A significant update to the Davis-Bacon and Related Acts, the first in nearly 40 years, took effect on October 23. Companies holding federal construction contracts must prepare for changes in the calculation of prevailing wage rates. J.J. Keller Compliance Network provides an in-depth guide for contractors working on federal projects.
The Davis-Bacon and Related Acts apply to federal contracts and subcontracts exceeding $2,000 for the construction, alteration, or repair of public buildings and works. These acts mandate that laborers and mechanics on covered federal contracts receive the prevailing wage for the area where the work is performed.
Key Changes in Prevailing Wage Calculation
The prevailing wage will now be determined based on the wage rate paid to at least 30% of workers in a specific trade. The existing method calculates the prevailing wage using 50% of workers.
The Wage and Hour Division (WHD) utilizes wage survey data to establish the prevailing wage for each job classification, along with fringe benefits. If 30% of workers lack a specific wage rate, the WHD will use a weighted average of wages for individuals in that job category.
In cases where there isn’t enough data for a region, the WHD can expand its data scope by considering neighboring counties, comparable county groups, or the entire state.
Apart from changing the prevailing wage calculation method, the update introduces several other modifications:
- Periodic Adjustments: The WHD can periodically modify prevailing wage and fringe benefit rates between surveys to keep rates in line with the local prevailing wages.
- State or Local Prevailing Wage Rates: The WHD is now authorized to adopt prevailing wage rates set by state or local authorities.
- Modern Construction Examples: The updated rule includes contemporary examples of covered construction activities, such as wind turbines, solar panels, broadband installation, and electric car charger installation.
- Clarification on Covered Transportation: It specifies the conditions under which the transportation of materials is considered a covered activity.
- Terminology Change: The terminology has been adjusted from “employee” to “worker” to acknowledge that Davis-Bacon labor standards apply even without a formal employment relationship between a contractor and a worker.
- Anti-Retaliation Protections: Anti-retaliation protections have been added for workers or job applicants who file complaints or assist in investigations.
These updates demand immediate attention and adjustment from companies with federal construction contracts to ensure compliance with the revised regulations.
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