On July 1, 2022, Diz Locaria was quoted in Law360 on top government contracting policy changes and proposals of 2022 so far, including the U.S. Department of Labor’s (DOL) move to overhaul prevailing wage and labor agreement rules.
According to the article, the DOL issued a notice of proposed rulemaking to overhaul the Davis-Bacon Act, the law that governs prevailing wages for federally funded construction projects. The changes include a reversion to the "30% rule" to determine prevailing wages, allowing the wage paid to at least 30% of workers of a particular classification in a particular area to be used to set the prevailing wage, if a majority of workers of that type aren't paid the same wage. The 30% standard had previously been used for decades, but was replaced in 1983, with the current standard based on either the wage paid to 51% or more of workers in a particular classification, or a "weighted average" rate if there is no majority wage, dividing total hourly wages for all relevant workers by the total number of workers.
According to the DOL proposal, the Davis-Bacon Act affects 1.2 million construction workers and $217 billion in federal construction spending annually, and the proposed rule drew more than 37,000 comments, from both critics, mostly on the business side, and supporters, mostly on the labor side.
"I think that goes to show what a sea change this represents," Locaria said. "That 30% rule was eliminated because it artificially increased the rate of pay by applying a more expansive definition of prevailing wage, and deciding to go back to that rule [that] for 40 years has not been in place really creates a lot of consternation in that [construction contractor] community."
Although the burden of the increased wages is ostensibly being placed on the construction contractors, the costs are ultimately likely to be passed on to the government by being factored into future proposals, Locaria said.
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