LEGAL BATTLE

WHAT HAPPENED?

The Association of General Contractors (AGC) has launched legal action to block the US government from making a major update to construction labour regulations.

The US Department of Labor (DOL) issued its Final Rules, updating certain requirements under the Davis-Bacon Act related to how workers are paid on federally-funded projects. The Act requires contractors on federallyfunded public works to pay “the prevailing wage,” in an area and, if this can’t be found, the wage rate paid to 30% of workers. In 1983 DOL stopped using the 30% rule in response to criticism it was driving wages up for gov. contracts. The Final Rules revive the 30% rule.

WHAT IT MEANS

The new rule would require all contractors to pay the wage rates prevalent in the local area, with the aim of taking away a competitive advantage for non-local contractors over local companies.

But the AGC has filed a suit in federal court to block the expansion of the reach of the Davis-Bacon Act, (which was passed in 1931) calling it, “unlawful”.

The AGC argues that the Biden administration lacks the legal authority to expand the law to cover manufacturing facilities miles from projects, or to retroactively impose the measure on already-executed contracts.

Stephen E. Sandherr, outgoing chief executive officer of the AGC, said, “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.

The AGC has filed a suit to block the expansion of the reach of the Davis-Bacon Act

PHOTO: ADOBE STOCK

“But we are challenging the president’s unlawful efforts to expand a construction wage law to cover a wide range of manufacturing and shipping operations.”

WHAT’S NEXT?

Sandherr argues that the move would increase regulatory burdens on small businesses and has been designed to extend to industries not covered by the original legislation. It is estimated that approximately 12% of US construction workers are in a union. The association filed its lawsuit in the US District Court for the Northern District of Texas in response to the US Department of Labor’s final rule proposing significant changes to the Davis-Bacon Act. At the time of writing, a date had not been given for when the court would issue a response to the lawsuit.

Supporters of the change argue that it will guarantee fair pay for workers and also deter wage theft.