Procedures for Predetermination of Wage Rates (29 CFR Part 1); Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Contracts (29 CFR Part 5)

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 (29 CFR Part 1);

Labor Standards Provisions Applicable to Contracts Covering Federally

Financed and Assisted Construction and to Certain Nonconstruction

Contracts (29 CFR Part 5)

AGENCY: Wage and Hour Division, Employment Standards Administration,

Office of the Secretary, Labor.

ACTION: Final rule.

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SUMMARY: This document adopts as a final rule the continued suspension

of the regulations previously issued under the Davis-Bacon and Related

Acts at 29 CFR 1.7(d), 29 CFR 5.2(n)(4), and 29 CFR 5.5(a)(1)(ii) and

suspended at 58 FR 58954 (Nov. 5, 1993), while the Department conducts

additional rulemaking proceedings to determine whether further

amendments should be made to those regulations. These regulations

govern the employment of ``semi-skilled helpers'' on federally-financed

and federally-assisted construction contracts subject to the prevailing

wage standards of the Davis-Bacon and Related Acts (DBRA).

EFFECTIVE DATE: December 30, 1996.

FOR FURTHER INFORMATION CONTACT: William W. Gross, Director, Office of

Wage Determinations, Wage and Hour Division, Employment Standards

Administration, U.S. Department of Labor, Room S-3028, 200 Constitution

Avenue, NW, Washington, DC 20210. Telephone (202) 219-8353. (This is

not a toll-free number.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

This rule does not contain any new information collection

requirements and does not modify any existing requirements. Thus, the

rule contains no reporting or recordkeeping requirements subject to the

Paperwork Reduction Act of 1995.

II. Background

On May 28, 1982, the Department published revised final

regulations, 29 CFR Part 1, Procedures for Predetermination of Wage

Rates, and 29 CFR Part 5, Subpart A--Davis-Bacon and Related Acts

Provisions and Procedures (47 FR 23644 and 23658, respectively), which,

among other things, would have allowed contractors to use 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. These rules

represented a reversal of a longstanding Department of Labor practice

by allowing some overlap between the duties of helpers and the duties

of journeymen and laborers. To protect against possible abuse, a

provision was include limiting the number of helpers which could be

used on a covered project to a maximum of two helpers for every three

journeymen. See 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) (1982).

[[Page 68642]]

As a result of a lawsuit brought by the Building and Construction

Trades Department, AFL-CIO, and a number of individual unions,

implementation of the regulations was enjoined. Building and

Construction Trades Department, AFL-CIO, et al. v. Donovan, et al., 553

F. Supp. 352 (D.D.C. 1982). The U.S. Courts of Appeals for the District

of Columbia issued a decision upholding the Department's authority to

allow increased use of helpers and approving the regulatory definition

of a helper's duties, but struck down the provision for issuing a

helper wage rate where helpers were ``identifiable,'' thereby requiring

a modification to the regulations to provide that a helper

classification be ``prevailing'' in the area before it may be used.

Building and Construction Trades Department, AFL-CIO, et al., v.

Donovan, et al., 712 F.2d 611 (D.C. Cir. 1983), cert. denied, 464 U.S.

1069 (1984).

Following a new round of notice-and-comment rulemaking, DOL

published a final rule in the Federal Register (54 FR 4234) on January

27, 1989, to add the requirement that the use of a particular helper

classification must prevail in an area in order to be recognized, and

to define the circumstances in which the use of helpers would be deemed

to prevail. (54 FR 4234). Following the Court's lifting of the

injunction by Order dated September 24, 1990, the Department published

a Federal Register notice on December 4, 1990, implementing the helper

regulations effective February 4, 1991 (55 FR 50148).

In April 1991, Congress passed the Dire Emergency Supplemental

Appropriations Act of 1991, Public Law 102-27 (105 Stat. 130), which

was signed into law on April 10, 1991. Section 303 of Public Law 102-27

(105 Stat. 152) prohibited the Department of Labor from spending any

funds to implement or administer the helper regulations. In support of

the prohibition, Chairman Ford of the House Education and Labor

Committee stated that ``Congress should insist that the administration

recognize that authorizing legislation is the only appropriate vehicle

for dealing with fundamental changes in the operation of the Davis-

Bacon Act.'' In compliance with the Congressional directive, the

Department did not implement or administer the helper regulations for

the remainder of fiscal year 1991.

After fiscal year 1991 concluded and subsequent continuing

resolutions expired, a new appropriations act was passed which did not

include a ban restricting the implementation of the helper regulations.

The Department issued All Agency Memorandum No. 161 on January 29,

1992, instructing the contracting agencies to include the helper

contract clauses in contracts for which bids were solicited or

negotiations were concluded after that date.

During the course of the ongoing litigation in this matter, the

U.S. Court of Appeals for the District of Columbia (by decision dated

April 21, 1992) upheld the rule defining the circumstances in which

helpers would be found to prevail and the remaining helper provisions,

but invalidated the provision of the regulations that prescribe a

maximum ratio governing the use of helpers (Building and Construction

Trades Department, AFL-CIO v. Martin, 961 F.2d 269 (D.C. Cir. 1992)).

To comply with this ruling, on June 26, 1992, the Department issued a

Federal Register notice removing the ratio provision at 29 CFR

5.5(a)(4)(iv) from the Code of Federal Regulations. (57 FR 28776).

Subsequently, Section 103 of the 1994 Department of Labor

Appropriations Act, Public Law 102-112, prohibited the Department of

Labor from expending funds to implement or administer the helper

regulations during fiscal year 1994. Accordingly, on November 5, 1993,

the Department published a Federal Register notice (58 FR 58954)

suspending the helper regulations and reinstituting the Department's

prior policy regarding the use of helpers. The 1995 Department of Labor

Appropriations Act again barred the Department form expending funds to

implement the helper regulations (Section 102, Public Law 103-333);

this prohibition extended midway through fiscal 1996 through several

continuing resolutions. There was no such prohibition in the Department

of Labor's Appropriations Act for the remainder of fiscal 1996, Public

Law 104-134, signed into law by President Clinton on April 26, 1996, of

for fiscal 1997.

On August 2, 1996, the Department published in the Federal Register

(61 FR 40366) a proposal to continue the suspension of the helper

regulations previously issued while the Department conducts additional

rulemaking proceedings to determine whether further amendments should

be made to those regulations. Public comments were invited for 30 days.

In response to this proposal, the Department received forty-seven

comments, including submissions by the Associate Builders and

Contractors, Inc. (ABC), the Associated General Contractors of America

(AGC), the National Association of Home Builders (NAHB), the Coalition

to Repeal the Davis-Bacon Act (CRDBA),the National Alliance for Fair

Contracting, the American Subcontractors Association, the American

Society of Civil Engineers (ASCE), the Building and Construction Trades

Department, AFL-CIO (BCTD), the Sheet Metal Workers' International

Association, and the Laborers' International Union of North America

(LIUNA), individual contractors, local chapters of unions and industry

associations, and individuals.

Summary of Comments and Discussion

Among the many comments received by the Department, relatively few

directly addressed the issue of whether the Department should continue

the suspension of the helper regulations temporarily while it engages

in rulemaking on possible amendments to those regulations. The bulk of

the comments focused on the merits of flaws of the substance of the

underlying helper regulations themselves, or on the factors that led

the Department to consider amending the regulations.

The issue addressed by the proposal, however, is not whether the

Secretary should or should not repeal or amend the helper regulations

for the reasons set forth in the NPRM. Those are issues that will be

fully explored in an upcoming notice of proposed rulemaking proceeding

concerning the substantive aspects of the helper regulations. However,

because the Secretary's decision to seek public comments on whether the

helper regulations should continue to be suspended pending the outcome

of the substantive rulemaking proceedings is obviously intertwined with

his conclusion that the helper regulations need to be reexamined, we

discuss below both categories of comments, beginning with those that

address the proposed temporary suspension.

Comments Concerning the Proposed Temporary Continuation of the

Suspension

The Department expressed its concern in the NPRM that implementing

the regulations immediately, during the pendency of rulemaking to

consider amending the regulations, could create disruption and

uncertainty for both the federal contracting community and the federal

agencies. In light of the length of time it would take to fully

implement the regulations so that helpers could actually be used on

federal construction, and given that shortly after the regulations

would be come effective the regulations could change, the Department

requested specific comment on whether continuing the suspension during

rulemaking would be advisable.

[[Page 68643]]

Three comments were received that directly addressed this issue.

The BCTD agreed with the Department, stating that the ``proposed rule

is the most prudent and responsible action under the circumstances'' to

``avoid the disruption and uncertainty that implementation of the

current `helper' regulations would cause during the short period of

time that it will take to complete formal rulemaking.''

On the other hand, the AGC disagreed that implementation would be

short-term or would create unwarranted disruption. It also disagreed

with the Department as to how long it would actually take to implement

the regulations if the suspension were lifted immediately. The AGC

noted that when the ratio provision was withdrawn by the Department in

June 1992, the General Services Administration published a rule

amending the FAR and DFAR in September 1992. The AGC claims that since

those amendments have been suspended, not withdrawn, ``there is no

reason to believe that delays, if any, would be more than minimal.''

The AGC also stated that ``there is no reason to believe that

additional `substantive rulemaking' will be completed, and

implementation initiated, within one year.''

The ABC in its comments did not directly address this issue, but

rather asserted:

While engaging in this predetermined rulemaking, the agency

thinks it will take too long (60 days) to implement the existing

regulations and that this will disrupt public bidding practices. (In

other words, the government should not be allowed to save money in

its construction projects, or to recognize prevailing practices,

where the savings will not be of long duration.)

First, the Department believes that it would take substantially

longer than 60 days to fully implement the helper regulations. This

view is fully supported by the Department's past experience with the

helper regulations. If the Department were to begin implementation of

the suspended rule immediately, the rule itself would provide a 60-day

effective date to allow affected parties time to come into compliance,

and would apply only to contracts for which bids are advertised or

negotiations concluded after that date. Bid solicitations to which the

regulations will apply must be advertised for at least 30-60 days

before a contract is awarded. Thus, following the effective date of the

regulations there will be another 30 to 60 days before contracts

potentially containing helper contract clauses could be signed.

Conforming changes in government procurement regulations (the

``FAR'' and ``DFAR'') and standard contract forms would also be needed,

a process which has sometimes taken several months. Amendments to the

FAR and DFAR following the Department's 1992 notice of implementation

had sixty-day effective dates. As noted previously in the NPRM, when

the Department implemented the helper rule in January 1992, conforming

changes in the FAR and DFAR did not actually become effective until

November 1992, approximately ten months after the Department issued its

notice implementing the rule. The AGC correctly notes that these

changes to the FAR and DFAR also included amendments necessitated by

the Department's June 1992 final rule.

Furthermore, a contractor can use helpers in accordance with the

helper regulations only if (1) the contract contains a wage

determination with a helper classification and rate or (2) the

contractor awarded the contract requests that a helper classification

be added to the wage determination and the Department determines that

the use of the helper classification is a prevailing practice in the

area in which the work will be performed. The time necessary for the

Department to perform wage determination and prevailing practice

surveys would further lengthen the period before contractors could

lawfully pay their workers at helper rates.

Furthermore, it continues to be the Department's intention to

complete a substantive rulemaking action within approximately one year.

Because of the substantial length of time it would take to implement

the helper regulations, any saving that might be gained from

implementation of the helper regulations during the rulemaking period

would be minimal, particularly in light of the disruption and

uncertainty which would be caused by implementing the rule while the

Department is engaged in rulemaking.

In sum, the comments have provided no information which would

change the Department's belief that the suspended regulation, if

immediately implemented, ``would be effective for only a brief period,

if at all, before the Department expects [to] complete substantive

rulemaking proceedings'' and that ``repeated changes in the regulations

within a short period of time would create unwarranted disruption in

the contracting process of federal agencies'' and uncertainty in the

contracting community as a whole.

Whether the proposal to continue the suspension meets the

requirements of the Administrative Procedure Act (APA).

Many of the contractors which commented on the proposal expressed

the view that the proposal violates the APA. The comments of the NAHB

are illustrative. The NAHB stated that the Department is ``already

refusing to enforce the current helper regulations, and the comment

period has not yet ended,'' in violation of the APA requirement that

agencies follow their own regulations, and may lawfully repeal or

suspend those regulations only after the public has been given notice

and allowed to comment. The NAHB also contended that the Department's

``decision to suspend the regulations is clearly an arbitrary and

capricious one,'' because the Department has stated the need for

additional substantive rulemaking on the helper regulation but has not

yet proposed any changes.

The ABC also contended that the current rulemaking violates the APA

and is arbitrary and capricious because there was no notice and comment

on the continued suspension of the regulation while the Department

engages in notice and comment rulemaking on whether to further continue

the suspension during substantive rulemaking. In other words, ABC

claimed that the failure to implement the rules while conducting

rulemaking on whether to continue to suspend the rules violates the

APA.

The BCTD commented that it does not believe the proposal violates

the APA; rather, its view is that the proposal is necessary to satisfy

the APA. The BCTD commented that one of the reasons it supports the

proposed rule is that it believes it is necessary in order to avoid

violating the APA. The BCTD expressed the view that the Department was

not required to lift the suspension or begin notice and comment

rulemaking immediately after the signing of the current Appropriations

Act. On the other hand, the BCTD believes that the suspension could not

continue indefinitely without the benefit of public notice and comment.

The publication of the August 2, 1996, proposed rule for comment,

however, alleviates that concern.

It is the Department's belief that the contention that the

continued suspension of the helper regulations violates the APA arises

from the faulty premise that the helper regulations are currently in

effect, and therefore must be enforced until such time as they are

amended or repealed after appropriate notice and comment proceedings.

However, the helper regulations are not now in effect, and have not

been in effect at any time during the past three years. The helper

regulations were properly suspended by notice published in the Federal

Register on November 5,

[[Page 68644]]

1993, in response to the enactment of the prohibition on expending

funds to implement the regulations which was contained in the

Department's 1994 Appropriations Act. While the Department's current

Appropriations Act does not contain such a prohibition, that Act did

not have the effect of lifting the suspension. Because the suspension

of the helper regulation had been effected through rulemaking action in

the Federal Register, action by the Department in the Federal Register

was necessary to lift the suspension. Thus, the proposed rule does not

suspend the helper regulations; they were already lawfully suspended.

Furthermore, even if the Secretary's continuation of the suspension

were construed as a postponement of the (as yet unestablished)

effective date of the helper regulations to allow time for notice and

comment, it is the view of the Department that the APA permits the

Department to seek comments before a final determination concerning

implementation of the rule is made. It is the Department's view that

delay for the sole purpose of seeking public comments accords with both

the language and underlying objectives of the APA--particularly where

the public has never had an opportunity to comment on the rule in its

present form (without a ratio provision) and over fourteen years have

passed since the Department first issued the rule.

It is also the Department's view that it has not acted arbitrarily

and capriciously in undertaking the current rulemaking. The purpose of

the proposed rule is to solicit public comment ``concerning whether or

not to continue the suspension of the helper regulation while further

action is being taken with respect to possibly amending the rule.'' 61

FR 40367. The Department has not decided to repeal the helper

regulations; nor has the Department made a final decision to amend the

regulations. The Department has, however, concluded that the basis and

effect of the semi-skilled helper regulations should be reexamined.

The Department believes that the reasons set forth in the NPRM

provide a reasonable basis for the decision to seek public comments

before making any decision concerning implementation of the rule.

Implementation of the regulation, on a short-term basis during the

pendency of the substantive rulemaking procedure, would affect

relatively few contracts, and yet could potentially create substantial

disruption and uncertainty in the federal procurement process.

Consequently, the Department believes it was entirely appropriate and

consistent with the objectives of the APA to seek comments from

affected parties before deciding how to proceed.\1\

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\1\ The question of the proposed rule's adequacy under the APA

is currently before the U.S. District Court for the District of

Columbia in the matter of Associated Builders and Contractors, Inc.,

et al. v. Reich, Civil Action No. 96-1490 CRR. The views of both the

Department and the ABC are discussed in greater length in the

pleadings filed in the case.

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Comments Concerning the Reasons for the Department's Decision To

Initiate Rulemaking Proceedings Proposing Further Amendments to the

Suspended Helper Rule

Many of the comments received addressed the reasons given by the

Department for initiating substantive rulemaking concerning the helper

rule. The specific question posed by the current proposed rule is

whether to continue the suspension of the helper regulation while the

Department further considers such substantive issues and what, if any,

amendments it should propose to address them. The time for full

consideration of substantive issues is after the Department has

published a proposal that would further amend the helper rule and the

public has had the opportunity to comment on that proposal. But given

that most of the comments received addressed the Department's

substantive concerns with the helper regulations, and that the need to

address those concerns is what led the Department to propose the

continued suspension of the regulations, it is appropriate to summarize

and discuss those comments here.

The Department explained in the NPRM that it has decided to

reexamine the helpers regulations to consider whether further amendment

is warranted. Data gathered during the brief period during which the

helper regulation was effective suggest that the use of helpers may not

be as widespread as initially thought. The Department is also preparing

an updated economic impact analysis based in part on data sources not

previously available. As a result of the Department's experience in

attempting to develop enforcement guidelines and the removal of the

ratio requirement from the regulation, the Department is very concerned

that administration of the helper regulation, and the policing of

potential abuse of the helper classification, may be more difficult

than initially anticipated. Finally, the Department stated that it is

concerned about the potential impact of the regulation on formal

apprenticeship and training programs.

Use of helpers may not be as widespread as initially thought.

The belief that use of helpers was widespread was a key assumption

underlying the Department's development of the helper regulation. Many

of the contractors and contractors' associations submitting comments

questioned the Department's stated concern that the use of helpers

might not be as widespread as it had initially assumed, and its

reliance upon prevailing wage survey results when the helper regulation

was in effect as the basis for that statement. The ABC, relying upon

its assertion that helpers are utilized extensively in the open-shop

sector, also points to BLS statistics showing a flat or slightly

declining level of unionization during the period 1989-1992 to question

the legitimacy of the Department's concern.

In the proposed rule published in August 1987, the Secretary

projected that helpers would be determined to be prevailing in two-

thirds to 100 percent of all craft classifications. 52 FR 31369. This

was amended by the statement (without quantification) in the final rule

that this would be reduced somewhat to the extent that collectively

bargained rates were recognized as prevailing and did not provide for

use of a helper classification. 54 FR 4242.

The Secretary's actual experience with the regulation presented a

starkly different picture. In contrast to the estimate published in

1987 that helpers would prevail in at least two-thirds of all craft

classifications, the Secretary found that use of helpers prevailed with

respect to only 69, or 3.9 percent, of the 1763 classifications

included in the 78 prevailing wage surveys completed during the period

the rule was in effect.\2\ These numbers are even lower if one looks

only at the nonunion sector--where it had been assumed in the past that

helpers would almost always be found to prevail. Of the 69 helper

classifications found to prevail, 21 were prevailing based on the

practice of union contractors.\3\

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\2\ Not included in the 69 helper classifications are instances

where the number of helpers actually used or the number of

contractors using helpers was insufficient to determine a prevailing

rate.

\3\ Fifteen of the 21 union help classifications were elevator

constructor helpers--a classification historically recognized

nationwide in the union sector of the elevator constructor trade.

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Furthermore, the Secretary found that use of helpers was not the

prevailing practice in any classifications in 43 of the 78 surveys

conducted, covering 229 of 328 counties surveyed.\4\ These

[[Page 68645]]

surveys included 2 surveys in which the schedule reflected entirely

collectively bargained rates, 10 surveys in which the schedule

reflected entirely open shop rates, and 66 mixed schedules, 51 of which

reflected 50 percent or more open shop rates. In 13 of the 35 surveys

where a helper classification was issued, the only helper

classification found to prevail was a union helper. A total of only 48

open shop helper classifications were found to prevail. Thus open shop

helper classifications were found to prevail in only 20 of 78 surveys

conducted, covering only 52 of 328 counties surveyed.

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\4\ Note that the survey results have been re-checked and the

numbers revised slightly since publication of the proposed rule.

Compare 61 FR 40367. Both the ABC and the AGC questioned the results

obtained in the 78 surveys, citing a 1996 GAO report on the Davis

Bacon wage determination process. GAO/HEHS-96-130, May 1996. It is

inappropriate to draw conclusions concerning the accuracy of survey

results based on the GAO report. The report did not examine or

verify the accuracy of wage determination data, survey response

rates, or calculation of prevailing wages. It focused on the

policies and procedures utilized to prevent the use of inaccurate

data, and proposed changes to strengthen those policies and

procedures.

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ABC in its comments attempts to dismiss this data as

``statistically insignificant.'' However, the extraordinary divergences

between the actual data and the projection used as a basis for adopting

the helper regulations clearly support the Secretary's conclusion that

``the basis and effect of the semi-skilled helper regulations should be

reexamined.'' 61 FR 40367. Moreover, ABC's reference to statistics that

show a decline in unionization fails to explain the dramatic

discrepancy between the Secretary's project in the 1987 proposed rule

and the data compiled from actual wage surveys during 1992 and 1993.

Data not previously available when the helper regulations were

originally proposed and promulgated also show a lower use of helpers

than was originally believed and, therefore, support the Secretary's

determination that the helper regulations require further examination.

For example, Bureau of Labor Statistics (``BLS'') tabulations from the

1995 Current Population Survey (``CPS'') show that helpers comprise

only 1.3 percent of the total construction employment. Employment data

from the Occupational Employment Statistics (``OES'') program, which

have formed the basis for earlier analyses of helper employment, show

that helpers comprise 9.4 percent of the total construction workforce--

higher than the CPS data but a much lower incidence than the

Department's economic impact analysis in 1987 and 1989 would suggest.

However, the OES figure is based on a helper definition which appears

to correspond to what is commonly considered to be laborer's or

tenders' work and does not appear to envision that helpers use tools of

the trade--an important component of the definition in the suspended

regulation.

Potential Cost Savings

The potential cost savings to be realized from implementation of

the helper regulation was cited by many of the commenters who opposed

the temporary continuation of the suspension. Many claimed that

implementation of the helper regulation could save the government up to

$600 million a year, based on the Department's earlier economic impact

analysis.

LIUNA expressed its view that implementation of the helper rule

would not significantly reduce the cost of federal and federally-

assisted construction projects. They believe the cost estimates

developed in the course of rulemaking on the helper regulations were

overly simplistic, failing to account for the productivity costs of

replacing higher wage, skilled workers with lower wage, less skilled

workers. Another commenter stated the view that semi-skilled workers

increase project costs due to increased safety violations and worker's

compensation claims, and lower productivity.

The data discussed above indicate that helpers may be found to

prevail at a much lower rate than previously assumed. The Department is

preparing a preliminary regulatory impact analysis which will discuss

the Department's updated estimate of costs and benefits relating to the

proposed regulation in preparation, and will include projected savings

if the suspended helper rule were implemented. This analysis will be

published for notice and comment with the proposed rule.

Potential for Abuse

Both the ABC and the AGC challenged the Department's concern that

the helper regulation may create an unwarranted potential for abuse of

the helper classification to justify payment of wages which are less

than the prevailing wage in the area. The AGC does not believe there is

any more potential for abuse with respect to the helpers regulation

than there is with respect to the Department's procedures for

identifying other classifications, calculating prevailing wages, or

conforming classifications. The ABC stated that if helpers prevail in

only a few areas, the position it ascribes to the Department, then it

is not likely that there would be any significant amount of abuse.

The extent to which helpers prevail in particular areas does not

bear on whether the use of helpers will be abused where they do

prevail. Moreover, the issue of what, if any, changes need to be made

to prevent potential abuse is one of the primary reasons the Department

has decided to reexamine the helper rule. The Department notes that the

helper classification as currently defined is unique in being based on

subjective standards such as skill level and supervision, rather than

an objective test of work performed. The Department is concerned that

such a subjective standard may be more difficult to enforce.

Three commenters, all of whom supported the proposal to continue

the suspension, expressed their concern that the definition of a helper

contained in the regulation would lead to abuse and misclassification.

One commenter submitted anecdotal evidence of intentional

misclassification under a State wage determination law that allowed the

use of helpers, and the two others believe it will be very difficult to

enforce the regulation against contractors who would call the majority

of their workforce helpers, including workers whose skill-levels

qualify them as journeymen.

Both the ABC and the AGC reject the notion that the regulation is

more difficult to administer without the ratio provision, and neither

finds it relevant that the public never had the opportunity to comment

on the possible impact on the regulation of eliminating the ratio.

LIUNA on the other hand believes the regulation without such a ratio is

significantly different from what was originally proposed, and believes

that the failure to submit the regulation without the ratio for public

comment renders it legally deficient.

The elimination of the ratio cap provisions from the helper

regulation, under which there could be no more than two helpers for

every three journeymen, is one of the primary reasons the Department is

concerned that the regulations may be more difficult to enforce than

anticipated, and more subject to abuse. As the proposed rules published

in 1981, 1987 and 1996 uniformly reflect, this ratio provision was

intended specifically to limit the potential for abuse of the helper

classification. 46 FR 41456 (Aug. 14, 1981); 52 FR 31366 (Aug. 1987);

61 FR 40367 (Aug. 2, 1996). The D.C. Circuit echoed the Secretary's

concern with potential abuse of the helper regulations in its 1983

decision when the Court observed that ``[t]he change may mean that some

unscrupulous contractors will find it easier to shift what the

prevailing practice denominates journeyman work

[[Page 68646]]

onto helpers * * * .'' 712 F.2d at 629. The Court, like the Secretary,

concluded that the numeric ratio ``increase[s] the likelihood that

gross violation will be caught, or at least that evasion will not get

too far out of line * * * .'' Id. at 630. While the D.C. Circuit

invalidated the specific ratio selected by the Secretary in its 1992

decision, nothing in that opinion suggests that a ratio is not an

important element of the regulation, nor does it purport to preclude

the Secretary from adopting such a measure designed to curb the

potential for abuse so long as the Secretary adequately explains his

actions. See Building & Construction Trades Dept., 961 F.2d at 276-277.

The regulation was modified as a result of the 1992 court decision,

to eliminate the numerical ratio of helpers to journeymen. Although

that ratio was one of the principal protections against abuse of the

new helper definition, the public never had an opportunity to comment

on whether other changes to the regulation, or an alternative ratio,

was appropriate in light of the elimination of the ratio provision.

In the course of attempting to develop enforcement guidelines for

the regulations while they were in effect, it became apparent that the

helper definition may be more difficult to administer and enforce than

anticipated, and more difficult to administer than other aspects of the

wage determination structure. Because a helper as defined in the

suspended regulation is the only classification with duties that are

specifically intended to overlap with the duties performed by other

classifications, the Department believed that the ratio cap was a

necessary buffer against potential contractor abuse and

misclassification. The Department is concerned that the elimination of

the ratio provision may greatly increase the possibility that

misclassifications will go unchecked. The Department therefore

continues to be concerned that the suspended regulation as written

should be reexamined through notice and comment rulemaking.

Effect on Apprenticeship and Training

Several of those who supported the proposed continuation of the

suspension believe that the helper regulation would have a negative

impact on formal apprenticeship and training programs. They claim that

the ability to pay apprentices a wage lower than that paid to

journeymen is a significant incentive for contractors to participate in

formal training programs. They also claim that the availability of

lower paid helpers would cause contractors to withdraw from such

programs and would threaten private funding for apprenticeship and

training. They believe that this poses a threat both to the industry,

which would face shortages of skilled, trained labor, and to the

individual workers who would find themselves in dead-end, low skilled

jobs without adequate opportunity to increase their skills. Both the

ABC and the AGC, however, believe such concerns are unfounded, and both

observe that the Department provided no new evidence on this topic in

the proposal.

The contractors who wrote to oppose the suspension proposal did not

directly address the impact the helper regulation would have on

apprenticeship and training. But some of them did describe how they use

helpers, suggesting that they view helpers not as a separate and

distinct classification but as an entry-level position in which workers

acquire skills to move up to the journey level, much like an

apprentice. These commenters endorsed the helper regulations (and

opposed their continued suspension, even temporarily) because they

allow workers to gain experience; promote training of unskilled

workers; provide the semi-skilled with an opportunity to gain

experience; and provide the unskilled with a first step to higher

paying jobs.

Some of these commenters, however, described helpers in a way that

is not incompatible with apprenticeship programs. One company noted

that it is not practical to enroll abundant numbers of semi-skilled

workers in apprenticeship training programs. Another viewed the helper

position as a pre-apprentice opportunity for unskilled workers to

acquire the skills necessary to enter an apprenticeship program.

These comments taken together confirm the Department's view that

the potential impact of the helper regulation on apprenticeship

programs is not fully understood, and should be revisited through

further rulemaking.

Additional Comments

A large number of those opposed to the proposed rule also raised

two additional issues. First, commenters stated that contractors that

use helpers would be more able to compete for federal construction

contracts if the helper regulation were implemented immediately.

Second, commenters contend that women and minorities are more likely to

be employed as helpers; therefore immediate implementation of the

helper regulations would increase employment opportunities for those

groups. LIUNA, on the other hand, stated that women and minorities are

more likely to be employed as laborers and therefore would be harmed by

implementation of the helper regulation.

LIUNA also stated its view that the Department's position on the

impact of the helper regulation on other occupational classifications

shifted without explanation during the prior rulemaking on the

suspended regulation. LIUNA notes that throughout the rulemaking the

Department had assumed that helpers would replace laborers as well as

journeymen, but significantly changed its position in the 1989 final

rule, in which it assumed that helpers would replace only journeymen.

They also cite developments within the industry that have rendered

obsolete the understanding of laborers as unskilled workers, making it

more difficult to use skill-level as a basis for distinguishing between

laborers and helpers. Thus, it is LIUNA's view that the impact of the

helper regulations upon laborers should be reexamined before the

regulations are implemented.

That certain contractors, who utilize ``helpers'' as that term is

defined in the suspended regulations, may benefit from implementation

of the helper regulations, does not negate either the need to reexamine

the practicality and enforceability of such regulations or the

advisability of continuing the suspension of these regulations during

such reexamination. Moreover, the disagreement among the commenters as

to the degree and nature of the potential effect of the helper

regulations upon the employment of women and minorities, as well as the

employment of laborers, provides even additional support for the

Secretary's decision to further reexamine the helper regulations

through additional rulemaking.

Conclusion

For the foregoing reasons and after consideration of all of the

comments submitted in response to the proposed rule published on August

2, 1996, in the Federal Register (61 FR 40366), the helper regulations

previously issued under the Davis-Bacon and Related Acts at 29 CFR

1.7(d), 29 CFR 5.2(n)(4) and 29 CFR 5.5(a)(1)(ii) and suspended at 58

FR 58954 (Nov. 5, 1993), are suspended until the Department either (1)

issues a final rule amending (and superseding) the suspended helper

regulations; or (2) determines that no further rulemaking is

appropriate, and issues a final rule reinstating the suspended

regulations. The Department expects these proceedings to be completed

within approximately one year.

V. Administrative Procedure Act

The APA at 5 U.S.C. 553(d)(3) requires that the effective date for

a

[[Page 68647]]

regulation be not less than 30 days from the date of publication unless

there is ``good cause'' shown for an earlier date. This rule does not

require affected persons to take any actions to prepare for its

implementation. Furthermore, a delay in the effective date could cause

confusion among the affected public as to whether the previously

suspended rule is in effect in the meantime. Therefore the Department

finds good cause to have this rule effective immediately.

VI. Executive Order 12866; Sec. 202 of the Unfunded Mandates Reform Act

of 1995

As stated in the notice of proposed rulemaking, the Department is

treating this rule as a ``significant regulatory action'' within the

meaning of sec. 3(f)(2) of Executive Order 12866 because the

alternative to the proposed rule--lifting of the suspension and

implementing the helper regulations while rulemaking is ongoing--could

possibly interfere with actions planned or taken by other government

agencies.

The AGC contends that the proposal for further rulemaking is

inconsistent with Executive Order No. 12866, Section 202 of the

Unfunded Mandates Reform Act of 1995, the Small Business Regulatory

Enforcement Fairness Act and the Regulatory Flexibility Act. The AGC

claims that the concerns expressed by the Department in the proposed

rule regarding implementation of the helper regulations are ``vague''

and not ``supported by reliable data.'' Relying upon the Department's

own previous cost analysis conducted in 1987 and published along with

the final rule at 54 FR 4242 (1989), the AGC claims that ``the

Department's contention that no cost would be incurred by continuing

the suspension of the helper regulations is simply not true,'' and that

failure to implement the helper regulations will ``cost the federal

government, taxpayers and the construction industry hundreds of

millions of dollars.'' Finally, the AGC asserts that ``the Department's

proposal is a `major rule' and requires both an economic and regulatory

flexibility analysis in full compliance with Executive Order No. 12866

and the Small Business Regulatory Enforcement Fairness Act.''

The AGC's comments address potential savings of implementation of

the helper regulations, rather than the impact of continuing the

suspension. As noted above, the Department is preparing a preliminary

regulatory impact analysis which will discuss the Department's estimate

of the costs and benefits of the proposed rule in preparation,

including any savings that might be realized from implementation of the

helper regulations as they now stand. This analysis will be published

for notice and comment concomitant with the Department's regulatory

proposals concerning the employment of helpers on Davis-Bacon projects.

As discussed above, the Congressional action of lifting the

prohibition against implementing the regulation did not itself

reinstate the suspended regulation, and a notice or other rulemaking

action by the Department was necessary to lift the suspension on the

helper regulation. It is the Department's view, therefore, that the

suspension has continued in effect since October 1993, and that the

suspension continues in effect today. This rule, which continues the

previously existing suspension, merely preserves the status quo.

Therefore the Department concludes that there will be no cost savings

from the continuation of the suspension of the helper regulations that

has been in effect since November 1993 during the substantive

rulemaking proceedings.

Moreover, as discussed above, a substantial period of time is

required before the regulations would be implemented by their

incorporation into contracts, and the Department's experience in the

period in 1992 and 1993 when the suspended regulation was in effect was

that relatively few surveys were completed in which helpers were found

to prevail. Thus, any potential savings that would be lost from a

failure to implement the helper regulations during the rulemaking

period would be minimal.

Accordingly, the Department has concluded that this rule, which

continues the suspension of the helper rule and therefore is a

continuation of the status quo, will not have an annual effect on the

economy of $100 million or more, or adversely affect in a material way

the economy or a sector of the economy.

Because this rule will not have a significant economic impact, no

economic analysis is required. For the same reason, this rule does not

constitute a ``major rule'' within the meaning of Sec. 804(2) of the

Small Business Regulatory Enforcement Fairness Act.

VII. Regulatory Flexibility Act

The AGC contends that the Department's conclusion that the proposed

continuation of the suspension ``will have no significant impact on

small entities is also contradicted by its 1987 estimate. * * *''

Again, the AGC's comments address the potential savings of

implementation of the helper regulations, rather than the costs or

savings of continuing the suspension. This regulation is merely a

continuation of the status quo. Therefore the Department has determined

that the rule does not have a significant economic impact on a

substantial number of small entities.

Furthermore, the Department has determined that if the current

suspension were lifted and the helper regulation implemented, there

would not be a significant economic impact on a substantial number of

small entities during the interim period prior to completion of

rulemaking action on the helper regulations--expected to be completed

within a year. Because of the lag times in agency procedures to amend

their regulations and incorporate the contract clauses, and the

relatively small number of helper classifications which the Department

found prevailing in its surveys in 1992 and 1993, it is unlikely that a

substantial number of small entities would have the opportunity to use

helper classifications during the period before the rulemaking is

completed. Accordingly, the rule is not expected to have a

``significant economic impact on a substantial number of small

entities'' within the meaning of the Regulatory Flexibility Act, and

the Department has certified to this effect to the Chief Counsel for

Advocacy of the Small Business Administration. Thus, a regulatory

flexibility analysis is not required.

VIII. Document Preparation

This document was prepared under the direction and control of Maria

Echaveste, Administrator, Wage and Hour Division, Employment Standards

Administration, U.S. Department of Labor.

Signed at Washington, D.C., this 23rd day of December 1996.

Gene Karp,

Deputy Assistant Secretary for Employment Standards.

[FR Doc. 96-33054 Filed 12-27-96; 8:45 am]

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