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What do the Davis-Bacon Act changes mean for HR?

Commercial litigator outlines how Davis-Bacon Act changes affect HR in public and private sectors

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Davis-Bacon Act has been in effect for 92 years.
Employers are now required to report a worker’s earned fringe benefits.
The Davis-Bacon Act was initially established to ensure fair wages for construction workers.

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The U.S. Department of Labor (DOL) implemented the final changes to the Davis-Bacon Act and Related Acts (DBRA), which have been in effect for 92 years, marking the first modification to federal contractor wage rules in four decades. As of October 23, the amendments have implications for federally funded contractors and subcontractors exclusively, but according to Melissa Taylormoore, a commercial litigation partner at White & Case, the Act’s reach is expanding.

With the increasing involvement of private sector companies in securing federal funding through initiatives like the Bipartisan Infrastructure and Jobs Act and aiming for eligibility for tax credits under the Inflation Reduction Act, adherence to Davis-Bacon Act prevailing wage requirements has become crucial. Taylormoore emphasized that companies seeking to benefit from these new incentives must comply with the Act, prompting many organizations unfamiliar with federal government regulations to delve into Davis-Bacon prevailing wage requirements.

Key Points for HR Professionals:

Operational Shift

One significant change is that the DBRA is now considered an “operation of law,” eliminating the need for explicit inclusion in contracts. Even without specific DBRA compliance language in federal contracts, the laws apply, requiring employers to evaluate the nature of the work, such as construction, repair, or installation, and whether it involves laborers and mechanics.

Fringe Benefit Compliance

The regulation now codifies the Department of Labor’s preference for annualizing fringe benefits. Employers are now required to report a worker’s earned fringe benefits on both DBRA and non-DBRA projects, ensuring fair compensation across all hours worked on various projects.

HR Partnership

HR teams are positioned as crucial business partners in this scenario. They play a key role in assessing the nature of work and ensuring compliance with fringe benefit regulations. Reviewing benefit analyses becomes vital to guaranteeing workers receive their rightful fringe benefits.

The Davis-Bacon Act was initially established to ensure fair wages for construction workers on federally funded projects and to prevent unfair wage practices from undermining local wage standards. Acting Secretary of Labor Julie Su emphasized that modernizing these acts is essential for creating quality jobs and fair wages under the Biden-Harris administration’s agenda. The updated rule aims to facilitate pathways to the middle class, promoting fair wages and benefits for workers on federally funded construction projects nationwide and creating a level playing field for ethical employers.

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