# Appendix — Building & Construction Trades Department v. Martin > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1002%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1992 - **Citation:** 506 U.S. 915 ## Text us | 92°13 OyILED | No. ———— JUL 20 1992 fa eteianbenitionih “OFFICE OF THE CLERK | IN THE -- er, Supreme Court of the United States OCTOBER TERM, 1992 — BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO, et al., Petitioners, v. LYNN MARTIN, SECRETARY OF LABOR, et al., Respondents. Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit APPENDIX TO PETITION FOR A WRIT OF CERTIORARI LAURENCE J. COHEN TERRY R. YELLIG (Counsel of Record) 1125 15th Street, N.W. Washington, D.C. 20005 (202) 785-9300 Attorneys for Petitioner Building and Construction Trades Department, AFL-CIO ROBERT J. CONNERTON PHILLIS PAYNE PAUL GREENBERG 1920 L Street, N.W. Washington, D.C. 20036 (202) 466-6790 Attorneys for Petitioner Laborers’ International Union of North America, AFL-CIO WILSON - Epes PrintiING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 ® ES co TABLE OF CONTENTS APPENDIX A Page Decision of the United States Court of Appeals for the District of Columbia, Building and Con- struction Trades Department, AFL-CIO, et al. v. Lynn Martin, Secretary of Labor, et al., April 21, OR Riar eed aR A Rea hn NET SEMIN SERS At na la APPENDIX B Decision of the United States Court of Appeals for the District of Columbia, Building and Con- struction Trades Department, AFL-CIO, et al. v. Raymond J. Donovan, Secretary of Labor, et al., July 6, 1983 ............. Meee APPENDIX C Decision of the United States District Court for the District of Columbia, Building and Construc- tion Trades Department, AFL-CIO, et al. v. Eliza- beth H. Dole, Secretary of Labor, et al., September eee ocaseaesnnbnihg icaeeksnemitconsanatekone aaa aoe APPENDIX D Decision of the United States District Court for the District of Columbia, Building and Construc- tion Trades Department, AFL-CIO, et al. v. Ray- mond J. Donovan, Secretary of Labor, et al., De- I is EE pire ae 72a APPENDIX E Decision of the United States District Court for the District of Columbia, Building and Construc- tion Trades Department, AFL-CIO, et al. v. Ray- mond J. Donovan, Secretary of Labor, et al., July BN MIE aiccdiunkcahs .ctcrgeecacota dca REID CET ee 79a APPENDIX F Decision of the United States District Court for the District of Columbia, Building and Construc- tion Trades Department, AFL-CIO, et al. v. Eliza- beth H. Dole, Secretary of Labor, et al., January eas AEE saci pccuiinatentaiamatnanalhen ded pene ee cer. 98a- il TABLE OF CONTENTS—Continued APPENDIX G Page Decision of the United States District Court for the District of Columbia, Building and Construc- tion Trades Department, AFL-CIO, et al. v. Ray- mond J. Donovan, Secretary of Labor, et al., De- COMDSE B1, LOGE ..... es. -venescnenincsniinisiassesmnanmmenete ae APPENDIX H Notice Establishing Effective Date for Amend- ments of 29 C.F.R. Parts 1 and 5, 55 Fed. Reg. GO14B-BO (ADOC). oncuscccncscinncdacsanseae 104a APPENDIX I Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Con- tracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Con- tracts: Final Rule. 54 Fed. Reg. 4234-44 (1989)... 115a APPENDIX J Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Con- tracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Con- tracts: Proposed Rule. 52 Fed. Reg. 31366-31372 (1008? a eae ssi ape ene oan APPENDIX K Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Con- tracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Con- tracts: Final Rule. 47 Fed. Reg. 23644 and 23658 (1DBR) ......:.:020 practice to observe tnis ratio ABC, on the other hand, suggested counting only the number of helpers, and not journeymen, and permit- ting helpers wherever there is a “substantial area prac- In our view this approach would be contrary to the Court of Appeals’ requirement that helpers be found prevail before they can be utilized on Davis-Bacon proj- ect ABC suggested as alternatives, Option C (count projects on which helpers are used) or Option E (count contractors employing helpers). These are not acceptable approaches, however, because they fail to give necessary se weight to the size of a project or a contractor’s work- force. Option D would weight projects by dollar volume, 138a a factor which is very djfficult to determine and may bear little relationship to the size of the workforce. In our view, the number of workers actually empioyed in a craft is the appropriate weighting factor. A number of commenters stated that there are other workers who perform similar duties to helpers on a proj- ect, and that they should be considered helpers in deter- mining whether helpers prevail. As discussed above, it is our experience that laborers do not normally function as helpers and it is not our intention to upset established practices regarding the use of laborers. In addition, ap- prentices and trainees, since they are separately defined in the regulations, are not helpers. However, we have observed that use of other sub-journeymen classifications, such as “improvers” or “learners,”’ sometimes is found in the union sector. Such workers will be counted as helpers in determining whether helpers prevail if they conform to the “helper” definition. Finally, DOL has determined upon review that in order to obtain a more accurate assessment of total employment in a particular classification, it will be necessary to in- clude, for counting purposes only, ali workers who work in the classification, including apprentices and trainees. Accordingly, a clarifying revision is added to section 1.7 (d) (2) to provide that the total number of workers in the classification employed by contractors utilizing helpers (all journeymen, helpers, apprentices, and trainees) will be compared to the total number of workers in the classi- fication employed by contractors not utilizing helpers (journeymen, plus apprentices and trainees, if any), and the practice covering the majority of the workers in such classification will determine whether to issue a helper rate. Since apprentices and trainees are defined separately in the regulations (29 CFR 5.2(n)(1) and (2)), and prevailing wage rates are not determined by DOI for apprentices and trainees (the contractor derives the rates required to be paid on DBRA work by applying the appro- we i ae a le oe, 9) Mia oi ee. ae a, ee priate percentage progression in the approved training programs to the applicable wage determination rate for the journeyman), the wage rates paid to apprentices and trainees will not be included in determining the prevailing wage rate for the helper classification (just as the journey- men rates are similarly not so included). With the added clarification, Option A is adopted as proposed. Issue: Conformance Procedures Comments The BCTD objected to the special criteria in proposed section 5.5(a) (1) (ii) (A) under which helper classifica- tions and wage rates could be “conformed” (i.e., added to a wage determination after the wage determination has been issued) if a particular wage determination did not contain a helper classification. As proposed, this sec- tion provided, as did the rule promulgated in 1982. that helper rates could be conformed without regard to the longstanding requirement, applicable to all other con- formance actions, that the work of a proposed classifica- tion to be conformed not be performed by another classi- fication already listed in the wage determination. In addition, a provision was added as a result of the court of appeals decision to require that helper classifications may be conformed only where they prevail in the area covered by the wage determination. The BCTD argued ' that the first provision will permit conformance of less- than-prevailing classifications if a helper is allowed to perform work performed by another classification in the wage determination (i.e, the journeyman). Secondly, according to the BCTD, the proviso would grant authority to contracting officers to determine if a helper classifica- tion prevails in an area without reference to any guide- lines or criteria for making such a determination. Under this scheme, the BCTD suggested that a contracting officer could undercut prevailing wage determinations issued by 140a DOL which, presumably, has already determined that use of the helper classification is not a prevailing practice in the area covered by the wage determination (otherwise DOL would have recognized the helper classification as prevailing in the first place and included it in the wage determination issued). The AGC objected to the provision in the existing con- formance procedures which requires that conformed wage rates bear a “reasonable relationship” to the wage rates contained in the wage determination. As applied to con-. formance of a proposed helper classification, this require- ment may raise helper wage rates beyond what is actually paid. AGC suggested that since the helper classification is a low-skilled, entry-level position, helper wage rates are likely to be much lower and this should be recognized when helper wage rates are conformed. Discussion The conformance procedure is intended to provide a practical solution to the need for adding classifications and wage rates in cases where a published wage determi- nation does not contain a particular classification that a contractor and the contracting agency find necessary to perform the government contract. The procedure provides for the Wage and Hour Administrator to review, approve, modify, or disapprove every proposed additional classifi- cation action. The new helper definition contemplates that a helper’s duties may overlap to some extent with the duties of journeymen. The conformance procedure, therefore, con- tains an exception from the normal rule for conformance of helpers, in order to permit adding a helper classifica- tion despite the fact that some of the duties to be per- formed by the helper may also be performed by journey- men in the classification. To do otherwise would mean a helper classification could never be conformed. 14la This provision will not permit conformance of less- than-prevailing helper classifications as alleged by the BCTD. One of the criteria for approval of helper con- formances requires, as a prerequisite, that the helper classification prevail in the area where the work is per- formed. The BCTD comment that the procedures grant new ithority to contracting officers to enable them to under- cut prevailing wage determinations issued by DOL. is unfounded. The Wage-Hour Administrator must approve every proposed conformance action. The Administrator il] be barred from approving a helper conformance if evidence is not submitted demonstrating that the helper ion preval classificat s, taking into consideration the prin- | ciples set forth in § 1.7. The BCTD comment that any wage determination issued by DOL that does not contain a particular helper classifi- cation can be presumed to mean that the helper classifi- cation does not prevail oversimplifies the issues. Not all vage determinations are the result of extensive wage surveys, and not all counties are surveyed each year. A ractical solution is needed for adding prevailing helper classifications to wage determinations, such as through formance, for the areas that have not recently been surveyed at the time a request is made to add a helper 1 classification to a wage determination. On the other hand, if a survey has recently been conducted and a determina- tion made that helpers do not prevail, conformance of an additional helper classification will not be approved. With respect to AGC’s comments, prevailing pay rela- tionships are generally found to be in direct proportion to the skill levels required and the difficulty of the duties neformed in the various classifications. The helper classi- ication, as defined, is a semiskilled classification, as op- posed to an wnskilled classification or a skilled mechanic’s classification. Thus, as a general statement, prevailing rates for semiskiiled helpers would be expected in most ee. « ie 142a cases to be between the lowest rate listed on a wage de- termination for an unskilled laborer classification and the higher rate listed for the skilled journeyman mechanic in the classification which the helper is assisting. Absent a contrary prevailing area practice, it is not likely that we will find helper wage rates lower than rates prevailing in an area for unskilled work (with the exception of rare instances where the union laborer rate prevails in combi- nation with open shop rates prevailing for the skilled trades). Therefore, the requirement that conformed wage rates bear a “reasonable relationship” to the wage rates contained in the wage determination should not, contrary to AGC’s assertion, raise helper wage rates to levels above what is actually being paid to helpers in a community. In any event, the requirement that the rates bear a “rea- sonable relationship” has always been an integral part of the conformance process. Accordingly, $ 5.5(a) (1) (ii) (A) is adopted as proposed. Issue: Ratio Limitation on the Use of Helpers: Variances. The enjoined 1982 regulations contained a numerical limitation on the use of helpers: two helpers for every three journeymen, or not more than 40 percent of the total number of helpers and journeymen, in the contrac- tor’s work force on the job site. (A one-helper-to-five- journeymen ratio was originally proposed, but was raised to 2:3 in the final rule in response to public comments that 1:5 was too restrictive and would not reflect the actual number of helpers used in the industry.) Helpers employed in excess of this ratio would be re- quired to be paid the applicable journeyman’s (or labor- er’s, where appropriate) wage rate for the work actually performed. To insure that this ratio did not disrupt existing established local practices in areas where DBRA wage determinations currently contain helper classifica- tions without any limitation on the number permitted, a eas 148a the preamble to the regulations provided that DOL would consider requests for variances from the ratio limitation prior to bid opening on a contract, if supported by a show- ing that the DBRA wage determination for the type of construction in effect in the area before the effective date of the final helper regulations contained a helper classifi- cation, and that there was a practice in the area of utiliz- ing such helpers in that classification on DBRA projects in excess of the two-for-three ratio. The ratio and variance provisions were not open for ‘comment in the current rulemaking. Comments were pre- viously invited on a proposed ratio in 1981, and a fina ‘atio was adopted in 1982 after consideration of the public comments received. In the litigation, the district court enjoined the implementation of all the new regulations governing the use of helpers, including the ratio. How- ever, the appeals court declined to rule on the helper pro- visions other than the expanded definition of duties and iS] a helper classification need only be “Sdentifiable” in an area to be used, on the grounds that the district court had not provided any significant dis- cussion of the issues involved. Because the ar ppeals court did not set aside the district court’s injunction on the io. which had been enjoined as a part of the total helper package which was overturned, the district court’s subsequent order, among other things, continued the in- junction against the ratio. The preamble to the 1987 Notice of Proposed Rulemak- ing (NPRM) included a discussion of the ratio and vari- rovision, and stated that the Department intended ance } to implement them as fina in the 1982 regulations, once the related helper provisions in the NPRM were finalized. 7 . ae Oc ’ ners | rules, as previously provided White several comments were submitted which took issue with either the mechanical operation of the ratio or ) + variance provisions, and/or suggested the 2:3 ratio be 144a dropped or revised to other numerical limits (which were similar to the comments received during the 1981-1982 rulemaking), DOL cannot at this time implement any of the suggested changes without further notice-and-comment rulemaking. Accordingly, as explained in the preamble to the 1987 NPRM, the 2:3 ratio contained in the enjoined 1982 regulations is being implemented in this final rule. In addition, to assure that the ratio does not disrupt exist- ing established local practices in areas where wage deter- minations currently contain helper classifications without restriction as to the number permitted, interested parties (which would include contracting agencies), may request, prior to bid opening on a contract, a variance from the ratio provision pursuant to section 5.14 of the regulations. Such variances will be considered for the applicable helper classification(s) upon a showing that the wage determi- nation for the type of construction in effect in the area prior to the effective date of these regulations contains one or more helper classifications, and that there was a practice in the area of utilizing such helpers on Davis- Bacon projects in excess of a ratio of two to every three journeymen in the classification. Issue: Use of wage data from projects covered by DBRA when determining whether helpers prevail. Comments AGC observed that under current policy and practices, projects covercd by DBRA constitute most or all of the data base for surveys in heavy and highway construction. (Under 29 CFR 1.3(d) (1985), data from projects sub- ject to DBRA are not used when determining prevailing wages for building or residential wage determinations, unless there is insufficient private construction from which to determine prevailing wages; data from DBRA projects are used in compiling wage rate data for heavy and high- way weze determinations, because of the extensive public funds expended, and the limited privately-funded work, 145a in heavy and highway construction.) AGC postulated that if this practice were continued under the new rules for determining if helpers prevaii, the prior restrictive helper policy on DBRA work would be perpetuated into future heavy and highway wage determinations. Similarly, where DBRA projects are included for building or residential wage determinations (due to insufficient data from private work). the same results would occur. AGC suggested that where DBRA projects are the source of wage and area practice data, helpers should be permitted for subsequent DBRA construction “where helper type of work has been found to prevail in a classification.” However, AGO offered no insight on how that determination could be made. Discussion The regulation on use of DBRA projects in wage sur- veys was not open for comments during the current rule- making. No valid approach has been suggested which would justify DOL using some separate data base for determining if helpers prevail that differs from the data sourees used to establish the prevailing wages in an area. However, if future experience under the new helper rules indicates further rulemaking is needed to adapt the Act’s implementation to changing prevailing area practices, DOL would not be precluded from considering further rulemaking initiatives. Executive Order 12291; Regulatory Flexibility Act Regulatory Impact and Flexibility Analyses The Department prepared a preliminary regulatory im- pact and regulatory flexibility analysis in connection with the proposed helper regulations published on August 14, 1981 (46 FR 41444; 46 FR 41456). A final regulatory impact and regulatory flexibility analysis was prepared and summarized in the May 28, 1982 publication of the helper regulations (47 FR 23644; 47 FR 23658). The 146a Department updated its analysis of the helper provisions in connection with the proposed rule published on August 19, 1987 (52 FR 31368). The updated analysis estimated that the annual cost savings to be realized from imple- menting the helper regulations ranged from midpoint esti- mates of $422 million (helpers substitute for laborers and journeymen) to $610 million (helpers substitute for jour- neymen only), and projected that the changes would have a substantial beneficial impact on small contractors. Several comments were received regarding the analysis from individuals, labor organizations, contractors, and the Chief Counsel for Advocacy of the Small Business Administration. Some commenters stated their belief that the cost savings estimates were inflated while others suggested they were understated; some questioned whether the estimated savings would be passed through to the end user (owner or government) ; and others questioned vari- ous assumptions in the analysis regarding productivity and the disaggregated approach to the wage bill estimates. SBA’s Chief Counsel for advocacy concurred with DOL’s views that the regulations would have a significant bene- ficial impact on small businesses, and would-also result in significant savings to the nation’s taxpayers. The Department, as set forth above in the discussion of comments received, has concluded that of the regulatory alternatives available, Option A is the most consistent with the stated objective of the statute. However, the Department has concluded upon review that the references in the analysis to the effect that help- ers may substitute for laborers are not correct. As noted above, laborers would not generally meet the definition for the helper classification. Further, under the Option A method for determining if the use of a helper classification prevails, prevailing pay relationships in the industry will make it highly unlikely that such a substitution effect could occur. For example, where the majority rate pre- vails for the journeyman and union rates are found pre- vailing in the area, the decision rule is not likely to pro- 147a duce a finding of prevailing helpers. Furthermore, it has been our experience in the open shop sector as well as in the union sector that prevailing pay relationships in the industry are found to be in direct proportion to skill levels, and semiskilled helper rates are above the unskilled laborer’s rate. Thus, we anticipate that this will continue to be the case if there is no majority rate under Option A and the weighted average rule is utilized. As also noted above in the discussion of comments on the conformance procedures, the helper classification, as defined, is a semi- skilled classification, as opposed to an unskilled laborer classification or a skilled mechanic’s classification. Thus there will be no economic incentive for contractors to re- place laborers with helpers. The economic incentive could only exist if the wage determination issued contained open shop rates for the journeyman and helper classifications, coupled with a union laborer rate that is higher than the helper rate. With rare exceptions, such a situation would not occur, since it is our experience that where there is an open shop journeyman rate it is almost never the case that there is a union laborers rate. Accordingly, the Department is withdrawing the por- tion of the analysis which contains estimates of cost sav- ings for where helpers substitute for both laborers and journeymen (Table II and the related discussion, 52 FR 31370). The Department is adopting the primary analy- sis published with the proposal as the Department’s final regulatory impact analysis. As indicated in the preliminary analysis, the results of the analysis represent the upper limit in potential cost savings from the proposed options. The analysis assumes the determination of whether helpers prevail is, in all cases, determined by the practice covering the majority of the workers reported in the survey (the second half of Option A), rather than the practice of particular con- tractors whose wage rates establish the prevailing wage the first half of Option A). Data limitations prevented 148a estimation of the effects on construction cost savings when the practices of contractors whose wage rates establish prevailing wages also determine helper utilization. How- ever, a review of prevailing wage determinations issued under DBRA indicates that roughly 35% of the general wage determinations issued and 20% of the individual project wage determinations issued contain rates based exclusively on collective bargaining agreements. To the extent that such collective bargaining agreements estab- lish the prevailing wages under DBRA, and do not pro- vide for the use of a helper classification, the estimate of cost savings would be reduced accordingly. Copies of the complete analysis may be obtained from the Wage and Hour Division at the address and telephone number listed above under FOR FURTHER INFORMA- TION CONTACT. Paperwork Reduction Act The information collection requirements contained in section 5.5(a) (1) (ii) of Part 5 were previously approved by the Office of Management and Budget under the Paper- work Reduction Act and assigned OMB control number 1215-0140. Conclusion The Solicitor of Labor has determined, in accordance with Executive Order 12291, that this regulation is clearly within the authority delegated to the Secretary of Labor by the Davis-Bacon Act (40 U.S.C. 276a et seq.), Re- organization Plan No. 14 of 1950 (5 U.S.C. Appendix), and the Copeland Act (40 U.S.C. 278c) as well as 5 U.S.C. 301, 29 U.S.C. 259, and the laws listed in Appendix A of Part 1 and Section 5.1(a) of Part 5. The Solicitor, as set forth above in the discussion of the major issues, has determined that this regulation is consistent with the Congressional intent of the Davis-Bacon and related Acts 149a +}, + that wage determinations issued under those Acts reflect the rates prevailing on similar construction in the locality + inal such wage determinations be incorporated in con- to those Acts, and that contractors per- forming work on Federal and federally assisted construc- tion projects subject to those Acts pay their workers at least the prevailing wages established by the Secretary of tracts subject Labor in accordance with industry classification and wage practices. Dat S of Applicability Certain provisions of this regulation are currently un- der injunction by the U.S. District Court for the District of Columbia. Accordingly, copies of this regulation are being submitted to the Court for review and approval prior to final implementation, pursuant to the Court’s decision of December 21, 1984. Once the injunction is lifted, a notice will be published in the Federal Register providing an effective date 60 days thereafter. The pro- visions of the revised rule will then take effect as follows: The revisions to section 1.7(d) of Part 1 shall be ap- plicable only as to wage determinations issued based on wage surveys completed on or after the date of imple- mentation of this revised rule. The revisions to sections 5.2 and 5.5 of Part 5 shall be applicable only as to contracts entered into pursuant to invitations for bids issued or negotiations concluded on or after the date of implementation of this revised rule. None of the revisions herein shall be applicable to any contract entered into prior to such date. This document was prepared under the direction and control of Paula V. Smith, Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor. 150a List of Subjects 29 CFR Part 1 Administrative practice and procedures, Government contracts, Labor, Minimum wages, Wages. 29 CFR Part 5 Administrative practice and procedure, Government contracts, Investigations, Labor, Minimum wages, Penal- ties, Reporting and recordkeeping requirements, Wages. Accordingly, 29 CFR Parts 1 and 5 are amended as set forth below. Concurrent with the publication of this final rule, the final helper rules previously published in the Federal Register on May 28, 1982 (47 FR 23644; 23658) and subsequently deferred (see 47 FR 32070, July 26, 1982; 48 FR 19368, April 29, 1983) are hereby withdrawn. Signed at Washington, DC, on this 24th day of Janu- ary, 1989. Dennis E. Whitfield, Acting Secretary of Labor. Alan C. MacMillan, Acting Assistant Secretary for Employment Standards. Paula V. Smith, Wage and Hour Division. PART 1—PROCEDURES FOR PREDETERMINATION OF WAGE RATES 1. The authority citation for Part 1 continues to read as follows: Authority: 5 U.S.C. 301; R.S. 161.64 Stat 1267; Reorganization Plan No. 14 of 1950, 5 U.S.C. Ap- pendix; 29 U.S.C. 259; 40 U.S.C. 276a-276a-7; 40 U.S.C. 276c; and the laws listed in Appendix A of . ; 1] 6) read as IOlOws: i (ont?) } ro . yT ind ¢ matters a y. * ¥ 1) (ii) (A) The contracting officer shall require that a - » 4%, sone . ; ; 1 class of laborers or mechanics. including helper vhic] is not listed in the wage determination and which is to he employed under the contract shall be classified in con- formance with the wage determination. The contracting officer shall approve an additional classification and wag td - » 1 . 7 1 } . 7 rate and fringe benefits therefor oniyv wnet ne Tolov y 4 iy criteria have been met ai a 2 ea ‘. ; CFR 5.2(n) (4), the work to be performed by the fication requested is not performed by a classificatioy the wage determination: and (2) The classification is utilized in the area bv the construction industry; and 9 TI aa ; eae aa _—— a2 l ee » ne proposed Wage rate, inciuding any bdona hada . , : . ' 4 } 4,4 . “O + ] ‘yy +1, . wee ] + yy) es i es ; \ C Fates CONntTalnet ne Wage determinatior ind +h " + + } ] ( mee) - j ] respec 0 eipers as denined ? , { } y’ yj ’ 110eh | t t '(4), such a classificatior the eV } Ss nerwt med 154a { 4 ) aa * ~ (iv) Helpers. Helpers will be permitted to work on a project if the helper classification is specified on an ap- plicable wage determination or is approved pursuant to the conformance procedure set forth in § 5.5(a) (1) (ii). The allowable ratio of helpers to journeymen employed by the contractor or subcontractor on the job site shall not be greater than two helpers for every three journeymen (in other words, not more than 40 percent of the total number of journeymen and helpers in each contractor’s or in each subcontractor’s own work force employed on the job site). Any worker listed on a payroll at a helper wage rate, who is not a helper as defined in 29 CFR 5.2(n} (4), shall be paid not less than the applicable wage rate on the wage determination for the classification of work actually per- formed. In addition, any helper performing work on the job site in excess of the ratio permitted shall be paid not less than the applicable journeyman’s (or laborer’s, where appropriate) wage rate on the wage determination for the work actually performed. * y ¥ ¥ (FR Doc. 89-1987 Filed 1-26-89: 8:45 am| Editorial Note: This reprint incorporates a correction that is published in the Federal Register of Thursday, February 2, 1989. 155a APPENDIX J FEDERAL REGISTER Vol. 52, No. 160 Wednesday, August 19, 1987 DEPARTMENT OF LABOR employment Standards Administration, Wage and Hour Division Office of the Secretary 29 CFR Parts 1 and 5 Procedures for Predetermination of Wage Rates: Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction (Also Labor Standards Provisions Applicable to Nonconstruc- tion Contracts Subject to the Contract Work Hours and Safety Standards Act) AGENCY: Wage and Hour Division, Employment Stand- ards Administration, Labor. ACTION: Proposed rule. SUMMARY: This document is a proposal resulting from the Department of Labor’s reexamination of revised reg- ulations previously issued under the Davis-Bacon and Re- lated Acts as required by an injunction and subsequent decision of the U.S. Court of Appeals for the District of Columbia Circuit. The proposed rule contains provisions governing the use of semi-skilled “helpers” on federally financed and assisted construction contracts subject to the prevailing wage standards of the Davis-Bacon and Related Acts. DATE: Comments are due October 19, 1987. ADDRESS: Submit written comments (preferably in triplicate) to Paula V. Smith, Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Room §$-3502, 200 Constitu- tion Avenue, NW., Washington, DC 20210. Any com- menters desiring notification of receipt of comments should include a self-addressed, stamped post card. FOR FURTHER INFORMATION CONTACT: Herbert J. Cohen, Deputy Administrator, Wage and Hour Divi- sion, Employment Standards Administration, U.S. De- partment of Labor, Room S-3502, 390 Constitution Ave- nue, NW., Washington, DC 20210, Telephone: 262-523- 8365. SUPPLEMENTARY INFORMATION: On May 28, 1982, the Department published revised final Regulations, 29 CFR Part 1, Procedures for Predetermination of Wage Rates, and Regulations, 29 CFR Part 5, Subpart A—Davis-Bacon and Related Acts Provisions and Pro- cedures (47 FR 23644 and 23658, respectively), contain- ing, among other rules, new provisions intended to allow contractors to expand their use of semi-skilled helpers on Davis-Bacon projects at wages lower than those paid to skilled journeymen, wherever the helper classification, as defined in the regulations, was ‘“‘identifiable” in the area. To protect against possible abuse, a provision was _ in- cluded limiting the number of helpers which could be used on a covered project to a maximum and two helpers for every three journeymen. These regulations were challenged in a lawsuit brought by the Building and Construction Trades Department, AFL-CIO, and a number of individual unions. The U.S. District Court for the District of Columbia issued a per- manent injunction on December 23, 1982 (Building and Construction Trades Department, AFL-CIO, et ai., V. Donovan, et al., 553 F. Supp. 352) which, as modified by its order of January 17, 1983, enjoined the implementa- 157a tion of the following regulatory sections of the May 28, 1982 final rules pertaining to the use of helpers; 29 CFR 1.7(d); 29 CFR 5.2(n) (4): 29 CFR 5.5(a) (1) (ii) (A) and 29 CFR 5.5(a) (4) (iv). The Department appealed this injunction and deferred and enjoined provisions until further notice pending the outcome of the appeal (see 48 FR 19368; April 29, 1983). On July 5, 1983, the U.S. Court of Appeals for the Dis- trict of Columbia Circuit issued a decision upholding the Department’s authority to allow increased use of helpers, and approving the regulatory definition of a helper’s du- ties. However, the court struck down the provision for issuing a helper wage rate where helpers were “identifi- able” (29 CFR 1.7(d)), thereby requiring a modification to the regulations to provide that the helper classification be “prevailing” in the area before it may be used. The Court did not rule on the remaining helper provisions. Building and Construction Trades Department, AFL-CIO, et al., v. Donovan, et al., 712 F.2d 611. On October 26, 1983, the AFL-CIO filed a petition for a writ of certiorari in the U.S. Supreme Court seeking review of the appeals court decision. On January 18, 1984, the U.S. Supreme Court denied the petition. 464 U.S. 1068. On December 21, 1964, the U.S. District Court for the District of Columbia issued an order which, inter alia, lifted the injunction on the definition of a_helper in 29 CFR 5.2(n) (4), but continued the injunction with re- spect to the remaining helper provisions. The order stated the Department could submit to the Court reissued regulations governing the use of helpers, and that they would be approved if they conformed to the Court of Appeals decision. The following is a description of the previously en- joined provisions which are now being reproposed with 7 necessary revisions to conform them to the rulings of the courts In the litigation. Lb&8a art 1 Section 1.7(d) Scope of consideration. This subsection provides that wage rates for semi- skilled classifications of helpers will be issued when they are “prevailing” in the area. The previous language that such classifications would be issued when “identifiable” in the area has been eliminated in accordance with the ruling of the appeals court. In addition, the Department is proposing, in the alternative, the following two ap- proaches for determining whether there is a “prevailing” practice of using a helper classification. Alternative Option A If the prevailing journeyman wage for a classification is determined by the “majority rule’ (29 CFR 1.2 (a) (1); ie., more than 50% of the journeymen are paid the same wage), then the determination of whether use of a helper classification prevails will be made according to the practice of those contractors whose rates are adopted as prevailing for the journeymen. Thus, if a union wage for a particular classification prevails by the majority rule, the applicable union practice as to whether helpers are used would be followed (i.e, the use of a helper classification would be recognized as prevailing in such cases if the union practice is for a separate helper classification to be used; conversely, the use of a helper classification would not be recognized as prevailing if the union contractors do not use such a helper classification). Similarly, if an open shop rate prevails by the majority rule and the open shop contractors who paid such rate use a separate helper classification, the use of a helper classification would be recognized as prevailing for Davis- Bacon projects. On the other hand, if the prevailing journeyman wage for a particular classification is determined by the “weighted average rule’ (29 CFR 1.2(a) (1), Le, the 159a average of the wages paid to the journeymen, weighted by the total of journeymen in the classification), then the total number of workers (i.e., journeymen plus helpers as defined in 29 CFR 5.2(n) (4)) in the classification em- ployed by contractors using helpers on projects reported in the survey will be compared to the total number of workers in the classification employed by contractors not using helpers (journeymen only). The practice which covers the majority of the workers reported in the survey (i.e., the majority of workers associated either with, or without, the use of helpers) will determine whether a helper classification prevails. For illustration, a survey discloses 150 journeymen carpenters working on projects where no carpenter help- ers are employed and 80 journeymen carpenters working on projects where 30 carpenter helpers are employed. If the majority of such journeymen do not receive the same wage rate then the ‘weighted average ruie” would apply. In this situation, helpers would not prevail since the ma- jority of the workers in the craft in the survey, 150 journeymen employed on projects with no helpers com- pared to 110 (i.e., 80 journeymen plus 30 helpers) em- ployed on projects with helpers, are employed by con- tractors not using helpers. In contrast, if 50 carpenter helpers are employed with 100 journeymen carpenters on projects where helpers were utilized, compared to 100 journeymen carpenters employed on projects where no carpenter helpers were employed, under the “weighted average rule’ helpers would be recognized as prevailing since the majority of workers in the craft, 150 (100 journeymen plus 50 help- ers) out of 250, are employed by contractors who use helpers. Alternative Option B For each separate classification, compare the total number of workers (journeymen plus helpers, as defined) in the classification employed by contractors using help- 160a ers on projects reported in the survey to the total num- ber of workers in the classification employed by contrac- tors not using helpers ‘journeymen only). The practice which covers the majority of the workers reported in the survey will in all cases determine whether use of a helper classification prevails. (This approach, in essence, is the same as Option A when the “weighted average rule” determines the prevailing journeyman wage. ) Additional Options Considered The Department is presently proposing to determine the “prevailing” use of a helper classification in one of the two manners described above, and seeks comments on eacn alternative. In addition, the Department has given careful consideration to several other alternatives and invites comments on the legal and practical feasibil- ity of the alternatives set forth in (c) through (e) below. Alternative Option C: Count by Number of Projects. For each journeyman classification in which helpers were utilized, determine from the wage survey results the number of projects on which helpers worked in the particular classification and compare this number to the number of projects on which no helpers worked in that classification. The practice covering the majority of the projects would be considered prevailing. Alternative Option D: Count by the Dollar Value of Con- struction Projects For each journeyman classification in which helpers were utilized, determine from the wage survey results the total dollar value of the construction projects on which helpers were utilized in the particular classification and compare this amount to the total dollar value of the con- struction projects on which no helpers were used in that classification. The practice followed on the construction projects which comprise the larger dollar value would be considered prevailing. 16la Alternative Option E: Count by the Number of Con- tractors For each journeyman classification in which helpers were utilized, determine from the wage survey results the number of contractors who used helpers in the par- ticular classification and compare this number to the number of contractors who did not use helpers in that classification. The practice covering the majority of the contractors would be considered prevailing. In order to assist the Department in establishing the most appropriate method for determining when the use of a helper classification is a prevailing practice on con- struction projects in an area, commenters are requested to provide specific information and supporting documen- tation which addresses, in detail, the practices in their local communities of using helpers (including estimates thereof) by craft classification (journeymen versus help- ers), dollar volume, size and type (building, residential, heavy, or highway) of construction project, workforce size and type of construction contractor, and the presence or absence of collective bargaining agreements applicable to construction work performed in the area. Part 5 Section 5.5(a)(1)(ii)(A) Conformance procedures. This subsection provides that helper classifications (as defined in §5.2(n)(4)) and rates can be conformed. without regard to whether the work of the helper classi- fication is performed by another classification listed in the wage determination. As a result of the appeals court decision, the previously stayed provision has been revised to provide that helper classifications may be conformed only where they prevail in the area. Re gulatory Definition of He le r The district court has lifted the injunction on the regu- latory definition of the term helper which was published on May 28, 1982 in 29 CFR 5.2(n) (4). Accordingly, no changes are being proposed in the helper definition. The Department intends to implement this definition when the remaining related provisions in this proposal are fi- nalized. The definition is being repeated here for infor- mational purposes. Section 5.2 Definitions * + . * * (n) The terms apprentice, trainee, and helper are de- fined as follows: * * * . * (4) A “helper” is a semi-skilled worker (rather than a skilled journeyman mechanic) who works under the direction of and assists a journeyman. Under the jour- neyman’s direction and supervision, the helper performs a variety of duties to assist the journeyman such as pre- paring, carrying and furnishing materials, tools, equip- ment, and supplies and maintaining them in order; clean- ing and preparing work areas; lifting, positioning, and holding materials or tools; and other related, semi-skilled tasks as directed by the journeyman. A helper may use tools of the trade at and under the direction and super- vision of the journeyman. The particular duties per- formed by a helper vary according to area practice. * . * . * al aad In addition, § 5.5(a) (4) (iv) of the May 28, 1982 final rules provided conditions governing the use of helpers on Davis-Bacon covered projects, including a ratio which per- mitted employment of no more than two helpers for every three journeymen (or not more than 40 percent of the total number of helpers and journeymen) in the contractor’s workforce on the project. No changes are being proposed in these provisions, which the Department also intends to implement in the final rulemaking. As previously provided in the May 29, 1982 publica- tion to assure that this ratio does not disrupt existing 163a established local practices in areas where wage deter- minations currently contain helper classifications without restriction as to the number permitted, it is proposed to allow interested parties (which would include contracting agencies), prior to bid opening on a contract, to request a variation from the ratio provision pursuant to § 5.14 of the regulations. Such variances would be considered for the applicable helper classification (s) upon a showing that the wage determination for the type of construction in effect in the area prior to the effective date of the final helper regulations contains one or more helper classifica- tions, and that there was a prevailing practice in the area of utilizing such helpers on Davis-Bacon projects in ex- cess of a ratio of two to every three journeymen in the classification. Regulatory Impact and Flexibility Analyses The Department prepared its preliminary regulatory impact and regulatory flexi bility analysis in connection with the proposed helper regulations published on August 14, 1981 (46 FR 41444; 46 FR 41456). A final regulatory impact and regulatory flexibility analysis was prepared and summarized in the May 28, 1982 publication of the helper regulations (47 FR 23644: 47 FR 23658). As set forth in the final analysis, the annual cost savings to be realized from implementing the helper regulations were estimated to range from $246.43 million to $479.89 mil- lion, with the midpoint estimate of likely cost savings a approximately $363 million, and the changes were pro- jected to have a substantia! beneficial] Impact on smal] contractors. The Department has since updated its analy- sis of the helper provisions in connection with the proposed rule being published today, as set forth below. The Cost Impact of the Increased Usage of Semi-Skille Workers on Davis-Bacon Projects 1 This regulatory impact and flexibility analysis i ased assumption that the revisions to §§5.2(n)(4) and 52 a)(4 164a Introduction In order to quantify the cost savings that would_result from an increase in the use of semi-skilled workers on projects covered by the Davis-Bacon and Related Acts (DBRA) as provided in this regulatory proposal, a dis- aggregated approach will be used. We will analyze the cost effects in each of four regions: The northeast, north central, west, and south. The aggregate annual cost sav- ings will then be determined by computing the arithmetic sum of the regional cost savings estimates. The disaggregated approach is used as a means of cap- turing some degree of the existing local differences in construction industry practices. This approach incorpo- rates changes in the occupational mix on Davis-Bacon projects by region which would occur as a result of changes being made in the regulations, and the effects these changes have on the wage cost component of Davis-Bacon projects. Therefore, the aggregate cost estimates derived from this method will provide a more accurate picture of total wage cost savings than would cost estimates derived from a more highly aggregated analysis (i.e., one that relied solely on national data. ) Admittedly, a four region disaggregation does not ap- proach the level of refinement to wage cost savings esti- mates that would result from the use of county-specific estimates; however, disaggregation to any significantly greater degree of detail as an attempt to measure cost effects in every locality is not possible due to data source limitations. In addition to this, the regions are defined to include selected metropolitan areas (in part, due to limita- tions of BLS data sources). This assumption is consistent with the view that most construction activity occurs in metropolitan areas. However, exclusion of wage rates in rural and less populated areas may cause our results to of the regulations (which have been stayed pending approval of the U.S. District Court for the District of Columbia) will be imple- mented together with the revisions being proposed. 165a overestimate cost savings since wage rates in these areas are typically lower than in larger metropolitan areas. As a final note, the primary analysis includes an im- portant analytical assumption that helpers will only substi- tute for some portion of journeymen. Recognizing that the regulations may allow for the substitution of helpers for some laborers, as well as journeymen, we will include an additional range of cost estimates for cases where helpers substitute for some portion of workers in both classes. We also assume comparable productivity levels for helpers, journeymen, and laborers. The 1984 Wage Bill for Helpers and Journeymen on Da vis-Bacon ( ‘onstruction Proje cts The initial step in the methodology is to determine the existing wage bill (i.e., labor cost) by region for all help- ers and journeymen employed on Davis-Bacon projects. Once determined, the cost savings associated with the reg- ulations can be derived by comparing these wage bills with regional wage bills that would result from increased helper usage on covered projects. Towards this end, we must first determine for each region, the size of the Davis- Bacon labor force, its occupational mix, and the average wage associated with each occupational classification. Employment levels by craft classifications and region are derived from regional construction employment shares and national aggregate industry and craft employment levels obtained from Bureau of Labor Statistics (BLS) data sources.? The initial step is to determine the total helper-journeyman wage bill by region. This requires deriving the 1984 (the most recent year for which data for all variables are available) regional helper share of Davis-Bacon employment. (See tables in the appendix. ) “Supplemental to Employment Hours. and Earnings, States and Areas, 1965. USDOL/BLS: and Occupational Employment Statis- tics Survey of Selected Nonmanufacturing Industries, 1985. USDOL/BLS. 166a If we assume the value of construction to vary in like manne? with construction employment, then based on our estimate that the share of DBRA construction is 18 per- cent of all new construction put into place, we assume that a corresponding share of all construction employment in each region works on covered projects.* This assump- tion is also used to derive the number of employees in the various craft classifications that are employed on covered projects. Thus, in 1964 out of a total of 3,375,000 construction workers, we estimate that 607,500 were engaged in work on projects covered by the DBRA. BLS data on em- ployment levels within various construction trade occupa- tion indicate that if the occupational mix on Davis-Bacon projects mirrors the mix that exists in the economy as a 3 We estimate all new public construction put into place in 1964, approximately $56 billion as reported in the U.S. Bureau of Census publication Construction Reports, to represent the share of all con- struction (18%) that is subject to DBRA. ‘All new construction put into place” includes renovations that cost $100,000 or more, rehabilitation projects that cost $500,000 or more, conversions, ad- ditions, improvements, remodeling, and replacement (e.g., heating systems, elevators). Using this as our estimate of construction covered by Davis-Bacon may cause a positive bias because it in- cludes public construction projects funded exclusively by State and local governments that are therefore not covered by DBRA as well as federally assisted construction funded under statutes which do not require payment of Davis-Bacon wages. However, an opposing bias arises from the exclusion of small rehabilitation, re- pair, and renovation projects, and private projects that only in- directly receive federal assistance. The alternative is to assume that only the value of the Federal share of all new construction put into place represents the covered universe. This would underestimate coverage since it also excludes small projects and projects to which Davis-Bacon is indirectly ap- plied by virtue of statutes providing Federal assistance. Other estimates of Davis-Bacon covered construction include those of the GAO and OMB at $37.8 billion in 1979 and $30.0 billion for FY 1982 respectively. Their corresponding shares of all new construction put into place are 16 percent in 1979 and 13 percent for FY 1982. 167a Whole, 248,798 (41 percent) of those working on Davis- Bacon projects will be journeymen, and 92,515 (15 per- cent) will be helpers (with the difference representing other workers in the construction industry such as truck drivers, draftsmen, laborers, ete.). However, since the use of helpers under current regula- tions is limited to situations where the helper is a separate class of worker whose duties can be distinguished from the journeymen and the helper is not used as an informa] apprentice or trainee, it is safe to assume that the helper Share of employment on Davis-Bacon projects is substan- tially lower than that found in the industry. The helper share of total Davis-Bacon employment was determined to be 5.98 percent in the 1982 Fina] Regulatory Impact Anal- ysis (FRIA).‘ We assume an identica] share of helpers on covered projects in 1984 despite the decline in unioniza- tion in the construction industry. Our assumption is valid in view of the fact that the use of helpers is still greatly restricted by Davis-Bacon regulations. We assume that the regional helper shares of Davis-Bacon employment are also 5.98 percent due to current restrictions on helper usage. The additional elements necessary for estimation of the wage bill on Davis-Bacon projects are the median weekly earnings data for journeymen and helpers. Unpublished data from BLS indicate that the Seasonally adjusted median weekly earnings for journeymen and helpers are $377 and $216, respectively. These aggregate median weekly earnings for journeymen and helpers were adjusted to reflect regional differences in wage levels. Using this information, the 1984 wage bill for helpers and journey- men in each of the four regions can be determined. Estimated Regional Wage Bills: * Final Regulatory impact and R: gulatory Flexibility A nalysis on Davis-Bacon Related R. gulations, USDOA, 1982. 168a Billions North East $2.0 North Central 1.1 West 1.8 South 1.3 It is with these wage bills that alternative helper usage scenarios will be compared in order to determine the labor cost savings associated with increased usage of helper classifications on Davis-Bacon projects. Methodology for the Dete rmination of the Pre vailing Practice Detailed occupational employment data provide employ- ment levels for various craft classifications of journeymen and helpers. If we assume that each helper in a particular craft works in association with one journeyman in the craft, then the number of helpers combined with the num- ber of journeymen that work with helpers can be defined the number of workers in that craft employed by con- tractors that use helpers. If we subtract this number from the total number of journeymen plus helpers in that craft, and identify the difference as the number of journeymen in that craft employed by contractors who do not use helpers, we can compare the two numbers to see which is larger, and therefore determine whether or not helpers prevail utilizing the proposed rule published herein. We find that if one helper works in association with one journeyman, helpers will prevail in two thirds of the craft categories. Where helpers are found to prevail, the regula- tions would allow their usage on Davis-Bacon projects in a ratio not to exceed 2:3 (i.e., two helpers to three journey- men). Thus, if the maximum allowable number of helpers is used in each craft classification for which helpers are found to prevail, and helpers substitute only for journey- 169a 4% 1 ] ° : : : . L277 ° men, the helper-journeym: Wage Dl on Davis-Bacon projects by region will be as follow ae Billions North East $1.5 North Centra] # West ey | South l. Total 5.9 The potential cost savings that result if the maximum number of helpers are used in two thirds of the craft classifications are $110 million in the north east, $94 million in the north central $142 million in the west. and $105 million in the south. (See Table I) This method provides a low estimate because in de- termining whether helpers prevail, it does not take into consideration the use of helpers who work in association with more than one journeyman. For this scenario, we make the modest assumption that one helper in a par- icular craft works in association with two journeymen in the classification. In this case, the number of helpers com- bined with the number of journeymen that work with helpers can as before, be defined as the number of work- ers in that craft employed by contractors that use helpe) [f we subtract this number from the total number of journeymen plus helpers in the craft and identify this difference as the number of journeymen in the craft em- ployed by contractors who do not use helpers, we can compare the two numbers, determine which js larger and subsequently determine whether or not helpers prevail. Our results indicate that if one helper works in associa- tion with two journeymen, hel Ipers are found to prevail in all craft classifications. Once again, the regulations would allow helpers to be used in a ratio not to exceed lumbers 8,608 Roofers 3,620 Sheet metal workers 1,256 Structural Ironworkers 2,011 Other helpers 8,148 ' Davis-Bacon employment by craft classification is assumed to be 18 percent of total employment by craft classification. Source: Derived from Occupational Employment Statistics survey of Selected Nonmanufacturing Industries, 1985. USDOL/BLS. 176a TABLE A3.—REGIONAL CONSTRUCTION TRADE E MPLOYMENT ON DAVIS-BACON PROJECTS—1984 ! Actual Employment levels | North North Occupation Fast Central West South Journeymen 79,613 12,295 64,685 64,685 Bricklayers 5,075 2,696 1,123 1,123 Carpenters 24,974 13,267 20,291 20,291 Cement Masons 5.022 2 668 1.080 4.080 Electricians 14,410 7,656 11,709 11,709 Painters 7,012 3,725 5,697 5,697 Pipefitters 125 66 102 102 Plumbers 11,621 6,174 9,442 9,442 Roofers 5,076 2,697 4,124 4,124 Sheet Metal Workers 3,406 1,811 2,769 2,769 Structural Ironworkers 2.890 1.535 2,348 2.348 Helpers 29,605 15,728 24,903 24,903 Bricklayers 3.966 2,107 3,222 3,222 Carpenters R 906 1.730 233 7.233 Cement Masons 2,879 1,530 2.339 2,339 Electricians 3,098 1.643 2,513 2,513 Painters 3,306 1,757 2.687 2.687 Pipefitters 1,492 793 1,213 1,213 Plumbers 2,755 1,463 2.238 2.238 Roofers 1,158 615 94] 94] Sheet Metal Workers 102 214 327 327 Structural Tronworkers 644 342 523 §23 Other Helpers 9 05) 1,090 1.667 1,667 ' Regional employment levels are derived from the aggregate level by calculating regional shares of Davis-Bacon construction employ ment in each craft classification. Davis-Bacon employment is 18 percent of all construction employment Paperwork Reduction Act The information collection requirements contained in §$5.5(a)(1) i) of Part 5 were previously approved by the Office of Management and Budget under the Paper- work Reduction Act and assigned OMB control number 1215-0140. This document was prepared under the direction and control of Paula V. Smith, Administrator, Wage and 177a Hour Division, Employment Standards Administration, U.S. Department of Labor. List of Subjects 29 CFR Part 1 Administrative practice and procedures contracts, Labor, Minimum wages, Wages. Government 29 CFR Part 5 Administrative practice and procedures, Government contracts, Investigations, Labor, Minimum wages. Pena)- ties, Reporting and recordkeeping requirements, Wages. Accordingly, 29 CFR Parts 1 and 5 amended as set forth below. } are proposed to he } | Signed at Washington, DC, on this 13th (day 1987. of August William E. Brock. Secretary of Labor. Fred W. Alvarez. Assistant Secre tary for Employment Standards. Paula V. Smith, Administrator, Wane and Hour Division. PART 1—PROCEDURES' FOR PREDETERMINA- TION OF WAGE RATES 1. The authority citation for Part ] continues as follows: Authority: 5 U.S.C. 301: RS. 161.64 Stat 1267; Re- organization Plan No, 14 of 1950, 5 U.S.C, Appendix; 29 U.S.C. 259.40 U.S.C. 276a-276a-7: 40 U.S.C . 276¢c; and the laws listed in Appendix A of this Part. é. Section 1.7 is proposed to be amended by new paragraph (d) to read as follows: y adding a 178a Proposed Option A §17 Scope of consideration. * * * * * (d) The use of “helpers”, “apprentices” and trainees” is permitted in accordance with Part 5 of this subtitle. Wage rates for semi-skilled classifications of helpers will be issued when the classifications are prevailing in the area. In determining whether use of a particular helper classification prevails in the area, the Administrator will follow the criteria set forth in paragraphs (d)(1) and (d) (2) of this section. (1) If the prevailing wage for a particular journey- man classification is a wage that is paid to the majority of the journeymen in the classification as defined in § 1.2 (a) (1) of this part, then the practice followed by these contractors whose rates are adopted as prevailing for the journeyman shall also be deemed the prevailing practice in determining whether to issue a helper classification. Any ambiguity with regard to such practice, will be re- solved by following the rule in paragraph (d) (2) of this section with respect to those contractors. (2) If the prevailing wage for a particular journey- man classification is the average of the wages paid to the journeymen, weighted by the total number of journeymen in the classification as defined in § 1.2(a) (1) of this part, then the total number of workers in the classification employed by contractors utilizing helpers (journeymen plus helpers as defined in § 5.2(n)(4) of this chapter) on reported projects will be compared to the total number of workers in the classification employed by contractors not utilizing helpers (journeymen only), and the practice which covers the majority of such workers shall be deemed the prevailing practice in determining whether to issue a helper classification. 179a Proposed Option B $1.7 Scope of consideration. * aa * * ~ (d)(1) The use of “helpers”, “apprentices” and “train- ees” is permitted in accordance with Part 5 of this sub- title. Wage rates for semi-skilled classifications of helpers will be issued when the classifications are prevailing in the area. In determining whether use of a particular helper classification prevails in the area, the Adminis- trator will follow the criteria set forth in paragraph (d) (2) of this section. (2) The total number of workers in the particular classification employed by contractors utilizing helpers (journeymen plus helpers as defined in § 5.2(n) (4) of this chapter) on reported projects will be compared to the total number of workers in the classification employed by contractors not utilizing helpers (journeymen only), and the practice which covers the majority of such workers Shall be deemed the prevailing practice in determining whether to issue a helper classification. PART 5—LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE CONTRACT WORK HOURS AND SAFETY STANDARDS ACT) Subpart A Procedures Davis-Bacon and Related Acts Provisions and 3. The authority citation for Part 5 continues to read as follows: Authority: 40 U.S.C. 276a-276a-7: 40 U.S.C. 276e: 40 U.S.C. 327-332; Reorganization Plan No. 14 of 1950, 5 180a U.S.C. Appendix; 5 U.S.C. 301; 29 U.S.C. 259; and the statutes listed in § 5.1(a) of this part. 4. Section 5.5 is proposed to be amended by revising paragraph (a) (1) (ii) (A) to read as follows: x 3 5.5 Contract provisions and related matters. * + + (a) (1) * + (ii) (A) The contracting officer shall require that any class of laborers or mechanics, including helpers, which is not listed in the wage determination and which is to be employed under the contract shall be classified in con- formance with the wage determination. The contracting officer shall approve an additional classification and wage rate and fringe benefits therefor only when the following criteria have been met: (1) Except with respect to helpers as defined in 29 CFR 5.2(n) (4), the work to be performed by the classi- fication requested is not performed by a classification in the wage determination; and (2) The classification is utilized in the area by the construction industry; and > (3) The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wages rates contained in the wage determination; and (4) With respect to helpers as defined in 29 CFR 5.2(n) (4), such a classification prevails in the area in which the work is performed. a * * aa * FR Doc. 87-18853 Filed 8-18-87; 8:45 am | 18la APPENDIX K FEDERAL REGISTER Vol. 47, No. 104 Friday, May 28, 1982 DEPARTMENT OF LABOR Wage and Hour Division. Employment Standards Administration Office of the Secretary 29 CFR Part 1 Procedures for Predetermination of Wage Rates AGENCY: Wage and Hour Division, Employment Standards Administration, Labor. ACTION: Final rule. SUMMARY: This document provides the final text of reg- ulations, 29 CFR Part 1, for the predetermination of prevailing wage rates under the Davis-Bacon and Re- lated Acts. The method of determining prevailing wage rates has been revised and a provision for the issuance of semi-skilled classifications on wage determinations has been added. DATES: Effective date: July 27, 1982. See Supplemen- tary Information for dates of applicability. POR FURTHER INFORMATION CONTACT: William M. Otter. Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washing- ton, D.C. 20210, Telephone: 202-523-8305. SUPPLEMENTARY INFORMATION: On December 28, 1979, a proposal was published in the Federal Register (44 FR 77026) to make certain revisions to 29 CFR Part l, Procedures for Predetermination of Wage Rates under the Davis-Bacon and Related Acts. As stated in the pro- posal, its purpose was to reexamine and revise the pro- cedures in Part 1 for predetermination of wage rates under the Davis-Bacon and Related Acts. On January 16, 1981, this regulation was published in the Federal Register (46 FR 4806) as a final rule with a scheduled effective date of February 17, 1981. However, pursuant to the President’s Memorandum of January 29 1981, the Department published a notice in the Federal Register on February 6, 1981 (46 FR 11253), delaying implementation of this regulation until March 30, 1981. The Department subsequently delayed the implementation of this regulation until August 15, 1981, in order to permit reconsideration pursuant to Executive Order 12291. See 46 FR 18973 (March 27, 1981) ; 46 FR 23739 (April 28, 1981); 46 FR 33514 (June 30, 1961); and 46 FR 36140 (July 14, 1981). On August 14, 1981, a new regulatory proposal de- veloped in accordance with Executive Order 12291 was published in the Federal Register (46 FR 41444), and the previously published rule was further postponed until action could be taken on the new proposal. (See 46 FR 41043). Interested persons were afforded the opportunity to sub- mit comments to the Wage and Hour Division within 60 days after publication of the proposal in the Federal Register. Comments were received from approximately 2,200 interested parties, including Members of Congress, contracting agencies, contractor associations, contractors, labor organizations State and local governmental agencies, business organizations, and individuals. Many comments were received either supporting or opposing the proposal in general. More than 1,000 comments (mostly from construction firms and associations) were directed solely to the issue of helpers in this proposal and a related proposal in 29 CFR Part 5. 183a Contractor associations and business organizations sub- mitting comments included the Associated General Con- tractors of America (AGC), the Associated Builders and Contractors, Ine. (ABC), the Nationa] Association of Home Builders (NAHB), the Chamber of Commerce of the United States (C of C), the National Association of Manufacturers (NAM), the Business Roundtable, the Na- tional Federation of Independent Business (NFIB), the National Utility Contractors Association (NUCA), the 7 Sheet Metal and Air Conditioning Contractors’ National Association, Inc., the American Road and Transportation suilders Association, the National League of Cities (NLC), the National Association of Counties, the Council of State Housing Agencies, the National Sand and Gravel Association, and the Nationa] Ready Mixed Concrete Association. Labor organizations commenting on the pro- posal included the Building and Construction Trades De- partment of the AFL-CIO (BCTD). the Laborers’ Interna- tional Union of North America (LIUNA), the United Brotherhood of Carpenters and Joiners of America (UBC , the International Brotherhood of Electrical Workers (IBIXW), the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry (UA), the International Brotherhood of Teamsters (Team- sters), the International Association of Bridge, Structural] and Ornamental Iron Workers (Iron Workers), the Inter- national Union of Operating Engineers (IUOE), the United Automobile Workers of America (UAW), the Sheet Metal Workers’ International Association (SMW), the Operative Plasterers’ and Cement Masons’ Interna- tional Association (OPCM), and the International Broth- erhood of Painters and Allied Trades (PAT). Among those Federal agencies submitting comments were the De- partment of Defense (DOD). the Department of Trans-* portation (DOT), the Department of Energy (DOE), the National Aeronautics and Space Administration (NASA ), the U.S. Postal Service (USPS), and the Small Business Administration (SBA). 184a Discussion of Major Comments The following is an analysis of all the principal com- ments received and the corresponding changes, if any, made to the proposed rules. Each submission has been thoroughly reviewed, and each criticism and suggestion has been given careful consideration. For each section and, where appropriate, subsection of the final rule, the analysis contains a description of the major comments, the Department’s conclusions regarding those comments, and the substantive changes herein adopted. Section 1.2(a)—Definition of Prevailing Wage Numerous comments favoring the proposal to eliminate the 30 percent rule were received from such parties as the AGC, NAM, NLC, USPS, local government agencies, con- tractors, and State contractor associations. These com- mentators stated that a rate based on 30 percent does not comport with the definition of “prevailing’’, and that the 30 percent rule gives undue weight to collectively bar- gained rates. Commentators also asserted that the 30 percent rule is inflationary because it sometimes results in wage determination rates higher than the average. Other contractors and associations, while agreeing in principle with the proposal’s elimination of the 30 percent rule, asserted that the proposed change in the definition of prevailing wages did not go far enough. Several com- mentators, including the ABC, NAHB, and the Council of State Housing Agencies, recommended that the weighted average rate be used in all cases. The C of C and some others recommended that the prevailing rate be deter- mined either by eliminating the higher 50 percent of the wage rates paid in a locality and adopting the weighted average of the lower 50 percent of the wages paid, or by adopting the entire range of wage rates existing in a locality. The BCTD, a few contractor associations, and some State labor departments commented in favor of retaining 185a the current 30 percent rule for determining prevailing wages. The major arguments made by these commentators were that the term “prevailing” contemplates the most frequently paid actual rate and thus, even the 30 percent rule unduly constricts the meaning of the statutory lan- guage; that an average rate is an artificially determined rate and therefore less consonant with the legislative in- tent than a rate which is actually paid; that the rule has been used by the Department since 1935 and was spe- cifically endorsed by the House Special Subcommittee on Labor in 1962; and that elimination of the rule would disrupt labor relations and harm the competitive standing of unionized firms. The BCTD also asserted that any immediate wage savings would be more than offset by lower productivity, and thus, that overall construction costs would increase. The Department agrees with the criticisms of the 30 percent rule. However, the Department has rejected the suggestion to define the prevailing wage as the weighted average in all cases because the term “prevailing” con- templates that wage determination rates mirror. to the extent possible, those rates actually paid in appropriate labor markets. In addition, the definitions of prevailing wage urged by the C of C are contrary to the prevailing wage concept embodied in the Davis-Bacon Act. Using the average of the lower 50 percent of Wage rates paid would exclude the higher 50 percent of wages from consideration and, therefore, could not be considered the prevailing wage. Similarly, adopting the entire range of wages in the lo- cality would permit contractors to pay the lowest wage that exists for a particular classification, rather than the , prevailing” rate. +s Based on the comments and our analysis of the statute. we have concluded the term “prevailing wage’ contem- plates the most widely paid rate as a definition of first choice. The Department has accordingly determined that the revision which defines prevailing wage as the ma- - 186a ¥ jority, or weighted average where there is no majority, is the most proper interpretation of the statute. Section 1.2(a) is therefore adopted as proposed. Section 1.3—Wage Data Considered—Use of Wage Data From Projects Subject to Davis-Bacon The preamble to the proposed solicited comments on whether projects subject to Davis-Bacon wage determina- tions should be excluded from the Department’s wage surveys. Comments were specifically invited on the feasi- bility of differentiating Federal projects in wage surveys; the feasibility of determining prevailing wages for cate- gories of construction which almost always involve Federal funding, if such projects are excluded; and the feasibility of differentiating projects where the contractor would otherwise have paid the wages contained in the wage determination. ‘ Several commentators, including ABC, NAHB, NASA, and DOE, favored excluding Federal projects from wage surveys in all cases, although they did not comment spe- cifically on the feasibility of such an exclusion. These conmentators asserted that the Act was intended to re- quire contractors to pay, at a minimum, those rates found to be prevailing o1. private construction projects in the area in which the federal work is to be performed. These construction projects subject to the Act in surveys skews the survey results upward. DOT commented that it saw no problem in excluding wages paid on Federal projects from surveys. It recommended that such data be excluded except in cases where there is not a sufficient sample of privately financed construction to establish a wage rate. The BCTD, most building trades unions, the Teamsters, the United Auto Workers, the Minnesota Building and Construction Trades Department, the North Carolina and Iowa Departments of Transportation, the Texas Highway Department, the Texas Heavy-Highway Branch of AGC, 187a and the Colorado Contractors Association opposed the exclusion of Federal wage data. Many of the union com- mentators asserted that the Act’s legislative history shows no Congressional intent to restrict wage surveys to pri- vately financed projects, and that the 1935 amendments extending the Act’s coverage to public works implied that Federal projects would be surveyed since the Act requires payment of wages prevaiiing on projects “of a character similar’, and there are few projects of a character similar to public works which are not federally financed. Most commentators in opposition to the exclusion claimed that, as a practical matter, it would be administratively difficult or even impossible to establish wage determina- tion rates for several types of construction projects that are always or nearly always federally financed, such as highways, bridges, dams, and Sewage treatment plants, and for certain craft classifications in rural areas. The MBCTD claimed that it would also be administratively difficult and costly to determine whether a given wage rate would have been paid absent a wage determination. noting that the State of Minnesota had attempted to make such a differentiation in its wage surveys but was unable to do so. The Department has concluded that, where practicable, it would be appropriate to exclude wage data from Davis- Bacon projects in determining prevailing wages. The De- partment also believes this result is in accordance with the statutory purpose. Accordingly, § 1.3 has been revised to provide that wages paid on projects subject to the Davis- Bacon Act will not be considered in developing wage de- terminations for “building” and “residential” projects unless the Department finds that there is not sufficient data from privately financed construction projects of a similar character to determine prevailing wages. We have also concluded that it would not be practical to determine prevailing wages for “heavy” and “highway” construction projects if Davis-Bacon covered projects are excluded in 188a making wage surveys because such a large portion of those types of construction receive Federal financing. The regu- lation therefore permits the use of such data on these types of projects. Section 1.6(a)(1)—Expiration Date of Project Wage De- terminations Several commentators, including ABC, AGC, and some State contractor associations, commented in favor of the proposal to extend the expiration date of project wage determinations from 120 days to 180 days. The BCTD, the Teamsters, the UAW, and others opposed this proposed change, claiming that extending the duration of project determinations will increase the likeli- hood that rates contained in wage determinations will be out of date before the start of construction. Extending the life of project wage determinations to 180 days will reduce the need for recompetition and other procurement delays caused by the expiration of such de- terminations after bid opening. Also, as a practical matter, it is the Department’s experience that most such determi- nations are used within a shorter period of time. Accord- ingly, this proposal is deemed reasonable and is adopted. Section 1.6(b) and Appendix C Several State chapters of AGC objected to the cate- gorization of construction in proposed Appendix C (which embodies the substance of All Agency Memoranda Nos. 130 and 131) on the ground that it would amount to an imposition of standards that are nationwide in scope ig- noring local area construction practices. A few contrac- tor associations stated that the categories of construction overlapped. Some associations disagreed with the pro- posed categorization of certain types of work. Contrac- tor groups also suggested that the regulations require 189a agencies to state specifically in the contract which sched- ule of wage rates is applicable. The Department has reconsidered the advisability of including in the regulations the specific guidelines of All Agency Memoranda Nos. 130 and 131. It has concluded that the best interests of all concerned parties would be more fully served by retaining the Memoranda as guide- lines rather than as regulations. However, in the near future the Department will amend the guidelines and issue a new memorandum to all federal agencies to in- sure that local practices will be the primary considera- tion in resolving disputes in this area. The Department will also publish this new memorandum as a notice to the public in the Federal Register. Section 1.6(b) has also been amended to clarify that contracting agencies are responsible for identifying as specifically as possible the appropriate schedule(s) to be applied to a contract. Accordingly, Appendix C is deleted from the regula- tions. Section 1.6(c)—“10-Day Rule” ; “90-Day Rule’’ Several commentators, including ABC, NASA, DOE and some State highway agencies, objected to the pro- posed revisions of the “10-day rule” which would (1) re- quire contracting agencies to accept modifications to wage determinations received less than 10 days before the opening of bids unless the agency finds there is not suf- ficient time to notify bidders of the modification, and (2) also require the agency to insert a report of such finding in the contract file, and make it available to the Admin- istrator upon request. Most of these commentators rec- ommended that the current “10-day rule” (which re- quires agencies to use modifications received less than 10 days before bid opening only if it is found that there is sufficient time to notify bidders) be retained, while others recommended that a 20-, 25-, or 30-day rule be adopted. ae : 190a DOL’s policy has been that bid solicitations should con- tain the most recently issued determination of current prevailing wages which can be included without causing undue disruption of the procurement process. However, in the past, many contracting agencies have declined to use wage modifications received less than 10 days before bid opening, even though there may have been more than sufficient time to notify bidders of the modification prior to bid opening. The courts have held that the current ‘10-day rule” imposes an affirmative obligation on the contracting agen- cies to make a substantive determination as to whether there is sufficient time to notify bidders of modifications received less than 10 days before bid opening. (Operat- ing Engineers, Local 627 v. Arthurs, 355 Supp. 7 (W.D. Okla.), Aff'd, 480 F.2d 603 (10th Cir. 1973).) In view of this obligation and the Department’s experience that the agencies often misunderstand that obligation to make such a determination, it was decided that the Act could be better implemented by adopting the proposed revision. DOL also helieves that the notification process can be completed in most cases without undue disruption of the procurement process or inflation of bid prices. Of course, it is recognized that there may be cases where an agency will find that it is not feasible to adopt modifications less than 10 days before bid opening. In such cases, the agency would simply be required to document its find- ing of insufficient time prior to bid opening and _ incor- porate this finding in the contract file. While we have considered the objections to this reporting requirement, we find that written documentation of the agency’s find- ing of insufficient time is in accord with sound adminis- trative practices and does not impose an undue paper- work burden upon the agency. ABC objected to the “90-day rule’, which provides that if a contract to which a general wage determination has been applied has not been awarded within 90 days after 19la bid opening, any modification published prior to contract award would be effective unless the agency has obtained an extension of the 90-day period from the Administra- tor. ABC asserted that the proposed rule would be dis- ruptive to the procurement process and is beyond DOL authority. The Department’s obligation to insure that the most current determination of prevailing wages is included in contracts subject to the DBA is frustrated by lengthy de- lays which occur between bid opening and contract award. Further, the regulation permits the agency to request an extension of the 90-day period in cases of un- due hardship. Therefore, we believe the “90-day rule” is appropriate. Since it is the Department’s experience that projects assisted under the National Housing Act and section & of the U.S. Housing Act of 1937 are not generally com- petitively bid and since it therefore would be confusing to suggest that the 10-day rule could apply to such proj- ects, the Department has determined upon review that the references to competitive bidding should be deleted from the pertinent paragraphs in $1.6(c). No other changes are being made in this section. Section 1.6(e) and (f)—Incorporation of Wage Deter- minations and Modifications After Contract Award A few commentators questioned DOL’s authority to require the incorporation of a new wage determination in a contract any time before award (or in some cases, after award) when the agency fails to include any wage determination in a covered contract, or has used an in- applicable wage determination or one that contains sub- stantial errors. DOT, DOE, and NASA asserted that the contracting agency, not DOL, has authority to make de- terminations of coverage under the Davis-Bacon Act. ABC commented that the provisions in question are dis- ruptive, and that the regulations should contain more 192a specific criteria regarding the circumstances in which DOL would exercise its authority to incorporate new wage determinations. The BCTD, several building trades unions, the Team- sters, and the UAW objected to the provision in § 1.6(f) that corrective action to include the proper wage deter- mination after contract award would occur only if the contractor is compensated, in accordance with applicable procurement law, for any increase in wages resulting from such action, asserting that the agencies could use this provision to resist post-award amendment of any contract which contains an invalid wage determination. Since the Davis-Bacon Act requires that all covered contracts contain an applicable wage determination, DOL must provide some mechanism for the incorporation of proper wage determinations in covered contracts after contract award. The Department’s authority in this re- gard, including the authority to determine questions of coverage under the Act, is derived from the Act as well as from Reorganization Plan 14 of 1950. With respect to the ABC comment, the Department agrees that the provision in § 1.6(e) (2) permitting with- drawal of wage determinations containing “substantial errors” without regard to the 10-day rule is not suffi- ciently specific. Accordingly, § 1.6(e) (2) is revised to permit such withdrawals only as a result of a decision by the Wage Appeals Board. As to the comments from labor organizations, we be- lieve it would be inequitable to require corrective action after contract award if the contractor would be finan- cially harmed in rectifying a Government error. Nor should contracting agencies be placed in the position of contravening procurement law. The regulation contem- plates that the agencies will find a method to incorporate a proper wage determination in a contract and compen- sate a contractor, where appropriate, which is in accord 1938a with procurement law. Accordingly, no changes are made in § 1.6(i). Section 1.7(b)—Scope of Consideration Numerous commentators, including AGC, ABC, NLC, NAHB, State contractor associations, and individual con- tractors, agreed with the proposal to prohibit the use of wage survey data obtained from a metropolitan area in issuing a wage determination for a rural area, and vice versa. Their rationale was that this provision would pre- vent the “importation” of generally higher metropolitan wages into lower paid rural areas. NUCA commented that in the past, such importation has disrupted labor re- lations in rural areas, because employees who received high wages on a Davis-Bacon project were unwilling to return to their usual pay scales after the project was completed. The BCTD and many individual building trades unions opposed the blanket prohibition. Several of these com- mentators stated that there is a need to retain flexibility in certain cases when wage data are unavailable in the rural area where the work will be performed, and that “importing” rates from nearby metropolitan areas in such cases is justified because workers from metropolitan areas often perform the work due to a shortage of skilled labor in the vicinity of the project. Several commentators, including the AGC and some of its local chapters, noted that the definition of “area” in $ 1.2(b) of this part includes political subdivisions smaller than the county, and claimed that our reliance in § 7.1(a) on the county as the normal survey area is not consistent with the intent of the Davis-Bacon Act. They suggested that DOL consider smaller local civil subdivisions within the county as the basis for making wage determinations. Other commentators, including the Texas Highway De- partment, the Texas Heavy-Highway Branch of AGC, and the Carolinas Branch of AGC, urged the Department to 194a expand the area_of consideration to the Standard Metro- politan Statistical Area or some other larger area, in cases where the same wage pattern exists throughout the area. The Department has determined that its past practice of allowing the use of wage data from metropolitan areas in situations where sufficient data does not exist within the area of a rural project is inappropriate. Therefore, the prohibition proposed against this practice is adopted. In response to the union comments, the Department notes that if sufficient data is not available from con- tigzuous rural counties, it would be obtained from other rural counties in the State, and if, as these comments sug- gested, large numbers of workers from metropolitan areas typically work at higher metropolitan wage rates on projects in rural areas, those higher wages would be found and receive proper weight in surveys of wages paid in such areas. With respect to comments on the size of the survey area, experience has demonstrated that the standard, but not inflexible, practice of using the county as the area of consideration is the most administratively feasible ap- proach to collecting meaningful data. In our view, this practice is in accord with the Act. In answer to the com- mentators who suggested that we recognize areas larger than one county, where a survey reflects that the same rate in fact prevails in several contiguous counties within a State, a single wage determination may be used for the entire area. Section 1.7(d)—Helpers A very large number of commentators, particularly various contractor associations such as ABC and AGC and their affiliates, the NAM, NAHB, the Business Roundtable, the C of C, and numerous individual non- union contractors, generally favored the proposal to in- crease recognition of helpe) Ta ificatio The y noted 4 ’ 4 41 i] , that the proposa reflects ne CONStYFUCLION INnduStry S ac tual practice on private proyects and the tated nai adoption of the proposal would result in increase job opportunities for youth, women, and minorities The building trades unions and some State and local vyovernmental agencies Opposed increased recog] ion of helpers on the grounds that this would undermine for mally established apprentice and rainee rograms to tne determent of minorities and unskilled workers. In hel) view, it would also lead to shortaves of qualified journey men. Most union groups felt the proposal was con rary to the statute because allows the use of helpers withor a finding that such a classification practice prevails in area. The Department currently r cognizes a helper classifi cation OniY Where It Is 1 Separate and aistinet ciass I workers which prevails in the area. and where the help- ers’ scope of duties can be differentiated from those yf Journeymen, The Department has concluded this restric- tive approach is inappropriate. Increased recognition of } }) y will reflect tho u i nread indy “VY "2OT 10% i¢ pers Will rere rie widespread InaguSi.ry practice of employing semi-skilled workers on construction projects. including both helpers working in a particular craft and cross-craft or general utility helpers. This w not on result in considerab € cost Savings to the (ye ernmen ul will result in mor D Opporcunictie ror NskKlilied and semi-skilled workers (‘including ith, women, and mi norities) and encourage their use in a manner whic] provides training. It will enhance productivity bv allow- Ing such workers to do tasks requiring more limited skills, thus allowing higher skilled workers to use their skills more effect ir ely. | Will ais enandi more on wtor tO compete for Gor ernment work. See also the related changes proposed to 29 CFR Part 5 regarding the allow- able use of helpers and the discussion of comments re- ceived thereon. 196a Accordingly, §1.7(d) is adopted with clarifying changes. In addition to the above, minor editorial and language changes have been made in some sections. Classification This rule would not appear to require a regulatory impact analysis under Executive Order 12291 since the changes will result in substantial cost savings annually for both contractors and the Government while still as- suring protection of local labor standards. However, because of the importance to the Government and the pub- lic of the issues involved, the Department has concluded that the regulation should be deemed a “major rule” for purposes of the Executive Order. It has been determined, in accordance with Executive Order 12291, that these changes are the most cost-effective regulatory alternatives consistent with the purpose of the statute. Summary of Final Regulatory Impact and Regulatory Flexibility Analysis The Department has prepared its final regulatory im- pact analysis to identify and quantify the cost impact of the final Davis-Bacon regulations and various alternatives that were explored and to inform the public of the eco- nomic considerations behind these final revisions in ac- cordance with Executive Order 12291. The final analysis builds upon a preliminary regulatory impact analysis (PRIA) which accompanied the proposed revisions published on August 14, 1981 (46 FR 41444). The PRIA estimated that the proposed changes would re- sult in substantial cost savings amounting to at least $670 million annually to both contractors and procuring agencies, while still assuring protection of local wage rates and practices. The Department requested comments and additional information on all economic assumptions 197a used in the analysis, as well as any alternative sugges- tions designed to achieve the objectives of the Davis-Bacon and Related Acts at lower costs. The Department re- ceived numerous comments on the PRIA estimates and its economic assumptions. The Department has carefully re- viewed all of these comments in finalizing the regulations and has incorporated these considerations, as appropriate, into the final regulatory impact analysis (FRIA). The final rule must also consider the Regulatory Flexi- bility Act of 1980. This Act requires agencies to prepare regulatory flexibility analyses and to develop flexible al- ternatives whenever possible in drafting regulations that will have “a significant economic impact on a substantial number of small entities.” The analysis summarized be- low meets the requirements set forth for assessing the economic impact of the final changes in the Davis-Bacon regulations on small entities as required under the Regu- latory Flexibility Act. A. Definition of “Prevailing” Rate The existing regulations define the “prevailing” rate as the rate paid to the majority of the employees in a classi- fication; or if there is no majority, the rate paid to the greatest number, provided it constitutes at least 30 per- cent of the employees in the classification; or if no single rate is paid to at least 30 percent of the employees, the weighted average rate. The proposed regulation re-defined the “prevailing” rate as the single rate paid to a majority of workers in a particular classification on similar construction in the locality, or the weighted average rate if no single rate is paid to a majority. The PRIA estimated that elimination of the “30 percent” rule would result in substantial cost savings on Federal and federally assisted construction contracts amounting to at least 120 million in Fiscal Year 1982 alone. 198a Many commentators on the preliminary analysis ar- gued that the $120 million estimate of cost savings was too high. Construction unions generally faulted the analy- sis for ignoring the productivity differences between workers and for implicitly assuming that all workers on covered construction projects earn the prevailing ( Davis- Bacon) rate. The Building and Construction Trades De- partment (BCTD) placed the maximum cost savings at $45 million annually and advocated retention of the cur- rent definition. In contrast, most. contractor associations (which generally advocated greater revision of the defini- tion) argued that few cost savings would result from the proposal because the wages of many workers are fixed by collective bargaining agreements. These groups offered alternative estimates ranging from no cost savings to $50 million. While acknowledging the validity of several of these criticisms, it remains our position that the $120 million estimate represents a “best guess” of the likely cost sav- ings. Many of the alternative estimates were based on an inaccurate reading of our methodology, which in fact took into account that few cost savings would result in highly unionized urban areas. In other cases, the direction of the bias asserted to exist in our PRIA by the comments was unclear, rather than working to inflate the cost sav- ings. Moreover, the commentators ignored significant . negative biases which would raise the cost savings, such as the bias resulting from the lack of construction wage data for small cities. All of the limitations associated with our methodology are clearly spelled out in the analysis. After careful review of all the evidence, the Depart- ment has adopted the proposed definition not only because it will result in substantial budgetary savings, but also because it is most consistent with the “prevailing wage” concept contemplated in the legislation, under which rates are designed to mirror, to the extent possible, those cus- tomarily paid in appropriate labor markets. 199a The Department also considered defining the “prevail- ing” rate as the average in all cases as proposed by the Associated Builders and Contractors Inc. (ABC). This alternative was not selected because the term “prevailing”’ contemplates the most widely paid rate as a definition of first choice. Several other alternatives were also considered includ- ing (1) setting wage determinations at the average of rates in the lower half of wage distributions for crafts in a locality (as proposed by the United States Chamber of Commerce) ; (2) issuing wage determinations as a range of wage rates reflecting the actual distribution of wages in a locality (also proposed by the United States Chamber of Commerce) ; and (3) allowing procurement agencies to set aside rates based on, rather than identical] to, DOL determinations (the “decoupling” approach). The De- partment has carefully considered these options, but con- cluded that they would not be consistent with the statute’s intent. The DOL methodology which is the basis for the $120 million estimate of cost savings calculates the change in wage costs under different decision rules by comparing a large sample of 1,170 Davis-Bacon craft determinations in effect in 1981 with average wage rates for those crafts and localities derived from field surveys conducted by the Employment Standards Administration (ESA). Our sample covered nine crafts and three types of construction (i.e., building, highway and heavy and residential) across all regions of the country. Because we know the decision rule actually used in setting each Davis-Bacon determination in the sample and the wage rates paid workers in geographic areas, the im- pact on Davis-Bacon rates of any change in administra- tive procedures can be readily determined. For example, to evaluate the percentage change expected in Davis- Bacon rates associated with dropping the 30 percent rule, 200a all determinations in the sample based on this rule were compared with their corresponding average rates to cal- culate the percent differences in the Davis-Bacon rates. For those determinations based on the majority or aver- age rule, the percent differences were set at zero. However, many Davis-Bacon determinations are not based on comprehensive wage surveys but rather on col- lective bargaining agreements or state surveys. Hence, results based solely on the sample will be biased if there is a higher frequency of determinations based on the 30 percent rule in non-surveyed areas. Clearly, average rates eannot be issued without a wage survey; hence, it is likely that Davis-Bacon determinations are implicitly based more frequently on the 30 percent rule in non-surveyed areas. To adjust our estimates for this possible sample bias, we used both survey data and independent sources to construct estimates of percent differences for all areas lacking surveys. For example, in large urban areas where wage determinations are based on collective bargaining agreements, information on the percentage of workers who are unionized in the area was used to determine the impact of using the majority rule or the average. Where the extent of unionization was sufficiently high, current rates could be expected to prevail even in the absence of the 30 percent rule. We, therefore, assumed that there would be no change in Davis-Bacon rates. Otherwise, we used estimates of percent changes from Davis-Bacon rates 7 to average rates derived from a CEA study of less union- ized urban areas. With estimates in hand for each county, we then summed the percentage differences for each type of construc- tion across all geographic areas (both rural and urban) based on their relative contribution to total public con- struction activity. This resulted in three separate esti- mates of the expected percentage change in Davis-Bacon rr 20la wage rates from adopting different administrative pro- cedures, one for each construction sector. : The final step involves matching these percent changes in wages to estimates of the total labor costs expected to be covered by Davis-Bacon in Fiscal Year 1982 for each type of construction. We then added up the separate labor cost savings estimates for each construction sector to form our final estimate of the aggregate wage cost sav- ings from alternative wage determination rules. The final regulatory impact analysis describes the method- ology in further detail. This methodology was used to estimate the cost impact of dropping the 30 percent rule and of using the average rule in all cases. This procedure produced cost savings ranging from $68 million to $173 million from eliminat- ing the 30 percent rule. The average cost savings in this range is around $120 million. The corresponding esti- mates of cost savings from switching to an average rule in all cases range from $127 milllion to $288 million, with average cost savings set at $210 million. This methodology could not be applied to estimate the cost impact of most other alternatives under consideration because of the absence of independent data on which to calculate the differences in wages resulting from these other options for non-surveyed areas. Also, and perhaps more importantly, this methodology measures only the changes in Davis-Bacon rates, not actual changes in wage rates paid on Davis-Bacon projects. The further one moves the Davis-Bacon minimum below the average, the less reflective it is of actual prevailing wages and hence of the real cost savings to be anticipated. Although the Department concluded that such an ap- proach would be inconsistent with the statute’s intent, we developed a crude estimate of the potential cost savings from the alternative calling for a range of wages rather than a single rate for each determination in a locality, using our methodology and the results of a CEA study 202a which estimated the net impact of setting minimum wages on Davis-Bacon projects. This estimate is similar to the alternative that establishes a range of wage rates, since the lowest rate in the range effectively becomes the Davis- Bacon minimum. This procedure produced cost savings estimates ranging from $505.3 million to $631 million with a midpoint estimate of $568.2 million for this option. Much of these cost savings would be passed on to small contractors. The Census Bureau’s Economic Census of Construction shows that in 1977 there were 53,665 con- struction establishments with fewer than 20 employees involved in construction work. These small contractors accounted for about 56 percent of all such construction establishments, but only about 17 percent of employment. While we could use relative employment percentages to distribute the total cost savings from adopting alternative wage determination procedures among large and small contractors, this would be inappropriate since smaller contractors are more likely to pay wages normally below Davis-Bacon rates, resulting in relatively larger cost sav- ings for small contractors from any lowering in Davis- Bacon rates. Although we can not develop numerical cost estimates, the cost savings would be expected to~be substantial. While our approach provides a reasonable approxima- tion of the wage cost savings expected to result from the final regulation, it should be stressed that they are only a proxy for actua! construction cost differences. Neverthe- less, these wage estimates are a useful indicator of the order of magnitude of the lower construction costs that may be expected from the final change in the definition of prevailing wages. B. Cost Impact of the Expanded Issuance of Semi-Skilled Classifications The Department has long permitted exceptions from predetermined Davis-Bacon rates set for a craft classifi- 208a ; cation for apprentices and trainees who are in approved programs. The Department has also recognized a helper classification in some areas under certain well-defined situations where (1) it constitutes a separate and dis- tinct class of workers (i.e., the scope of duties of the helper is defined and can be differentiated from journey- man duties) ; (2) the particular helper classification pre- vails in the area; and (3) the helper is not used as an informal apprentice or trainee. During its review, the Department concluded that the current policies regarding semi-skilled crafts do not ade- quately reflect construction industry practices, in par- ticular, the widespread use of helpers to perform certain craft tasks. The proposed revisions allowed for the issu- ance of semi-skilled classifications such as helpers or other subclassifications of a journeyman class that could be identified in the locality. Helpers were permitted as long as their use did not exceed a ratio of one helper to five journeymen. The proposal further allowed con- tractors to conform rates after award for helper classi- fications whieh were not issued in the wage determina- tions, but which the contractor felt were appropriate to performing the contract work so long as those classifica- tions were currently utilized in the locality. The PRIA estimated that these proposed changes would result in significant cost savings of about $650 million in Fiscal Year 1982. Many commentators viewed these cost estimates as excessively high. Contractor associations welcomed the helper classifications, but criticized the 1:5 ratio as an artificial rule that would prohibit thé following of area practices. These groups argued that the ratio, coupled with the considerably lower ceilings specified by collec- tively bargained contracts, would significantly dampen the cost savings—to about $200 million annually. Con- struction unions, on the other hand, did not comment on the ratio per se, but instead focused on the PRIA assump- 204a tion that each helper employed on Davis-Bacon projects would replace one journeyman. They argued that the analysis overstated the cost savings because it ignored the low productivity of helpers relative to journeymen and the likelihood that helpers would be better substitutes for lower-paid laborers and apprentices than for journey- men. The construction unions aiso pointed to possible long-term cost increases due to a shortage of skilled craftsmen. These comments prompted a thorough re-evaluation of the helper cost methodology. Some comments required no new adjustment; for example, our methodology already controlled for the minimal use of helpers on union projects. The revised helper methodology incorporated relevant criticisms from both business and labor groups to the extent permitted by available data. The revised estimates were also based on more recent data showing a sharp drop in construction industry employment (and hence antici- pated helper employment on Davis-Bacon projects. } The final helper regulations preserve the basic elements of the proposal with several changes. These changes in- clude: (1) Lowering the ratio from 1:5 to 2:3 (2 helpers allowed for every 3 journeymen) to better reflect the diversity in industry practices, and (2) permitting helpers to include multitrade, as well as single craft, helpers to provide employers with maximum flexibility in their em- ployment practices on Davis-Bacon jobs. The basic methodology remains the same as that found in the PRIA—using evidence on the mix of skills in the construction industry as a whole to predict the increased helper employment on Davis-Bacon projects as a result of the regulation. The expected savings in wage costs on Davis-Bacon construction are derived by multiplying esti- mates of increased helper employment by changes in wage bills for contractors. However, in the present analysis, we develop separate estimates of the likely cost savings from the regulations 205a for the unrestricted use of helpers and for alternative ratios of helpers to journeymen. In addition, we test the sensitivity of the estimates to various assumptions regard- ing the skill level of workers replaced_by helpers. One set of cost estimates assumes that helpers replace journeymen only. A second series of cost estimates allows helpers to replace laborers as well as journeymen. The initial step involves determining the number of construction workers employed on Davis-Bacon projects and the number of helpers likely to be employed on Federal and federally-assisted construction work. For this analy- sis, We use a more recent estimate of construction employ- ment showing that there were 758,000 construction work- ers on Davis-Bacon projects during 1980 (the PRIA used an estimate of one million total employees in the construc- tion industry covered by Davis-Bacon in 1979). The PRIA discusses the derivation of these estimates in further detail. While their skill composition is unknown, we assume that in the absence of any restrictions on their use, the helper share of employment on Davis-Bacon projects would be identical to that found overall in construction (exclud- ing residential construction under 5 stories). The esti- mated helper share based on the 1976-1977 BLS survey of large metropolitan areas would be 3.2 percent and 5.6 percent, depending on whether we used the entire survey or only those occupations in the survey that specifically identify helpers. However, the helper shares estimated directly from the BLS survey may be biased because of its limitation to large metropolitan areas and the 1976-1977 period. The BLS survey shows about 78 percent of construction work- ers under collective bargaining agreements. Although such agreements are almost certainly more prevalent on Davis-Bacon construction than on all construction, the BLS survey probably over-represents the percent of union workers on Davis-Bacon projects nationwide. This means 206a that estimates of the helper employment share based on the BLS survey will be too small compared to total Davis- Bacon construction. To correct this bias, we base alterna- tive helper estimates on the conservative assumption that the true union share of Davis-Bacon employment is 50 percent. Weighting the individual estimates found in the BLS survey shows about 78 percent of construction work- union and non-union sectors produces 5.96 percent and 9.4 percent. This gives us four estimates of helper employment. As- suming that the high unionization rate found in the BLS survey of large cities prevails in all areas with Davis- Bacon projects, we can estimate that there will be between 24,256 and 42,448 additional helpers on Davis-Bacon proj- ects. Assuming that 50 percent of the workers on Davis- Bacon jobs are organized would translate into higher esti- mates—45,328 and 71,252 additional helpers on Davis- Bacon jobs. When helpers substitute for laborers in some cases as well as journeymen, the helper estimates need to be fur- ther adjusted. While it is difficult to evaluate the precise extent of this combined substitution, we use the estimated helper shares from above, but assume that helpers replace both types of labor as long as the proportion of laborers and journeymen found in the BLS Survey remain constant (j.e., the laborer to journeymen ratio). The BLS data shows the laborer to journeymen ratio to range between 2:5 and 5:11 for all construction projects in the sample. This produces estimates of helpers ranging from 24,256 to 64,056. The second step is to calculate the expected hourly wage cost savings from hiring these helpers instead of journey- men. Using the PRIA procedures, we estimate the average wage differential between helpers and journeymen, based on the same 1977 BLS survey of large metropolitan areas adjusted to FY 1982 levels. This produces estimates of ee Ee 207a $5.72 and $5.73 as the absolute wage differential between helpers and journeymen. For the adjusted estimates where we assume that 50 percent of Davis-Bacon is covered by union contracts, it Was necessary to recalculate the wage rates accordingly. Separate union percentages for journeymen and helpers from the BLS survey were used to weight the union and non-union average hourly wage rates to arrive at the new overall averages of about $6.70. The above estimates of wage differences assume that helpers replace only journeymen. If helpers substitute for laborers in some cases as well as journeymen, the wage differences in some cases will narrow substantially -ranging from $4.95 to $5.71. The final regulatory im- pact analysis describes these wage calculations in further detail as well as the biases involved in the use of average wage rates. The next ingredient needed to compute the expected cost savings is an estimate of average hours worked annually in construction. The PRIA used an estimate of 1535 hours worked per year. However, in light of the ABC comments showing that contractors’ annual work hours average well over 1900 hours and the fact that seasonality is already controlled for by our use of annual averages of monthly employment levels, we used 1924 hours from Employment and Karnings published by the Bureau of Labor Statistics as the estimate of annual hours worked per full year con- struction worker to convert helper employment levels into their total hours equivalents. Our estimates of the resulting cost savings from in- creased recognition of helpers with no ratio were obtained simply by multiplying number of helpers by hours worked in a year (1924) and various estimates of the existing wage differential between helpers and journeymen and laborers. However, where there is a ceiling restriction on the em- ployment of helpers to journeymen, another step is neces- La: 20 U.S. 43731 ! 3 GQ Natior iv. ni Ins ] e De \ DI DID TIS 28, 20 U.S. s4 ) lO. Nat il Foundatior e Arts and \ of 1965 see. 5 19 St artment of Labor regulation this bill blocks In 1989 we lost by only 22 votes an attempt to defeat an expansion bill. This is a close issue in the House, and I am disap- pointed that a few persons would rather attach a rider to a supplemental appropriation than revisit the issue in an open, deliberative manner. [ want to revisit the issue again, but I want to do it when we also have a chance to vote on repeal or reform of the archaic Davis-Bacon Act of 1931. I do not think it is fair, with virtually no notice, to be forced to fight a defensive action against a sneak attack to protect a regulation the Secretary of Labor has had every right to issue. For these reasons, I ask that we adopt the Stenholm amendment today and set the stage for a real Davis- Bacon debate later in this Congress. Mr. RAY. Mr. Chairman, I move to strike the req- uisite number of words. (Mr. RAY asked and was given permission to revise and extend his remarks. ) Mr. RAY. Mr. Chairman, I rise in support of the amendment offered by my friend from Texas. Mr STENHOLM. The House has openly debated the issue of Davis- Bacon reform in the last few years, usually as a part of 304a the Department of Defense authorization bill. The de- bate has been thoughtful and the votes have been close. I believe it is proper to consider Davis-Bacon reform in the context of an authorization bill. Unfortunately, this issue is now being debated because the Appropriations Committee attached a rider to the supplemental appropriations bill which would prevent the Department of Labor from implementing their modest regulations regarding construction helpers. The courts have held that the Department of Labor has the power to issue regulations which allow the use of semiskilled helpers on Federal construction projects. These regula- tions are consistent with the Davis-Bacon Act. Mr. Chairman, these regulations do not need to be ad- dressed through this rider on a supplemental appropria- tions bill. I encourage my colleagues to support the Stenholm amendment and delete the language in the bill. Mr. BALLENGER. Mr. Chairman [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_1002%3A2. Public record. Not legal advice.