Dive Brief:
- Contractor employer groups have sued the federal government over a recent final rule change to the Davis-Bacon Act, which went into effect Oct. 23.
- On Tuesday, Associated Builders and Contractors and its Southeast Texas chapter filed suit against the federal government in the U.S. District Court for the Eastern District of Texas and Associated General Contractors of America filed suit in the U.S. District Court for the Northern District of Texas.
- The rule change aimed to raise the hourly earnings of workers for general contractors and subcontractors on federally funded projects, such as those under the Infrastructure Investment and Jobs Act and the CHIPS Act.
Dive Insight:
The groups said the change would raise the price of those projects substantially and cost taxpayers more. Now, ABC and AGC are claiming in court the rule change is illegal, just two weeks after it became official.
ABC named the Department of Labor, acting Labor Secretary Julie Su and Wage and Hour Division Administrator Jessica Looman as plaintiffs in the filing. AGC named just Su and the DOL.
The rule change, first announced in March 2022, restored the DOL’s prevailing wage definition to make it equivalent to 30% of workers, rather than 50%, in a given trade locality. Under the previous process, at least 51% of wages surveyed by the DOL needed to fall within a “same or similar” margin. If they didn’t, the weighted average would decide the prevailing wage, meaning more frequent occurrences of low wages could drag down the overall rate.
In an effort to reverse that, the DOL returned to the system used until 1983, when President Ronald Reagan made changes, in a major blow to organized labor. During a 60-day comment period, the DOL received 40,938 comments on the rule change.
Formal complaints
ABC said it submitted nearly 70 pages of comments on the matter to dissuade the federal government from adopting the change. Now, it’s taking the matter to court.
“The DOL’s final rule forces ABC to take legal action to address its numerous illegal provisions and protect its members, the free market and taxpayers from the devastating impacts of this regulation,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in a release.
AGC’s challenge indicated the federal government had overreached by applying Davis-Bacon rules to other industries connected to construction, such as manufacturing and delivery truck drivers.
“As an industry that largely pays above existing Davis-Bacon rates, our concerns are with the administration’s unconstitutional exercise of legislative power and not with the wage rate themselves,” AGC CEO Stephen Sandherr said in a release.
The organization also challenged President Joe Biden’s administration for ruling that the federal government can retroactively apply Davis-Bacon rules to contracts that omitted them initially.
The DOL declined to comment on the litigation.
