We Need New Davis-Bacon Act Conformance Procedures
If it sometimes seems like the Davis-Bacon Act (“DBA”) wages and benefit levels are being manipulated higher, that is because that is objectively the case. Under the Obama Administration, with former union officials firmly in the saddle at the US Department of Labor (“DOL”), the government was willing to distort the conformance process in US Government construction contracts to furnish distinct advantages to workers in rural areas with few unions and little wage data. A conformance is a process of setting a wage and benefit rate for a job missing from the prevailing wage determination (“WD”). Specifically, where there was only a single "skilled craft" set forth on the subject DBA WD, DOL is willing to make those union wage and benefits the bench mark for all other skilled positions under the DBA, whether union or nonunion. By this sleight of hand, DOL can bootstrap union wages and benefit rates to all the nonunion positions. Thus, the unions merely have to penetrate a single position on a rural WD, get a rate posted from a CBA, and that union rate would thereafter potentially apply to all the other skilled labor positions on the contract but not set forth in DOL’s WD (i.e., the “missing” jobs).
For example, if the wage and benefit rates for painters was based on the collective bargained rates negotiated by the dominant painters’ union in the locality, then under its All Agency Memorandum (“AAM”) No. 213 guidance, DOL will only conform a skilled construction trade positions to other skilled construction trades, and DOL will ordinarily not look at the non-skilled worker wage and benefit rates. In the words of AAM 213: "[a] proposed skilled craft classification is compared to skilled classifications in the wage determination." However, the AAM No. 213 instruction is to look at the "entirety of the rates for skilled classifications…." It doesn’t appear to contemplate a situation where there is but a single skilled craft position on the subject WD. Where there is but one skilled position in the WD, however, DOL apparently just uses that single position as the minimum prevailing rate for any missing skilled position -- without looking at alternatives to conform rates for positions similar to the missing position.
AAM No. 213 states in pertinent part as follows:
WHD has concluded, however, that it better reflects the regulatory requirement that "the proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination" to consider the entirety of the rates within the relevant category on the wage determination and to not generally use as a benchmark the lowest rate within that category. The regulation at 29 C.F.R. §5.5(a)(l)(ii)(A)(3) requires that the proposed wage rate bear a reasonable relationship to the "wage rates" on the wage determination and not to a particular rate or the lowest rate.
Id. (emphasis added). The animating idea behind AAM No. 213 was the admonition to consider the “entirety” of the skilled job classification wage rates, not just the lowest rates. DOL was not supposed to focus on a single rate, be it the lowest, or the highest, or the only rate, and assume that is the end of the process. In the words of AAM No. 213, DOL is supposed to consider the “full range of wage rates” under AAM No. 213. The ideal was to derive a reasonable relationship by looking at more than one category of worker.
The touch stone of any conformance is to find a rate that bears a “reasonable relationship” to the wage and fringe benefit rates set forth on the WD. See 29 C.F.R. § 5.5(a)(1)(ii)(A). That is the binding regulation; and when it refers to the reasonable relationship requirement therein, it refers to the “wage rates contained in the wage determination.” With all due respect, the DOL regulations do not refer to the wages and benefits of the dominant class of similar worker on the WD or any of the other variations and formulations DOL has adopted in AAM No. 213. The regulations suggest DOL must look at the whole WD, and not cherry pick the applicable wages and benefits of a single unionized workforce.
Yet, under the Obama Administration and its result oriented AAM No. 213 policy, that is exactly what DOL put in place. It picks up a single skilled position on the WD and makes a dominant union-based wage into the prevailing wage rate for all other skilled positions not found on the WD. Thus, DOL does not consider the "entirety" of the skilled trades in setting wage and benefit rates, because there is no entirety here – with just one skilled trade listed on the subject WD. It doesn’t seem to matter to DOL that this is a situation not covered by AAM No. 213, as illustrated by the DOL‘s own Frequently Asked Question: Conformances publication. In that DOL FAQ, every example invoked the use multiple skilled crafts to suggest there are many possible different conformance outcomes. See www.dol.gov/whd/govcontracts/dbra.htm. But the reality is that more often than not there is but one skilled trade data set and it involves a job which is not similarly situated.
My opinion is that it isn’t a bona fide conformance to simply say the contractor must pay that same wage and fringe benefit rate because that is the only data point of its kind on the WD. That does a serious disservice to the whole purpose of the conformance process which is to find a rate that bears a reasonable relationship to the wages and fringe benefits prevailing in the locality where the work is being performed. The regulations require DOL to classify the position so as to bear a reasonable relationship to the wage rates in the wage determination, and that doesn't mean excluding unskilled WD job positions in circumstances where the WD data on the skilled craft rates is so sparse and of a different character from the position being conformed.
Moreover, I respectfully submit that the rates being required by this kind of conformance do not bear a reasonable relationship to the prevailing wage rates in the locality for non-union skilled labor. The analysis is skewed by the issuance of a WD with but a single skill labor category derived from a dominant union CBA. DOL is in danger of losing track of the point of the conformance process. It is not to apply some mechanical rule. It is to find a rate that bears a reasonable relationship to the wage rates on the WD based on the skills of the missing job position. The legal issue is whether this conformance "bears a reasonable relationship" to the wages set forth in the Government contract. While a WD with just a Painter rate is a reference point, it begs the issue of whether the skill level of missing position – say a Cement Mason -- is lesser, the same or greater than that of Painters. If it is a lesser skilled position, it should have lesser conformed wage and benefit rates than the Painters' rates.
At one time, DOL quite rightly insisted that it would be wrong to conform non-union workers in one job classification to different job classifications with dominant union-based wage rates. (As you may know, when a union represents more than 50% of the workers in a locality in a construction trade, the dominant union rate becomes the Davis-Bacon Act rate.) The idea is that the dominant union exception to the use of average survey data for prevailing wages and benefits was a limited exception. It should not be used to bootstrap other different classifications of workers to those high union rates, because that would expand the reach of the CBA beyond the classes of workers in the bargaining unit and would not bear a reasonable relationship to the wages prevailing in the locality for nonunion labor in different classification.
That principle, however, was refined during the Obama Administration when AAM No. 213 was promulgated:
Additionally, whether the wage rates in the applicable category (skilled craft, laborer, power equipment operator, truck driver) in the wage determination are predominantly union prevailing wage rates or predominantly weighted average prevailing wage rates should be considered when proposing rates for an additional classification. For example, if a wage determination contains predominantly union prevailing wage rates for skilled classifications, it typically would be appropriate to look to the union sector skilled classifications in the wage determination and the rates for those classifications when proposing a wage rate for the additional classification. Conversely, if a wage determination contains predominantly weighted average prevailing wage rates for skilled classifications, it typically would be appropriate to look to the weighted average/non-union sector skilled classifications in the wage determination and the rates for those classifications when proposing a wage rate for the additional classification. If the wage rates in the applicable category are roughly half union prevailing rates and half weighted average prevailing rates, it would typically be appropriate to look to the lowest union rate and the highest weighted average rate (assuming the union rates are higher than the weighted average rates) when proposing a wage rate.
Id. (emphasis added). My point here is that while it "typically" may be appropriate, it is not typical to find one skilled trade on a wage determination, so that is an "atypical" situation calling for different treatment. We all know the reason for the AAM, and I am not going to belabor the political nature of the memorandum here, except to note that its application in the manner imposed by DOL here strips bare it transparent purpose to impose union wages on nonunionized workers. The AAM has a suspect political purpose, and one that is likely not shared by the current Trump Administration, or by any court that would review it, or even a new Administrative Review Board appointed by the Trump Administration, when they get around to doing so. This is another Obama Administration overreach that cries out for review.
AAM No. 213 appears to contemplate the fact that its rules may not work neatly in every situation. The AAM specifies that:
Each conformance request and corresponding wage determination involves particular circumstances and therefore should be evaluated as such. The full range of wage rates on the wage determination for the appropriate category should be reviewed in the manner discussed above.
Id. All I am suggesting is that DOL consider the particular circumstances and evaluate the full range of wage rates on the WD to determine what constitutes a reasonable relationship, and not rely on mechanistic tools and rules that were not meant to be applied to this kind of circumstance. The Department should revisit its mechanical DBA conformance procedures and find a better way to determine the prevailing wages when there is just one data point on its WD. Looking at just one union dominant union rate for skilled trades is not sufficient to set the wages and benefits for a non-union craft category. It is an “atypical” situation, and it calls for an atypical conformance. What DOL is now doing -- the conformance of a nonunion position to a single dominant union-based skilled classification -- is per se unreasonable and arbitrary. And it is bad policy.
While the Trump Administration may not be ready to take on every highly politicized DBA issue, it can and should still take action to fix some of the worse procedural abuses of the prevailing wage laws. And this is one of those abuses. It doesn’t even require any rulemaking. It is just a question of revising a bad AAM. There is no excuse for inactivity. As one who counts himself a proponent of wage and hour laws, and a friend of the working man, I still think there is room for commonsense reforms of wage and hour laws. This is one procedure that begs for reform.