Material Suppliers and DOL Changes

BY JAY HANSEN

Earlier this year, the U.S. Department of Labor (DOL) announced the publication of a proposed rule, “Updating the Davis-Bacon and Related Acts Regulations.” The Davis-Bacon Act (DBA) requires contractors to pay locally prevailing wages to laborers and/or mechanics employed on federally funded construction projects. If the proposed rule is finalized and implemented by the DOL, the updated DBA will have a significant impact on material suppliers in terms of costs, compliance and administrative responsibilities.

According to the DOL, the proposed rule represents the most comprehensive review of DBA regulations in 40 years. The reach of DBA is significant since there are 71 DBA laws applicable to federal and federally assisted construction programs that require payment of locally prevailing wage rates for 1.2 million U.S. construction workers. DBA requirements currently cover approximately $217 billion in federal spending on construction annually.

Since 1930, “material suppliers” have never been treated by DOL as contractors or subcontractors under the DBA or related Acts. As proposed, the new DBA rule would complicate this long-held understanding by including “transportation” under the proposed rule, adding unnecessary complexity and regulations to material suppliers.

Under the rule, for the first time, contractors would have to monitor transportation involving hauling material at the site of work and pay prevailing rates for the time spent at the construction site. The DOL proposes to cover a driver’s “onsite activities essential or incidental” to offsite transportation “where the time spent is not so insignificant that it cannot be practically recorded.” The essential or incidental activities related to the transportation of material include loading, unloading, and waiting time where time is not so insubstantial that it is not practical to precisely record.

This rule change, as complicated as it is, would significantly expand DBA coverage for material suppliers. That is why the National Asphalt Pavement Association (NAPA) joined with the National Ready Mixed Concrete Association (NRMCA) and the National Stone, Sand & Gravel Association (NSSGA) in submitting joint comments to DOL on the proposed rule before the comment period ended May 17.

The regulatory burden on contractors to track each haul of material for DBA compliance along with tracking and complying with Hoursof-Service rules would be considerable. Every day, millions of material hauls take place to supply billions of tons of aggregates, asphalt and concrete to build our nation’s infrastructure. In the joint comments, the three associations urged DOL to make clear that material suppliers are not covered under the new transportation requirement.

The DOL rule would also expand DBA coverage to temporary material production facilities. Under current law, while fixed plants open for commercial business are not covered by DBA, portable plants were always a gray area. Under the proposed rule, DBA coverage would include portable equipment at construction sites. Material suppliers that place portable crushers and plants at a work site would no longer be exempt from DBA if the proposed rule were to become final. NAPA, NRMCA and NSSGA have urged the DOL to reexamine the definition in the proposed rule to ensure portable processing and material production facilities are treated by the agency as material suppliers and not contractors or subcontractors under DBA.

Finally, the three associations expressed concern with DOL’s proposal to continue using voluntary wage survey responses from contractors to make wage determinations. Low participation rates in the surveys have resulted in a lack of data and results in prevailing wages that poorly reflect the construction labor markets in many parts of the country. The associations are urging the DOL to use certified payrolls to establish minimum wage and fringe benefits, which would update wages and fringe benefits more accurately than survey responses. Material suppliers already submit this information to state agencies.

As of press time, the DOL was pouring over 40,000 comments on an extraordinarily complex rule and was expected to issue a final rule in the following months. Contractors should follow this rulemaking process closely as it would change the costs of doing business and complicate the bidding process for anyone doing business with the federal government in the future.

Jay Hansen is the executive vice president—advocacy for the National Asphalt Pavement Association.

Elise Posillico 781.738.5805

Peter Brickman 516.353.9177

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