Part of Biden’s Prevailing Wage Rule for Federal Contractors is Blocked

Associated General Contractors of America (“AGCA”) took a successful first step towards challenging two provisions of the Department of Labor’s (“DOL”) August 2023 prevailing wage rule for those working on federal construction projects when it obtained a favorable initial ruling in the form of a temporary injunction from the District Court in Lubbock, Texas.

The AGCA challenged the provision of the rule that would expand when contractors working on federally funded construction sites are required to pay workers “prevailing wages.” The August 2023 rule changed the framework of the prevailing wage from one where it had to be specifically stated in the contract to one where the rule would always be in effect as the default. In addition, the rule expanded the definition of “mechanics and laborers” to include truck drivers that work on construction sites.

In its opinion, the District Court said that the DOL lacked power to impose these requirements. The court opined that neither the DOL nor the President has the power to unilaterally amend Acts of Congress to suit their policy choices.

As a reminder, the “prevailing wage” in the context of federal contractors is understood as follows:

(1) The wage paid to the majority (more than 50 percent) of the laborers or mechanics in the classification on similar projects in the area during the period in question;

(2) If the same wage is not paid to a majority of those employed in the classification, the prevailing wage will be the wage paid to the greatest number, provided that such greatest number constitutes at least 30 percent of those employed; or

(3) If no wage rate is paid to 30 percent or more of those so employed, the prevailing wage will be the average of the wages paid to those employed in the classification, weighted by the total employed in the classification.

In determining the prevailing wage, the following factors may be considered:

(1) Statements showing wage rates paid on projects, including the names and addresses of contractors, including subcontractors; the locations, approximate costs, dates of construction and types of projects, as well as whether or not the projects are Federal or federally assisted projects subject to Davis-Bacon prevailing wage requirements; and the number of workers employed in each classification on each project and the respective wage rates paid to such workers.

(2) Signed collective bargaining agreements, for which the Administrator may request that the parties to such agreements submit statements certifying their scope and application.

(3) Wage rates are determined for public construction by State and local officials pursuant to State and local prevailing wage legislation.

(4) Wage rate data submitted to the Department of Labor by contracting agencies pursuant to § 5.5(a)(1)(iii) of this subtitle.

(5) For Federal-aid highway projects under 23 U.S.C. 113, information obtained from the highway department(s) of the State(s) in which the project is to be performed. For such projects, the Administrator must consult the relevant State highway department and give due regard to the information thus obtained.

(6) Any other information pertinent to the determination of prevailing wage rates.

With the Supreme Court’s June 28, 2024, decision overturning the long-standing precedent that provided great deference to government agency rule making, it seems more likely than not that the AGCA has a good chance of having a court ultimately rule in its favor.