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New regs impact government construction contracting

Posted by National Alliance for Fair Contracting on

New England Biz Law Update staff
October 31, 2023

The the U.S. Department of Labor has issued a final rule updating regulations that implement the Davis-Bacon and Related Acts (DBRA).

The DBRA requires contractors and subcontractors on federally funded construction projects to pay their workers at least the prevailing wage rates for the locality in which the work is being performed. The final rule is the first comprehensive update to the Davis-Bacon regulations in over 40 years.

The rule includes a number of changes, including:

Restoring the 30% rule. The final rule restores the DOL’s definition of prevailing wage that was used until the Reagan Administration. Under this three-step process, the prevailing wage is that which is paid to a majority of workers in the classification. If no majority exists, then the prevailing wage is the rate paid to at least 30% of workers. If no rate is paid to at least 30%, then a weighted average will be used. (Previously, the average was used if a prevailing wage was not paid to 50% of workers.)

Adopting wage escalators. The final rule allows the DOL to more frequently update prevailing wage rates. Rather than hinging on DOL wage surveys, periodic updates will now be based on total compensation data from the Bureau of Labor Statistics Employment Cost Index, which tracks both wages and benefits. Rate updates will occur every three years, at most.

Strengthening worker protection and enforcement rights. The final rule includes new anti-retaliation provisions to protect workers. The rule also strengthens the DOL’s ability to withhold money from federal contractors in order to pay employees their lost wages.

Providing greater clarity. The rule updates a number of definitions that affect applicability. For example, “building or work” now includes solar panels, wind turbines, broadband installation, and the installation of electric car chargers. Other changes affect who is considered a “material supplier” or a “prime contractor.”

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Illinois joins lengthening list of states outlawing wage theft

Posted by National Alliance for Fair Contracting on

October 30, 2023

By an overwhelming legislative majority Illinois has joined the lengthening list of states to outlaw wage theft.

The measure, signed by Democratic Gov. J.B. Pritzker in September, shows again the importance of state-level lawmakers and governors to workers.

That can be both positive and negative. The nation is increasingly politically polarized. In “Blue States,” such as Illinois, New York, California, and, this year, Michigan and Minnesota, elected officials respond to workers’ support with worker protection legislation unlikely to make it through Capitol Hill.

But in often gerrymandered and/or racially polarized “Red States” – such as Texas and Florida and other Southern and lightly populated Great Plains states – right-wing radicals, funded by corporate special interests, enact and enforce worker suppression and voter suppression legislation, often at the same time.

Illinois’ wage theft bill, HB1122, was one of the top priorities of the state AFL-CIO. The Illinois House passed it 68 to 38 and the state Senate agreed 35 to 20. It takes effect next July 1.

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Senate confirms Looman as DOL Wage and Hour administrator

Posted by National Alliance for Fair Contracting on

Justin R. Barnes & Jeffrey W. Brecher
10.26.23

The Senate has confirmed Principal Deputy Administrator Jessica Looman as the head of the Department of Labor’s Wage and Hour Division (WHD) by a 51-46 vote.

The WHD enforces the federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the Fair Labor Standards Act, as well as other employment standards and worker protections under other statutes.

Since January 20, 2021, Looman had been serving as the Principal Agency Administrator, a role designated to permit her to lead the WHD while her nomination was pending without triggering litigation. An effort late last year to have Looman confirmed through unanimous consent was unsuccessful.

Previously, Looman served in various capacities in her home state of Minnesota, including as executive director of the state Building and Construction Trades Council, commissioner of the state’s Commerce Department, and deputy commissioner of the Minnesota Department of Labor and Industry.

This is a key time for the WHD. The Department of Labor proposed new regulations in August that would substantially increase the number of workers who would be eligible for overtime compensation. The key provision of the rulemaking would provide overtime pay to salaried employees earning less than $55,068 annually. If the proposal is finalized, millions more salaried workers could be eligible for overtime compensation. More than 100 business groups have asked Looman to extend the comment period for the new overtime regulations given the significant impact of the proposed rulemaking.

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Final Rule Effective for the Davis-Bacon Act

Posted by National Alliance for Fair Contracting on

Updating the Davis-Bacon and Related Acts Regulations
Oct. 23, 2023

Effective today, October 23, 2023, the U.S. Department of Labor implemented the final rule, “Updating the Davis-Bacon and Related Acts Regulations.” This implementation follows the official publishing of the final rule in the Federal Register on August 23, 2023.

The change in regulation provides greater clarity and enhances the Davis-Bacon and Related Acts (DBRA) regulations’ effectiveness in the modern economy. Updates to the regulations strengthen and streamline the process for setting and enforcing prevailing wage rates on federally funded construction projects. This ensures that when the federal government invests in infrastructure, it also invests in workers.

These regulatory changes improve the department’s ability to administer and enforce DBRA labor standards effectively and efficiently. These changes include:

  • Creating several efficiencies in the prevailing wage update system and ensuring prevailing wage rates keep up with actual wages, which over time would mean higher wages for workers.
  • Returning to the definition of “prevailing wage” used from 1935 to 1983 to ensure prevailing wages reflect actual wages paid to workers in the local community.
  • Periodically updating prevailing wage rates to address out-of-date wage determinations.
  • Providing broader authority to adopt state or local wage determinations when certain criteria are met.
  • Issuing supplemental rates for key job classifications when no survey data exists.
  • Updating the regulatory language to better reflect modern construction practices.
  • Strengthening worker protections and enforcement, including debarment and new anti-retaliation provisions.

Visit our website for more information on the Davis-Bacon Final Rule and the Davis-Bacon Act.

Davis-Bacon Regulations in the Federal Register

POINT: Strong prevailing-wage standards help grow the economy

Posted by National Alliance for Fair Contracting on

The Sun Chronicle
By Karla Walter Oct 20, 2023

The trickle-down strategies of the last several decades — defined by tax cuts for the wealthy — didn’t work and, in fact, led to stagnating incomes for everyone else.

However, the Biden administration’s vision for growth is clear: The Inflation Reduction Act, Bipartisan Infrastructure Law and CHIPS and Science Act chart a new path based on the philosophy that the economy is strongest when it grows from the “middle out and bottom up.”

These sweeping economic laws build out public investment in 21st century infrastructure and support domestic competitiveness in key sectors, all while strengthening protections to ensure new public investment benefits working people from all walks of life.

At times, pundits portrayed Bidenomics as a gamble, but key elements of the laws’ middle-class protections — such as prevailing-wage standards — are proven strategies that raise standards for workers, support law-abiding contractors and ensure the public receives good value for the investments paid for by tax dollars.

The overwhelming majority of the Bipartisan Infrastructure Law, CHIPS and Science Act funds, and the IRA’s tax credit programs are protected by the Davis-Bacon Act — a 90-year-old law that requires corporations receiving federal funds to pay construction workers market — or “prevailing” — wages and benefits.

Prevailing-wage standards, also frequently adopted by state and local policymakers, prevent the government from driving down standards when it acts as a purchaser of goods and services. Private-sector recipients are required to provide workers with wages and fringe benefits comparable to those paid to other similarly placed workers in the region.

Research shows that prevailing-wage laws improve workers’ lives by supporting middle-class pay, ensuring union wage rates are not undercut, expanding health insurance and retirement coverage, and closing the income gap between white and Black construction workers.

DOL Increases Hourly Minimum Wage to $17.20 for Federal Contractors Starting January 1, 2024

Posted by National Alliance for Fair Contracting on

JD Supra
October 4, 2023

Beginning on January 1, 2024, Executive Order 14026 (Order) will raise the minimum wage for workers performing work on or in connection with covered contracts to from $16.20 to $17.20 per hour, a second year of a significant adjustment to the minimum wage for service and construction workers doing work on federal projects. Government contractors in the service and construction sectors should evaluate how the minimum wage increase will affect their operations and pricing strategies when bidding on new government contracts.

The Evolution of Federal Contract Minimum Wage

This Order builds upon the foundation laid by Executive Order 13658, which initially established a minimum wage of $10.10 per hour for federal contract workers in 2014. Since then, the minimum wage has seen incremental increases. In 2021, the Biden administration issued Executive Order 14026, adjusting the wage upward to $15.00 per hour with annual adjustments issued by the Department of Labor (DOL) each calendar year, and which automatically become effective on January 1.

Who Is Affected by Executive Order 14026?

The Order broadly affects federal contracts and subcontracts and applies to:

  1. contracts subject to the Davis-Bacon Act (DBA), governing wage rates on federal construction projects and
  2. contracts covered by the Service Contract Act (SCA), which regulates service contracts.

Compliance and Enforcement

  1. The DOL is responsible for enforcing compliance with the Order. Contractors found to be in violation may face penalties, including the withholding of contract funds.
  2. Contractors are required to maintain comprehensive records of employees’ wages, hours worked, and other relevant data related to covered contracts, facilitating the enforcement of the order.
  3. Federal Acquisition Regulation (FAR) 52.222-55, Minimum Wages for Contractors Under Executive Order 14026 (distinguished from the former FAR provision with the same number but a different name) should have been modified into applicable contracts or subcontracts that were solicited, renewed, or extended after January 31, 2022.
  4. From the effective date of the modification that incorporated the new provision through December 31, 2022, the applicable minimum wage was $15.00 per hour.
  5. Effective January 1, 2023, the minimum wage became $16.20 per hour. The DOL may issue increases to the minimum wage that will be effective each year on January 1.
  6. At this point, a contract for services or construction should contain the new FAR clause. If it does not, the obligation to pay the higher minimum wage does not apply. However, to avoid possible investigations by the DOL and disgruntled employees, we recommend bringing the issue to the attention of the contracting officer or prime contractor immediately and retroactively applying the wage requirements.
  7. You may request a price adjustment for the actual difference in wages and fringe benefits you have to pay as a result of a change, and you should do so within thirty (30) days of the change in wage rate.
  8. This requirement applies to non-exempt workers on contracts subject to the DBA and SCA, as well as any non-exempt employee working in connection with a covered contract.

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