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Following the release of the U.S Department of Labor’s proposed rule, Updating the Davis-Bacon and Related Acts Regulations, on March 18, ABC formally submitted a request for the 60-day comment period to be extended by an additional 60 days.

The 1931 Davis-Bacon Act and related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. The DOL estimates the Davis-Bacon Act and 71 active related acts collectively apply to approximately $217 billion in federal and federally assisted construction spending per year and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers. ABC continues to review the 432-page rule, which appears to have missed an opportunity for meaningful Davis-Bacon reform and instead will likely worsen existing flaws in prevailing wage regulations.

“For ABC to best accommodate the Wage and Hour Division’s request for comments from the regulated community, time will be needed to review the dense and substantial proposed rule, reach out to ABC members and receive feedback, analyze responses and data received from these members and finally, draft comprehensive and well-considered regulatory comments. Unfortunately, the current 60-day comment period does not provide sufficient time for ABC to effectively communicate with its members before providing these comments,” ABC said in its extension request.

House Committee on Education and Labor Republican Ranking Member Virginia Foxx, N.C., and Senate Committee on Health, Education, Labor and Pensions Republican Ranking Member Richard Burr, N.C., have also weighed in, sending a letter to DOL Secretary Marty Walsh requesting an extension of the comment period.

“Unfortunately, WHD has missed an opportunity to fix the issues identified by multiple Office of Inspector General and Government Accountability Office reports. We request a 60-day extension to the comment period to provide the regulated community appropriate time to provide robust comments to WHD,” Rep. Foxx and Sen. Burr wrote.

While this request is pending, ABC encourages its members, industry stakeholders and taxpayers to suggest additional improvements to the Davis-Bacon Act regulations within the 60-day comment period deadline. Comments are due on May 17.

ABC will continue to inform members about new developments related to the Davis-Bacon Act in Newsline.

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On March 28, the White House released the president’s $5.8 trillion budget for the next fiscal year, which renews calls for tax hikes to support Democrats’ federal spending priorities in the coming years.  

President Biden’s budget calls for $5.8 trillion in federal spending for fiscal year 2023 and requests a significant increase of approximately $31 billion in military spending, including aid to Ukraine as it continues its fight against Russia’s invasion. The president’s budget would also increase federal discretionary spending by $109 billion over the recently enacted FY22 omnibus federal spending bill and estimates that the national debt would grow by more than $13 trillion over the next decade. To fund the president’s priorities, the budget would impose tax increases for many Americans and American businesses, including an increase in the corporate tax rate from 21% to 28%, a raise in the top individual income tax rate to 39.6% and a new 20% tax hike on high-earning Americans.

While the president’s budget is not typically approved by Congress, it highlights the administration’s priorities for the coming year and provides a blueprint for Democrats in Congress as they continue discussions on the partisan budget reconciliation proposal this year. Aspects of the president’s budget seem designed to appeal to Sen. Joe Manchin, D-W.Va., who is a key vote for any reconciliation proposal and previously blocked Democrats’ efforts to move forward with the partisan reconciliation process last year.

Democrats, including House Speaker Nancy Pelosi, have praised the proposal, while Republicans on the Senate Budget Committee released a number of talking points critical of the president’s budget and its impact on the economy and national debt.

Throughout the budget proposal, the president also calls for the creation of union-only jobs on federal infrastructure, energy, broadband, supply chain and environmental projects, alluding to the administration’s continued support for ABC-opposed policies that will limit job opportunities for hard-working Americans in the construction industry. The White House proposal also calls for $319 million for the National Labor Relations Board, a 16% funding increase for the NLRB, which has maintained flat funding since 2014. The NLRB under President Biden continues to pursue rules and decisions that contradict decades of well-established precedent and upend labor relations without regard to the negative impact these actions have on employees, employers, and the economy. 

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On Feb. 17, the U.S. Department of Agriculture published a proposed rule to make amendments to the Agriculture Acquisition Regulation, which includes new labor law compliance certifications and reporting provisions that present wide-ranging implications for ABC members that perform work on federal contracts awarded under the AGAR. On March 21, ABC submitted comments urging the USDA to withdraw the proposal.

“The proposal would insert a clause requiring contractors to certify compliance with 15 different labor laws and their state law equivalents, as well as certify the compliance of any subcontractors and suppliers,” ABC said in its comments. “The proposed rule would also insert a clause requiring contractors to certify that they and any subcontractors comply with previously required corrective actions for adjudicated labor law violations and provide a list of specific violations to a contracting officer.

ABC supports a level and transparent playing field for federal contractors and believes unethical firms should be held accountable. Bad actors who facilitate inequities in the federal procurement process are a detriment to taxpayers, contractors and the employees whose livelihoods rely on a fair contracting marketplace. But the current proposal is overbroad, arbitrary and capricious, and violates the statutory and constitutional rights of responsible, ethical contractors.

ABC had substantive concerns with an earlier USDA direct final rule and proposed rule, which similarly sought to amend the AGAR to include a new clause addressing labor law compliance certification and reporting. Those changes—which were proposed and then quickly withdrawn in 2012—would have had significant negative implications for the federal procurement system, construction industry and USDA contractor stakeholders. The 2022 proposed rule suffers from the same flaws previously identified by ABC and other stakeholders and must therefore be withdrawn.”

In addition, the language proposed by the USDA’s latest proposed rule is substantially the same as the U.S. Department of Labor’s 2016 Guidance Document and Federal Acquisition Regulation Final Rule implementing President Obama’s July 31, 2014, Fair Pay and Safe Workplaces Executive Order 13673, commonly referred to as the blacklisting rule. On Oct. 24, 2016, implementation of the reporting and disclosure requirements of the controversial EO was blocked by a U.S. District Court for the Eastern District of Texas judge in Associated Builders and Contractors of S.E. Tex. v. Rung.

The court ruled in favor of ABC’s lawsuit and granted a preliminary injunction, after finding that very similar certification and disclosure requirements in the FAR rules conflicted with the labor statutes themselves; were arbitrary and capricious; and violated contractors’ constitutional rights. Subsequently, Congress voted to disapprove the FAR’s blacklisting rule pursuant to the Congressional Review Act, signed into law by President Trump.

The CRA states that, once an agency rule is disapproved by Congress, such a rule may not be issued in “substantially the same form,” unless it is expressly authorized by a subsequent law. Congress has made no such authorization here. Therefore, because the language in the USDA’s 2022 proposed rule is substantially the same as the DOL’s 2016 Guidance Document and FAR final rule implementing EO 13673, the proposed rule violates the CRA as well as the judge’s findings in Associated Builders and Contractors of S.E. Tex. v. Rung.

ABC is concerned with the USDA’s rulemaking and the manner in which it was issued. Such a significant policy change requires a great deal of additional review. The proposal threatens to destabilize labor relations in the construction industry at a time when construction contractors are currently up against historic global supply chain disruptions, rising materials prices and a workforce shortage of 650,000. The new rules have the potential to harm existing businesses and impair their ability to grow and create new jobs. Therefore, ABC requests that the USDA withdraw its rulemaking on the challenged provisions without delay.

ABC will continue to inform members about new developments on this issue in Newsline.

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On March 15, the U.S. District Court for the Eastern District of Texas dealt a blow to the Biden administration’s efforts to delay and rescind the Trump administration’s 2021 independent contractor final rule. Under a decision applauded by ABC, which had sued to block those actions, the ABC-supported rule went into effect as scheduled on March 8, 2021, and remains in effect today.

“The independent contractor final rule brings much-needed clarity and guidance to the proper classification of contractors under the Fair Labor Standards Act,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in a statement. “For too long, businesses and contractors who want to remain independent have been subjected to burdensome lawsuits and inconsistent court rulings under the FLSA. The U.S. Department of Labor’s improper delay and withdrawal of the independent contractor rule did nothing to address the very real problems confronting millions of contractors who have made the choice to remain independent.

“This decision will provide much-needed clarity for small businesses and the entire construction industry,” said Brubeck. “Independent contractors are an essential lifeline to the construction industry, and the Trump-era independent contractor rule will ensure these workers and their clients can continue to thrive and play an important role in economic growth.”

ABC’s general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge. Read Littler’s analysis of the decision for more details.

Background and ABC Actions:

On Feb. 5, 2021, the DOL’s Wage and Hour Division proposed to delay the effective date of the ABC-supported and Trump-era final independent contractor rule from March 8 to May 7.

On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.

On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.

On March 26, ABC, ABC’s Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against the DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserted that the steps taken by the DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act. ABC’s general counsel, Littler Mendelson P.C., represented the plaintiffs in the legal challenge.

On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.

On May 14, ABC, ABC’s Southeast Texas Chapter, the Coalition for Workforce Innovation and the Financial Services Institute filed an amended complaint challenging the DOL’s unlawful withdrawal of the independent contractor rule. The complaint said that the department’s hasty and unjustified action violates the Administrative Procedure Act, compounding a violation that began when the department improperly delayed the effective date of the rule in March.

On May 5, the DOL announced the withdrawal—effective May 6—of the Trump-era independent contractor final rule. Read ABC’s statement.

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On March 15, the U.S. District Court for the Eastern District of Texas dealt a blow to the Biden administration’s efforts to delay and rescind the Trump administration’s 2021 independent contractor final rule. Under a decision applauded by ABC, which had sued to block those actions, the ABC-supported rule went into effect as scheduled on March 8, 2021, and remains in effect today.

“The independent contractor final rule brings much-needed clarity and guidance to the proper classification of contractors under the Fair Labor Standards Act,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in a statement. “For too long, businesses and contractors who want to remain independent have been subjected to burdensome lawsuits and inconsistent court rulings under the FLSA. The U.S. Department of Labor’s improper delay and withdrawal of the independent contractor rule did nothing to address the very real problems confronting millions of contractors who have made the choice to remain independent.

“This decision will provide much-needed clarity for small businesses and the entire construction industry,” said Brubeck. “Independent contractors are an essential lifeline to the construction industry, and the Trump-era independent contractor rule will ensure these workers and their clients can continue to thrive and play an important role in economic growth.”

ABC’s general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge. Read Littler’s analysis of the decision for more details.

Background and ABC Actions:

On Feb. 5, 2021, the DOL’s Wage and Hour Division proposed to delay the effective date of the ABC-supported and Trump-era final independent contractor rule from March 8 to May 7.

On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.

On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.

On March 26, ABC, ABC’s Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against the DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserted that the steps taken by the DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act. ABC’s general counsel, Littler Mendelson P.C., represented the plaintiffs in the legal challenge.

On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.

On May 14, ABC, ABC’s Southeast Texas Chapter, the Coalition for Workforce Innovation and the Financial Services Institute filed an amended complaint challenging the DOL’s unlawful withdrawal of the independent contractor rule. The complaint said that the department’s hasty and unjustified action violates the Administrative Procedure Act, compounding a violation that began when the department improperly delayed the effective date of the rule in March.

On May 5, the DOL announced the withdrawal—effective May 6—of the Trump-era independent contractor final rule. Read ABC’s statement.

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The 91-year-old Davis-Bacon Act is in need of reform, but a proposed rule issued by the U.S. Department of Labor on March 18, Updating the Davis-Bacon and Related Acts Regulations, misses the mark. The 1931 Davis-Bacon Act and related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. The DOL estimates the Davis-Bacon Act and 71 active related acts collectively apply to approximately $217 billion in federal and federally assisted construction spending per year and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers.

“While ABC is still reviewing the 432-page rule, it appears the DOL missed an opportunity for meaningful Davis-Bacon reform. For example, the proposed rule reverts back to 1983 regulations that do not result in actual prevailing rates, as required by statute. Reversing course by 40 years is not modernization. Instead, it is even worse public policy catering to special interests embedded in the Biden administration that benefit from the broken status quo,” ABC said in a statement.

Throughout the rulemaking process, ABC will continue to advocate for commonsense reforms to Davis-Bacon regulations that will provide clarity for the regulated community and create accurate and timely prevailing wages. This approach will encourage quality contractors and their skilled workforce to compete to rebuild their communities and give taxpayers the best value for investments in public works projects.

ABC encourages its members, industry stakeholders and taxpayers to suggest additional improvements to the Davis-Bacon Act regulations within the 60-day comment period deadline. Comments are due on May 17. If you need assistance with comments, please reach out to Manager of Federal Regulatory Affairs  Michael Altman.

Why the Davis-Bacon Act Needs Commonsense Reform:

• ABC recently surveyed its contractor members on the burdensome Davis-Bacon Act and related prevailing wage laws and their impact on member companies’ ability to develop their workforce; hire local, small, women-, minority-, veteran-owned and disadvantaged businesses and workers; win work; and deliver quality projects safely, on time and on budget. Nearly 90% of survey respondents did not support prevailing wage laws and the Davis-Bacon Act in its current form and 83% of respondents supported a full repeal of prevailing wage laws, while 82% supported prevailing wage law reform. In addition, 95% of respondents said prevailing wage laws make construction projects more expensive and 75% said prevailing wage regulations make them less likely to bid on taxpayer-funded public works projects.
• The Congressional Budget Office has estimated that repealing the Davis-Bacon Act would save the federal government $17.1 billion between 2021 and 2030.
• According to a study by the Heritage Foundation, 30,000 more construction jobs could be created on an annual basis if the DOL accurately calculated Davis-Bacon rates to find the true prevailing wage. 
• For decades, watchdogs in the federal government have criticized the DOL’s convoluted method for determining prevailing wage and benefit rates through an outdated and unscientific survey process riddled with errors and inefficiencies.
• Davis-Bacon needlessly raises taxpayer-funded construction costs, stifles job creation, undermines productivity and discourages competition from small businesses interested in pursuing federal and federally assisted construction projects. For years, ABC has called for reforms to confusing DOL compliance rules and enforcement policies which, coupled with a dysfunctional wage determination process, have resulted in a broken system.

The DOL announced that it will offer online compliance seminars for contracting agencies, contractors, unions, workers and other stakeholders to provide information on the requirements governing payment of prevailing wages on federally funded construction. Q&A sessions for Davis-Bacon topics are available on March 29, June 14 and Sept. 13. Learn more about the free seminars and register today.

ABC will continue to inform members about new developments related to the Davis-Bacon Act in Newsline.

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