On June 24, 2024, Judge Sam R. Cummings of the U.S. District Court for the Northern District of Texas enjoined part of a U.S. Department of Labor (“DOL”) Rule altering the Davis-Bacon Act. In his opinion, Judge Cummings held that the DOL had engaged in “egregious violations” of the U.S. Constitution by expanding the application of the statute without congressional approval.

Background
The Davis-Bacon Act (“DBA”) has governed federally-funded construction projects since its passage in 1931. Among other things, the statute requires contractors to pay their workers the same prevailing wages as those provided to similarly-situated workers in the relevant geographic area.

Of relevance to the injunction, the statute defines “workers” as “mechanics and laborers” performing their job “directly on the site of the work.” As a result, workers who performed their job primarily off-site, albeit in relation to the project, would not be covered under the statute.

Further, when a contract is covered by the DBA, the statute explicitly requires that the contracting federal agency include prevailing wage requirements within the relevant contract. This prevents a contractor from being penalized after the fact if a contract that possibly should have been covered under the statute did not follow the requirements of the statute.

As reported here, on August 8, 2023, the DOL proposed changes to the DBA concerning the calculation of prevailing wages, recordkeeping requirements, survey processes, and enforcement mechanisms. In its final rule, issued on August 23, 2023, the DOL made additional changes, including the application of prevailing wage rates to additional laborers and contracts.

Challenged Sections of Final Rule
Section 5.2 of the DOL Rule expanded the application of the statute to material suppliers and transportation workers. This would require contractors to provide prevailing wage rates to an additional subset of workers whose jobs are more attenuated to the on-site work.

Section 5.5(e) of the DOL Rule also provided that prevailing wage requirements are 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. This would create substantial uncertainty regarding potential application of the statute to any construction contract that is silent on Davis-Bacon requirements.

District Court Granted Preliminary Injunction
In granting a preliminary injunction, Judge Cummings put a hold on the DOL Rule’s expanded application of the DBA. The Court determined that the DOL had exercised authority “inconsistent with the administrative structure that Congress enacted into law.”

Concerning the enjoined sections, the “plain language” of the DBA indicates that truck drivers and material suppliers are not covered workers, and their inclusion is a “fundamental amendment to the DBA.” According to the Court, this proposed alteration was outside the purview of the agency constitutional authority.

The Court also held that the DOL lacked authority to contradict the express text of the DBA by including in the Rule that “DBA requirements are applicable by operation of law” even if omitted from a contract. As a result, in enacting its Rule, the DOL failed to “faithfully execute the DBA” and was instead “making substantive amendments to the DBA” and “usurp[ing] Congress’ law-making power.”

Judge Cummings, therefore, granted a preliminary injunction with respect to Sections 5.2 and 5.5(e) of the DOL Rule as they relate to the expanded application of the DBA. The other aspects of the DOL Rule remain in effect.

Takeaways
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. While the prevailing wage calculations set forth in the DOL Rule remain in effect, the DOL Rule has been limited in scope to more accurately reflect the text of the DBA. Now, the DOL cannot enforce the provisions of its Rule that expanded application of prevailing wage requirements to truck drivers and material suppliers, and the requirement that prevailing wage requirements are interposed on federal contracts where the contracts themselves with the respective federal agencies are silent as to the application of the DBA.

This preliminary injunction will continue pending a final resolution of the merits of the underlying case. The DOL may also appeal the ruling to the Fifth Circuit Court of Appeals.

We will continue to monitor this case and the status of the DOL Rule.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Paul Salvatore Paul Salvatore

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

He negotiates major collective bargaining agreements…

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

He negotiates major collective bargaining agreements in several industries, including real estate and construction. Paul represents the NYC real estate industry’s multi-employer organization, the Realty Advisory Board on Labor Relations (RAB), and its principal trade organization, the Real Estate Board of New York (REBNY). In 2023, he helped the RAB reach a new collective bargaining agreement with SEIU Local 32BJ, covering 20,000 commercial building employees, enabling the industry to adapt its labor practices to tenants’ post-COVID utilization of office space, including that caused by remote/hybrid work.

Paul has long represented construction employers and developers, such as the Related Companies, Cement League, Association of Master Painters and others. He negotiates Project Labor Agreements (PLA’s), such as for Related (enabling the construction of Hudson Yards), and presently for Gateway Development Corporation (GDC) in building the New York-New Jersey train tunnels, the largest infrastructure project in America. City & State magazine has named him one of the most powerful lawyers in New York for his work in this sector.

Paul also tries arbitrations and litigations, and argues appeals, arising from labor-management relationships. He argued and won before the U.S. Supreme Court 14 Penn Plaza LLC v. Pyett. In a 5-4 decision of importance to employers, the Court held that a collective bargaining agreement explicitly requiring unionized employees to arbitrate employment discrimination claims is enforceable, modifying 35 years of labor law. Unions and employers now negotiate “Pyett clauses” in collective bargaining. He has argued and won federal circuit court cases reversing the National Labor Relations Board’s findings against employers, including in the D.C. and Fifth Circuits.

Paul represents universities and colleges in their labor and employment relations, including in the currently active areas of unionization and collective bargaining with graduate students, undergraduates, athletes and adjunct faculty. Among other schools he has worked with are Yale, Duke, Chicago, Washington University in St. Louis and Caltech. Paul pioneered innovative non-NLRB graduate student union election agreements at Cornell, Brown and Syracuse Universities.

An honors graduate of Cornell’s School of Industrial and Labor Relations (ILR) and the Cornell Law School, Paul served eight years on Cornell’s Board of Trustees, including on its Executive Committee. He subsequently was elected Trustee Emeritus and Presidential Councilor. He presently serves as a Trustee Member of the Board of Fellows of Weill Cornell Medicine, as well as on the Law School and ILR Deans’ Advisory Councils. In 2002, ILR awarded him the Judge William B. Groat prize, the school’s highest honor.

At Proskauer, Paul was elected to its Executive Committee and served as co-chair of its global Labor & Employment Law Department, named during his tenure by The American Lawyer and Chambers USA as one of the premier U.S. practices. He is widely recognized as a leading U.S. labor and employment lawyer in such publications as Chambers Global and USA (Band 1), and Legal 500 (“Hall of Fame”). The National Law Journal selected Paul as one of “The Decade’s Most Influential Lawyers” – one of only three in the labor and employment law field. His peers elected him to the College of Labor and Employment Lawyers.

An active speaker and writer on labor and employment law issues, Paul’s recent publications include “One Dozen Years of Pyett: A Win for Unionized Workplace Dispute Resolution” in the American Bar Association Labor & Employment Law Journal (“ABA Journal”), Volume 36, Number 2 at 257, and “The PLA Alternative in an Increasingly Open Shop New York City Construction Market: The REBNY-BCTC Statement of Principles,” Volume 37 ABA Journal, Number 3 at 415. He is an Adjunct Professor at Cornell Law School, teaching “Current Issues in Collective Bargaining.”

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Michael Kratochvil

Michael Kratochvil is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relations & Sports Groups. Michael represents unionized and non-unionized employers in all stages of labor-management relations and in proceedings before the National Labor Relations Board.…

Michael Kratochvil is an associate in the Labor & Employment Law Department and a member of the Labor-Management Relations & Sports Groups. Michael represents unionized and non-unionized employers in all stages of labor-management relations and in proceedings before the National Labor Relations Board.

Michael’s labor-management relations experience spans a variety of industries including healthcare, entertainment, production and manufacturing, higher education, and various service industries. His work involves bargaining units of all sizes represented by labor organizations such as SEIU, Teamsters, UAW, IUOE, UFCW, CWA and many others.

While in law school, Michael interned for Magistrate Judge Katharine H. Parker in the Southern District of New York and was a student volunteer field examiner at Region 2 of the National Labor Relations Board.