Updated Davis-Bacon Rules Change Wage Cost Landscape

By Lorrie Ray posted 08-17-2023 09:28 AM


Federal construction contractors now have access to the U.S. Department of Labor’s (DOL’s) recently issued final rule titled Updating the Davis-Bacon and Related Acts Regulations. Many changes are taking place, and the DOL has a long list of frequently asked questions for construction contractors that work on federally funded projects. The DOL explained that the rule will be effective 60 days after its publication in the Federal Register, which is scheduled to happen on August 23, 2023. 

The DOL has stated that this is the new way of determining wage rates; nevertheless, many of the significant rule changes take the method for determining wage rates back to before President Reagan updated the rules in the 1980s. The changes allow union-bargained rates to prevail more easily by getting rid of the weighted average requirement and instead using a rate when it prevails 30% of the time in each area. This is because unions are far more likely to submit their wage rates to the DOL than contractors are, so if they submit those rates only 30% of the time for a wage determination in a county, the union rates prevail. 

The following are some additional changes: 

  • Wage determinations, for the most part, are still county-wide, but the DOL wants to use broader regions when the work involves something like a multi-county highway project, blending urban and rural rates. The DOL is also going to be using local and state wage determination rates in deciding what the Davis-Bacon rates will be.   

  • Wage rates will be updated every three years even if there are inadequate survey results indicating higher wages. Instead, the DOL will be using Employment Cost Index data published by the Bureau of Labor Statistics to determine increases in Davis-Bacon wage determinations. 

  • Delivery drivers are still only paid for the time spent at a construction site, but the DOL expects the contractor to add up the few minutes each time to pay them the driver rate in the determination for the total amount they spend onsite, rather than treating it as de minimis. 

  • There are changes that impact fringe benefits. For example, as the DOL explains, “The final rule codifies and clarifies the requirement that fringe benefits should be annualized. Annualization is the method of calculating the hourly equivalent amount of a contractor’s contributions to fringe benefits plans that may be credited against the contractor’s fringe benefits obligations under the DBRA. 

Those wanting more information about the changes can review the DBA Comparison Charts. If you are a construction contractor that bids on federal projects and are a Consulting or Enterprise member, Employers Council can assist with your questions on the changes to the federal rules. Contact us at