Texas Court Enjoins Wage Requirement Changes to the Davis-Beacon Act

A Texas district court has enjoined some of the Department of Labor’s proposed wage requirement changes to the Davis-Beacon Act, which governs federally-funded construction projects.

Proskauer attorneys write about the case on the firm’s website. The Department of Labor (DOL) made proposed changes to the act that would expand prevailing wage requirements to additional laborers and contracts. Judge Sam R. Cummings ruled that the DOL violated the US Constitution by acting without congressional approval.

The Davis-Bacon Act requires contractors to pay their workers, defined as “mechanics and laborers” performing their job directly on the site of the work, the same prevailing wages as those provided to similarly-situated workers in the relevant geographic area. Workers who performed tasks off-site have not been covered since the Act came into effect, in 1931.

Two sections of the DOL’s Final Rule were challenged. Section 5.2 expanded the application of the statute to material suppliers and transportation workers, much of whose work is performed off-site.

Section 5.5(e) made prevailing wage requirements effective “by operation of law,” and considered to be incorporated in a federally-funded construction project, even when they have been omitted from the contract.

The Proskauer attorneys write that this would create “substantial uncertainty regarding potential application of the statute to any construction contract that is silent on Davis-Bacon requirements.”

The attorneys note that the Fifth Circuit and district courts within the Circuit have been particularly active in addressing alleged agency overstep, especially in the realm of labor relations. Importantly, while the injunction is in effect, prevailing wage requirements cannot be an obligation of federal contracts when the contracts themselves are silent as to the application of the Davis-Bacon Act. The DOL may appeal the ruling to the Fifth Circuit.