Government Contracts Monitor

Department of Labor’s New Guidance On the Davis-Bacon Act

June 20, 2013

Earlier this Spring, the Department of Labor’s Wage and Hour Division (“WHD”) issued All Agency Memorandum Number 213 on the Davis Bacon Act announcing a change in how agencies should determine wage rates for additional classifications that are conformed to an existing wage determination.

In the past, the Wage and Hour Division generally approved proposed wages for a conformed skilled craft when such rates were not less than the rate for the lowest classification in the respective category on the contract wage determination.  Under the new guidance, a new classification and related new wage rate may be set only when:

1. The work to be performed by the classification requested is not performed by a classification in the wage determination; and
2. The classification is utilized in the area by the construction industry; and
3. The proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination.

To determine a “reasonable relationship,” agencies proposing conformed classifications should determine:

1. The category (skilled crafts, laborers, power equipment operators, truck drivers, etc.) of the classification that is being conformed;
2. Whether union or a weighted average/non-union sector rate prevails in the existing wage determination;
3. A rate that bears a reasonable relationship to the union/private sector rate on the wage determination.

The effect of this new guidance is that agencies will be required to do a more searching analysis before creating new labor classifications and/or new wage rates, and any newly approved wage rates will no longer automatically be equivalent to the lowest wage in the most closely analogous classification.  In other words, it is likely that the applicable wage rates for new classifications will higher than in the past.

The full text of these Wage and Hour Division memorandum can be found here.

 

Michael J. Schrier is the attorney responsible for the content of this article.