By Caroline M. Brooks of Smith Currie Oles
Originally published June 26, 2024
On Monday, June 24, 2024, a judge of the U.S. District Court for the Northern District of Texas issued a preliminary injunction preventing the application of the Davis-Bacon Act’s wage requirements to truck drivers and material suppliers on federally funded construction projects.
We previously covered the Department of Labor’s August 2023 “Updating the Davis-Bacon and Related Act Regulations” (“Final Rule”), which expanded application of the Davis-Bacon Act’s requirements for paying a minimum prevailing wage to “mechanics and laborers employed directly on the site of the work” for construction projects under federal contracts to include material suppliers and truck drivers employed or engaged by contractors working on the project. Prior to the Final Rule, material suppliers were not subject to the Davis-Bacon Act unless supplier employees spent more than 20% of their time on the project site performing work. The same was true of delivery and haul-off drivers.
Rather than using the 20% threshold, the Final Rule expands the Davis-Bacon Act’s prevailing wage requirements to material suppliers and truck drivers that spend more than a de minimis amount of time performing work on site. The Final Rule declines to define de minimis.1
The Associated General Contractors of America challenged the Final Rule as unconstitutional, filing a claim seeking injunctive relief in the United States District Court for the Northern District of Texas. The Department of Labor argued that the Final Rule codified existing policy rather than expanded coverage to material suppliers and truck drivers. In addition, the Department of Labor argued that the Davis-Bacon Act applies to contracts by operation of law even when the contract is silent on its application.
The court found that the Final Rule went too far, overstepping the bounds of the Davis-Bacon Act by 1) “imposing a stealth self-implementing DBA requirement into contracts by an operation-of-law provision that contradicts the express statutory language of the Act”; and 2) applying to “workers who are not mechanics and laborers, and to extend the scope of the work covered by DBA to include work that is not performed ‘directly on the site of the work.’”2
The nationwide injunction prohibits the Department of Labor from implementing and enforcing Final Rule section 5.2 regarding the definitions of Covered Transportation and Material Supplier, and section 5.5(e) regarding incorporation by law. Beginning June 24, 2024, and running until the case is resolved or another order overrides the preliminary injunction, the Department of Labor is prohibited from applying or enforcing those sections of the Final Rule in any federal contract.
Given that this nationwide injunction does not touch the rest of the Final Rule and is time-limited, it should not be assumed that these prevailing wage expansions will not apply in the future. When approaching federally funded construction projects, contractors should be prepared to track the time and activities of any material suppliers and truck drivers while on site in case this information is needed to justify later wage decisions. If in doubt as to the application of the Davis-Bacon Act, request guidance from the contracting officer or qualified counsel.
Caroline M. Brooks is an Associate with Smith Currie Oles. She advocates for owners, contractors, subcontractors, architects and design professionals in construction claims litigation. She handles disputes related to an array of issues, including defects, delay damages, scope of work, breach of contract, differing site conditions and unjust enrichment. Brooks can be reached at cmbrooks@smithcurrie.com or 703.705.7003.
[1] Final Rule, 88 Fed. Reg. at 57626.
[2] Associated Gen. Contractors of America v. DOL, N.D. Tex., No. 5-00272, Court’s Findings of Fact and Conclusions of Law and Order Granting Preliminary Injunction, pg. 15, ¶9.