ESA Proposed Rules

Procedures for Predetermination of Wage Rates (29 CFR Part 1); Labor Standards Provisions Applicable to ContractsCovering Federally Financed and Assisted Construction and to Certain Nonconstruction Contracts (29 CFR Part 5)   [8/2/1996]
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SUMMARY: This document seeks comment on the Department's proposal to
continue the suspension of the implementation of regulations previously
issued under the Davis-Bacon and Related Acts while the Department
conducts additional rulemaking proceedings to determine whether further
amendments should be made to those regulations. These regulations
govern the employment of ``semi-skilled helpers'' on federally-financed
and federally-assisted construction contracts subject to the prevailing
wage standards of the Davis-Bacon and Related Acts (DBRA).

DATES: Comments are due September 3, 1996.

ADDRESSES: Submit written comments to Maria Echaveste, Administrator,
Wage and Hour Division, Employment Standards Administration, U.S.
Department of Labor, Room S-3502, 200 Constitution Avenue, N.W.,
Washington, DC 20210. Any commenters desiring notification of receipt
of comments should include a self-addressed, stamped post card.

FOR FURTHER INFORMATION CONTACT: William W. Gross, Director, Office of
Wage Determinations, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Room S-3028, 200 Constitution
Avenue, NW., Washington, DC 20210. Telephone (202) 219-8353. (This is
not a toll free number.)

SUPPLEMENTARY INFORMATION

I. Paperwork Reduction Act

This rule does not contain any new information collection
requirements and does not modify any existing requirements.
Thus, the rule contains no reporting or recordkeeping requirements
subject to the Paperwork Reduction Act of 1995.

II. Background

On May 28, 1982, the Department published revised final
Regulations, 29 CFR Part 1, Procedures for Predetermination of Wage
Rates, and 29 CFR Part 5, Subpart A--Davis-Bacon and Related Acts
Provisions and Procedures (47 FR 23644 and 23658, respectively), which,
among other things, would have allowed contractors to use semi-skilled
helpers on Davis-Bacon projects at wages lower than those paid to
skilled journeymen, wherever the helper classification, as defined in
the regulations, was ``identifiable'' in the area. These rules
represented a reversal of a longstanding Department of Labor practice
by allowing some overlap between the duties of helpers, and journeymen
and laborers. To protect against possible abuse, a provision was
included limiting the number of helpers which could be used on a
covered project to a maximum of two helpers for every three journeymen.
See 29 CFR 1.7(d), 29 CFR 5.2(n)(4), 29 CFR 5.5(a)(1)(ii)(A), and 29
CFR 5.5(a)(4)(iv).
As a result of a lawsuit brought by the Building and Construction
Trades Department, AFL-CIO, and a number of individual unions,
implementation of the regulations was enjoined. Building and
Construction Trades Department, AFL-CIO, et al. v. Donovan, et al., 553
F. Supp. 352 (D.D.C. 1982). The U.S. Court of Appeals for the District
of Columbia issued a decision upholding the Department's authority to
allow increased use of helpers and approving the regulatory definition
of a helper's duties, but struck down the provision for issuing a
helper wage rate where helpers were ``identifiable,'' thereby requiring
a modification to the regulations to provide that the helper
classification be ``prevailing'' in the area before it may be used.
Building and Construction Trades Department, AFL-CIO, et al., v.
Donovan, et al., 712 F.2d 611 (D.C. Cir. 1983), cert. denied, 464 U.S.
1069 (1984).
On January 27, 1989, DOL published a final rule in the Federal
Register (54 FR 4234) to add the requirement that the use of a
particular helper classification must prevail in an area in order to be
recognized, and to define the circumstances in which the use of helpers
would be deemed to prevail. (54 FR 4234). Following the Court's lifting
of the injunction by Order dated September 24, 1990, the Department
published a Federal Register notice on December 4, 1990, implementing
the helper regulations effective February 4, 1991 (55 FR 50148).
In April 1991, Congress passed the Dire Emergency Supplemental
Appropriations Act of 1991, Public Law 102-27 (105 Stat. 130), which
was signed into law on April 10, 1991. Section 303 of Public Law 102-27
(105 Stat. 152) prohibited the Department of Labor from spending any
funds to implement or administer the helper regulations. In support of
the prohibition, Chairman Ford of the House Education and Labor
Committee stated that ``Congress should insist that the administration
recognize that authorizing legislation is the only appropriate vehicle
for dealing with fundamental changes in the operation of the Davis-
Bacon Act.'' In compliance with the Congressional directive, the
Department did not implement or administer the helper regulations for
the remainder of fiscal year 1991.
After fiscal year 1991 concluded and subsequent continuing
resolutions expired, a new appropriations act was passed which did not
include a ban restricting the implementation of the helper regulations.
The Department issued All Agency Memorandum No. 161 on January 29,
1992, instructing the contracting agencies to include the helper
contract in contracts for which bids were solicited or negotiations
were concluded after that date.

[[Page 40367]]

During the course of the ongoing litigation in this matter, the
U.S. Court of Appeals for the District of Columbia (by decision dated
April 21, 1992) upheld the rule defining the circumstances in which
helpers would be found to prevail and the remaining helper provisions,
but invalidated the provision of the regulations that prescribed a
maximum ratio governing the use of helpers (Building and Construction
Trades Department, AFL-CIO v. Martin, 961 F.2d 269 (D.C. Cir. 1992)).
To comply with this ruling, on June 26, 1992, the Department issued a
Federal Register notice removing 29 CFR 5.5(a)(4)(iv) from the Code of
Federal Regulations. (57 FR 28776).
Subsequently, Section 103 of the 1994 Department of Labor
Appropriations Act, Public Law 103-112, prohibited the Department of
Labor from expending funds to implement or administer the helper
regulations during fiscal year 1994. Accordingly, on November 5, 1993,
the Department published a Federal Register notice (58 FR 58954)
suspending the helper regulations and reinstituting the Department's
prior policy regarding the use of helpers. The 1995 Department of Labor
Appropriations Act again barred the Department from expending funds to
implement the helper regulations (Section 102. Pub. L. 103-333); this
prohibition extended into fiscal 1996 through several continuing
resolutions. There is no such prohibition in the Department of Labor's
Appropriations Act for fiscal year 1996, Public Law 104-134, signed
into law by President Clinton on April 26, 1996.

III. Discussion

During the brief period since the passage of the appropriations act
for fiscal year 1996, the Department has carefully considered whether
the suspended regulation governing the use of helpers should be
modified. Fourteen years have passed since the Department first
promulgated the regulation, and more than four years have passed since
the Department last attempted to put a revised version of that
regulation in effect. During the extended period of time in which the
regulation was suspended, additional information has become available
which warrants review of the suspended rule.
The suspended helper regulation was proposed and adopted
principally because it was believed that it would result in a
construction workforce on Federal construction projects that more
closely mirrored the private construction workforce's widespread use of
helpers and, at the same time, effect significant cost savings in
federal construction costs. However, data developed from the
Department's experience implementing the helper regulation (which was
not available during the rulemaking proceedings and upon which the
public has had no opportunity to comment) reveals that the use of
helpers might not be as widespread as previously thought. The
Department conducted 78 prevailing wage surveys during the period
January 29, 1992, through October 21, 1993, when the (now suspended)
semi-skilled helper regulations were in effect. In 45 of the 78 areas
surveyed, the Department determined that the use of helpers was not the
prevailing practice in any of the job classifications analyzed. In the
remaining 33 areas, the use of helpers was the prevailing practice in
only about 7 percent (i.e., 65 of 888) of job classifications surveyed.
The Department is preparing a preliminary regulatory impact analysis to
accompany a proposed rule which will discuss the Department's updated
estimate of costs savings which would be realized from the suspended
helper rule.
The Department is concerned that the helper regulation may create
an unwarranted potential for abuse of the helper classification to
justify payment of wages which are less than the prevailing wage in the
area. As initially proposed, the 1982 helper regulation imposed a
numerical limitation on the use of helpers under which there could be
no more than two helpers for every three journeymen. 47 FR 23655. As
the Court of Appeals stressed in its 1983 decision, this limitation
``increased the likelihood that gross violations will be caught, or at
least that evasion will not get too far out of line.'' However, the
specific ratio adopted by the Department was subsequently invalidated
by the Court in 1992. The Department's subsequent efforts to develop
enforcement guidelines led it to conclude that administration of the
revised helper criteria would be much more difficult than anticipated,
particularly in light of the court-ordered abandonment of the ratio
provision. When the Department implemented the Court's decision in
1992, it did not conduct notice and comment rulemaking proceedings on
the regulation as revised. Instead, the Court's order was implemented
by publication of a notice in the Federal Register removing the
numerical ratio from the regulation. Consequently, the public has never
had an opportunity to comment on the regulation in its current form.
The Department is also concerned about the possible impact of the
helper regulations on formal apprenticeship and training programs.
These factors, and the obvious Congressional controversy over the
regulation, have led the Department to conclude that the basis and
effect of the semi-skilled helper regulation should be reexamined.
Accordingly, the Department intends to propose, and seek public comment
on, a rule that would amend the currently suspended helper regulations,
29 C.F.R. 1.7(d), 29 C.F.R. 5.2(n)(4), and 29 C.F.R. 5.5(a)(1)(ii). The
Department anticipates that these rulemaking proceedings will be
concluded, and any final amendment to the regulations promulgated,
within one year.
The Department has carefully considered whether the regulations
which have been in effect during the past three years, while the
suspension has been in effect, should continue to apply during the
interim period or, alternatively, whether the suspended helper
regulation in its current form should be made effective during that
period. Given the information now available, the fact that the public
has never had an opportunity to comment on the suspended regulation in
its present form, and the Department's decision to initiate proceedings
proposing further amendments to the rule, the Department has decided to
seek public comment concerning whether or not to continue the
suspension of the helper regulation while further action is being taken
with respect to possibly amending the rule.
In addition to the problems with the suspended helper regulation
discussed above, the Department is preliminarily of the view that
implementation of the regulation on a short-term basis would create
unwarranted disruption and uncertainty for both federal agencies and
the contracting community. Accordingly, the rule proposed here would
make no change to the regulations currently in effect, and thereby
continue the suspension of the helper regulations that has been in
effect since October 1993, while the Department engages in substantive
rulemaking concerning the helper regulations.
The Department's past experience indicates that implementation of
the suspended helper regulations, even on an interim basis, would
likely require a substantial period of time. When the Department
promulgated the helper regulations in 1982 (47 FR 23658, May 28, 1982)
and in 1990 (55 FR 50149, December 4, 1990), it provided a 60-day
effective date, applicable to bids advertised or negotiations concluded
after the date, to allow agencies an opportunity to amend their

[[Page 40368]]

implementing regulations and their contract clause forms to incorporate
the new provisions. Solicitations for bids are ordinarily advertised
for at least 30 to 60 days before a contract may be awarded. In
accordance with the Department's usual practice, an effective date at
least 60 days after publication would be afforded if the Department
were to begin implementation of the suspended rule today.
Conforming changes then have to be made by the appropriate
responsible federal agencies to the Federal Acquisition Regulations
(FAR) and the Defense Acquisition Regulations (DAR), which are
applicable to contracts subject to the Davis-Bacon Act. It is likely
that such changes would also have an effective date 60 days after their
publication, as did amendments to the FAR and DAR following the
Department's 1992 notice of implementation (September 1992-November
1992). In fact, when the Department implemented the helper rule in
January 1992, conforming changes in the FAR and the DAR did not
actually become effective until November 1992, approximately ten months
after the Department issued its notice implementing the rule.
Moreover, under the suspended rule, helpers could be used on a
given contract only after the Department determines that the use of
helpers is the prevailing practice in a particular job classification
in the area in which the work will be performed. Thus, the time
necessary for the Department to perform surveys in response to requests
to use helper classifications adds further delay before contractors may
lawfully pay their workers at helper rates.
Thus, the suspended regulation would be fully effective for only a
brief period, if at all, before the Department expects it would
complete substantive rulemaking proceedings to consider amending the
regulation. Given the pendency of those proceedings, and the history of
the regulation, contractors would be uncertain to reconfigure their
staffing patterns and work site procedures for the purpose of
submitting bids in reliance upon a regulation which they are aware the
Department may amend shortly thereafter. Similarly, repeated changes in
the regulations within a short period of time would create unwarranted
disruption in the contracting process of federal agencies which would
be required to amend their regulations and contract forms on an interim
basis only to repeat the entire process if proposed amendments to the
helper regulation are finalized. Finally, the Department of Labor would
have to postpone or abandon planned surveys needed to update prevailing
wage determinations in order to divert resources to the collection and
analysis of prevailing practice and wage data under helper regulations
which may be modified shortly thereafter.
In short, the Department believes that the disruption and
uncertainty associated with implementation of the suspended helper
regulations for such a brief period would be unwarranted. The
Department expects to complete its analysis of public comments on this
proposed rule to continue the suspension of the helper regulations, and
publish a final rule within 120 days after the date of publication.

IV. Executive Order 12866; Sec. 202 of the Unfunded Mandates Reform
Act of 1995; Small Business Regulatory Enforcement Fairness Act

This proposed rule is not ``economically significant'' within the
meaning of Executive Order 12866; nor does it require a statement under
Sec. 202 of the Unfunded Mandates Reform Act of 1995. This rule merely
continues the suspension of the helper regulations that has been in
effect since November 1993 in order that the Department may proceed
with rulemaking while avoiding the unnecessary disruption and confusion
that would result from implementation of the helper regulations during
the interim. Therefore, there would be no cost or savings that would
result from continuing the suspension since this would merely preserve
the status quo. Moreover, as discussed above, a substantial period of
time is required before the regulations would be implemented by their
incorporation in contracts, and the Department's experience in the
brief period in 1992 and 1993 when the suspended regulation was in
effect was that relatively few surveys were completed in which helpers
were found to prevail.
Thus, any theoretical savings that would be lost from a failure to
implement the helper regulations during the rulemaking period would be
minimal. Accordingly, it is expected that this proposal will not result
in a rule that may have an annual effect on the economy of $100 million
or more, or adversely affect in a material way the economy or a sector
of the economy. Because this rule will not have a significant economic
impact, no economic analysis is required. For the same reason, this
rule does not constitute a ``major rule'' within the meaning of section
804(2) of the Small Business Regulatory Enforcement Fairness Act.
Because the alternative to the proposed rule--lifting of the
suspension and implementing the helper regulations while rulemaking is
ongoing--could possibly interfere with actions planned or taken by
other government agencies, the Department has concluded that it will
treat the proposed rule as a ``significant regulatory action'' within
the meaning of section 3(f)(2) of Executive Order 12866.

V. Regulatory Flexibility Act

The Department has determined that the proposed rule will not have
a significant economic impact on a substantial number of small
entities. As a continuation of the status quo, there is no economic
impact. Furthermore, the Department has determined that if the
suspension were lifted and the regulation implemented, there would not
be a significant economic impact on a substantial number of small
entities during the interim period prior to completion of rulemaking
action on the helper regulations--expected to be completed within a
year. Because of the lag times in agency procedures to amend their
regulations and incorporate the contract clauses, and the relatively
small number of helper classifications which the Department found
prevailing in its surveys in 1992 and 1993, it is unlikely that a
substantial number of small entities would have the opportunity to use
helper classifications during the period before the rulemaking is
completed. Accordingly, the <B>proposed</B> rules are not expected to have a
``significant economic impact on a substantial number of small
entities'' within the meaning of the Regulatory Flexibility Act, and
the Department has certified to this effect to the Chief Counsel for
Advocacy of the Small Business Administration. Thus, a regulatory
flexibility analysis is not required.

VII. Document Preparation

This document was prepared under the direction and control of Maria
Echaveste, Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor.

Signed at Washington, D.C., this 29th day of July 1996.
John R. Fraser,
Deputy Administrator, Wage and Hour Division.
[FR Doc. 96-19649 Filed 7-31-96; 8:45 am]
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