Employment / 2 min read
The U.S. Department of Labor (DOL) recently changed how prevailing wages are determined for federal construction projects. Before the new rule, prevailing wages were determined based on the wage rates paid to a majority of workers in a geographic area. If no single wage rate was paid to 50% of the area workforce, the DOL would use a weighted average of the rates in the geographic area to determine a prevailing wage.
The new wage rule adopts the process previously used for determining the prevailing wage prior to 1984. Under this standard, prevailing wages on federally funded construction projects can be calculated based on the wages of 30% of workers in a particular geographic area.
The three-step process now used to determine a prevailing wage is:
- Any wage rate paid to a majority of workers.
- If there was no wage rate paid to a majority of workers, next move to the 30-percent rule using the wage rate paid to the greatest number of workers, provided it was paid to at least 30 percent of workers.
- If the 30-percent rule was not met, use the weighted average rate.
Other changes made by the new rule include a provision clarifying and expanding upon an existing requirement holding contractors responsible for the Davis-Bacon Act compliance of lower-tier contractors. Under the new rule, upper-tier subcontractors (along with prime contractors) may be liable for violations made by lower-tier subcontractors. Both prime contractors and any responsible upper-tier subcontractors are required to pay back wages on behalf of their lower-tier subcontractors. The final rule also clarifies that lower-tier subcontractors’ violations may subject prime and upper-tier contractors to debarment in appropriate circumstances. The final rule holds prime contractors responsible for the back wages of subcontractors, regardless of intent. Upper-tier subcontractors must have some intent to be held liable for back wages of their lower-tier subcontractors.
In another significant change, Davis-Bacon requirements can be imposed on any federal contract by law, even if the agency does not include Davis-Bacon language in a federal contract. So even if the contract does not mention prevailing wages, a federal contractor is still obligated to pay them.
The new rule provides more stringent recordkeeping requirements and includes anti-retaliation provisions. Records must now be kept including employee phone numbers and email addresses and employers must hold onto that information for at least three years after work is completed on a contract. The anti-retaliation language seeks to protect workers who raise concerns about payment practices or assist agencies, such as the DOL, in investigations of termination and other adverse employment actions.
The final rule will take effect 60 days after publication in the Federal Register.