The Wage and Hour Implications of the Infrastructure Investment and Jobs Act
February 3, 2022 | Business | Employment
In early November, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act, a bipartisan infrastructure deal. The bill allocates approximately $1.2 trillion for infrastructure spending, including $55 billion to expand access to clean drinking water, $110 billion for roads and bridges, $66 billion for railroads, $65 billion each for power grid updates and broadband expansion to rural areas and low-income communities, $39 billion for public transit, and $21 billion for environmental cleanup such as closing old mines and oil/gas wells and salvaging closed, potentially contaminated industrial areas. One other important term of this legislation is that Congress decided the Davis-Bacon Act applies, which means that all laborers and mechanics employed in the performance of construction for any job funded by this legislation are entitled to a prevailing wage rate.
WHAT IS A PREVAILING WAGE RATE?
The prevailing wage is a rate set by a federal government regulatory agency. It is localized and intended to be a competitive wage in the geographic area where work occurs. Specifically, the wage is what “the Secretary of Labor determines to be prevailing for the corresponding classes of [eligible employees/contractors] employed on projects of a character similar to the contract work in the civil subdivision of the State in which the work is to be performed.”[i] This rate factors in fringe benefits such as insurance, pension, paid leave.
WHAT IS THE DAVIS-BACON ACT AND WHAT DOES IT DO?
President Hoover signed the Davis-Bacon Act (referred to, with subsequent legislation, as the “Davis Bacon and Related Acts,” hereinafter the “Act”) into law in 1931. Generally speaking, the Act requires that any and every contractor for any public works construction contract to which the United States government is a party or provides funds for pay a prevailing wage set by the Department of Labor. The Act was passed, at least partly, in response to contractors hiring migrant workers at significantly lower wage rates than local workers in any given area for a given job.
ARE ALL OF A CONTRACTOR’S EMPLOYEES TO A GOVERNMENT CONTRACT ENTITLED TO A PREVAILING WAGE?
No. The prevailing wage requirement only applies to certain types of workers or employees. Specifically, laborers and mechanics are entitled to the prevailing wage, including apprentices and trainees. Laborers and mechanics are those whose primary duties are physical and/or manual in nature. Workers whose duties are administrative, executive, or managerial are typically exempt from prevailing wage requirements under the Act. Carpenters, electricians, plumbers, and ironworkers may all generally be entitled to the prevailing wage whereas employees like architects, engineers, timekeepers, supervisors, and foremen may typically be exempt. However, employees such as foremen may be entitled to the prevailing wage if over 20% of their work week is devoted to manual labor.
The Davis-Bacon Act only applies to the construction, alteration, or repair of public buildings or works. However, these terms are to be broadly construed. “Construction, alteration, or repair” can of course include renovation or installation of items, but can also include painting and remodeling. Public buildings or works include highways, bridges and dams, parks, tunnels, airports and docks, piers and canals, and many other types of public works.
HOW DOES THE DAVIS-BACON ACT APPLY HERE TO THE INFRASTRUCTURE INVESTMENT AND JOBS ACT?
The Infrastructure Investment and Jobs Act does not change the Davis-Bacon Act, but there are many items in the new infrastructure legislation to which the Davis-Bacon Act applies. The Act provides funding for new freight rail and safety projects, zero-emission buses and facilities, construction of ferry boats, let alone more traditional infrastructure projects such as road, airports, and safe processing of wastewater, and specifically applies the Davis-Bacon Act. As such, contractors performing this work will need to be aware of the myriad requirements under the legislation.
WHAT TYPE OF REQUIREMENTS NEED TO BE FOLLOWED?
The Davis-Bacon Act imposes many requirements on employers and general contractors. For example, employers must maintain up-to-date addresses, worker classifications, regular hourly rate of pay, actual wages paid, deductions, details about fringe benefits, and hours worked. Employers must pay employees weekly and submit weekly certified payrolls to the relevant funding agency to verify they are paying the prevailing wage. Contractors are required to maintain these records for 3 years after final payment on a Davis-Bacon Project. Contractors must post this poster at a prominent place in the worksite as well.
There are numerous pitfalls for even a well-intentioned contractor. Common violations include anything from mis-classifying a laborer or mechanic or failing to keep sufficient records to failure to pay the appropriate wage, submit weekly payrolls, or display the above-mentioned poster.
As always, if you are a contractor who has questions about your rights and obligations under the Davis-Bacon Act, or any other employment related question, feel free to contact the attorneys at Kramer, Elkins & Watt, LLC at 608-709-7115 or info@kewlaw.com.
[i] 40 USC § 3142(b)