by Savanna L. Shuntich

In a case currently before the U.S. 9th Circuit Court of Appeals (which covers employers in Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, and Washington), the Nevada chapter of the Associated General Contractors of America and two other trade associations are challenging prevailing wages established by the Department of Labor (DOL) under the Davis Bacon Act (DBA). The outcome of the case has the potential to restrict the way prevailing wages are determined by the DOL at a time when many jobs covered by the DBA will be created due to the Bipartisan Infrastructure Law. More broadly, the case fits into the trend where litigants are increasingly challenging the underlying legal authority of agencies to take actions affecting them.

Alleged Use of Unlawful Compensation Data

The DBA applies to direct federal contracts for the construction, alteration, or repair of public buildings or public works that are for in excess of $2,000. The prevailing wage is designed to be the wage paid to the majority of the mechanics and laborers in the geographic area the federal contract applies to, based on wage survey information, and it’s what mechanics and laborers on contracts covered by the DBA must be paid.

The DOL was challenged when it used wage survey information from Las Vegas to determine the prevailing wages for a construction project in northern Nevada, an area hundreds of miles away. The agency claimed there was insufficient data from the counties where the work was to be performed and that it needed to use information from Las Vegas. In the plaintiffs’ brief to the 9th Circuit, they allege the prevailing wages set by the DOL were far higher than the local market. For example, truck driver wage rates in one county went up by 115% and by 80% in another county.

Among other reasons, the plaintiffs assert the DOL’s use of compensation data from Las Vegas is unlawful under the DBA because under the law prevailing wages must be based on “the wages the Secretary of Labor determines to be prevailing for the corresponding classes of laborers and mechanics 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” (emphasis added). The plaintiffs argue the plain language of the DBA precludes the DOL from using data from other “civil subdivisions,” including from sites hundreds of miles away. According to their argument, the agency needed to use any available data from the relevant counties. The court’s ruling may curtail the ability of the DOL to draw wage data from wider areas.

New Proposed DBA Regulations

Further complicating matters, in March 2022 the DOL published proposed revisions to the existing DBA regulations for the first time since 1983. The final rule was scheduled to be released in February of this year, but to date no final regulations have been issued.

It remains to be seen whether this case will affect that regulatory process.

Supreme Court Cases Indicate Trend

Finally, the Nevada Chapter of the Associated General Contractors of America case shows an increasing appetite on the part of litigants to challenge the underlying legal authority for agency actions. To give another example, on April 14 the U.S. Supreme Court handed down its opinion in Axon Enterprise, Inc. v. Federal Trade Commission (FTC). The Court found the plaintiff could challenge the constitutionality of elements of the FTC’s and Security and Exchange Commission’s (SEC) administrative adjudicatory processes in federal court. Both Nevada Chapter of the Associated General Contractors of America and Axon show that litigants perceive the federal court system to be more open to challenges to agency authority than in the past, even in areas where agency authority went largely unquestioned in prior years.

Savanna L. Shuntich is an attorney with FortneyScott in Washington, D.C. Savanna’s practice includes representation of individuals and companies in employment litigation matters before federal and state courts and administrative agencies. She handles discrimination and retaliation cases under Title VII, the ADA, and other applicable federal and state civil right laws, as well as contractual disputes between employers and employees. You can reach her at sshuntich@fortneyscott.com.