Dive brief:
- A Texas judge handed the Associated General Contractors of America a legal victory on Wednesday. repeal the provisions of the Davis-Bacon Act from the administration of former President Joe Biden.
- The provisions, which extended prevailing wage standards beyond construction workers to other subcontracted employees including material suppliers and truck driverswere implemented in the fall of 2023 and immediately contested by the AGC.
- President Donald Trump’s Department of Labor did not oppose AGC’s subsequent motion for a final judgment on the case, U.S. District Judge for the Northern District of Texas James Wesley Hendrix wrote in his decision. Another legal challenge by the builders and associated contractors, one against the method of determining prevailing wages, continues in the courts.
Diving knowledge:
The Davis-Bacon Act, originally passed in 1931, determines prevailing wages on government-funded contracts. The benchmark measures the standard wage for most workers in a specific occupation and region in order to determine the hourly wage for workers in those jobs.
In addition to changing how prevailing wages were calculated in 2023, the DOL added provisions to extend the Davis-Bacon rules beyond construction workers, which AGC challenged.
Shortly after the AGC filed its lawsuit, along with its Texas chapter and the Lubbock, Texas Chamber of Commerce, the federal court issued a preliminary injunction barring the DOL from enforcing the challenged provisions, according to a statement from the contractor group.
That led to settlement discussions, before the DOL ultimately dropped the lawsuit, conceding that the plaintiffs would likely succeed.
“Our legal challenge was that the previous administration bypassed Congress and attempted to expand a construction wage law to cover a wide range of manufacturing and shipping operations that were not authorized by that law,” AGC CEO Jeffrey Shoaf said in the statement. “AGC respects the purposes underlying the Davis-Bacon Act, and our members recognize the need to comply with the requirements of Davis-Bacon to the extent permitted by law.”
According to Ogletree Deakins, one of the law firms that represented AGC in the lawsuit, the they would have three vacant provisions:
- Current wage coverage has been extended to material suppliers operated by contractors or subcontractors.
- Davis-Bacon requirements have been applied to delivery truck drivers who spend an undefined amount of time at jobs.
- It imposed the requirements retroactively on contracts that omitted the required clauses.
“This result reflects what the litigation was always intended to do: to ensure that agency regulations are consistent with the law,” Robert Roginson, lead counsel for the plaintiffs, said in a news release from Ogletree Deakins. “Our clients sought clarity and a level playing field for contractors bidding on government-funded projects, and today’s judgment provides both.”
The Davis-Bacon rule change in 2023 also restored the DOL’s current wage definition to be equivalent to what 30% of workers, rather than 50%, receive in a given business locality. This would likely have spread higher wages to more workers.
Although the AGC challenged the amendments to the rule, the prevailing wage determination itself was not at issue. Then-CEO Stephen Sandherr said at the time.
“As an industry that pays substantially above the existing Davis-Bacon rates, our concerns are with the administration’s unconstitutional exercise of lawmaking power and not with the wage rate itself,” Sandherr, who is now retiredhe said in 2023.
But around the same time, Associated Builders and Contractors took issue with the change in how the prevailing wage was determined and filed its own lawsuit focused on that issue. That lawsuit is still pending in the District Court for the Eastern District of Texas.
In response to Wednesday’s ruling, ABC released a statement from its vice president of government affairs, Kristen Swearingen, who applauded the ruling, calling it a “victory for the construction industry.”
“However, there is much more to be done,” Swearingen said. “This decision leaves in place the vast majority of the costly and heavy Davis-Bacon regulations enacted under the Biden administration.”
His statement called for the current wage rule to be overturned, saying: “ABC continues to fight to completely overturn this illegal and onerous rule.”
