Quick Overview

  • On Wednesday, a federal judge in Texas ruled in favor of the Associated General Contractors of America (AGC), striking down provisions of the Davis-Bacon Act from the administration of former President Joe Biden.
  • These provisions, which extended prevailing wage rules to other subcontractor employees beyond construction workers, including material suppliers and truck drivers, took effect in the fall of 2023 and were immediately challenged by the AGC.
  • The U.S. Department of Labor under President Donald Trump did not oppose the AGC's subsequent motion for final judgment, wrote U.S. District Judge James Wesley Hendrix of the Northern District of Texas in his ruling. Another legal challenge filed by the Associated Builders and Contractors (ABC) — targeting the method for determining prevailing wages — remains pending in court.

In-Depth Analysis

The Davis-Bacon Act was originally passed in 1931 to set prevailing wages on government-funded contracts. This benchmark measures the standard pay of the majority of workers in a specific occupation and region to determine the hourly wage for workers in those jobs.

In addition to changing how prevailing wages were calculated in 2023, the Department of Labor added provisions extending Davis-Bacon rules beyond construction workers, which the AGC subsequently challenged.

According to a statement released by the contractor organization, shortly after the AGC, along with its Texas chapter and the Lubbock Chamber of Commerce, filed the lawsuit, a federal court issued a preliminary injunction barring the Labor Department from enforcing the challenged provisions.

This led to settlement negotiations, which ultimately resulted in the Labor Department ceasing to defend the lawsuit, acknowledging that the plaintiffs were likely to prevail.

"Our legal challenge targeted the previous administration's attempt to bypass Congress and extend a construction wage law to a broad range of manufacturing and transportation operations, which the law does not authorize," AGC CEO Jeffrey Shoaf said in the statement. "The AGC respects the purpose behind the Davis-Bacon Act, and our members recognize the need to comply with Davis-Bacon requirements within the scope authorized by law."

According to Ogletree Deakins, one of the law firms representing the AGC in the litigation, the three provisions that were struck down would have:

  • Extended prevailing wage coverage to material suppliers operated by contractors or subcontractors.
  • Applied Davis-Bacon requirements to delivery truck drivers with vaguely defined time spent at the job site.
  • Applied these requirements retroactively to contracts that omitted the required clauses.

"This outcome reflects what the litigation has always been about — ensuring that agency regulations comply with the law," said Robert Roginson, lead counsel for the plaintiffs, in an Ogletree Deakins press release. "Our clients sought clarity and a level playing field for contractors bidding on government-funded projects, and today's ruling achieves both."

The 2023 Davis-Bacon rule changes also restored the Labor Department's previous prevailing wage definition, equating it to the wages earned by 30% of workers in a specific industry region, rather than 50%. This could extend higher wages to more workers.

Although the AGC challenged the revisions to the rule, the determination of prevailing wages themselves was not the issue. Then-CEO Stephen Sandherr expressed a similar view at the time.

"As an industry that largely pays above existing Davis-Bacon rates, our concern was the government's unconstitutional exercise of legislative power, not the wage rates themselves," Sandherr, now retired, said in 2023.

But around the same time, the Associated Builders and Contractors challenged the changes to how prevailing wages are determined and filed its own lawsuit on the issue. That case remains pending in the U.S. District Court for the Eastern District of Texas.

In response to Wednesday's ruling, ABC issued a statement from its vice president of government affairs, Kristen Swearingen, praising the decision and calling it a "victory for the construction industry."

"However, there is more work to be done," Swearingen said. "This decision preserves the vast majority of the costly and burdensome Davis-Bacon regulations promulgated by the Biden administration."

Her statement called for overturning the prevailing wage rule, saying, "ABC continues to pursue litigation to completely overturn this unlawful and burdensome rule."