What does this update to a 1931 enactment mean for us? Construction wage work principlesoriginally outlined are now rules “and expected to face legal challenges,” according to Fredrikson’s The Construction Counselor.
The bottom line: Use caution when considering federal infrastructure projects. Legal advisors recommend creating an internal checklist to determine DBA coverage at the pre-bid stage of a project.
Other DBA takeaways include:
- Companies using special-purpose entities for construction projects (LLCs, JVs, partnerships) need to reassess compliance risk.
- Contractors should re-evaluate subcontractor compliance monitoring programs and contract indemnification terms. Higher-tier contractors can now be held responsible for lower-tier subcontractor noncompliance.
- DBA obligations will now be read into all contracts, even if they were omitted by the government originally.
- Demolition/site remediation can be covered by DBA if the future project will/could be federally funded.
- Department of Labor (DOL) has new authority to demand records related to DBA without initiating an investigation or other compliance action.
- Energy infrastructure projects, such as wind, electric car chargers, and broadband, are subject to DBA if they have federal funding.
- General contractors are now also “prime contractors” that will be held liable for noncompliance.
- If you have a DBA exemption, check now to ensure it still applies.
- Material suppliers had a DBA exemption, but the scope is much more limited than before.
- Modular construction companies need to reassess if/how DBA could apply to them.
- Recordkeeping obligations are significantly increased, along with the duty to keep those records until three years after the prime contract is closed out.
Fredrikson concludes that construction wage work will cost more, especially in rural areas. “DBA wages and benefits are more likely to mirror union rates going forward.” Construction Business Owner reminds contractors prevailing construction wage work varies by location and employers can see payroll tax savings when providing bona fide benefits. (These are insurance/retirement/vacation benefits separate from the base hourly rate.)
October 23, 2023: The U.S. Department of Labor…announced implementation of a final rule that modernizes Davis-Bacon Act (DBA) and Davis-Bacon and Related Acts regulations to reflect the needs of construction workers on federally funded projects better (and) …to meet the demands of the modern economy.
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