New Davis-Bacon rule expands coverage, raises prevailing wage

The U.S. Department of Labor (DOL) has issued the highly anticipated update of its Davis-Bacon rule. The 800+ page rule expands coverage to include new-technology projects and—by altering the prevailing wage “formula”—is likely to increase the prevailing wage in many jurisdictions. The new rule will become effective 60-days after formal publication in the Federal Register, which is expected to be August 23, 2023.

New threshold for prevailing wage

Perhaps the most far-reaching change reduces from 50% to 30% the percentage of workers in a jurisdiction who will be paid a particular wage to determine what will become the prevailing wage. The same process is used for fringe benefits: If 30% or more of workers receive a certain fringe benefit, then that is the prevailing fringe wage rate. This new computation is all but certain to raise costs in areas where the generally higher union pay scale is less prevalent.

Further, most prevailing wages are currently calculated on a county-wide basis. Under the new rule, prevailing wages can be calculated on a multicounty or highway-district basis. This change is linked to the change that eliminates the prior prohibition on mixing and matching rural and metropolitan data to determine wage rates, another change expected to increase the prevailing wage on many projects.

DBA coverage expanded