I have closely followed the new initiative by the USDOL on its changing in a dramatic way the manner in which prevailing wage rates are determined.  That effort, however, has, for the moment, come to an end as a federal judge in Texas issued an injunction blocking portions of the new rules.  The Judge found the agency had exceeded its authority under the Davis-Bacon Act (“DBA”) and issued a nationwide injunction.  The case is entitled Associated General Contractors of America et al. v. U.S. Department of Labor et al. and was filed in federal court in the Northern District of Texas.

The Judge came down hard on the new regulations.  He stated that “in pertinent part for purposes of this case, the Final Rule amends the DBA by imposing a stealth self-implementing DBA requirement into contracts by an operation-of-law provision that contradicts the express statutory language of the Act.  Further, the Final Rule amends the Act to extend the DBA to apply to workers who are not [explicitly] covered by DBA.”

The so-called new rule actually adopts a formula that had been in use for four decades until 1983.  That process determined the wage by adopting the wage paid to at least 30% of workers in a trade in a given area if a majority of workers in that trade were not paid the same rate.  If there is no common wage paid, a weighted average methodology is employed to arrive at the DBA rate.  The plaintiffs also argued that the rule improperly extended DBA coverage to truck drivers and other workers not employed directly on the site of the work.

The Judge believed the plaintiffs had demonstrated they had a good chance of winning on the merits.  For example, the Judge concluded that truck drivers were not “mechanics” or “laborers” but rather transportation workers and therefore not subject to DBA coverage.  The Judge also found that “material suppliers” were improperly included within the reach of the new regulations.

The agency had contended that the rule should be incorporated by reference into every federal funded contract although the related requirements were not made a part of the contract.  The Supreme Court had ruled, however, that the DBA was not “self-implementing.”  The Judge found that this was also an error.  This helped convince him to conclude that contractors would face irreparable harm by being put at a severe economic/competitive disadvantage if the rule went into implementation.     

The Takeaway

This is a significant expansion of the Davis Bacon Act and shows again the decidedly pro-worker position of this Administration. I am not so concerned about the method of rate calculation but the expansion of the DBA to groups of workers never included and who, in my view, should not be included, is more troublesome for me.

We will see what happens…

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