The Davis-Bacon Act
The Davis–Bacon Act was enacted in 1931 and established and required that contractors working on public works projects be paid local prevailing wages. The bill was drafted by Senator James Davis (R-PA) and Congressman Robert Bacon (R-NY) after concerns were voiced about working conditions and ongoing pressure toward lower wages on public works projects.
This regulation encompasses the applicable hourly wage, benefits, and overtime. The Davis-Bacon Act applies to "contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works". The Act covers four main construction sectors:
- Residential
- Heavy
- Buildings
- Highway
Under the terms of the Act, the Wage and Hour Division of the Department of Labor is responsible for collecting and disseminating prevailing wage data. The process under the framework of the current statute includes the following:
- Planning and scheduling of wage surveys.
- Conducting the surveys.
- Analyzing the data collected.
- Issuing wage determinations using the data collected and analyzed.
Prevailing wage laws like the Davis-Bacon Act seek to prevent the federal government from undermining local economies and prevailing local employment and training practices by reflecting local conditions.
From 1935 to 1983, the Department of Labor used a three-step process to determine the wage. Those steps were:
- Use the wage rate paid to a majority of the workers.
- If no such majority wage exists, use the wage paid to the largest number of workers, as long as it was paid to at least 30 percent of the workers (30 percent rule).
- If the 30 percent rule could not be met, then use the weighted average rate.
The Supreme Court viewed the law as written as a "minimum wage law designed for the benefit of construction workers." The law was considered a victory for supporting highly-skilled, and often local workers.
However, under new Reagan-era rules enacted in the 1980s, this process was changed. Prevailing wages were identified as (1) any wage rate paid to most workers. (2) if there is no wage rate paid to most workers, then the wage rate is paid to the most significant number of workers, provided it is paid to at least 50 percent of workers (i.e., the so-called "50-percent rule").
SMACNA long believed that these rule changes in the '80s negatively impacted the ability of union contractors to compete for federal construction work as it gave the appearance that their wages were not reflective of the overall labor environment. In March of 2022, the Department of Labor began modernizing this rule.
In October of 2023, the DOL formally adopted the new rule, which will make the wage determination and verification process far more responsive by giving the Department of Labor's Wage and Hour Administrator the express authority to adopt prevailing wages determined by state and local governments, issue wage determinations for labor classifications where insufficient data was received through the wage survey process and update outdated wage rates.
The Department of Labor is returning to the 30% Rule after decades of harm to the Act. After more than 40 years, restoring the 30% rule for prevailing wages ensures our members are compensated in a way that is consistent with local collectively bargained rates and the real rates paid to the most skilled and qualified apprentices and journey workers in such short supply today, and so badly needed for the complex Federal projects of the future.
How Will The Final Rule Alter The Law?
Under the terms of the revised rule, several updates, which SMACNA has long supported. A full recounting of the rule changes can be found here. Highlights of some of the changes include:
Key changes in the Final Rule include:
- Returning to the three-step process for determining the “prevailing wage,” including the “30% Rule”;
- Clarifying and Expanding DBA Coverage;
- Automatically incorporating contract clauses and wage determinations into federal contractors by “operation of law”;
- Simplifying and streamlining the calculation of the prevailing wage, including adoption of wage rates set by state and local governments;
- Increased recordkeeping requirements;
- New anti-retaliation protections for workers; and New and expanded DOL enforcement mechanisms.
The Final Rule is effective October 23, 2023. Contracts entered into after this date will be impacted, and the DOL will implement the Final Rule’s changes to the wage determination process to wage determinations completed after the effective date.
Why Does SMACNA Support This Revision?
SMACNA believes that by returning to the original 30-percent rule, more union contractors will be able to competitively bid for federal contracts since, under the terms of the 50-percent rule, there was the appearance that union wages did not accurately reflect the realities of the labor environment.
In addition, SMACNA member corporations and chapters support the Department of Labor's efforts because they include several enhancements that reflect technological changes in work processes in the nine decades since the Davis Bacon Act was enacted. These rules would improve the overall efficiency of the Act and its enforcement and ensure that wages do not become "stale" or outdated.
Comments / Alerts
The Department of Labor is currently in the middle of reviewing all of the submitted comments. Once that process is complete, they will determine whether or not to proceed and codify the revisions into law. The Department of Labor has made comments available for viewing by the general public. To review all comments made regarding the rule change, click here.
Review comments by specific organizations:
Webinar: Davis-Bacon 101
U.S. Department of Labor presented a webinar on Davis-Bacon prevailing wages for SMACNA chapters and SMART representatives who are newcomers to this topic. The focus of the webinar is wage determinations and Collective Bargained Agreement (CBA) prevailing wage updates and the DOL's recent extension of prevailing wage coverage to laborers and mechanics who perform testing, adjusting, and balancing (TAB) on federal and federally assisted projects. Participants will learn how to update prevailing wage rates, the types of projects on which workers are entitled to federal prevailing wage protection, the type of fringe benefits a contractor or subcontractor may credit toward its prevailing wage obligation, classification of workers, coverage of apprentices and independent contractors, and the difference between construction covered under the Davis-Bacon Act and routine maintenance covered under the Service Contract Act.
Labor Relations
SMACNA works to ensure contractors have the best and most up-to-date information regarding issues affecting their unionized workforce. As industry issues and challenges arise, SMACNA makes available to its chapters and members, the latest and most vital information available in order for them to make intelligent business decisions.