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The Biden administration is recent changes to the Davis-Bacon Act they are the most dramatic of a generation. They reinstate the Labor Department’s prevailing wage definition that was used until 1983, thereby increasing the pay of construction workers on federally funded projects. The new rule, which will take effect on October 23, also expands the types of work and workers covered, and increases enforcement.
Davis-Bacon sets the prevailing wages that contractors must pay workers on federal projects and contains complex rules around which specific workers and jobs are covered by its requirements. The update makes the prevailing wage equal to the wage paid to at least 30% of workers, instead of 50% of workers previously, in a given trade in a locality.
The updates increase enforcement and include for the first time protections for whistleblowers, said Peter Crofton, partner and head of the Atlanta section of Smith, Gambrell & Russell’s construction law practice, an indication that the administration de Biden plans to enforce the rule more zealously.
“Biden’s Department of Labor has indicated that they will be more vigilant in enforcing some of this,” Crofton said. “It’s going to be important for contractors to properly administer Davis-Bacon and be ready when someone knocks on the door and says, ‘Hey, we want to look at your records.’
Peter Crofton
Permission granted by Smith, Gambrell and Russell
The rule also expands agencies’ ability to withhold back payments from contractors, attorney Dan Ramish, a partner in the Northern Virginia office of Haynes and Boone, said in an email.
In addition, “upper-level subcontractors can now be held liable for back wages of lower-level subcontractors, if they knew or were ignorant of whether their lower-level subcontractors were paying their workers,” Ramish said.
The new rule also expands the scope of Davis-Bacon to cover new types of federally funded work, including energy infrastructure and related activities such as solar panels, wind turbines, broadband installation and charger installation electric cars, Ramish said. The update also clarifies or expands the coverage of various categories of workers.
“It explains that flaggers, people who direct traffic, are covered by Davis-Bacon, even if they’re not working in the main construction zone,” Ramish said. “Truck drivers are covered by Davis-Bacon when they transport supplies or materials within the work site, or between the primary work site and secondary or support sites, and when they load or unload or wait for others to load or unload materials , unless the time spent. on site is minimal. Survey crew members are also more likely to be covered.”
Extended coverage
The new regulation also extends the coverage of work carried out in “secondary work” in order to enhance it coverage of modular constructionwhich involves major parts of a construction being built off-site and then assembled on-site.
“Under the old rule, off-site construction was generally only covered if a site had been established specifically for the contract or project, or was practically adjacent to the site of the work, such as the site of the work, grounds of tools, batch plants or loans,” said Ramish. . “Now, off-site construction may be subject to Davis-Bacon at sites that are used exclusively or almost exclusively to perform the contract for a specific period of time.”
Daniel Ramish
Permission granted by Haynes and Boone
Generally, a contract’s wage determinations apply for the life of the contract, but the revised regulations say they must be updated when it is amended to include new construction that was not within the original scope, or if the contractor is obliged to perform the work. for additional time (other than extension of time), said Ramish. In contracts that are not tied to a single project, such as open-ended, indefinite-quantity contracts, wage determinations must be updated annually.
The new rule also formalizes the Department of Labor’s policies on how fringe benefits should be calculated, which previously were just included in guidance documents, Ramish said.
The new rule is safe face legal challengesaccording to Roll Call, and the Associated Builders and Contractors said last month that it does considering legal actions.
Get your paperwork in order
Experts say contractors need to understand the new payment schedules so they can properly set their rates and price their change orders accordingly. The new rule is not expected to directly increase costs for builders, who will be able to charge government agencies higher prices as before to offset the new wages, according to Ramish. However, if they don’t account for the hours correctly or the price change orders are incorrect, they could end up eating up the cost.
Going through a Davis-Bacon investigation can be expensive, Crofton said. Non-compliant contractors will be required to pay back wages that should have been paid, and may also be subject to administrative penalties of up to $200 per worker per day and other fees.
There may also be consequences beyond the financial, including a negative performance rating that could harm your ability to obtain future employment. To protect themselves, contractors should get their documents in order.
“Contractors need to be vigilant about what they do, how they document it, keeping their documentation correct so that if there are questions about compliance, they can deal with it,” Crofton said.
The first step is to find out if they are subject to a Davis-Bacon wage and, if so, get the current wage tables. These are typically found in RFP documents, according to Crofton. Contractors must then verify that they are paying subcontractors and other workers the correct wages and that they have a compliance system in place.
For this, it is important to have a suitable registration system. Make sure you have a document management system in place that allows you to easily file, organize and retrieve data, so if you need to know what a specific contractor was doing on a specific job at a specific time, certified payroll information is easily accessible.
Contractors and higher-level subcontractors may want to consider indemnifying their subcontractors for any back-payment liability for not paying workers, Ramish said.
It’s also important for the back office to check that it has subscriber payroll, that the pay period is correct and that records are in order for the workers on the list, Crofton said. This is a good time to do a “health check” of the contracts and see how the subcontractors and subcontractors are required to flow documentation and certifications, and to make sure that the forms that need to come out of the main contract with Davis- Bacon’s obligations are conveyed as they should be.
“You’d be surprised how many contractors, somewhere along the way, something got left out,” Crofton said. “A regular review catches a lot of that and cleans it up.”
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