Understanding the Davis-Bacon Act Expansion - Prevailing Wages for Offsite Construction
After an extensive year-and-a-half long lobbying effort by the Modular Building Institute (MBI) and its members, the US Dept. of Labor published the final rule today without the proposed expansion to the modular building industry!
What's Could Have Changed?
On March 31, 2022, the US Department of Labor announced it was seeking to “re-interpret” the Davis-Bacon Act (DBA) in Construction to include, among other things, the construction of modular buildings. Some offsite manufacturing or fabrication of building materials could also be affected by the proposed revisions to the “site of the work” requirement. Under these proposals, the definition of “site of the work” would have been changed to apply to offsite construction of “significant portions” of a building or work. Under the final rule, offsite construction sites are usually excluded from coverage unless the work is performed at facilities established by the contractor specifically for the performance of a contract or project.
Potential Impacts of Davis-Bacon Expansion
The proposed changes to the Davis-Bacon Act would have had two main effects on the modular construction industry:
- The first concern is that the 26 states who have adopted “Little Davis Bacon” Acts (i.e., state-level laws that mirror the Davis-Bacon Acts requirements) will also adopt the federal government’s re-interpretation, thus limiting the financial viability of offsite and modular construction for public projects in those states.
- The second concern is that instead of utilizing U.S.-based modular companies, federal (and eventually state) developers and contractors will simply utilize foreign companies that do not have to abide by the Davis-Bacon Act. Should the proposed changes take effect, U.S.-based modular construction—which, due to its speed and lower labor costs, is currently being used by state and local governments to combat the critical need for affordable housing and infrastructure—will be financially impractical.
MBI’s outreach to Congressional lawmakers is paying dividends – essentially keeping pressure on the U.S. Department of Labor (DOL) and its proposed expansion of the Davis-Bacon Act (DBA), where the final rule remains pending.
The Advocacy Team at Squire Patton Boggs has been Reaching Out to Congressional Offices to Educate Legislators on the Significant Impact of the Proposed Davis-Bacon Act Rule.
The advocacy team at Squire Patton Boggs has been reaching out to Congressional offices to educate legislators on the significant impact of the U.S. Department of Labor’s (DOL) proposed Davis-Bacon Act in Construction (DBA) rule. Most recently, they met with congressional staff from the office of Senator Jon Thune (R-South Dakota) on the DOL’s expansion of the law to “secondary worksites” which clearly targets the modular industry.
US House of Representatives & Senate Submit Letters Opposing Davis-Bacon Expansion: Davis Bacon Regulations
Members of the US House of Representative's Committee on Education and Labor, led by ranking members Reps. Virginia Miller and Fred Keller, and the Senate's Committee on Health, Education, Labor and Pensions, led by ranking member Sen. Richard Burr, have submitted letters to the US Dept. of Labor opposing its proposed expansion of the Davis-Bacon Act.
Learn More about MBI's Work to Protect the Modular Building Industry
MBI executive director Tom Hardiman discusses the potential expansion of the Davis-Bacon Act—which would impose prevailing wages on offsite and modular manufacturers working on federal construction projects—and its many implications for the modular industry at-large.
On a call with the White House’s Office of Information and Regulatory Affairs (OIRA), several MBI members provided testimony about the potential impacts of expanding the Davis-Bacon Act (DBA).
Frequently Asked Questions
The U.S. Department of Labor’s (“DOL”) 400+ page revision of its regulations implementing the ninety-year-old Davis–Bacon Act of 1931 could prove disastrous for the modular construction industry. The proposed rule expressly targets the modular industry by expanding DBA coverage to permanent offsite modular factories and eliminating the regulatory exemption that has been in place for decades. The public comment period on the proposed rule expired on May 17, 2022 and the DOL is in the next stage of drafting a final rule.
Here at MBI, we’ve fielded numerous questions about the DOL’s proposed expansion of DBA coverage and its impact on the industry. Davis Bacon Regulations play a significant role in understanding these impacts.