 below.
(E) Paragraph Designations
The Department is also proposing to amend Sec. Sec. 1.2, 3.2, and
5.2 to remove paragraph designations of defined terms and instead to
list defined terms in alphabetical order. The Department proposes to
make conforming edits throughout parts 1, 3, and 5 in any provisions
that currently reference lettered paragraph definitions.
iii. Section 1.3 Obtaining and Compiling Wage Rate Information
(A) 29 CFR 1.3(b)
The Department proposes to switch the order of Sec. 1.3(b)(4) and
(5) for clarity. This nonsubstantive change would simply group together
the subparagraphs in Sec. 1.3(b) that apply to wage determinations
generally, and follow those subparagraphs with one that applies only to
Federal-aid highway projects under 23 U.S.C. 113.
(B) 29 CFR 1.3(d)
As part of its effort to modernize the regulations governing the
determination of Davis-Bacon prevailing wage rates, the Department is
considering whether to revise Sec. 1.3(d), regarding when survey data
from Federal or federally assisted projects subject to Davis-Bacon
prevailing wage requirements (hereinafter ``Federal project data'') may
be used in determining prevailing wages for building and residential
construction wage determinations. The Department is not proposing any
specific revisions to Sec. 1.3(d) in this NPRM, but rather is seeking
comment on whether this regulatory provision--particularly its
limitation on the use of Federal project data in determining wage rates
for building and residential construction projects--should be revised.
For approximately 50 years (beginning shortly after the DBA was
enacted in 1931 and continuing until the 1981-1982 rulemaking), the
Department used Federal project data in determining prevailing wage
rates for all categories of construction, including building and
residential construction. The final rule promulgated in May 1982
codified this practice with respect to heavy and highway construction,
providing in new Sec. 1.3(d) that ``[d]ata from Federal or federally
assisted projects will be used in compiling wage rate data for heavy
and highway wage determinations.'' \42\ The Department explained that
``it would not be practical to determine prevailing wages for `heavy'
and `highway' construction projects if Davis-Bacon covered projects are
excluded in making wage surveys because such a large portion of those
types of construction receive Federal financing.'' \43\
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\42\ See Final Rule, Procedures for Predetermination of Wage
Rates, 47 FR 23644 (May 28, 1982).
\43\ Id.
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With respect to building and residential construction, however, the
1982 final rule concluded that such construction often occurred without
Federal financial assistance subject to Davis-Bacon prevailing wage
requirements, and that to invariably include Federal project data in
calculating prevailing wage rates applicable to building and
residential construction projects therefore would ``skew[ ] the results
upward,'' contrary to congressional intent.\44\ The final rule
therefore provided in Sec. 1.3(d) that ``in compiling wage rate data
for building and residential wage determinations, the Administrator
will not use data from Federal or federally assisted projects subject
to Davis-Bacon prevailing wage requirements unless it is determined
that there is insufficient wage data to determine the prevailing wages
in the absence of such data.'' 29 CFR 1.3(d). In subsequent litigation,
the D.C. Circuit upheld Sec. 1.3(d)'s limitation on the use of Federal
project data as consistent with the DBA's purpose and legislative
history--if not necessarily its plain text--and therefore a valid
exercise of the Administrator's broad discretion to administer the
Act.\45\
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\44\ See Donovan, 712 F.2d at 620.
\45\ Id. at 621-22.
---------------------------------------------------------------------------
As a result of Sec. 1.3(d)'s limitation on the use of Federal
project data in calculating prevailing wage rates applicable to
building and residential construction, WHD first attempts to calculate
a prevailing wage based on non-Federal project survey data at the
county level--i.e., survey data that includes data from private
projects or projects funded by State and local governments without
assistance under the DBRA, but excludes data from Federal or federally
assisted projects subject to Davis-Bacon prevailing wage requirements.
See 29 CFR 1.3(d), 1.7(a); Manual of Operations at 38; Coal. for
Chesapeake Hous. Dev., ARB No. 12-010, 2013 WL 5872049, at *4 (Sept.
25, 2013) (Chesapeake Housing). If there is insufficient non-Federal
project survey data for a particular classification in that county,
then WHD considers survey data from Federal projects in the county if
such data is available.
Under the current regulations, WHD expands the geographic scope of
data that it considers when it is making a county wage determination
when data is insufficient at the county level. This procedure is
described below in the discussion of the ``scope of consideration''
regulation at Sec. 1.7. For wage determinations for federally funded
building and residential construction projects, WHD currently
integrates Federal project data into this procedure at each level of
geographic aggregation in the same manner it is integrated at the
county level: If the combined Federal and non-Federal survey data
received from a particular county is insufficient to establish a
prevailing wage rate for a classification in a county, then WHD
attempts to calculate a prevailing wage rate for that county based on
non-Federal wage data from a group of surrounding counties. See 29 CFR
1.7(a), (b). If non-Federal project survey data from the surrounding-
county group is insufficient, then WHD includes Federal project data
from all the counties in that county group. If both non-Federal project
and Federal project data for a surrounding-county group is still
insufficient to determine a prevailing wage rate, then, for
classifications that have been designated as ``key''
[[Page 15709]]
classifications, WHD may expand to a ``super group'' of counties or
even to the statewide level. See Chesapeake Housing, 2013 WL 5872049,
at *6; PWRB, Davis-Bacon Surveys, at 6.\46\ At each stage of data
expansion for building and residential wage determinations, WHD first
attempts to determine prevailing wages based on non-Federal project
data; however, if there is insufficient non-Federal data, WHD will
consider Federal project data.
---------------------------------------------------------------------------
\46\ See note 16, supra.
---------------------------------------------------------------------------
As reflected in the plain language of Sec. 1.3(d) as well as WHD's
implementation of that regulatory provision, the current formulation of
Sec. 1.3(d) does not prohibit all uses of Federal project data in
establishing prevailing wage rates for building and residential
construction projects subject to Davis-Bacon requirements; rather it
limits the use of such data to circumstances where ``there is
insufficient wage data to determine the prevailing wages in the absence
of such data.'' 29 CFR 1.3(d). WHD often uses Federal project data in
calculating prevailing wage rates applicable to residential
construction due to insufficient non-Federal project survey data
submissions. By contrast, because WHD's surveys of building
construction typically have a higher participation rate than
residential surveys, WHD uses Federal project data less frequently in
calculating prevailing wage rates applicable to building construction
projects covered by the DBRA. For example, the 2011 GAO Report analyzed
4 DBA surveys and found that over two-thirds of the residential rates
for 16 key job classifications (such as carpenter and common laborer)
included Federal project data because there was insufficient non-
Federal project data, while only about one-quarter of the building wage
rates for key classifications included Federal project data. 2011 GAO
Report, at 26.\47\
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\47\ See note 8, supra.
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Notwithstanding the use of Federal project data in calculating
prevailing wage rates for building and residential construction, the
Department recognizes that some interested parties may believe that
Sec. 1.3(d) imposes an absolute barrier to the use of Federal project
data in determining prevailing wage rates. As a result, survey
participants may not submit Federal project data in connection with
WHD's surveys of building and residential construction--thereby
reducing the amount of data that WHD receives in response to its
building and residential surveys. The Department strongly encourages
robust participation in Davis-Bacon prevailing wage surveys, including
building and residential surveys, and it therefore urges interested
parties to submit Federal project data in connection with building and
residential surveys with the understanding that such data will be used
in calculating prevailing wage rates if insufficient non-Federal
project data is received. In the absence of such Federal project data,
for example, a prevailing wage rate may be calculated at the
surrounding-county group or even statewide level when it would have
been calculated based on a smaller geographic area if more Federal
project data had been submitted.
Although increased submission of such Federal project data thus
could be expected to contribute to more robust wage determinations even
without any change to Sec. 1.3(d), the Department recognizes that
revisions to Sec. 1.3(d) may nonetheless be warranted. Specifically,
the Department is interested in comments regarding whether to revise
Sec. 1.3(d) in a way that would permit WHD to use Federal project data
more frequently when it calculates building and residential prevailing
wages. For example, particularly given the challenges that WHD has
faced in achieving high levels of participation in residential wage
surveys--and given the number of residential projects that are subject
to Davis-Bacon labor standards under Related Acts administered by the
U.S. Department of Housing and Urban Development--it may be appropriate
to expand the amount of Federal project data that is available to use
in setting prevailing wage rates for residential construction.
There may also be other specific circumstances that particularly
warrant greater use of Federal project data. More generally, if the
current limitation on the use of Federal project data were removed from
Sec. 1.3(d), WHD could in all circumstances establish Davis-Bacon
prevailing wage rates for building and residential construction based
on all usable wage data in the relevant county or other geographic
area, without regard to whether particular wage data was ``Federal''
and whether there was ``insufficient'' non-Federal project data.
Alternatively, Sec. 1.3(d) could be revised in order to provide a
definition of ``insufficient wage data,'' thereby providing increased
clarity regarding when Federal project data may and may not be used in
establishing prevailing wage rates for building or residential
construction. The Department specifically invites comments on these and
any other issues regarding the use of Federal project data in
developing building and residential wage determinations.
(C) 29 CFR 1.3(f)--Frequently Conformed Rates
The Department is also proposing changes relating to the
publication of rates for labor classifications for which conformance
requests are regularly submitted when such classifications are missing
from wage determinations. The Department's proposed changes to this
subsection are discussed below in part III.B.1.xii (``Frequently
conformed rates''), together with proposed changes to Sec. 5.5(a)(1).
(D) 29 CFR 1.3(g)-(j)--Adoption of State/Local Prevailing Wage
Determinations
The Department proposes to add new paragraphs (g), (h), (i), and
(j) to Sec. 1.3 to permit the Administrator, under specified
circumstances, to determine Davis-Bacon wage rates by adopting
prevailing wage rates set by State and local governments.
About half of the States, as well as many localities, have their
own prevailing wage laws (sometimes called ``little'' Davis-Bacon
laws).\48\ Additionally, a few states have processes for determining
prevailing wages in public construction even in the absence of such
State laws.\49\ Accordingly, the Administrator has long taken
prevailing wage rates set by States and localities into account when
making wage determinations. Under the current regulations, one type of
information that the Administrator may ``consider[ ]'' in determining
wage rates is ``[w]age rates determined for public construction by
State and local officials pursuant to State and local prevailing wage
legislation.'' 29 CFR 1.3(b)(3). Additionally, for wage determinations
on federally-funded highway construction projects, the Administrator is
required by statute and regulation to ``consult[ ]'' with ``the highway
department of the State'' in which the work is to be performed, and to
``give due regard to the information thus obtained.'' 23 U.S.C. 113(b);
29 CFR 1.3(b)(4).
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\48\ A list of such states, and the thresholds for coverage, can
be found here: Dollar Threshold Amount for Contract Coverage, U.S.
Dep't of Lab., Wage and Hour Div., <a href="https://www.dol.gov/agencies/whd/state/prevailing-wages">https://www.dol.gov/agencies/whd/state/prevailing-wages</a> (last updated Jan. 2021).
\49\ These states include Iowa, North Dakota, and South Dakota.
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In reliance on these provisions, WHD has sometimes adopted and
published certain states' highway wage determinations in lieu of
conducting wage surveys in certain areas. According to a 2019 report by
the Department's Office of the Inspector General (OIG), WHD used
highway wage
[[Page 15710]]
determinations from 15 states between fiscal years 2013 and 2017. See
2019 OIG Report at 10.\50\
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\50\ See note 11, supra.
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The OIG report expressed concern about the high number of out-of-
date Davis-Bacon wage rates, particularly non-union rates, noting, for
example, that some published wage rates were as many as 40 years old.
Id. at 5. The OIG report further noted that at the time, 26 states and
the District of Columbia had their own prevailing wage laws, and
recommended that WHD ``should determine whether it would be statutorily
permissible and programmatically appropriate to adopt [S]tate or local
wage rates other than those for highway construction.'' Id. at 10-11.
WHD indicated to OIG that in the absence of a regulatory revision, it
viewed adoption of State rates for non-highway construction as in
tension with the definition of prevailing wage in Sec. 1.2(a) and the
ARB's Mistick decision. Id. at 10.
The Department shares OIG's concern regarding outdated wage rates.
Outdated and/or inaccurate wage determinations are inconsistent with
the intent of the Davis-Bacon labor standards, which aim to ensure that
laborers and mechanics on covered projects are paid locally prevailing
wages and fringe benefits. Wage rates that are significantly out-of-
date do not reflect this intent and could even have the effect of
depressing wages if covered contractors pay no more than an
artificially-low prevailing wage rate that has not been adjusted over
time to continue to reflect the wages paid to workers in a geographic
area. Accordingly, the Department agrees with OIG that, where
appropriate, adoption of more current wage determinations made by
states and localities would be consistent with the DBA's purpose.
States often conduct wage surveys far more frequently than WHD.\51\
Furthermore, if a State or locality is already engaged in efforts to
determine prevailing wages--and if the State's methods are reliable,
rigorous, and transparent--similar activities conducted by WHD on a
less regular basis can be duplicative and an inefficient use of survey
respondents' efforts and WHD's scarce resources. Relatedly, states and
localities that regularly update their own wage determinations may have
ongoing relationships with stakeholders in the relevant geographic
areas that facilitate that process. In contrast, WHD may lack similarly
strong relationships with those stakeholders given the relative
infrequency with which it surveys any given area. Thus, many states and
localities may be in a position to ensure greater participation in wage
surveys, which can improve wage survey accuracy.
---------------------------------------------------------------------------
\51\ Some states, such as Minnesota, conduct surveys annually.
See Prevailing Wage: Annual Statewide Survey, Minn. Dep't of Labor &
Indus., <a href="https://www.dli.mn.gov/business/employment-practices/prevailing-wage-annual-statewide-survey">https://www.dli.mn.gov/business/employment-practices/prevailing-wage-annual-statewide-survey</a> (last visited Nov. 17,
2021). Others use a different frequency; for example, Nevada
conducts a survey every 2 years. See Nevada's 2021-2023 Prevailing
Wage Survey Released, Nev. Dep't of Bus. & Indus., <a href="https://business.nv.gov/News_Media/Press_Releases/2021/Labor_Commissioner/Nevada%E2%80%99s_2021-2023_Prevailing_Wage_Survey_Released/">https://business.nv.gov/News_Media/Press_Releases/2021/Labor_Commissioner/Nevada%E2%80%99s_2021-2023_Prevailing_Wage_Survey_Released/</a> (last
visited Nov. 17, 2021).
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The Department believes that a regulatory revision would best
ensure that WHD can incorporate State and local wage determinations
where doing so would further the purposes of the Davis-Bacon labor
standards. As noted above, the current regulations permit WHD to
``consider'' State or local prevailing wage rates among a variety of
sources of information used to make wage determinations, and require
WHD to give ``due regard'' to information obtained from State highway
departments for highway wage determinations. See 29 CFR 1.3(b)(3)-(4).
However, they also provide that any information WHD considers when
making wage determinations must ``be evaluated in the light of [the
prevailing wage definition set forth in] Sec. 1.2(a).'' 29 CFR 1.3(c).
While some States and localities' definitions of prevailing wage mirror
the Department's regulatory definition, many others' do not.\52\
Because the current regulations at Sec. Sec. 1.2(a) and 1.3(c), as
well as the ARB's decision in Mistick, suggest that any information
(such as State or local wage rates) that WHD obtains and
``consider[s]'' under Sec. 1.3(b) must be filtered through the
definition of ``prevailing wage'' in Sec. 1.2, the Department is
proposing a regulatory change to clarify that WHD may adopt State or
local prevailing wage determinations under certain circumstances even
where the State or locality's definition of prevailing wage differs
from the Department's.
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\52\ For example, Washington uses a definition similar to the
Department's current majority rule. See Wash. Rev. Code Sec.
39.12.010(1) (2021). Wyoming, in contrast, uses a method that
mirrors the three-step process in this proposed rule. Wyo. Stat.
Ann. Sec. Sec. 27-4-401-413 (2021). Other states use CBA rates as a
starting point. N.M. Stat. Ann. Sec. Sec. 13-4-10-17 (2021); N.M.
Code R. Sec. 11.1.2.12 (2021); N.Y. Lab. Law Sec. Sec. 220-224
(McKinney 2021).
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Additionally, the Department's regulations apply numerous
requirements and constraints to WHD's own wage determinations, such as
those concerning geographic scope, see Sec. 1.7, and the type of
project data that may be used, see Sec. 1.3(d). Like the definition of
prevailing wage, analogous requirements under State and local
prevailing wage laws vary. Although, as noted above, the Department's
regulations permit WHD to ``consider'' State and local determinations
and to give ``due regard'' to State rates for highway construction, the
current regulations do not specifically address whether WHD may adopt
State or local rates derived using methods and requirements that differ
from those used by WHD.
Accordingly, and in light of the advantages of adopting State and
local rates discussed above, the Department is proposing to add a new
paragraph, Sec. 1.3(g), which would explicitly permit WHD to adopt
prevailing wage rates set by State or local officials, even where the
methods used to derive such rates, including the definition of the
prevailing wage, may differ in some respects from the methods the
Administrator uses under the DBA and the regulations in 29 CFR part 1.
The proposal would permit WHD to adopt such wage rates provided that
the Administrator, after reviewing the rate and the processes used to
derive the rate, concludes that they meet certain listed criteria. The
criteria, which are explained further below, are intended to allow WHD
to adopt State and local prevailing wage rates where appropriate while
also ensuring that adoption of such rates is consistent with the
statutory requirements of the Davis-Bacon Act and does not create
arbitrary distinctions between jurisdictions where WHD makes wage
determinations by using its own surveys and jurisdictions where WHD
makes wage determinations by adopting adopt State or local rates.
Importantly, the proposed rule requires the Administrator to make
an affirmative determination that the enumerated criteria have been met
in order to adopt a State or local wage rate, and to do so only after
careful review of both the rate and the process used to derive the
rate. This makes clear that if the proposed rule is finalized, the
Department may not simply accept State or local data with little or no
review. Such actions would be inconsistent with the Secretary's
statutory responsibility to ``determine[ ]'' the wages that are
prevailing. 40 U.S.C. 3142(b). Adoption of State or local rates after
appropriate review, however, is consistent with the authority Congress
granted to the Department in the Davis-Bacon Act. The DBA ``does not
prescribe a method for determining prevailing wages.'' Chesapeake
Housing, 2013 WL 5872049, at *4.
[[Page 15711]]
Rather, the statute ``delegates to the Secretary, in the broadest terms
imaginable, the authority to determine which wages are prevailing.''
Donovan, 712 F.2d at 616. The D.C. Circuit has explained that the DBA's
legislative history reflects that Congress ``envisioned that the
Secretary could establish the method to be used'' to determine DBA
prevailing wage rates. Id. (citing 74 Cong. Rec. 6,516 (1931) (remarks
of Rep. Kopp) (``A method for determining the prevailing wage rate
might have been incorporated in the bill, but the Secretary of Labor
can establish the method and make it known to the bidders.'')).
Reliance on prevailing wage rates calculated by State or local
authorities for similar purposes is a permissible exercise of this
broad statutory discretion. In areas where states or localities are
already gathering reliable information about prevailing wages in
construction, it may be inefficient for the Department to use its
limited resources to perform the same tasks. As a result, the
Department is proposing to use State and local wage determinations
under specified circumstances where, based on a review and analysis of
the processes used in those wage determinations, the Administrator
determines that such use would be appropriate and consistent with the
DBA. Such resource-driven decisions by Federal agencies are
permissible. See, e.g., Hisp. Affs. Project v. Acosta, 901 F.3d 378,
392 (D.C. Cir. 2018) (upholding Department's decision not to collect
its own data but instead to rely on a ``necessarily . . . imprecise''
estimate given that data collection under the circumstances would have
been ``very difficult and resource-intensive''); Dist. Hosp. Partners,
L.P. v. Burwell, 786 F.3d 46, 61-62 (D.C. Cir. 2015) (agency's use of
``imperfect[ ]'' data set was permissible under the Administrative
Procedure Act).
The Department is proposing to permit the adoption of State and
local rates for all types of construction. The FHWA's independent
statutory obligation for the Department to consider and give ``due
regard'' to information obtained from State highway agencies for
highway wage determinations does not prohibit WHD from adopting State
or local determinations, either for highway construction or for other
types of construction, where appropriate. Rather, this language imposes
a minimum requirement for the Secretary to consult with states and
consider their wage determinations for highway construction. See
Virginia, ex rel., Comm'r, Virginia Dep't of Highways and Transp. v.
Marshall, 599 F.2d 588, 594 (4th Cir. 1979) (``Section 113(b) requires
that the Secretary `consult' and give `due regard' to the information
thus obtained.''). In sum, the FHWA's requirement sets a floor for
reliance on State data for highway construction, not a ceiling, and
does not foreclose reliance on State or local data for other types of
construction.
The criteria the Department proposes for the adoption of State or
local rates, which are included in proposed new paragraph Sec. 1.3(h),
are as follows:
First, the State or local government must set prevailing wage
rates, and collect relevant data, using a survey or other process that
generally is open to full participation by all interested parties. This
requirement ensures that WHD will not adopt a prevailing wage rate
where the process to set the rate artificially favors certain entities,
such as union or non-union contractors. Rather, the State or local
process must reflect a good-faith effort to derive a wage that prevails
for similar workers on similar projects within the relevant geographic
area within the meaning of the Davis-Bacon Act statutory provisions.
The use of the language ``survey or other process'' in the proposed
regulatory text is intended to permit the Administrator to incorporate
wage determinations from States or localities that do not necessarily
engage in surveys but instead use a different process for gathering
information and setting prevailing wage rates, provided that this
process meets the required criteria.\53\
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\53\ For example, a few states determine prevailing wage rates
through stakeholder negotiations that typically involve labor and
employer groups. The proposed rule does not foreclose acceptance of
rates set using such a process providing that the process is
generally open to full participation by all interested parties and
that the other required criteria are met.
---------------------------------------------------------------------------
Second, the State or local wage rate must reflect both a basic
hourly rate of pay as well as any locally prevailing bona fide fringe
benefits, each of which can be calculated separately. Thus, under the
proposed rule, WHD must be able to confirm during its review process
that both figures are prevailing for the relevant classification(s),
and must be able to list each figure separately on its wage
determinations. This reflects the statutory requirement that a
prevailing wage rate under the Davis-Bacon Act must include fringe
benefits, 40 U.S.C. 3141(2)(B); 29 CFR 5.20, and that ``the Secretary
is obligated to make a separate finding of the rate of contribution or
cost of fringe benefits.'' 29 CFR 5.25(a). This requirement also would
ensure that WHD could determine the basic or regular rate of pay in
order to determine compliance with the Contract Work Hours and Safety
Standards Act (CWHSSA) and the Fair Labor Standards Act (FLSA).
Third, the State or local government must classify laborers and
mechanics in a manner that is recognized within the field of
construction. The Department recognizes that differences in industry
practices mean that the precise types of work done and tools used by
workers in particular classifications may not be uniform across states
and localities. For example, in some areas, a significant portion of
work involving the installation of heating, ventilation, and air-
conditioning (HVAC) duct work may be done by an HVAC Technician,
whereas in other areas such work may be more typically performed by a
Sheet Metal Worker. Indeed, unlike in the case of the Service Contract
Act (SCA), WHD does not maintain a directory of occupations for the
Davis-Bacon Act. However, under this proposed rule, in order for WHD to
adopt a State or locality's wage rate, the State or locality's
classification system must be in a manner recognized within the field
of construction. This standard is intended to ensure that the
classification system does not result in lower wages than are
appropriate by, for example, assigning duties associated with skilled
classifications to a classification for a general laborer.
Finally, the State or local government's criteria for setting
prevailing wage rates must be substantially similar to those the
Administrator uses in making wage determinations under 29 CFR part 1.
The proposed regulation provides a non-exclusive list of factors to
guide this determination, including, but not limited to, the State or
local government's definition of prevailing wage; the types of fringe
benefits it accepts; the information it solicits from interested
parties; its classification of construction projects, laborers, and
mechanics; and its method for determining the appropriate geographic
area(s). Thus, the more similar a State or local government's methods
are to those used by WHD, the greater likelihood that their
corresponding wage rate(s) will be accepted. While the proposed
regulation lists the above factors as guidelines, it ultimately directs
that the Administrator's determination in this regard will be based on
the totality of the circumstances. The reservation of such discretion
in the Administrator intends to preserve the Administrator's ability to
make an overall determination regarding whether adoption of a State or
local wage rate is consistent with both
[[Page 15712]]
the language and purpose of the DBA, and thereby is consistent with the
statutory directive for the Secretary (in this case, via delegation to
the Administrator), to determine the prevailing wage. See 40 U.S.C.
3142(b).
Proposed Sec. 1.3(g) permits the Administrator to adopt State or
local wage rates with or without modification. This is intended to
encompass situations where the Administrator reviews a State or local
wage determination and determines that although the State or local wage
determination might not satisfy the above criteria as initially
submitted, it would satisfy those criteria with certain modifications.
For example, the Administrator may obtain from the State or local
government the State or locality's wage determinations and the wage
data underlying those determinations, and, provided the data was
collected in accordance with the criteria set forth earlier (such as
that the survey was fully open to all participants) may determine,
after review and analysis, that it would be appropriate to use the
underlying data to adjust or modify certain classifications or
construction types, or to adjust the wage rate for certain
classifications. Consistent with the Secretary's authority to make wage
determinations, the regulation permits the Administrator to modify a
State or local wage rate as appropriate while still generally relying
on it as the primary source for a wage determination. For instance,
before using State or local government wage data to calculate
prevailing wage rates under the DBA, the Administrator could regroup
counties, apply the definition of ``prevailing wage'' set forth in
Sec. 1.2, disregard data for workers who do not qualify as laborers or
mechanics under the DBA, and/or segregate data based on the type of
construction involved. It is anticipated that the Administrator would
cooperate with the State or locality to make the appropriate
modifications to any wage rates.
The Department also proposes to add a new paragraph Sec. 1.3(i),
which would explain that in order for WHD to adopt a State or local
government prevailing wage rate, the Administrator must obtain the wage
rates and any relevant supporting documentation and data from the State
or local entity, and provides instructions for submission.
Finally, the Department proposes to add a new paragraph Sec.
1.3(j), which would explain that nothing in the additional proposed
sections described above precludes the Administrator from considering
State or local prevailing wage rates in a more holistic fashion,
consistent with Sec. 1.3(b)(3), or from giving due regard to
information obtained from State highway departments, consistent with
Sec. 1.3(b)(4), as part of the Administrator's process of making
prevailing wage determinations under 29 CFR part 1. For example, under
this proposed rule, as under the current regulations, if a State or
locality were to provide the Department with the underlying data that
it uses to determine wage rates, even if the Administrator determines
not to adopt the wage rates themselves, the Administrator may consider
or use the data as part of the process to determine the prevailing wage
within the meaning of 29 CFR 1.2, provided that the data is timely
received and otherwise appropriate. The purpose of the proposed
additional language is to clarify that the Administrator may, under
certain circumstances, adopt State or local wage rates, and use them in
wage determinations, even if the process and rules for State or local
wage determinations differs from the Administrator's. These proposed
revisions therefore address the concerns WHD voiced to OIG that the
current regulations, and in particular the definition of prevailing
wage as interpreted by the ARB in Mistick, could preclude, or at least
be in tension with, such an approach.
iv. Section 1.4 Report of Agency Construction Programs
Section 1.4 currently provides that, to the extent practicable,
agencies that use wage determinations under the DBRA shall submit an
annual report to the Department outlining proposed construction
programs for the coming year. The reports described in Sec. 1.4 assist
WHD in its multi-year planning efforts by providing information that
may guide WHD's decisions regarding when to survey wages for particular
types of construction in a particular locality. These reports are an
effective way for the Department to know where Federal and federally
assisted construction will be taking place, and therefore where updated
wage determinations will be of most use.
Notwithstanding the importance of these reports to the program,
contracting agencies have not regularly provided them to the
Department. As a result, after careful consideration, the Department
proposes to remove the language in the regulation that currently allows
agencies to submit reports only ``to the extent practicable.'' Instead,
as proposed, Sec. 1.4 would require Federal agencies to submit the
construction reports.
The Department also now proposes to adopt certain elements of two
prior AAMs addressing these reports. In 1985, WHD updated its guidance
regarding the agency construction reports, including by directing that
Federal agencies submit the annual report by April 10 each year and
providing a recommended format for such agencies to submit the report.
See AAM 144 (Dec. 27, 1985). In 2017, WHD requested that Federal
agencies include in the reports proposed construction programs for an
additional 2 fiscal years beyond the upcoming year. See AAM 224 (Jan.
17, 2017). The proposed changes to Sec. 1.4 would codify these
guidelines as part of the regulations.
The Department also proposes new language requiring Federal
agencies to include notification of any expected options to extend the
terms of current construction contracts. The Department is proposing
this change because--like a new contract--the exercise of an option
requires the incorporation of the most current wage determination. See
AAM 157 (Dec. 9, 1992); see also 48 CFR 22.404-12(a). Receiving
information concerning expected options to extend the terms of current
construction contracts therefore will help the Department assess where
updated wage determinations are needed for Federal and federally
assisted construction, which will in turn contribute to the
effectiveness of the overall Davis-Bacon wage survey program. The
Department also proposes that Federal agencies include the estimated
cost of construction in their reports, as this information also will
help the Department prioritize areas where updated wage determinations
will have the broadest effects.
In addition, the Department proposes to require that Federal
agencies include in the annual report a notification of any significant
changes to previously reported construction programs. In turn, the
Department proposes eliminating the current directive that agencies
notify the Administrator mid-year of any significant changes in their
proposed construction programs. Such notification would instead be
provided in Federal agencies' annual reports.
Finally, the Department proposes deleting the reference to the
Interagency Reports Management Program as the requirements of that
program were terminated by the General Services Administration (GSA) in
2005. See 70 FR 3132 (Jan. 19, 2005).
The Department does not believe that these proposed changes will
result in significant burdens on contracting agencies, as the proposed
provisions request only information already on
[[Page 15713]]
hand. Furthermore, any burden resulting from the new proposal should be
offset by the proposed elimination of the current directive that
agencies notify the Administrator of any significant changes in a
separate mid-year report. However, the Department also seeks comment on
any alternative methods through which the Department may obtain the
information and eliminate the need to require the agency reports.
v. Section 1.5 Publication of General Wage Determinations and Procedure
for Requesting Project Wage Determinations
The Department proposes a number of revisions to Sec. 1.5 to
clarify the applicability of general wage determinations and project
wage determinations. Except as noted below, these revisions are
consistent with longstanding Department practice and subregulatory
guidance.
First, the Department proposes to re-title Sec. 1.5, currently
titled ``Procedure for requesting wage determinations,'' as
``Publication of general wage determinations and procedure for
requesting project wage determinations.'' The proposed revision better
reflects the content of the section as well as the distinction between
general wage determinations, which the Department publishes for broad
use, and project wage determinations, which are requested by
contracting agencies on a project-specific basis.
Additionally, the Department proposes to add language to Sec.
1.5(a) to explain that a general wage determination contains, among
other information, a list of wage rates determined to be prevailing for
various classifications of laborers and mechanics for specified type(s)
of construction in a given area. Likewise, the Department proposes to
add language to Sec. 1.5(b) to explain circumstances under which an
agency may request a project wage determination, namely, where (1) the
project involves work in more than one county and will employ workers
who may work in more than one county; (2) there is no general wage
determination in effect for the relevant area and type of construction
for an upcoming project; or (3) all or virtually all of the work on a
contract will be performed by one or more classifications that are not
listed in the general wage determination that would otherwise apply,
and contract award or bid opening has not yet taken place. The first of
these three circumstances conforms to the proposed revision to the
definition of ``area'' in Sec. 1.2 discussed above that would permit
the issuance of project wage determinations for multi-county projects
where appropriate. The latter two circumstances reflect the
Department's existing practice. See PWRB, Davis-Bacon Wage
Determinations, at 4-5.
The Department also proposes to add language to Sec. 1.5(b)
clarifying that requests for project wage determinations may be sent by
means other than the mail, such as email or online submission, as
directed by the Administrator. Additionally, consistent with the
Department's current practice, the Department proposes to add language
to Sec. 1.5(b) requiring that when requesting a project wage
determination for a project that involves multiple types of
construction, the requesting agency must attach information indicating
the expected cost breakdown by type of construction. See PWRB, Davis-
Bacon Wage Determinations, at 5. The Department also proposes to
clarify that in addition to submitting the information specified in the
regulation, a party requesting a project wage determination must submit
all other information requested in the Standard Form (SF) 308.
Finally, the Department proposes to clarify the term ``agency'' in
Sec. 1.5. In proposed Sec. 1.5(b)(2) (renumbered, currently Sec.
1.5(b)(1)), which describes the process for requesting a project wage
determination, the Department proposes to delete the word ``Federal''
that precedes ``agency.'' This proposed deletion, and the resulting
incorporation of the definition of ``agency'' from Sec. 1.2, clarifies
that, as already implied elsewhere in Sec. 1.5, non-Federal agencies
may request project wage determinations. See, e.g., Sec. 1.5(b)(3)
(proposed Sec. 1.5(b)(4)) (explaining that a State highway department
under the Federal-Aid Highway Acts may be a requesting agency).
vi. Section 1.6 Use and Effectiveness of Wage Determinations
(A) Organizational, Technical and Clarifying Revisions
The Department proposes to reorganize, rephrase, and/or re-number
several regulatory provisions and text in Sec. 1.6. These proposed
revisions include adding headings to paragraphs and subparagraphs for
clarity; changing the order of some of the paragraphs and subparagraphs
so that discussions of general wage determinations precede discussions
of project wage determinations, reflecting the fact that general wage
determinations are (and have been for many years) the norm, whereas
project wage determinations are the exception; adding the word
``project'' before ``wage determinations'' in locations where the text
refers to project wage determinations but could otherwise be read as
referring to both general and project wage determinations; using the
term ``revised'' wage determination to refer both to cases where a wage
determination is modified, such as due to updated CBA rates, and cases
where a wage determination is re-issued entirely (referred to in the
current regulatory text as a ``supersedeas'' wage determination), such
as after a new wage survey; consolidating certain subsections that
discuss revisions to wage determinations to eliminate redundancy and
improve clarity; revising the regulation so that it references the
publication of a general wage determination (consistent with the
Department's current practice of publishing wage determinations
online), rather than publication of notice of the wage determination
(which the Department previously did in the Federal Register); and
using the term ``issued'' to refer, collectively, to the publication of
a general wage determination or WHD's provision of a project wage
determination.
The Department also proposes minor revisions to clarify that there
is only one appropriate use for wage determinations that are no longer
current--which are referred to in current regulatory text as
``archived'' wage determinations, and the Department now proposes to
describe as ``inactive'' to conform to the terminology currently used
on the System for Award Management (<a href="http://SAM.gov">SAM.gov</a>). That permissible
circumstance is when the contracting agency initially failed to
incorporate the correct wage determination into the contract and
subsequently must incorporate the correct wage determination after
contract award or the start of construction (a procedure that is
discussed in Sec. 1.6(f)). In that circumstance, even if the wage
determination that should have been incorporated at the time of the
contract award has since become inactive, it is still the correct wage
determination to incorporate into the contract.
The Department also proposes that agencies should notify the
Administrator prior to engaging in incorporation of an inactive wage
determination, and that agencies may not incorporate the inactive wage
determination if the Administrator instructs otherwise. While the
current regulation requires the Department to ``approv[e]'' the use of
an inactive wage determination, the proposed change permits the
contracting agency to use an inactive wage determination under these
limited circumstances as long as it has notified the Administrator and
has
[[Page 15714]]
not been instructed otherwise. The proposed change is intended to
ensure that contracting agencies incorporate omitted wage
determinations promptly rather than waiting for approval.
The Department also proposes revisions to Sec. 1.6(b) to clarify
when contracting agencies must incorporate multiple wage determinations
into a contract. The proposed language states that when a construction
contract includes work in more than one area (as the term is defined in
Sec. 1.2), and no multi-county project wage determination has been
obtained (as contemplated by the proposed revisions to Sec. 1.2), the
applicable wage determination for each area must be incorporated into
the contract so that all workers on the project are paid the wages that
prevail in their respective areas, consistent with the DBA. The
Department also proposes language stating that when a construction
contract includes work in more than one type of construction (as the
Department has proposed to define the term in Sec. 1.2), the
contracting agency must incorporate the applicable wage determination
for each type of construction where the total work in that category of
construction is substantial. This accords with the Department's
longstanding guidance published in AAM 130 (Mar. 17, 1978) and AAM 131
(July 14, 1978).\54\ The Department intends to continue interpreting
the meaning of ``substantial'' in subregulatory guidance.\55\ The
Department requests comments on the above proposals, including
potential ways to improve the standards for when and how to incorporate
multiple wage determinations into a contract.
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\54\ AAM 130 states that where a project ``includes construction
items that in themselves would be otherwise classified, a multiple
classification may be justified if such construction items are a
substantial part of the project . . . [but] a separate
classification would not apply if such construction items are merely
incidental to the total project to which they are closely related in
function,'' and construction is incidental to the overall project.
AAM 130, p. 2, n.1. AAM 131 similarly states that multiple schedules
are issued if ``the construction items are substantial in relation
to project cost[s].'' However, it, it further explains that ``[o]nly
one schedule is issued if construction items are `incidental' in
function to the overall character of a project . . . and if there is
not a substantial amount of construction in the second category.''
AAM 131, p. 2.
\55\ Most recently, on December 14, 2020, the Administrator
issued AAM 236, which states that ``[w]hen a project has
construction items in a different category of construction,
contracting agencies should generally apply multiple wage
determinations when the cost of the construction exceeds either $2.5
million or 20 percent of the total project costs,'' but that WHD
will consider ``exceptional situations'' on a case-by-case basis.
AAM 236, pp. 1-2.
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The Department also proposes to add language to Sec. 1.6(b)
clarifying and reinforcing the responsibilities of contracting
agencies, contractors, and subcontractors with regard to wage
determinations. Specifically, the Department proposes to clarify in
Sec. 1.6(b)(1) that contracting agencies are responsible for making
the initial determination of the appropriate wage determination(s) for
a project. In Sec. 1.6(b)(2), the Department proposes to clarify that
contractors and subcontractors have an affirmative obligation to ensure
that wages are paid to laborers and mechanics in compliance with the
DBRA labor standards.
The Department also proposes to revise language in Sec. 1.6(b)
that currently states that the Administrator ``shall give foremost
consideration to area practice'' in resolving questions about ``wage
rate schedules.'' In the Department's experience, this language has
created unnecessary confusion because stakeholders have at times
interpreted it as precluding the Administrator from considering other
factors when resolving questions about wage determinations.
Specifically, the Department has long recognized that when ``it is
clear from the nature of the project itself in a construction sense
that it is to be categorized'' as either building, residential, heavy,
or highway construction, ``it is not necessary to resort to an area
practice'' to determine the proper category of construction. AAM 130,
at 2; see also AAM 131, at 1 (``area practice regarding wages paid will
be taken into consideration together with other factors,'' when ``the
nature of the project in a construction sense is not clear.'');
Chastleton Apartments, WAB No. 84-09, 1984 WL 161751, at *4 (Dec. 11,
1984) (because the ``character of the structure in a construction sense
dictates its characterization for Davis-Bacon wage purposes,'' where
there was a substantial amount of rehabilitation work being done on a
project similar to a commercial building in a construction sense, it
was ``not necessary to determine whether there [was] an industry
practice to recognize'' the work as residential construction). The
regulatory reference to giving ``foremost consideration to area
practice'' in determining which wage determination to apply to a
project arguably is in tension with the Department's longstanding
position, and has resulted in stakeholders contending on occasion that
WHD or a contracting agency must in every instance conduct an
exhaustive review of local area practice as to how work is classified,
even if the nature of the project in a construction sense is clear. The
revised language would resolve this perceived inconsistency and would
streamline determinations regarding construction types by making clear
that while the Administrator should continue considering area practice,
the Administrator may consider other relevant factors, particularly the
nature of the project in a construction sense. This proposed regulatory
revision also would better align the Department's regulations with the
FAR, which does not call for ``foremost consideration'' to be given to
area practice in all circumstances, but rather provides, consistent
with AAMs 130 and 131, that ``[w]hen the nature of a project is not
clear, it is necessary to look at additional factors, with primary
consideration given to locally established area practices.'' 48 CFR
22.404-2(c)(5).
In Sec. 1.6(e), the Department proposes to clarify that if, prior
to contract award (or, as appropriate, prior to the start of
construction), the Administrator provides written notice that the
bidding documents or solicitation included the wrong wage determination
or schedule, or that an included wage determination was withdrawn by
the Department as a result of an Administrative Review Board decision,
the wage determination may not be used for the contract, without regard
to whether bid opening (or initial endorsement or the signing of a
housing assistance payments contract) has occurred. Current regulatory
text states that under such circumstances, notice of such errors is
``effective immediately'' but does not explain the consequences of such
effect. The proposed language is consistent with the Department's
current practice and guidance. See Manual of Operations at 35.
In Sec. 1.6(g), the Department proposes to clarify that under the
Related Acts, if Federal funding or assistance is not approved prior to
contract award (or the beginning of construction where there is no
contract award), the applicable wage determination must be incorporated
retroactive to the date of the contract award or the beginning of
construction; the Department proposes to delete language indicating
that a wage determination must be ``requested,'' as such language
appears to contemplate a project wage determination, which in most
situations will not be necessary as a general wage determination will
apply. The Department also proposes to revise Sec. 1.6(g) to clarify
that it is the head of the applicable Federal agency who must request
any waiver of the requirement that a wage determination
[[Page 15715]]
provided under such circumstances be retroactive to the date of the
contract award or the beginning of construction. The current version of
Sec. 1.6(g) uses the term ``agency'' and is therefore ambiguous as to
whether it refers to the Federal agency providing the funding or
assistance or the State or local agency receiving it. The proposed
clarification that this term refers to Federal agencies reflects both
the Department's current practice and its belief that it is most
appropriate for the relevant Federal agency, rather than a State or
local agency, to bear these responsibilities, including assessing, as
part of the waiver request, whether non-retroactivity would be
necessary and proper in the public interest based on all relevant
considerations.
(B) Requirement To Incorporate Most Recent Wage Determinations Into
Certain Ongoing Contracts
The Department's longstanding position has been to require that
contracts and bid solicitations contain the most recently issued
revision to a wage determination to be applied to construction work to
the extent that such a requirement does not cause undue disruption to
the contracting process. See 47 FR 23644, 23646 (May 28, 1982); United
States Army, ARB No. 96-133, 1997 WL 399373, at *6 (July 17, 1997)
(``The only legitimate reason for not including the most recently
issued wage determination in a contract is based upon disruption of the
procurement process.''). Under the current regulations, a wage
determination is generally applicable for the duration of a contract
once incorporated. See 29 CFR 1.6(c)(2)(ii) and (c)(3)(vi). For
clarity, the Department proposes to add language to Sec. 1.6(a) to
state this affirmative principle.
The Department also proposes to add a new section, Sec.
1.6(c)(2)(iii), to clarify two circumstances where this general
principle does not apply. First, the Department proposes to explain
that the most recent version of any applicable wage determination(s)
must be incorporated when a contract or order is changed to include
additional, substantial construction, alteration, and/or repair work
not within the scope of work of the original contract or order--or to
require the contractor to perform work for an additional time period
not originally obligated, including where an agency exercises an option
provision to unilaterally extend the term of a contract. This proposed
change is consistent with the Department's guidance, case law, and
historical practice, under which such modifications are considered new
contracts. See United States Army, 1997 WL 399373, at *6 (noting that
DOL has consistently ``required that new DBA wage determinations be
incorporated . . . when contracts are modified beyond the obligations
of the original contract''); Iowa Dep't of Transp., WAB No. 94-11, 1994
WL 764106, at *5 (Oct. 7, 1994) (``A contract that has been
`substantially' modified must be treated as a `new' contract in which
the most recently issued wage determination is applied.''); AAM 157
(Dec. 9, 1992) (explaining that exercising an option ``requires a
contractor to perform work for a period of time for which it would not
have been obligated . . . under the terms of the original contract,''
and as such, ``once the option . . . is exercised, the additional
period of performance becomes a new contract''). Under these
circumstances, the most recent version of any wage determination(s)
must be incorporated as of the date of the change or, where applicable,
the date the agency exercises its option to extend the contract's term.
These circumstances do not include situations where the contractor is
simply given additional time to complete its original commitment or
where the additional construction, alteration, and/or repair work in
the modification is merely incidental.
Additionally, modern contracting methods frequently involve a
contractor agreeing to perform construction as the need arises over an
extended time period, with the quantity and timing of the construction
not known when the contract is awarded.\56\ Examples of such contracts
would include, but are not limited to: A multi-year indefinite-
delivery-indefinite-quantity (IDIQ) contract to perform repairs to a
Federal facility when needed; a long-term contract to operate and
maintain part or all of a facility, including repairs and renovations
as needed; \57\ or a schedule contract or blanket purchase agreement
whereby a contractor enters into an agreement with a Federal agency to
provide certain products or services (either of which may involve work
subject to Davis-Bacon coverage, such as installation) or construction
at agreed-upon prices to various agencies or other government entities,
who can order from the schedule at any time during the contract. The
extent of the required construction, the time, and even the place where
the work will be performed may be unclear at the time such contracts
are awarded.
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\56\ Depending on the circumstances, these types of contracts
may be principally for services and therefore subject to the SCA,
but contain substantial segregable work that is covered by the DBA.
See 29 CFR 4.116(c)(2).
\57\ The Department of Defense, for example, enters into such
arrangements pursuant to the Military Housing Privatization
Initiative, 10 U.S.C. 2871, et seq.
---------------------------------------------------------------------------
Particularly when such contracts are lengthy, using an outdated
wage determination from the time of the underlying contract award is
contrary to the text and purpose of the DBA because it does not
sufficiently ensure that workers are paid prevailing wages.
Additionally, in the Department's experience, agencies are sometimes
inconsistent as to how they incorporate wage determination revisions
into these types of contracts. Some agencies do so every time
additional Davis-Bacon work is obligated, others do so annually, others
only incorporate applicable wage determinations at the time the
original, underlying contract is awarded, and sometimes no wage
determination is incorporated at all. This inconsistency can prevent
the payment of prevailing wages to workers and can disrupt the
contracting process.
Accordingly, the Department proposes to require, for these types of
contracts, that contracting agencies incorporate the most up-to-date
applicable wage determination(s) annually on each anniversary date of a
contract award or, where there is no contract, on each anniversary date
of the start of construction, or another similar anniversary date where
the agency has sought and received prior approval from the Department
for the alternative date. This proposal is consistent with the rules
governing wage determinations under the SCA, which require that the
contracting agency obtain a wage determination prior to the ``[a]nnual
anniversary date of a multi-year contract subject to annual fiscal
appropriations of the Congress.'' See 29 CFR 4.4(a)(1)(v).
Additionally, consistent with the discussion above, if an option is
exercised for one of these types of contracts, the most recent version
of any wage determination(s) would need to be incorporated as of the
date the agency exercises its option to extend the contract's term
(subject to the exceptions set forth in proposed Sec. 1.6(c)(2)(ii)),
even if that date did not coincide with the anniversary date of the
contract. When any construction work under such a contract is
obligated, the most up-to-date wage determination(s) incorporated into
the underlying contract must be included in each task order, purchase
order, or any other method used to direct performance. Once an
applicable wage determination revision is included in such an order,
that revision would generally be applicable until the
[[Page 15716]]
construction items originally called for by that order are completed,
even if the completion of that work extends beyond the twelve-month
period following the most recent anniversary date of the underlying
contract. By proposing this revision, the Department seeks to ensure
that workers are being paid prevailing wages within the meaning of the
Act, provide certainty and predictability to agencies and contractors
as to when, and how frequently, wage rates in these types of contracts
can be expected to change, and bring consistency to agencies'
application of the DBA. The Department has also included language
noting that contracting and ordering agencies remain responsible for
ensuring that the applicable updated wage determination(s) is included
in task orders, purchase orders, or other similar contract instruments
that are issued under the master contract.
(C) 29 CFR 1.6(c)(1)--Periodic Adjustments
The Department proposes to add a provision to 29 CFR 1.6(c)(1) to
expressly provide a mechanism to regularly update certain non-
collectively bargained prevailing wage rates. Such rates (both base
hourly wages and fringe benefits) would be updated between surveys so
that they do not become out-of-date and fall behind wage rates in the
area.
(1) Background
Based on the data that it receives through its prevailing wage
survey program, WHD generally publishes two types of prevailing wage
rates on the Davis-Bacon wage determinations that it issues: (1) Modal
rates (under the current majority rule, wage rates that are paid to a
majority of workers in a particular classification), and (2) weighted
average rates, which are published whenever the wage data received by
WHD reflects that no single wage rate was paid to a majority of workers
in the classification. See 29 CFR 1.2(a)(1).
Under the current majority rule, modal majority wage rates
typically reflect collectively bargained wage rates. When a CBA rate
prevails on a general wage determination, WHD updates that prevailing
wage rate based on periodic wage and fringe benefit increases in the
CBA. Manual of Operations at 74-75; see also Mistick Construction, 2006
WL 861357, at *7 n.4.\58\ However, when the prevailing wage is set
through the weighted average method based on non-collectively bargained
rates or a mix of collectively bargained rates and non-collectively
bargained rates, or when a non-collectively bargained rate prevails,
such wage rates (currently designated as ``SU'' rates) on general wage
determinations are not updated between surveys, and therefore can
become out-of-date. This proposal would expand WHD's practice of
updating collectively bargained rates between surveys to include
updating non-collectively bargained rates.
---------------------------------------------------------------------------
\58\ WHD similarly updates weighted average rates based entirely
on collectively bargained rates (currently designated as ``UAVG''
rates) using periodic wage and fringe benefit increases in the CBAs.
---------------------------------------------------------------------------
While the goal of WHD is to conduct surveys in each area every 3
years, because of the resource intensive nature of the wage survey
process and the vast number of survey areas, many years can pass
between surveys conducted in any particular area. The 2011 GAO Report
found that, as of 2010, while 36 percent of ``nonunion-prevailing
rates'' \59\ were 3 years old or less, almost 46 percent of these rates
were 10 or more years old. 2011 GAO Report at 18.\60\ As a result of
lengthy intervals between Davis-Bacon surveys, the real value of the
effectively-frozen rates erodes as compensation in the construction
industry and the cost of living rise. The resulting decline in the real
value of prevailing wage rates may adversely affect construction
workers the DBA was intended to protect. See Coutu, 450 U.S. at 771
(``The Court's previous opinions have recognized that `[o]n its face,
the Act is a minimum wage law designed for the benefit of construction
workers.' '' (citations omitted)).
---------------------------------------------------------------------------
\59\ ``Nonunion-prevailing rates,'' as used in the GAO report,
is a misnomer, as it refers to weighted average rates that, as
noted, are published whenever the same wage rate is not paid to a
majority of workers in the classification, including when much or
even most of the data reflects union wages, just not that the same
union wage was paid to a majority of workers in the classification.
\60\ See note 8, supra.
---------------------------------------------------------------------------
This issue is one that program stakeholders raised with the GAO.
According to several union and contractor officials interviewed in the
2011 report, the age of the Davis-Bacon ``nonunion-prevailing rates''
means they often do not reflect actual prevailing wages. 2011 GAO
Report at 18.\61\ As a result, the officials said it is ``more
difficult for both union and nonunion contractors to successfully bid
on Federal projects because they cannot recruit workers with
artificially low wages but risk losing contracts if their bids reflect
more realistic wages.'' Id. Regularly updating these rates would
alleviate this situation and better protect workers' wage rates. The
Department anticipates that updated rates would also better reflect
construction industry compensation in communities where federally
funded construction is occurring.
---------------------------------------------------------------------------
\61\ See note 8, supra.
---------------------------------------------------------------------------
This proposal to update non-collectively bargained rates is
consistent with, and builds upon, the current regulatory text at 29 CFR
1.6(c)(1), which provides that wage determinations ``may be modified
from time to time to keep them current.'' This regulatory provision
provides legal authority for updating wage rates, and it has been used
as a basis for updating collectively bargained prevailing wage rates
based on CBA submissions between surveys. See Manual of Operations at
74-75. In this rule, the Department proposes to extend this practice to
non-collectively bargained rates based on ECI data. The Department
believes that ``chang[ed] circumstances''--including an increase in
weighted average rates--and the lack of an express mechanism to update
non-collectively bargained rates between surveys under the existing
regulations support this proposed ``extension of current
regulation[s]'' to better effectuate the DBRA's purpose. Motor Vehicle
Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 42 (1983); see also In re Permian Basin Area Rate Cases, 390 U.S.
747, 780 (1968) (Court ``unwilling to prohibit administrative action
imperative for the achievement of an agency's ultimate purposes''
absent ``compelling evidence that such was Congress' intention'').
This proposal is consistent with the Department's broad authority
under the statute to ``establish the method to be used'' to determine
DBA prevailing wage rates. Donovan, 712 F.2d at 63. The Department
believes that the new periodic adjustment proposal will ``on balance
result in a closer approximation of the prevailing wage'' for these
rates and therefore is an appropriate extension of the current
regulation. Id. at 630 (citing American Trucking Ass'ns v. Atchison, T.
& S.F. Ry., 387 U.S. 397, 416 (1967)).
This proposed new provision is particularly appropriate because it
seeks to curb a practice the DBA and Related Acts were enacted to
prevent: Payment of ``substandard'' wages (here, out-of-date non-
collectively bargained rates) on covered construction projects that are
less than current wages for similar work prevailing in the private
sector. Regularly increasing non-collectively bargained weighted
average and prevailing rates that are more than 3 years old would be
consistent with the DBA's purpose of protecting local wage standards.
[[Page 15717]]
As proposed, the periodic adjustment provision would help
effectuate the DBA's purpose by updating significantly out-of-date non-
collectively bargained wage rates, including thousands of wage rates
that were published decades ago, that have not been updated since, and
that therefore likely have fallen behind currently prevailing local
rates. As of September 30, 2018, over 7,100 non-collectively bargained
wage rates, or 5.3 percent of the 134,738 total unique published rates
at that time, had not been updated in 11 to 40 years. See 2019 OIG
Report at 3, 5. Updating such out-of-date construction wages would
better align with the DBRA's main objective.
Tethering the proposed periodic updates to existing non-
collectively bargained prevailing wage rates is intended to keep such
rates more current in the interim period between surveys. It is
reasonable to assume that non-collectively bargained rates, like other
rates that the Secretary has determined to prevail, generally increase
over time like other construction compensation measures. See, e.g.,
Table A (showing recent annual rates of union and non-union
construction wage increases in the United States); Table B (showing
Employment Cost Index changes from 2001 to 2020).
Table A--Current Population Survey (CPS) Wage Growth by Union Status--Construction
----------------------------------------------------------------------------------------------------------------
Median weekly earnings
-------------------------------- Members of
Year Members of unions (%) Non-union (%)
unions Non-union
----------------------------------------------------------------------------------------------------------------
2015............................................ $1,099 $743 .............. ..............
2016............................................ 1,168 780 6 5
2017............................................ 1,163 797 0 2
2018............................................ 1,220 819 5 3
2019............................................ 1,257 868 3 6
2020............................................ 1,254 920 0 6
---------------------------------------------------------------
Average..................................... .............. .............. 3 4
----------------------------------------------------------------------------------------------------------------
Source: Current Population Survey, Table 43: Median weekly earnings of full-time wage and salary workers by
union affiliation, occupation, and industry, Bureau of Labor Statistics, <a href="https://www.bls.gov/cps/cpsaat43.htm">https://www.bls.gov/cps/cpsaat43.htm</a>
(last modified Jan. 22, 2021).
Note: Limited to workers in the construction industry.
Table B--Employment Cost Index (ECI), 2001-2020, Total Compensation of
Private Workers in Construction, and Extraction, Farming, Fishing, and
Forestry Occupations
[Average 12-month percent changes (rounded to the nearest tenth)]
------------------------------------------------------------------------
Average %
Year change
------------------------------------------------------------------------
2001........................................................ 4.5
2002........................................................ 3.5
2003........................................................ 3.9
2004........................................................ 4.5
2005........................................................ 3.1
2006........................................................ 3.5
2007........................................................ 3.5
2008........................................................ 3.7
2009........................................................ 1.7
2010........................................................ 2.0
2011........................................................ 1.6
2012........................................................ 1.5
2013........................................................ 1.8
2014........................................................ 2.0
2015........................................................ 2.0
2016........................................................ 2.4
2017........................................................ 2.7
2018........................................................ 2.3
2019........................................................ 2.3
2020........................................................ 2.4
------------------------------------------------------------------------
Source: Bureau of Labor Statistics, <a href="https://www.bls.gov/web/eci/eci-constant-real-dollar.pdf">https://www.bls.gov/web/eci/eci-constant-real-dollar.pdf</a>.
(2) Periodic Adjustment Proposal
This proposal seeks to update non-collectively bargained rates that
are 3 or more years old by adjusting them regularly based on total
compensation data to keep pace with current construction wages and
benefits. Specifically, the Department proposes to add language to
Sec. 1.6(c)(1) to expressly permit adjustments to non-collectively
bargained rates on general wage determinations based on U.S. Bureau of
Labor Statistics (BLS) Employment Cost Index (ECI) data or its
successor data. The Department's proposal provides that non-
collectively bargained rates may be adjusted based on ECI data no more
frequently than once every 3 years, and no sooner than 3 years after
the date of the rate's publication, continuing until the next survey
results in a new general wage determination. This proposed interval
would be consistent with WHD's goal to increase the percentage of
Davis-Bacon wage rates that are 3 years old or less. Under the
proposal, non-collectively bargained rates (wages and fringe benefits)
would be adjusted from the date the rate was originally published and
brought up to their present value. Going forward under the proposed 30-
percent rule, any non-collectively bargained prevailing or weighted
average rates published after this rule became effective would be
updated if they were not re-surveyed within 3 years after publication.
The Department anticipates implementing this new regulatory provision
by issuing general wage determination modifications.
The Department believes that ECI data is appropriate for these
proposed rate adjustments because the ECI tracks both wages and
benefits, and may be used as a proxy for construction compensation
changes over time. Therefore, the Department proposes to use a
compensation growth rate based on the change in the ECI total
compensation index for construction, extraction, farming, fishing, and
forestry occupations to adjust non-collectively bargained rates (both
base hourly and fringe benefit rates) published in 2001 or after.\62\
---------------------------------------------------------------------------
\62\ Because this particular index is unavailable prior to 2001,
the Department proposes to use the compensation growth rate based on
the change in the ECI total compensation index for the goods-
producing industries (which includes the construction industry) to
bring the relatively small percentage of non-collectively bargained
rates published before 2001 up to their 2000 value. The Department
would then adjust the rates up to the present value using the ECI
total compensation index for construction, extraction, farming,
fishing, and forestry occupations.
---------------------------------------------------------------------------
In addition, because updating non-collectively bargained rates
would be resource-intensive, the Department does not anticipate making
all initial adjustments to such rates that are 3 or more years old
simultaneously, but rather anticipates that such adjustments would be
made over a period of time (though as quickly as is reasonably
possible). Similarly, particularly due to the effort involved, the
process of adjusting non-collectively bargained rates that are 3 or
more years old is
[[Page 15718]]
unlikely to begin until approximately 6 months to a year after a final
rule implementing this proposal becomes effective.
The Department seeks comments on this proposal, and invites
comments on alternative data sources to adjust non-collectively
bargained rates. The Department considered proposing to use the
Consumer Price Index (CPI) but considers this data source to be a less
appropriate index to use to update non-collectively bargained rates
because the CPI measures movement of consumer prices as experienced by
day-to-day living expenses, unlike the ECI, which measures changes in
the costs of labor in particular. The CPI does not track changes in
wages or benefits, nor does it reflect the costs of construction
workers nationwide. The Department nonetheless invites comments on use
of the CPI to adjust non-collectively bargained rates.
(D) 29 CFR 1.6(f)
Section 1.6(f) addresses post-award determinations that a wage
determination has been wrongly omitted from a contract. The
Department's proposed changes to this subsection are discussed below in
part III.B.3.xx (``Post-award determinations and operation-of-law''),
together with proposed changes to Sec. Sec. 5.5 and 5.6.
vii. Section 1.7 Scope of Consideration
The Department's existing regulations in Sec. 1.7 address two
related concepts. The first is the level of geographic aggregation of
wage data that should be the default for making a wage determination.
The second is how the Department should expand that level of geographic
aggregation when it does not have sufficient wage survey data to make a
wage determination at the default level. The Department is considering
whether to update the language of Sec. 1.7 to more clearly describe
WHD's process for expanding the geographic scope of survey data, and
whether to modify the regulations by eliminating the current bar on
mixing wage data from ``metropolitan'' and ``rural'' counties when the
geographic scope is expanded.
(A) Background
With regard to the first concept addressed in Sec. 1.7, the
default level of geographic aggregation, the DBA specifies that the
relevant geographic area for determining the prevailing wage is the
``civil subdivision of the State'' where the contract is performed. 40
U.S.C. 3142(b). For many decades now, the Secretary has used the county
as the default civil subdivision for making a wage determination. The
Department codified this procedure in the 1981-1982 rulemaking in Sec.
1.7(a), in which it stated that the relevant area for a wage
determination will ``normally be the county.'' 29 CFR 1.7(a); see 47 FR
23644, 23647 (May 28, 1982).
The use of the county as the default ``area'' means that in making
a wage determination the Administrator first considers the wage survey
data WHD has received from projects of a ``similar character'' in a
given county. See 40 U.S.C. 3142(b). If there is sufficient county-
level data for a ``corresponding class[ ]'' of covered workers (e.g.,
laborers, painters, etc.) working on those projects, the Administrator
then makes a determination of the prevailing wage rate for that class
of workers. Id; 29 CFR 1.7(a). This has a practical corollary for
contracting agencies--in order to determine what wages apply to a given
construction project, the agency needs to identify the county (or
counties) in which the project will be constructed and obtain the wage
determination for the correct type of construction for that county (or
counties) from <a href="http://SAM.gov">SAM.gov</a>.
The second concept currently addressed in Sec. 1.7 is the
procedure that WHD follows when it does not receive sufficient survey
wage data at the county level to determine a prevailing wage rate for a
given classification of workers. This process is described in detail in
the 2013 Chesapeake Housing ARB decision. 2013 WL 5872049. In short, if
there is insufficient data to determine a prevailing wage rate for a
classification of workers in a given county, WHD will determine that
county's wage-rate for that classification by progressively expanding
the geographic scope of data (still for the same classification of
workers) that it uses to make the determination. First, WHD expands to
include a group of surrounding counties at a ``group'' level. See 29
CFR 1.7(b) (discussing consideration of wage data in ``surrounding
counties''); Chesapeake Housing, 2013 WL 5872049, at *2-3. If there is
still not sufficient data at the group level, WHD considers a larger
grouping of counties in the State called a ``supergroup,'' and
thereafter uses data at a statewide level. See 29 CFR 1.7(c);
Chesapeake Housing, 2013 WL 5872049, at *2-3.\63\ Currently, WHD
identifies county groupings by using metropolitan statistical areas
(MSAs) and other related designations from the Office of Management and
Budget (OMB). See 75 FR 37246 (June 28, 2010).
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\63\ As discussed above in part III.B.1.iii.(A), for residential
and building construction, this expansion of the scope of data
considered also involves the use of data from Federal and federally
assisted projects subject to Davis-Bacon labor standards at each
county-grouping level when data from non-Federal projects is not
sufficient. Data from Federal and federally assisted projects
subject to Davis-Bacon labor standards is used in all instances to
determine prevailing wage rates for heavy and highway construction.
---------------------------------------------------------------------------
The current regulations do not define the term ``surrounding
counties'' that delineates the initial county grouping level. However,
the provision at Sec. 1.7(b) that describes ``surrounding counties''
limits the counties that may be used in this grouping by excluding the
use of any data from a ``metropolitan'' county in any wage
determination for a ``rural'' county, and vice versa. 29 CFR 1.7(b). To
be consistent with the existing prohibition at Sec. 1.7(b), WHD's
current practice is to use the OMB designations (discussed above) to
identify whether a county is metropolitan or rural.\64\ Under the
current constraints, such a proxy designation is reasonable, and the
practice has been approved by the ARB. See Mistick Construction, 2006
WL 861357, at *7-8. Although the language in Sec. 1.7(b) does not
apply explicitly to the consideration of data above the surrounding
county level, see Sec. 1.7(c), the Department's current procedures do
not mix metropolitan and rural county data at any level in the
expansion of geographic scope, including even at the statewide level.
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\64\ OMB does not specifically identify counties as ``rural''
and disclaims that its MSA standards ``produce an urban-rural
classification.'' 75 FR 37246, 37246 (June 28, 2010). Nonetheless,
because OMB identifies counties that have metropolitan
characteristics as part of MSAs, the practice of the WHD
Administrator has been to designate counties as rural if they are
not within an OMB-designated MSA and metropolitan if they are within
an MSA. See Mistick Construction, 2006 WL 861357, at *8.
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(B) Proposals for Use of ``Metropolitan'' and ``Rural'' Wage Data
The current language in Sec. 1.7(b) barring the cross-
consideration of metropolitan and rural wage data was added to the
Department's regulations in the 1981-1982 rulemaking. See 47 FR 23644
(May 28, 1982). As the Department noted in that rulemaking, the prior
practice up until that point had been to allow the Department to look
to metropolitan wage rates for nearby rural areas when there was
insufficient data from the rural area to determine a prevailing wage
rate. See id. at 23647. In explaining the change in the longstanding
policy, the Department noted commenters had stated that ``importing''
higher rates from metropolitan areas caused labor disruptions where
workers were ``unwilling to return to their usual pay scales after the
project was completed.'' Id. The Department stated that a more
[[Page 15719]]
appropriate alternative would be to use data from rural counties in
other parts of the State. See id. To effectuate this, it imposed the
bar on cross-consideration of rural and metropolitan county data in
Sec. 1.7(b).
The Department has received feedback that that this blanket
decision did not adequately consider the heterogeneity of commuting
patterns and local labor markets between and among counties that may be
designated overall as ``rural'' or ``metropolitan.'' As noted in the
2011 GAO report, the DBA program has been criticized for using
``arbitrary geographic divisions,'' given that the relevant regional
labor markets, which are reflective of area wage rates, ``frequently
cross county and state lines.'' 2011 GAO Report at 24.\65\ OMB itself
notes that ``[c]ounties included in Metropolitan and Micropolitan
Statistical Areas and many other counties may contain both urban and
rural territory and population.'' 75 FR 37246, 37246 (June 28, 2010).
---------------------------------------------------------------------------
\65\ See note 8, supra.
---------------------------------------------------------------------------
The Department understands the point articulated in the GAO report
that actual local labor markets are not constrained by or defined by
county lines--even those lines between counties identified (by OMB or
otherwise) as ``metropolitan'' or ``rural.'' This is particularly the
case for the construction industry, in which workers tend to commute
longer distances than other professionals--resulting in geographically
larger labor markets. See, e.g., Keren Sun et al., Hierarchy Divisions
of the Ability to Endure Commute Costs: An Analysis based on a Set of
Data about Construction Workers, J. of Econ. & Dev. Stud., Dec. 2020,
at 1, 6.\66\ Even within the construction industry, workers in certain
trades have greater or lesser tolerance for longer commutes. Keren Sun,
Analysis of the Factors Affecting the Commute Distance/Time of
Construction Workers, Int'l J. of Arts & Humanities, June 2020, at 34-
35.\67\
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\66\ <a href="http://jedsnet.com/journals/jeds/Vol_8_No_4_December_2020/1.pdf">http://jedsnet.com/journals/jeds/Vol_8_No_4_December_2020/1.pdf</a>.
\67\ <a href="http://ijah.cgrd.org/images/Vol6No1/3.pdf">http://ijah.cgrd.org/images/Vol6No1/3.pdf</a>.
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By excluding a metropolitan county's wage rates from consideration
in a determination for a bordering rural county, the current language
in Sec. 1.7(b) ignores the potential for projects in both counties to
compete for the same supply of construction workers and be in the same
local construction labor market. In many cases, the workers working on
the metropolitan county projects may themselves live across the county
lines in the neighboring rural county and commute to the urban
projects. In such cases, under the current bar, the Department may not
be able to use the wage rates of the same workers to determine the
prevailing wage rate for projects in the county in which they live.
Instead, WHD would import wage rates from other ``rural''-designated
counties, potentially somewhere far across the State. Such a practice
can result in Davis-Bacon wage rates that are lower than the wage rates
that actually prevail in a bi-county labor market and that are based on
wage data from distant locales rather than from neighboring counties.
For these reasons, the Department believes that limitations based
on binary rural and metropolitan designations at the county level can
result in geographic groupings that at times do not fully account for
the realities of relevant construction labor markets. To address this
concern, the Department has considered the possibility of using smaller
basic units than the county as the initial area for a wage
determination--and expanding to labor market areas that do not directly
track county lines. The Department, however, has concluded that
continuing the longstanding practice of using counties as the civil
subdivision basis unit is more administratively feasible.\68\ As a
result, the Department is now considering the option of eliminating the
metropolitan-rural bar in Sec. 1.7(b) and relying instead on other
approaches to determine how to appropriately expand geographic
aggregation when necessary.
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\68\ The Department also considered this option in the 1981-1982
rulemaking, but similarly concluded that the proposal to use the
county as the basic unit of a wage determination was the ``most
administratively feasible.'' See 47 FR 23644, 23647 (May 28, 1982).
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In addition to allowing WHD to account for actual construction
labor market patterns, this proposal could have other benefits. It
could allow WHD to publish more rates at the group level rather than
having to rely on data from larger geographic areas, because it could
increase the number of counties that may be available to supply data at
the group level. The proposal could also allow WHD to publish more
rates overall by authorizing the use of both metropolitan and rural
county data together when it must rely on statewide data. Combining
rural and urban data at the State level would be a final option for
geographic expansion when otherwise the data could be insufficient to
identify any prevailing wage at all.\69\ The Department believes that
the purposes of the Act are better served by using such combined
statewide data to determine the prevailing wage, when the alternative
could be to fail to publish a wage rate at all.
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\69\ The Department is also considering the option of more
explicitly tailoring the ban on mixing metropolitan and rural data
so that it applies only at the ``surrounding counties'' level, but
not at the statewide level or an intermediate level.
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The proposal to eliminate the strict rural-metropolitan bar would
result in a program that would be more consistent with the Department's
original practice between 1935 and the 1981-1982 rulemaking. Reverting
to this prior status quo would be appropriate in light of the text and
legislative history of the DBA. Congressional hearings shortly after
the passage of the initial 1931 Act suggest that Congress understood
the DBA as allowing the Secretary to refer to metropolitan rates where
rural rates were not available--including by looking to the nearest
city when there was insufficient construction in a village or ``little
town'' to determine a prevailing wage. See 75 Cong. Rec. 12,366, 12,377
(1932) (remarks of Rep. Connery). Likewise, the Department's original
1935 regulations directed the Department to ``the nearest large city''
when there had been no similar construction in the locality in recent
years. See Labor Department Regulation No. 503 section 7(2) (1935).
In light of the above, the Department solicits comments on its
proposal to allow the Administrator the discretion to determine
reasonable county groupings, at any level, without the requirement to
make a distinction between counties WHD designates as rural or
metropolitan.
(C) Proposals for Amending the County Grouping Methodology
In addition to considering whether to eliminate the metropolitan-
rural proviso language in Sec. 1.7(b), the Department is also
considering other potential changes to the methods for describing the
county groupings procedure.
(1) Defining ``Surrounding Counties''
One potential change is to more precisely define ``surrounding
counties,'' as used in Sec. 1.7(b). Because the term is not currently
defined, this has from time to time led to confusion among stakeholders
regarding whether a county can be considered ``surrounding'' if it does
not share a border with the county for which more data is needed. As
noted above, WHD's current method of creating ``surrounding county''
groupings is to use OMB-designed MSAs to create pre-determined county
groupings. This method does not require that all counties in the
grouping share a border with (in other words, be a direct neighbor to)
the county in need. Rather,
[[Page 15720]]
at the ``surrounding county'' grouping, WHD will include counties in a
group as long as they are all a part of the same contiguous area of
either metropolitan or rural counties--even though each county included
may not be directly adjacent to every other county in the group.\70\
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\70\ In addition, in certain limited circumstances, WHD has
allowed the aggregation of counties at the ``surrounding counties''
level that are not part of a contiguous grouping of all-metropolitan
or all-rural counties. This has been considered appropriate where,
for example, two rural counties border an MSA on different sides and
do not themselves share a border with each other or with any other
rural counties. Under WHD's current practice, those two rural
counties could be considered to be a county group at the
``surrounding counties'' level even though they neither share a
border nor are part of a contiguous group of counties.
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For example, in the Chesapeake Housing case, one ``surrounding
county'' group that WHD had compiled included the independent city of
Portsmouth, combined with Virginia Beach, Norfolk, and Suffolk
counties. 2013 WL 5872049, at *1, n.1. That was appropriate because
those jurisdictions all were part of the same contiguous OMB-designated
metropolitan area, and each county thus shared a border with at least
one other county in the group--even if they did not all share a border
with every other county in the group. See id. at *5-6. Thus, by using
the group, WHD combined data from Virginia Beach and Suffolk counties
at the ``surrounding counties'' level, even though those two counties
do not themselves touch each other.
This grouping strategy--of relying on OMB MSA designations--has
been found to be consistent both with the term ``surrounding counties''
as well as with the metropolitan-rural limitation proviso in Sec.
1.7(b). See Mistick, 2006 WL 861357, at *7-8. An OMB-designated
metropolitan statistical area is, at least by OMB's definition, made up
entirely of ``metropolitan'' counties and thus WHD can group these
counties together without violating the proviso. See id.; Manual of
Operations at 39. Thus, the Department has used these OMB designations
to put together pre-determined groups that can be used as the same
first-level county grouping for any county within the grouping. While
relying on OMB designations is not the only way that the Department
could currently group counties together and comply with the proviso,
the Department recognizes that, if it eliminates the metropolitan-rural
proviso at Sec. 1.7(b), it could be helpful to include in its place
some further language to explain or delimit the meaning of
``surrounding counties'' in another way that would be both
administrable and faithful to the purpose of the Davis-Bacon and
Related Acts.
The first option would be to eliminate the metropolitan-rural
proviso but not replace it with a further definition or limitation for
``surrounding counties.'' The Department has included this proposal in
the proposed regulatory text of this NPRM. The term ``surrounding
counties'' is not so ambiguous and devoid of meaning that it requires
further definition. Even without some additional specific limitation,
the Department believes the term could reasonably be read to require
that such a grouping be of a contiguous grouping of counties as the
Department currently requires in its use of OMB MSAs (as described
above), with limited exceptions. Thus, while the elimination of the
proviso would allow a nearby rural county to be included in a
``surrounding county'' grouping with metropolitan counties that it
borders, it would not allow WHD to append a faraway rural county to a
``surrounding county'' group made up entirely of metropolitan counties
with which the rural county shares no border at all. Conversely, the
term does not allow the Department to consider a faraway metropolitan
county to be part of the ``surrounding counties'' of a grouping of
rural counties with which the metropolitan county shares no border at
all. Although containing such an inherent definitional limit, this
first option would allow the Department the discretion to develop new
methodologies of grouping counties at the ``surrounding county'' level
and apply them as along as it does so in a manner that is not arbitrary
or capricious.\71\
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\71\ For example, the Department could rely on county groupings
in use by State governments for little Davis-Bacon laws or similar
purposes, as long as they are contiguous county groupings that
reasonably can be characterized as ``surrounding counties.''
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The second option the Department is considering is to limit
surrounding counties to solely those counties that share a border with
the county for which additional wage data is sought. Such a limitation
would create a relatively narrow grouping at the initial county
grouping stage--narrower than the current practice of using OMB MSAs.
As discussed above, construction workers tend to commute longer than
other professionals. This potential one-county-over grouping limitation
would ensure that, in the vast majority of cases, the ``surrounding
county'' grouping would not expand outward beyond the home counties or
commuting range of the construction workers who would work on projects
in the county at issue. The narrowness of such a limitation would also
be a drawback, as it could lead to fewer wage rates being set at the
``surrounding counties'' group level. Another drawback is that such a
limitation would not allow for the use of pre-determined county
groupings that would be the same for a number of counties--because each
county may have a different set of counties with which it alone shares
a border. This could result in a significant burden on WHD in
developing far more county-grouping rates than it currently does, and
could result in less uniformity in required prevailing wage rates among
nearby counties.
A third option would be to include language that would define the
``surrounding counties'' grouping as a grouping of counties that are
all a part of the same ``contiguous local construction labor market''
or some comparable definition. In practice, this methodology could
result in similar (but not identical) groupings as the current
methodology, as the Department could decide to use OMB designations to
assist in determining what counties are part of the contiguous local
labor market. Without the strict metropolitan-rural proviso, however,
this option would allow the Department to use additional evidence on a
case-by-case basis to determine whether the OMB designations--which do
not track construction markets specifically--are too narrow for a given
construction market. Under this option, the Department could consider
other measures of construction labor market integration, including
whether construction workers in general (or workers in specific
construction trades) typically commute between or work in two bordering
counties or in a cluster of counties.
This third option also would bring with it some potential benefits
and drawbacks. On the one hand, the ability to identify local
construction labor markets would allow the Department to make pre-
determined county groupings much like it does now. This would reduce
somewhat the burden of the second option--of calculating a different
county grouping for each individual county to account for the counties
that border specifically that county. It would also explicitly
articulate the limitation that the Department believes is inherent in
the term ``surrounding counties''--that the grouping must be limited to
a ``contiguous'' group of counties, with limited exceptions. On the
other hand, the case-by-case determination of a local ``construction''
labor market (that might
[[Page 15721]]
be different from an OMB MSA) could also be burdensome on WHD. The
definition, however, could allow such a case-by-case determination but
not require it. Accordingly, if such case-by-case determinations become
too burdensome, WHD could revert to the adoption of designations from
OMB or some other externally-defined metric.
Finally, the Department recognizes that even if it retains the
metropolitan-rural proviso, doing so does not bind WHD to the current
practice of using OMB-designated county groupings and other procedures.
Under the language of the current regulation, the Department retains
the authority to make its own determinations regarding whether a county
is ``metropolitan'' or ``rural.'' See 29 CFR 1.7(b). The Department
also retains certain flexibility for determining how to group counties
at each level and is not limited to using the OMB designations. As
noted above, the Department also believes that the plain text of Sec.
1.7(b) does not necessarily limit it from combining metropolitan and
rural data beyond the ``surrounding counties'' group level.
(2) Other Proposed Changes to Sec. 1.7
The Department is also considering other proposed changes to Sec.
1.7. These include nonsubstantive changes to the wording of the
paragraphs that clarify that the threshold for expansion in each one is
insufficient ``current wage data.'' The existing regulation now defines
``current wage data'' in Sec. 1.7(a) as ``data on wages paid on
current projects or, where necessary, projects under construction no
more than one year prior to the beginning of the survey or the request
for a wage determination, as appropriate.'' The Department seeks
comment on whether this definition should be kept in its current format
or amended to narrow or expand its scope.
The Department is also considering whether to amend Sec. 1.7(c) to
better describe the process for expanding from the ``surrounding
county'' level to consider data from an intermediary level (such as the
current ``supergroup'' level) before relying on statewide data. For
example, as the Department has included in the current proposed
regulatory text, the Department could describe this second level of
county groupings as a consideration of ``comparable counties or groups
of counties in the State.'' As with the third option discussed above
for defining ``surrounding counties,'' this ``comparable counties''
language in Sec. 1.7(c) would allow the Department to continue to use
the procedure described in Chesapeake Housing of combining various MSAs
or various non-contiguous groups of rural counties to create
``supergroups.'' It would also allow a more nuanced analysis of
comparable labor markets using construction market data specifically.
As the foregoing discussion reflects, there is no perfect solution
for identifying county groupings in Sec. 1.7. Each possibility
described above has potential benefits and drawbacks. In addition, the
Department notes that the significance of this section in the wage
determination process is also related to the level of participation by
interested parties in WHD's voluntary wage survey. If more interested
parties participate in the wage survey, then there will be fewer
counties without sufficient wage data for which the Sec. 1.7 expansion
process becomes relevant. Absent sufficient survey information,
however, WHD will need to continue to include a larger geographic scope
to ensure that it effectuates the purposes of the DBA and Related
Acts--to issue wage determinations to establish minimum wages on
federally funded or assisted construction projects. The Department thus
seeks comment on all aspects of amending the county grouping
methodology of Sec. 1.7--including administrative feasibility and the
distinction between rural and metropolitan counties--to ensure that it
has considered the relevant possibilities for amending or retaining the
various elements of this methodology.
viii. Section 1.8 Reconsideration by the Administrator
The Department proposes revisions to Sec. Sec. 1.8 and 5.13 to
explicitly provide procedures for reconsideration by the Administrator
of decisions, rulings, or interpretations made by an authorized
representative of the Administrator. Parts 1 and 5 both define the term
``Administrator'' to mean the WHD Administrator or an authorized
representative of the Administrator. See 29 CFR 1.2(c), 5.2(b).
Accordingly, when parties seek rulings, interpretations, or decisions
from the Administrator regarding the Davis-Bacon labor standards, it is
often the practice of the Department to have such decisions made in the
first instance by an authorized representative. After an authorized
representative issues a decision, the party may request reconsideration
by the Administrator. The decision typically provides a time frame in
which to request reconsideration by the Administrator, often 30 days.
To provide greater clarity and uniformity, the Department proposes to
codify this practice and to clarify how and when reconsideration may be
sought.
First, the Department proposes to amend Sec. 1.8, which concerns
reconsideration by the Administrator of wage determinations and
decisions regarding the application of wage determinations under part
1, to provide that if a decision for which reconsideration is sought
was made by an authorized representative of the Administrator, the
interested party seeking reconsideration may request further
reconsideration by the Administrator of the Wage and Hour Division. The
Department proposes that such requests must be submitted within 30 days
from the date the decision is issued, and that this time period may be
extended for good cause at the Administrator's discretion upon a
request by the interested party. Second, the Department proposes to
amend Sec. 5.13, which concerns rulings and interpretations under
parts 1, 3, and 5, to similarly provide for the Administrator's
reconsideration of rulings and interpretations issued by an authorized
representative. The Department proposes to apply the same procedures
for such reconsideration requests as apply to reconsideration requests
under Sec. 1.8. The Department also proposes to divide Sec. Sec. 1.8
and 5.13 into paragraphs for clarity and readability, and to add email
addresses for parties to submit requests for reconsideration or for
rulings or interpretations, respectively.
ix. Section 1.10 Severability
The Department proposes to add a new Sec. 1.10, titled
``Severability.'' The proposed severability provision explains that
each provision is capable of operating independently from one another,
and that if any provision of part 1 is held to be invalid or
unenforceable by its terms, or as applied to any person or
circumstance, or stayed pending further agency action, the Department
intends that the remaining provisions remain in effect.
x. References to Website for Accessing Wage Determinations
The Department proposes to revise Sec. Sec. 1.2, 1.5, and 1.6 to
reflect, in more general terms, that wage determinations are maintained
online without a reference to a specific website.
The current regulations reference Wage Determinations OnLine
(WDOL), previously available at <a href="https://www.wdol.gov">https://www.wdol.gov</a>, which was
established following the enactment of the E-Gov
[…truncated; see source link]Indexed from Federal Register on March 18, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.