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On March 29, the U.S. Department of Labor’s Office of Inspector General released an audit report on the prevailing wage rates mandated by the Davis-Bacon Act on federal or federally assisted construction projects. 

Passed in 1931, the DBA requires contractors to pay no less than the local prevailing wage to on-site workers on federally funded construction projects costing more than $2,000.

Currently, the DOL’s Wage and Hour Division determines and updates these wage rates by conducting surveys to collect and compile data about hourly rates in four types of construction projects. For more than 20 years, the OIG, along with Office of Management and Budget, Government Accountability Office, U.S. Congress and other stakeholders, have raised concerns about the timeliness and accuracy of these rates, with a main concern being the potential bias produced by the voluntary nature of these wage surveys. 

According to the report, the OIG found that, as of September 2018, 3% of WHD’s 134,738 unique published rates, roughly 4,400, had not been updated in 21 to 40 years. 

Additionally, of seven sampled surveys that analyzed 124 wage rates, the OIG found 48% of the rates were not determined from data about a single construction worker within the 31 counties that the published rates represented.

The report found union wages prevailed for 48% of the wage determinations, despite the fact that just 13.2% of the U.S. private construction workforce is unionized.

Finally, the report found union wages prevailed for 48% of the wage determinations, despite the fact that just 12.8% of the U.S. private construction workforce is unionized. Furthermore, less than .01% of these 64,850 union wage rates were more than 10 years old, while 10% of the 69,888 nonunion wage rates were more than 10 years old. The report noted that union rates are typically updated when labor unions renegotiate collective bargaining agreements, while WHD must conduct new surveys to update nonunion rates.

As part of the report, the OIG listed eight recommendations to improve the overall quality and accuracy of DBA prevailing wage rates, which include developing and implementing a risk-based strategy to manage rates more than 10 years old and consulting with the U.S. Bureau of Labor Statistics to evaluate alternative methods to update wage rates, such as the Consumer Price Index and Occupational Employment Survey data. The OIG also noted contractors’ lack of participation in filling out these surveys and recommended continuing efforts to identify new strategies to increase participation and obtain more relevant wage rates. 

In addition to advocating for repeal of the DBA, ABC has made numerous recommendations over the years that could have mitigated some of the act’s damage to the economy, including the use of BLS data for wage determinations.

Research has found that state prevailing wage requirements increase the cost of construction. In New York, a 2017 report released by the Empire Center for Public Policy found that prevailing wage requirements inflated the cost of publicly funded construction projects in the state by 13 to 25%. The state of Ohio saved almost $500 million following the state’s repeal of prevailing wage rules on school construction, according to an Ohio Legislative Service Commission study published by the state.

Because of their anti-competitive and inflationary impact, 24 states have no prevailing wage laws and a total of eight states have repealed or significantly reformed their prevailing wage laws since 2015.

The Congressional Budget Office estimates the federal government would spend less on construction, saving $12 billion in discretionary outlays from 2019 through 2028, if the Davis-Bacon Act was repealed, although industry stakeholders believe the overall savings would be much more, once accounting for the impact of repeal on state and local government-procured projects impacted by Davis-Bacon requirements.

The Beacon Hill Institute at Suffolk University in Boston found that wages on federally funded construction projects under the DBA are grossly inflated. The February 2008 study compared the methods used by the BLS and the DOL’s Employment Standards Administration’s Wage and Hour Division to determine the prevailing wage for workers employed on federally funded construction projects.

The BHI study found the WHD’s inaccurate measurement of wages has several principal consequences for construction wages and costs: 

• The WHD methods inflate wages by an average of 22%.
• The WHD methods inflate construction costs on projects subject to the DBA by 9.91%.
• The WHD methods unnecessarily raise construction costs by a total of $8.6 billion per year on projects subject to the DBA.

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On March 28, 2019, a federal judge ruled that parts of the Trump administration’s 2018 final rule on association health plans were invalid. The U.S. Department of Labor has been directed to reconsider how the rest of the rule is affected by this ruling.  

The court specifically struck down two parts of the rule:

• The provision defining “employer” to include associations of disparate employers; and
• The provision expanding membership in these associations to include working owners without employees.

The ruling found that the DOL exceeded its authority under ERISA in how it defined employers.

Most of the plans ABC knows are currently being contemplated rely on state regulations and will not actually be affected by this court ruling. However, there are several that do make some use of the Federal AHP law changes and may need to go back to the drawing board.  

Contact Sam Melamed at melamed@abc.org with any questions or concerns.

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ABC will be observing Construction Safety Week 2019 from May 6-10 with an awareness campaign highlighting member achievements in safety performance and our collective commitment to creating the conditions for all to do their work without incident and go home safe and healthy every day. 

Among the headline events of the week, the Occupational Safety and Health Administration will host its sixth annual National Safety Stand-down to Prevent Falls in Construction with events across the country to improve compliance and save lives. ABC chapters and members can find local events to attend as well as guidance on hosting a stand-down and registering their event if it’s open to the public. Visit constructionsafetyweek.com for advice on engaging your team with an event guide, toolbox talks, messages to share and more ideas to promote safety as an industry priority.

Look for daily Safety Week social media posts from ABC and Construction Executive, including highlights from the 2019 Safety Performance Report demonstrating the effectiveness of the STEP safety management system and articles featuring member safety performance leaders. Share your event plans by using the hashtags #ABCMeritShopProud and #safetyweek.

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ABC will be celebrating the seventh annual Infrastructure Week, May 13-20, with an awareness campaign highlighting the critical importance of infrastructure to America’s economic competitiveness, security, job creation and in the daily lives of Americans. The future of America will be shaped by the infrastructure-related choices we make today—so let’s all prepare to #BuildForTomorrow!

Join the many companies, organizations and cities hosting events nationwide and spreading the message in the press and on social media. Visit infrastructureweek.org for a plethora of resources including templates for op-eds, sharable factoids on America’s infrastructure and information how to participate or plan your own event. 

Be sure to look for daily Infrastructure Week social media posts on ABC National’s social media channels and follow the conversation using the hashtags #ABCMeritShopProud and #BuildForTomorrow.

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ABC members should continue to monitor developments after a recent court order dealing with the EEO-1 form enforced by the Equal Employment Opportunity Commission. The form has long required employers with more than 100 employees and government contractors with more than 50 employees to list the number of their employees in job categories by race, ethnicity and gender. This data, known as “Component 1 data” is due this year by May 31, 2019.

However, there is controversy over a new set of data on the EEO-1 form called “Component 2 data,” which the Obama administration asked employers to start collecting for the first time this year. The new data would report employee compensation in “pay bands” by race, ethnicity and gender. During the Trump administration, the Office of Management and Budget blocked the EEOC from forcing employers to submit any compensation data until recently, when a court ordered the OMB stay to be vacated. The impact of the court order is to suddenly revive the burdensome pay data requirement with very little time for employers to respond. The EEOC has also told the court it is not ready to receive compensation data. 

 
At this time, the issue remains unsettled, and ABC is involved in efforts to reverse the court’s decision or at a minimum extend the time period for employers to comply with any new Component 2 pay data requirement. The Component 1 data is still due by May 31. We will keep members apprised of updates in the court case as they occur. 

This article is intended for informational purposes only and does not constitute legal advice or opinion.

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Last week, the Office of Federal Contract Compliance Programs issued the latest Corporate Scheduling Announcement List and an updated hiring benchmark for veterans protected under the Vietnam Era Veterans’ Readjustment Assistance Act.
   
FY19 Corporate Scheduling Announcement List
On March 25, the OFCCP released its fiscal year 2019 CSAL, a courtesy notification that lists 3,500 selected contractor establishments for an upcoming compliance review of a their affirmative action goals, outreach activities and recruitment efforts for protected groups, according to the OFCCP website.

The CSAL provides at least a 45-day notice before these establishments undergo a Corporate Management Compliance Evaluation, Functional Affirmative Action Program review or Section 503 Focused Review.

More information on the FY19 CSAL can be found on the OFCCP website and in an analysis published by ABC’s general counsel, Littler Mendelson P.C.

VEVRAA Hiring Benchmark
On March 27, the OFCCP announced it has lowered its hiring benchmark for veterans protected under VEVRAA to 5.9 percent from 6.4 percent, effective for affirmative action plan years starting on or after March 31, 2019.

Under VEVRAA regulations, the OFCCP’s hiring benchmark reflects the percentage of total hires in the civilian labor force who are protected veterans, and contractors who are required by VEVRAA to develop a written affirmative action program must also reach the benchmark provided by the OFCCP each year. 

While the OFCCP offers a national benchmark determined through data from the U.S. Bureau of Labor Statistics, contractors can also develop individualized hiring benchmarks using five factors found on the OFCCP website. 

More information on VEVRAA and the updated hiring benchmark can also be found in an analysis published by Littler Mendelson P.C.

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On April 1, the U.S. Department of Labor’ Wage and Hour Division announced it is issuing a proposed rule to update and clarify its interpretation of joint-employer status under the Fair Labor Standards Act. According to the proposal, the changes are designed to promote certainty for employers and employees, reduce litigation and encourage innovation in the economy.

The DOL’s proposal would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek. Specifically, they propose a four-factor test for determining joint employment under the FLSA. The DOL will consider whether the potential joint employer actually exercises the power to:

•  Hire or fire the employee
•  Supervise and control the employee’s work schedules or conditions of employment
•  Determine the employee’s rate and method of payment
•  Maintain the employee’s employment records

The proposal also provides several examples for comment that would further assist stakeholders in determining joint-employer status. For more information on the joint-employer proposal, see WHD’s website, fact sheet and frequently asked questions page. Additionally, see ABC general counsel Littler Mendelson’s ASAP for further analysis.

WHD also issued a proposal to clarify and update the regulations governing regular rate requirements, which define what forms of payment employers include and exclude in the “time and one-half” calculation when determining workers’ overtime rates. For more information see WHD’s website and Littler Mendelson’s analysis. 

The public will have the opportunity to comment on the proposed rules. Comments on WHD’s regular rate proposal are due May 28 and comments on its joint-employer proposal are due 60 days upon publication in the Federal Register. 

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On March 29, the U.S. Department of Homeland Security announced that it would make 30,000 H-2B visas available for previous H-2B workers who have worked in the United States for one or more of the past three fiscal years. Earlier this year, Congress included a provision in the Consolidated Appropriation Act of 2019 (Pub. L. 116-6) that allowed for DHS to release more than 69,000 additional H-2B visas above the 66,000 annual cap. As part of the H-2B Workforce Coalition, ABC has continually advocated for expanding the cap on H-2B workers and enacting meaningful reforms to the H-2B visa program to better address the workforce needs of the construction industry. Details on eligibility and filing requirements will be published on uscis.gov. 

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ABC joined a coalition of construction and business associations urging President Trump to eliminate government-mandated project labor agreements and allow for the vast majority of qualified contractors and their skilled employees to compete for federal and federally assisted taxpayer-funded construction projects.

In the coalition’s March 14 letter, the group called on President Trump to rescind President Obama’s Executive Order 13502, which encourages federal agencies, on a case-by-case basis, to require project labor agreements on federal construction projects exceeding $25 million in total value and permits states and localities to mandate PLAs on federally assisted projects.

“With the current construction boom contributing to a severe shortage of skilled labor, a new fair and inclusive policy encouraging all Americans to compete to rebuild their community’s schools and infrastructure would be a win-win for taxpayers and the U.S. economy,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “And with a projected 10-year, $2 trillion infrastructure investment gap in the United States, a policy ensuring taxpayers get the best possible infrastructure at the best possible price is essential to rebuilding America.”

The coalition highlighted that studies of hundreds of taxpayer-funded school construction projects found that PLA mandates increased the cost of construction by 12 percent to 18 percent compared to similar non-PLA projects. In addition, PLAs unfairly discourage competition from quality contractors and their nonunion workers, who comprise of 87.2 percent of the U.S. private construction industry, according to recent U.S. Bureau of Labor Statistics data.

ABC and industry groups have repeatedly petitioned President Trump to rescind President Obama’s Executive Order 13502 and replace it with Executive Orders 13202 and 13208, which would prohibit PLAs from being required on federal and federally assisted construction projects, respectively.

A total of 24 states have passed measures restricting government-mandated PLAs, allowing the free market—not the government—to determine if a PLA is appropriate for a construction project, according to the letter. 

Additionally, in a December 2018 membership survey, ABC found its members strongly oppose government-mandated PLAs on taxpayer-funded construction contracts and said a construction contract that required a PLA would be more expensive and result in poor local hiring outcomes compared to a contract procured via free and open competition.

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On March 11, a federal judge dismissed a lawsuit by the Arizona State Building and Construction Trades Council that aimed to block enforcement of parts of a pro-taxpayer Arizona law restricting government-mandated project labor agreements. 

According to court documents, the trades council filed the lawsuit in response to two statutory provisions enacted in 2011 and 2015 that prohibit political subdivisions of the state from requiring bidders for public contracts to enter into PLAs or participate in apprenticeship programs. In their lawsuit, the trades council stated the provisions are pre-empted by various federal laws, including the National Labor Relations Act and the Fitzgerald Act.  

However, U.S. District Judge Roslyn O. Silver with the U.S. District Court for the District of Arizona ruled the suit lacks standing because the trades council has not identified any concrete injury it has suffered or is about to suffer as the result of these provisions, according to court documents. 

The judge also dismissed the case for its violation of the 11th Amendment, which bars suits in federal court against states and state officials.

“This ruling solidifies Arizona’s pro-taxpayer law ensuring fair and open competition public works projects,” said ABC Vice President of Legal, Regulatory and State Affairs Ben Brubeck. “A total of 24 states have passed similar measures restricting government-mandated project labor agreements and all legal challenges by PLA advocates to such state measures have ultimately failed.”

In a December 2018 membership survey, ABC found its members strongly oppose government-mandated PLAs on taxpayer-funded construction contracts and said a construction contract that required a PLA would be more expensive and result in poor local hiring outcomes compared to a contract procured via free and open competition.

Additionally, ABC and industry groups have repeatedly asked President Trump to rescind President Obama’s Executive Order 13502, which allows state and local recipients of federal dollars to mandate PLAs on public works projects and encourages federal agencies to require PLAs on federal contracts to build projects of $25 million or more on a case-by-case basis.

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