The U.S. Department of Labor (DOL) implemented a comprehensive final rule, effective from October 23, 2023, to make significant changes to the Davis-Bacon and Related Acts (DBRA). This rule spans hundreds of pages and will impact over 1 million construction workers nationwide. The primary aim is to enhance clarity, consistency, and administration of the DBRA in response to the growing number of federally funded projects.

Key provisions of the rule include:

1. New Definition of "Prevailing Wage": The rule revises how prevailing wages are calculated, transitioning to a three-step process based on the majority rate, the rate paid to at least 30 percent of workers, or the weighted average rate. This change is expected to result in higher wages for employees.
2. Adjustments for Non-Collectively Bargained Rates: The rule introduces provisions for periodically adjusting non-collectively bargained rates based on data from the Employment Cost Index.
3. Adoption of State and Local Government Wage Rates: The rule allows the DOL to incorporate state and local government-set wage rates into federal surveys, subject to certain criteria.
4. Codification of Annualizing Fringe Benefits:Contractors must now annualize fringe benefits, preventing their use on private projects to meet prevailing wage obligations.
5. Increased Record-keeping Requirements:Contractors are required to maintain payroll records for at least three years and include specific worker details.
6. Anti-Retaliation Provisions: The rule includes anti-retaliation measures for workers who file DBRA complaints, providing remedies such as reinstatement, front/back pay, compensatory damages, and posting anti-retaliation notices.
7. Wage Determination for Current Contracts:Existing contracts created before October 23, 2023, will retain their wage determinations unless substantially modified.

Additionally, the final rule reverts to certain pre-Reagan era DBRA policies, including the reintroduction of the 30% rule for determining prevailing wages. It also adopts Bureau of Labor Statistics (BLS) wage escalators without altering BLS wage survey methods, which could potentially inflate Davis-Bacon wage rates. Furthermore, it expands the geographic scope of wage determinations, redefines "single wage" factor counting, and adds "anti-retaliation" provisions.

Moreover, the rule extends DBA coverage to activities like installing green equipment (solar panels, wind turbines, etc.) in public works, expands the definition of the construction "site," and holds contractors responsible for DBRA compliance "by operation of law." It grants the DOL debarment and withholding authority and introduces new fringe benefit annualization and administrative cost requirements.

However, the rule does not address the use of more scientific wage survey methods, offer guidance on worker classification, or provide realistic estimates of regulatory burdens on small businesses. The effective date of the rule is 60 days after publication in the Federal Register, with certain aspects applying at different times.

Overall, construction contractors are advised to become familiar with the rule's changes and seek legal advice on its implications, as legal challenges to some aspects of the rule are anticipated. The final rule aims to bring significant changes to the DBRA regulations and is expected to have substantial impacts on the construction industry, federal projects, and labor standards.