The Davis-Bacon Act: 2022 Proposed Rule

August 16, 2022

The Davis-Bacon Act: 2022 Proposed Rule

Introduction

Beginning in the 1930s, Congress has enacted multiple

statutes that establish minimum labor standards for various

classes of workers. Some of these standards (e.g., the Fair

Labor Standards Act and the National Labor Relations Act)

apply broadly to most employers, while others apply more

narrowly to private employers that enter into contracts with

the federal government. This In Focus examines the federal

law that prescribes labor standards for federal construction

contracts—the Davis-Bacon Act (DBA)—and a recently

proposed rule that would substantively amend DBA

regulations for the first time since 1982.

The Davis-Bacon and Related Acts

The Davis-Bacon Act (DBA), 40 U.S.C. §§3141-3148,

requires government contractors to pay locally prevailing

wages to laborers and mechanics employed on certain

federally funded construction projects. Enacted in 1931, the

DBA reflects Congress’s interest in giving the government

“the power to require its contractors to pay their employees

the prevailing wage scales in the vicinity of the building

projects.” (S. Rep. No. 71-1445, at 1-2 [1931]). Under the

DBA, the Secretary of Labor calculates prevailing wages by

reviewing wages paid to corresponding classes of laborers

and mechanics employed on projects of a similar character

in the civil subdivision of the state in which the work is

performed (40 U.S.C. §3142(b)). The DBA defines wages

to include not only a basic hourly rate of pay, but also

amounts related to health, retirement, and other fringe

benefits (40 U.S.C. §3141(2)(A)-(B)).

The DBA requires government contractors to pay locally

prevailing wages when the following conditions exist: (1)

there is a contract in excess of $2,000; (2) the United States

or the District of Columbia is a party to the contract; and (3)

the contract is for construction, alteration, or repair,

including painting and decorating, of public buildings or

public works of the United States or the District of

Columbia within the geographical limits of the United

States or the District of Columbia (40 U.S.C. §3142(a)).

Contractors are generally required to pay locally prevailing

wages to laborers and mechanics when a construction

project satisfies these three conditions. The government

may terminate a contract if it discovers that a contractor has

not paid the required prevailing wages (40 U.S.C. §3143).

Following termination, the government may contract to

complete the work and hold the original contractor liable

for any excess costs incurred.

The Comptroller General of the United States must

distribute to all federal agencies a list of individuals or

firms that have failed to pay laborers and mechanics a

prevailing wage under the DBA (40 U.S.C. §3144(b)(1)).

The federal government may not award a contract to the

persons or firms appearing on the list or to any firm,

corporation, partnership, or association in which such

persons or firms have an interest until three years after the

list’s publication date (40 U.S.C. §3144(b)(2)).

Besides the DBA, there are numerous statutes that authorize

federal financial assistance for construction projects

through grants, loans, and other funding mechanisms to

which Congress has added prevailing wage provisions.

These laws, described as Davis-Bacon related acts (DBRA)

because of their prevailing wage requirements, involve

construction in areas such as transportation, housing, air

and water pollution reduction, and health. The related acts’

prevailing wage requirements apply when federal financial

assistance is provided for construction but the federal

government is not a contracting party or a public building

or public work is not involved.

Proposed Changes to DBA Regulations

The U.S. Department of Labor’s Wage and Hour Division

(WHD), which administers the DBA, published a Notice of

Proposed Rulemaking (NPRM) in March 2022 (“Updating

the Davis-Bacon and Related Acts Regulations,” 87

Federal Register 15698, March 18, 2022) to provide the

“first comprehensive regulatory review” of DBA and

DBRA regulations since 1982. The comment period for the

NPRM closed on May 17, 2022.

Prevailing Wage Methodology

The DBA defines the minimum wages to be paid to laborers

and mechanics as those that the Secretary of Labor

determines to be prevailing for corresponding workers in

the civil subdivision of the state in which the covered

construction work is to occur. WHD surveys construction

contractors and, since 1935, has used a selection among the

following three methods to determine prevailing wage

rates:

 the 50% rule—wage rate paid to the majority of

workers;

 the 30% rule—wage rate paid to at least 30% of

workers; and

 the weighted average rate.

The NPRM would amend the procedure that has been in use

since a 1982 rulemaking changed the process that had been

in effect since the enactment of the DBA in 1935.

As shown in Table 1, WHD used a three-step process for

determining prevailing wages from 1935 until 1982. If a

majority wage rate existed, that rate became the prevailing

wage. If not, the wage rate paid to at least 30% of workers

prevailed. If no single rate exceeded the 30% of workers

threshold, the weighted average rate prevailed. The 1982

rulemaking eliminated the 30% rule, thus creating a twostep process for determining the prevailing rate: the wage

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The Davis-Bacon Act: 2022 Proposed Rule

rate paid to the majority of workers; if none, then the

weighted average rate.

The proposed rule would return the prevailing wage

determination to the three-step process in use 1935 through

1982. In justifying a return to the three-step process, WHD

explains that the original fallback method—weighted

averages—has become the dominant wage determination

method. WHD argues that current practice has resulted in

an “overuse” of average rates that are “artificial,” as they

are not “actually paid” to workers for whom prevailing

wages are calculated (87 Federal Register 15700).

Table 1. DBA Prevailing Wage Methodology

Period

First Step

Second Step

Third Step

1935–

1982

50% rule

30% rule

Average

1983–

present

50% rule

Average

n/a

NPRM

50% rule

30% rule

Average

Source: CRS review of U.S. Department of Labor, Wage and Hour

Division, “Updating the Davis-Bacon and Related Acts Regulations,”

87 Federal Register 15698, March 18, 2022.

Notes: Under the DBA, average wages are calculated as the

weighted average of wage rates for each employee in each

occupational classification.

Use of State and Local Data

Under current regulations, WHD may “consider” wage

rates calculated for public construction projects by states or

localities as part of the determination process. The proposed

rule would clarify that WHD may adopt state or local

prevailing rates, even if the state or local definition of

prevailing differs from the WHD definition. To adopt these

rates, WHD would have to determine that the prevailing

wage rate methodology used by states or localities meets

certain criteria, including a survey process that

encompasses all relevant stakeholders, an occupational

classification system recognized within the construction

industry, and a wage methodology “substantially similar” to

that used by WHD. By adopting this proposed change,

WHD argues the timeliness and currency of prevailing

wage rates would improve.

Geographic Scope

The DBA specifies that the geographic area for which

prevailing wages should be determined is the “civil

subdivision of the State in which the work is to be

performed” (40 U.S.C. §3142(b)). In practice, WHD has

used the county as the default area for wage determinations.

If data at the county level are not sufficient to determine

prevailing wages for corresponding classes of laborers and

mechanics, WHD progressively expands the geographic

scope of data collection to a group of surrounding counties,

then to supergroups of counties, and finally to the state as a

whole. The 1982 regulations barred the mixing of “rural”

and “metropolitan” county wage data for determining

prevailing wages based on the rationale that importing

higher wages from metropolitan counties would disrupt

rural labor markets. In some cases, this bar meant that

WHD would mix wage data from a metropolitan county in

one part of the state with data from another nonadjacent

metropolitan county. The NPRM proposes two changes in

the geographic scope for wage data:

 Removing the ban on allowing WHD to mix wage data

between rural and metropolitan counties when the

geographic scope is expanded beyond a single county.

WHD argues that this rural-metropolitan distinction

does not capture actual construction labor markets,

which tend to be geographically large and are not

aligned with county borders.

 Clarifying the definition of surrounding counties to

reduce ambiguity about which counties may be part of a

multi-county grouping for prevailing wage

determinations.

Periodic Adjustments

As noted in the NPRM, under the current 50% rule for

determining prevailing wage, majority wage rates for DBA

classifications are typically rates from collective bargaining

agreements (CBAs). WHD updates the CBA-determined

prevailing rates based on periodic wage and benefit

increases in the CBA. If, however, a prevailing wage rate is

based on a weighted average or the majority rate is from

non-CBA rates, there is no mechanism to adjust these rates

without updated construction wage surveys. Although

WHD has a goal of conducting wage surveys in each area

every three years, in practice this does not happen, and

many area wage determinations are more than three years

old. In some cases, the determinations may be more than 10

years old. Thus, out-of-date wage surveys may lead to wage

determinations that are lower than the current prevailing

construction wages in a local area.

To address out-of-date, non-CBA-determined prevailing

wage rates, WHD proposes in the NPRM to update this

class of rates by adjusting them with the Bureau of Labor

Statistics Employment Cost Index (ECI) data, which tracks

data on wages and benefits. Specifically, WHD would use

ECI data to update existing non-CBA rates from the date

the rate was published to their present value. Going

forward, non-CBA rates or weighted average rates would

be adjusted in accordance with ECI data if WHD has not

updated these rates within three years after publication.

Anti-retaliation

Currently, WHD can debar contractors and seek back

wages for laborers and mechanics who have been retaliated

against for cooperating with WHD investigations or

reporting potential violations of the DBA. The NPRM

proposes to broaden the scope of protected activities for

workers and authorize “make-whole relief” and other

remedial actions, including reinstatement, promotion, and

the expungement of reprimands that are unavailable under

current law.

David H. Bradley, Specialist in Labor Economics

Jon O. Shimabukuro, Legislative Attorney

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The Davis-Bacon Act: 2022 Proposed Rule

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