Dept. of Labor

Contractors Decry Amended Davis-Bacon Rule

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The U.S. Dept. of Labor’s final rule, issued August 8th, revamps its Davis-Bacon Act procedures for determining prevailing wage levels – in favor of workers – on federally funded construction projects.

Expected to go into effect in approximately 60 days, the rule is being hailed by construction unions yet criticized by contractors and their associations. The revised rule reverts to pre-1983 methodology for determining whether a wage rate is prevailing, also referred to as the “30 percent rule.” Under the 30 percent rule, contractors must use the wage rate paid to a majority of the workers; if no such majority rate exists, they must use the wage paid to the largest number of workers on the job, as long as it was paid to at least 30 percent of that workforce.

The wage rule solidifies as $1.2 trillion in Infrastructure Investment and Jobs Act funding is propelling the start of a deluge of federal construction projects as well as projects that are stemming from the Chips and Science and Inflation Reduction Acts.

AGC of America CEO Stephen Sandherr says the more than 800-page ruling lowers the threshold of reporting required from the Dept. of Labor.

“This final rule appears to make it easier on the Dept. of Labor itself to set prevailing wages with less of the data it already collects, or lack thereof,” says Sandherr.

The Associated Builders and Contractors says this regulatory notice will annually affect an estimated $217 billion in federal and federally assisted construction spending for about 1.2 million construction workers.

“Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation,” says ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established nearly 40 years ago, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.”

For more information about the ruling, see www.dol.gov/agencies/whd/government-contracts/construction/rulemaking-davis-bacon.

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Carpenters Support DOL Rule Determining Independent Contractor Status

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The United Brotherhood of Carpenters and Joiners of America this month announced on October 13 its support of the U.S. Dept. of Labor Wage and Hour Division’s proposed rule on determining employee and independent contractor status under the Fair Labor Standards Act.

The proposed rule rescinds and replaces the 2021 rule that the DOL rushed to implement in the closing days of the Trump Administration. Once implemented, this rule would affect millions of workers, including construction workers, healthcare workers and gig workers.

“Misclassifying workers as independent contractors has been a coordinated effort for years by companies who cheat their workers on wages and overtime, and who cheat payroll taxes,” said Douglas J. McCarron, general president of the United Brotherhood of Carpenters. “The previous administration’s independent contractor rule did nothing to solve that problem. In fact, it aggravated the issue and undermined law-abiding employers. We commend the Dept. of Labor for supporting good jobs and high-road employers.”

The classification of a worker as either an employee or an independent contractor is significant, says McCarron, because the Fair Labor Standard Act’s minimum wage, overtime and recordkeeping obligations apply only to employees, not to independent contractors. The consequences of misclassifying employees as independent contractors can include liability for failure to pay minimum wage and overtime, and possible criminal penalties in addition to other penalties under state wage laws.

Shortly after the Biden Administration commenced in January 2021, the Dept. of Labor first delayed implementing the Trump Administration rule and then withdrew it altogether in May 2021.

In March 2022, however, a Texas federal court held that both the rule implementation delay and the rule withdrawal were unlawful. As a result, the Trump rule went into effect.

The latest notice of proposed rulemaking abandons the Trump Administration’s list of factors in assessing independent contractor status and returns to a “totality of the circumstances” approach where the factfinder is free to consider any relevant facts in assessing whether individuals are economically dependent on their employer for work.

The Dept. of Labor is accepting comments on the proposed rule through November 28.

For more information and/or to comment on the rule, see https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act.

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