The White House recently announced that the Department of Labor (DOL) will publish a rule that will raise wage standards of construction workers by updating prevailing wage regulations issued under the Davis-Bacon and Related Acts.
The rule advances President Biden’s Executive Order 14008 and will help ensure the one million construction workers who work on $200 billion of federally funded or assisted construction projects are paid fairly.
What is the Davis-Bacon Act?
The Davis-Bacon Act or DBA was created in 1931 to protect workers from receiving low pay while competing for federally funded construction projects during the Great Depression. The act, as currently amended, requires that any federal contractor who takes on a job over $2,000 on public buildings or public works must pay their workers no less than the prevailing wage and fringe benefits as on similar projects. Types of work include construction, alteration or repair (including painting and decorating).
How Prevailing Wage is Currently Determined
The prevailing wage rate is determined by the Wage and Hour Division (WHD) and depends on where the work is being done, i.e., a specific geographic area for a certain type of construction. It’s required to be posted by the contractor at the site of the work in a prominent and accessible place where it can be easily seen by the workers. For example, according to Sam.gov, construction employers working on government highway projects in several Pennsylvania counties must pay their workers at least $16.20 per hour if the contract was awarded on or after January 20, 2022. Specializations, like boilermakers and bricklayers, earn a higher prevailing wage. Prevailing wages, including fringe benefits, must be paid on all hours worked on the site of the work and employers must submit weekly certified payroll records.
The DBA prevailing wage regulations have not been comprehensively updated in more than 40 years. The White House has stated the DOL’s new rule is more important than ever considering the number of jobs created by the hundreds of millions of federal infrastructure investments. Increased prevailing wage requirements will help attract the workers needed for these projects.
Not everyone embraces these changes, with some organizations and construction professionals saying increased prevailing wages will drive up project costs. The Associated Builders and Contractors (ABC) opposes the rule and submitted nearly 70 paged of comments that outline how the rule will fail to fix the DOL’s wage determination process, rescind reforms made by the Reagan administration and increase regulatory burdens on small businesses, new industries and more public works projects.
“Voters should know this proposed rule could not come at a worse time, as it will exacerbate the inflationary headwinds facing the construction industry—supply chain disruptions, unprecedented materials cost inflation, declining investment in structures and a skilled labor shortage of 650,000—and fail to improve the timeliness and quality of taxpayer-funded construction projects,“ said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “This proposal will ultimately result in less value and job creation from taxpayer investment in infrastructure––including the $550 billion of new infrastructure funding via the Infrastructure Investment and Jobs Act.”
However, when this new rule goes into effect, any company working on federal contracts will need to comply.
How DOL’s New Rule will Impact Prevailing Wage Requirements
The DOL’s new rule updates the Davis-Bacon prevailing wage regulations by:
- Restoring the DOL’s definition of “prevailing wage” used for nearly 50 years before it was upended by the Reagan administration. It will make the prevailing wage equivalent to the wage paid to at least 30% of workers, rather than 50% of workers, in a given trade in a locality. Prior to the new rule, if the majority of workers in a given trade and location did not earn a single wage rate, then the prevailing wage was determined by the average wage. The effect of that approach was the average could pull down the prevailing wage if some employers pay very little. Setting the prevailing wage to the wage paid to at least 30% of workers makes it more likely that workers are paid a true prevailing wage.
- Making it easier to keep prevailing wages up to date by allowing them to keep up with wage growth. Currently, the DOL must periodically survey contractors and other parties to update prevailing wage rates, which is resource intensive. The White House states the final rule makes this process easier by giving DOL’s WHD the express authority to adopt prevailing wages determined by state and local governments, issue wage determinations for labor classifications where insufficient data was received through the wage survey process and update outdated wage rates.
- Strengthening DOL enforcement. The rule will also add a new anti-retaliation provision in contract clauses to protect workers who raise concerns from being fired or punished. It also strengthens DOL’s ability to withhold money from a contractor to pay employees their lost wages. DOL is announcing this rule as inflation has fallen by two-thirds over the last year, and independent analysts have credited infrastructure investments with keeping our economy strong during that period. Since last year, inflation-adjusted wages are up 1.6% for all production and nonsupervisory workers (the 80% of workers who are not managers), 2.4% for construction nonsupervisory workers and 2.0% for workers without a college degree. According to the White House, this rule maintains that momentum by continuing to invest in America’s workers.
How Time Tracking Maintains Prevailing Wage Compliance
Time tracking is tied to payroll. Wages are calculated based on the number of hours employees work in a 40-hour week. But construction payroll must also consider other factors, like tracking hours and cost codes per job site. Workers may work on both federally funded and private jobs in one week, which could change their rate of pay, with one being the current prevailing wage. A time tracking system that integrates with the top payroll systems can sort out the wages and provide data for certified payroll reports, a requirement for federal contractors.
If you’re tracking this time via paper timesheets, Excel spreadsheets or even generic or one-size-fits-all software, payroll becomes a really big, confusing job. Workers may not always remember exactly when they arrived at a jobsite and how long they were there until moving on. And supervisors still need to add or approve cost codes manually. If you’re not keeping extremely accurate records for certified payroll – required for government contracts – you could be looking at a costly compliance issue.
Arcoro’s ExakTime mobile time tracking app can help construction companies adhere to existing and emerging federal contractor compliance requirements by accurately logging time and securing storing the data.