=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Employment Standards Administration
Wage and Hour Division
Office of the Secretary
29 CFR Parts 1 and 5
Procedures for Predetermination of Wage Rates (29 CFR Part 1);
Labor Standards Provisions Applicable to Contracts Covering Federally
Financed and Assisted Construction and to Certain Nonconstruction
Contracts (29 CFR Part 5)
AGENCY: Wage and Hour Division, Employment Standards Administration,
Office of the Secretary, Labor.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This document adopts as a final rule the continued suspension
of the regulations previously issued under the Davis-Bacon and Related
Acts at 29 CFR 1.7(d), 29 CFR 5.2(n)(4), and 29 CFR 5.5(a)(1)(ii) and
suspended at 58 FR 58954 (Nov. 5, 1993), 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).
EFFECTIVE DATE: December 30, 1996.
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 the duties
of journeymen and laborers. To protect against possible abuse, a
provision was include 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) (1982).
[[Page 68642]]
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. Courts 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 a 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).
Following a new round of notice-and-comment rulemaking, DOL
published a final rule in the Federal Register (54 FR 4234) on January
27, 1989, 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 clauses in contracts for which bids were solicited or
negotiations were concluded after that date.
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 prescribe 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 the ratio provision at 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 102-112, 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 form expending funds to
implement the helper regulations (Section 102, Public Law 103-333);
this prohibition extended midway through fiscal 1996 through several
continuing resolutions. There was no such prohibition in the Department
of Labor's Appropriations Act for the remainder of fiscal 1996, Public
Law 104-134, signed into law by President Clinton on April 26, 1996, of
for fiscal 1997.
On August 2, 1996, the Department published in the Federal Register
(61 FR 40366) a proposal to continue the suspension of the helper
regulations previously issued while the Department conducts additional
rulemaking proceedings to determine whether further amendments should
be made to those regulations. Public comments were invited for 30 days.
In response to this proposal, the Department received forty-seven
comments, including submissions by the Associate Builders and
Contractors, Inc. (ABC), the Associated General Contractors of America
(AGC), the National Association of Home Builders (NAHB), the Coalition
to Repeal the Davis-Bacon Act (CRDBA),the National Alliance for Fair
Contracting, the American Subcontractors Association, the American
Society of Civil Engineers (ASCE), the Building and Construction Trades
Department, AFL-CIO (BCTD), the Sheet Metal Workers' International
Association, and the Laborers' International Union of North America
(LIUNA), individual contractors, local chapters of unions and industry
associations, and individuals.
Summary of Comments and Discussion
Among the many comments received by the Department, relatively few
directly addressed the issue of whether the Department should continue
the suspension of the helper regulations temporarily while it engages
in rulemaking on possible amendments to those regulations. The bulk of
the comments focused on the merits of flaws of the substance of the
underlying helper regulations themselves, or on the factors that led
the Department to consider amending the regulations.
The issue addressed by the proposal, however, is not whether the
Secretary should or should not repeal or amend the helper regulations
for the reasons set forth in the NPRM. Those are issues that will be
fully explored in an upcoming notice of proposed rulemaking proceeding
concerning the substantive aspects of the helper regulations. However,
because the Secretary's decision to seek public comments on whether the
helper regulations should continue to be suspended pending the outcome
of the substantive rulemaking proceedings is obviously intertwined with
his conclusion that the helper regulations need to be reexamined, we
discuss below both categories of comments, beginning with those that
address the proposed temporary suspension.
Comments Concerning the Proposed Temporary Continuation of the
Suspension
The Department expressed its concern in the NPRM that implementing
the regulations immediately, during the pendency of rulemaking to
consider amending the regulations, could create disruption and
uncertainty for both the federal contracting community and the federal
agencies. In light of the length of time it would take to fully
implement the regulations so that helpers could actually be used on
federal construction, and given that shortly after the regulations
would be come effective the regulations could change, the Department
requested specific comment on whether continuing the suspension during
rulemaking would be advisable.
[[Page 68643]]
Three comments were received that directly addressed this issue.
The BCTD agreed with the Department, stating that the ``proposed rule
is the most prudent and responsible action under the circumstances'' to
``avoid the disruption and uncertainty that implementation of the
current `helper' regulations would cause during the short period of
time that it will take to complete formal rulemaking.''
On the other hand, the AGC disagreed that implementation would be
short-term or would create unwarranted disruption. It also disagreed
with the Department as to how long it would actually take to implement
the regulations if the suspension were lifted immediately. The AGC
noted that when the ratio provision was withdrawn by the Department in
June 1992, the General Services Administration published a rule
amending the FAR and DFAR in September 1992. The AGC claims that since
those amendments have been suspended, not withdrawn, ``there is no
reason to believe that delays, if any, would be more than minimal.''
The AGC also stated that ``there is no reason to believe that
additional `substantive rulemaking' will be completed, and
implementation initiated, within one year.''
The ABC in its comments did not directly address this issue, but
rather asserted:
While engaging in this predetermined rulemaking, the agency
thinks it will take too long (60 days) to implement the existing
regulations and that this will disrupt public bidding practices. (In
other words, the government should not be allowed to save money in
its construction projects, or to recognize prevailing practices,
where the savings will not be of long duration.)
First, the Department believes that it would take substantially
longer than 60 days to fully implement the helper regulations. This
view is fully supported by the Department's past experience with the
helper regulations. If the Department were to begin implementation of
the suspended rule immediately, the rule itself would provide a 60-day
effective date to allow affected parties time to come into compliance,
and would apply only to contracts for which bids are advertised or
negotiations concluded after that date. Bid solicitations to which the
regulations will apply must be advertised for at least 30-60 days
before a contract is awarded. Thus, following the effective date of the
regulations there will be another 30 to 60 days before contracts
potentially containing helper contract clauses could be signed.
Conforming changes in government procurement regulations (the
``FAR'' and ``DFAR'') and standard contract forms would also be needed,
a process which has sometimes taken several months. Amendments to the
FAR and DFAR following the Department's 1992 notice of implementation
had sixty-day effective dates. As noted previously in the NPRM, when
the Department implemented the helper rule in January 1992, conforming
changes in the FAR and DFAR did not actually become effective until
November 1992, approximately ten months after the Department issued its
notice implementing the rule. The AGC correctly notes that these
changes to the FAR and DFAR also included amendments necessitated by
the Department's June 1992 final rule.
Furthermore, a contractor can use helpers in accordance with the
helper regulations only if (1) the contract contains a wage
determination with a helper classification and rate or (2) the
contractor awarded the contract requests that a helper classification
be added to the wage determination and the Department determines that
the use of the helper classification is a prevailing practice in the
area in which the work will be performed. The time necessary for the
Department to perform wage determination and prevailing practice
surveys would further lengthen the period before contractors could
lawfully pay their workers at helper rates.
Furthermore, it continues to be the Department's intention to
complete a substantive rulemaking action within approximately one year.
Because of the substantial length of time it would take to implement
the helper regulations, any saving that might be gained from
implementation of the helper regulations during the rulemaking period
would be minimal, particularly in light of the disruption and
uncertainty which would be caused by implementing the rule while the
Department is engaged in rulemaking.
In sum, the comments have provided no information which would
change the Department's belief that the suspended regulation, if
immediately implemented, ``would be effective for only a brief period,
if at all, before the Department expects [to] complete substantive
rulemaking proceedings'' and that ``repeated changes in the regulations
within a short period of time would create unwarranted disruption in
the contracting process of federal agencies'' and uncertainty in the
contracting community as a whole.
Whether the proposal to continue the suspension meets the
requirements of the Administrative Procedure Act (APA).
Many of the contractors which commented on the proposal expressed
the view that the proposal violates the APA. The comments of the NAHB
are illustrative. The NAHB stated that the Department is ``already
refusing to enforce the current helper regulations, and the comment
period has not yet ended,'' in violation of the APA requirement that
agencies follow their own regulations, and may lawfully repeal or
suspend those regulations only after the public has been given notice
and allowed to comment. The NAHB also contended that the Department's
``decision to suspend the regulations is clearly an arbitrary and
capricious one,'' because the Department has stated the need for
additional substantive rulemaking on the helper regulation but has not
yet proposed any changes.
The ABC also contended that the current rulemaking violates the APA
and is arbitrary and capricious because there was no notice and comment
on the continued suspension of the regulation while the Department
engages in notice and comment rulemaking on whether to further continue
the suspension during substantive rulemaking. In other words, ABC
claimed that the failure to implement the rules while conducting
rulemaking on whether to continue to suspend the rules violates the
APA.
The BCTD commented that it does not believe the proposal violates
the APA; rather, its view is that the proposal is necessary to satisfy
the APA. The BCTD commented that one of the reasons it supports the
proposed rule is that it believes it is necessary in order to avoid
violating the APA. The BCTD expressed the view that the Department was
not required to lift the suspension or begin notice and comment
rulemaking immediately after the signing of the current Appropriations
Act. On the other hand, the BCTD believes that the suspension could not
continue indefinitely without the benefit of public notice and comment.
The publication of the August 2, 1996, proposed rule for comment,
however, alleviates that concern.
It is the Department's belief that the contention that the
continued suspension of the helper regulations violates the APA arises
from the faulty premise that the helper regulations are currently in
effect, and therefore must be enforced until such time as they are
amended or repealed after appropriate notice and comment proceedings.
However, the helper regulations are not now in effect, and have not
been in effect at any time during the past three years. The helper
regulations were properly suspended by notice published in the Federal
Register on November 5,
[[Page 68644]]
1993, in response to the enactment of the prohibition on expending
funds to implement the regulations which was contained in the
Department's 1994 Appropriations Act. While the Department's current
Appropriations Act does not contain such a prohibition, that Act did
not have the effect of lifting the suspension. Because the suspension
of the helper regulation had been effected through rulemaking action in
the Federal Register, action by the Department in the Federal Register
was necessary to lift the suspension. Thus, the proposed rule does not
suspend the helper regulations; they were already lawfully suspended.
Furthermore, even if the Secretary's continuation of the suspension
were construed as a postponement of the (as yet unestablished)
effective date of the helper regulations to allow time for notice and
comment, it is the view of the Department that the APA permits the
Department to seek comments before a final determination concerning
implementation of the rule is made. It is the Department's view that
delay for the sole purpose of seeking public comments accords with both
the language and underlying objectives of the APA--particularly where
the public has never had an opportunity to comment on the rule in its
present form (without a ratio provision) and over fourteen years have
passed since the Department first issued the rule.
It is also the Department's view that it has not acted arbitrarily
and capriciously in undertaking the current rulemaking. The purpose of
the proposed rule is to solicit 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.'' 61
FR 40367. The Department has not decided to repeal the helper
regulations; nor has the Department made a final decision to amend the
regulations. The Department has, however, concluded that the basis and
effect of the semi-skilled helper regulations should be reexamined.
The Department believes that the reasons set forth in the NPRM
provide a reasonable basis for the decision to seek public comments
before making any decision concerning implementation of the rule.
Implementation of the regulation, on a short-term basis during the
pendency of the substantive rulemaking procedure, would affect
relatively few contracts, and yet could potentially create substantial
disruption and uncertainty in the federal procurement process.
Consequently, the Department believes it was entirely appropriate and
consistent with the objectives of the APA to seek comments from
affected parties before deciding how to proceed.\1\
---------------------------------------------------------------------------
\1\ The question of the proposed rule's adequacy under the APA
is currently before the U.S. District Court for the District of
Columbia in the matter of Associated Builders and Contractors, Inc.,
et al. v. Reich, Civil Action No. 96-1490 CRR. The views of both the
Department and the ABC are discussed in greater length in the
pleadings filed in the case.
---------------------------------------------------------------------------
Comments Concerning the Reasons for the Department's Decision To
Initiate Rulemaking Proceedings Proposing Further Amendments to the
Suspended Helper Rule
Many of the comments received addressed the reasons given by the
Department for initiating substantive rulemaking concerning the helper
rule. The specific question posed by the current proposed rule is
whether to continue the suspension of the helper regulation while the
Department further considers such substantive issues and what, if any,
amendments it should propose to address them. The time for full
consideration of substantive issues is after the Department has
published a proposal that would further amend the helper rule and the
public has had the opportunity to comment on that proposal. But given
that most of the comments received addressed the Department's
substantive concerns with the helper regulations, and that the need to
address those concerns is what led the Department to propose the
continued suspension of the regulations, it is appropriate to summarize
and discuss those comments here.
The Department explained in the NPRM that it has decided to
reexamine the helpers regulations to consider whether further amendment
is warranted. Data gathered during the brief period during which the
helper regulation was effective suggest that the use of helpers may not
be as widespread as initially thought. The Department is also preparing
an updated economic impact analysis based in part on data sources not
previously available. As a result of the Department's experience in
attempting to develop enforcement guidelines and the removal of the
ratio requirement from the regulation, the Department is very concerned
that administration of the helper regulation, and the policing of
potential abuse of the helper classification, may be more difficult
than initially anticipated. Finally, the Department stated that it is
concerned about the potential impact of the regulation on formal
apprenticeship and training programs.
Use of helpers may not be as widespread as initially thought.
The belief that use of helpers was widespread was a key assumption
underlying the Department's development of the helper regulation. Many
of the contractors and contractors' associations submitting comments
questioned the Department's stated concern that the use of helpers
might not be as widespread as it had initially assumed, and its
reliance upon prevailing wage survey results when the helper regulation
was in effect as the basis for that statement. The ABC, relying upon
its assertion that helpers are utilized extensively in the open-shop
sector, also points to BLS statistics showing a flat or slightly
declining level of unionization during the period 1989-1992 to question
the legitimacy of the Department's concern.
In the proposed rule published in August 1987, the Secretary
projected that helpers would be determined to be prevailing in two-
thirds to 100 percent of all craft classifications. 52 FR 31369. This
was amended by the statement (without quantification) in the final rule
that this would be reduced somewhat to the extent that collectively
bargained rates were recognized as prevailing and did not provide for
use of a helper classification. 54 FR 4242.
The Secretary's actual experience with the regulation presented a
starkly different picture. In contrast to the estimate published in
1987 that helpers would prevail in at least two-thirds of all craft
classifications, the Secretary found that use of helpers prevailed with
respect to only 69, or 3.9 percent, of the 1763 classifications
included in the 78 prevailing wage surveys completed during the period
the rule was in effect.\2\ These numbers are even lower if one looks
only at the nonunion sector--where it had been assumed in the past that
helpers would almost always be found to prevail. Of the 69 helper
classifications found to prevail, 21 were prevailing based on the
practice of union contractors.\3\
---------------------------------------------------------------------------
\2\ Not included in the 69 helper classifications are instances
where the number of helpers actually used or the number of
contractors using helpers was insufficient to determine a prevailing
rate.
\3\ Fifteen of the 21 union help classifications were elevator
constructor helpers--a classification historically recognized
nationwide in the union sector of the elevator constructor trade.
---------------------------------------------------------------------------
Furthermore, the Secretary found that use of helpers was not the
prevailing practice in any classifications in 43 of the 78 surveys
conducted, covering 229 of 328 counties surveyed.\4\ These
[[Page 68645]]
surveys included 2 surveys in which the schedule reflected entirely
collectively bargained rates, 10 surveys in which the schedule
reflected entirely open shop rates, and 66 mixed schedules, 51 of which
reflected 50 percent or more open shop rates. In 13 of the 35 surveys
where a helper classification was issued, the only helper
classification found to prevail was a union helper. A total of only 48
open shop helper classifications were found to prevail. Thus open shop
helper classifications were found to prevail in only 20 of 78 surveys
conducted, covering only 52 of 328 counties surveyed.
---------------------------------------------------------------------------
\4\ Note that the survey results have been re-checked and the
numbers revised slightly since publication of the proposed rule.
Compare 61 FR 40367. Both the ABC and the AGC questioned the results
obtained in the 78 surveys, citing a 1996 GAO report on the Davis
Bacon wage determination process. GAO/HEHS-96-130, May 1996. It is
inappropriate to draw conclusions concerning the accuracy of survey
results based on the GAO report. The report did not examine or
verify the accuracy of wage determination data, survey response
rates, or calculation of prevailing wages. It focused on the
policies and procedures utilized to prevent the use of inaccurate
data, and proposed changes to strengthen those policies and
procedures.
---------------------------------------------------------------------------
ABC in its comments attempts to dismiss this data as
``statistically insignificant.'' However, the extraordinary divergences
between the actual data and the projection used as a basis for adopting
the helper regulations clearly support the Secretary's conclusion that
``the basis and effect of the semi-skilled helper regulations should be
reexamined.'' 61 FR 40367. Moreover, ABC's reference to statistics that
show a decline in unionization fails to explain the dramatic
discrepancy between the Secretary's project in the 1987 proposed rule
and the data compiled from actual wage surveys during 1992 and 1993.
Data not previously available when the helper regulations were
originally proposed and promulgated also show a lower use of helpers
than was originally believed and, therefore, support the Secretary's
determination that the helper regulations require further examination.
For example, Bureau of Labor Statistics (``BLS'') tabulations from the
1995 Current Population Survey (``CPS'') show that helpers comprise
only 1.3 percent of the total construction employment. Employment data
from the Occupational Employment Statistics (``OES'') program, which
have formed the basis for earlier analyses of helper employment, show
that helpers comprise 9.4 percent of the total construction workforce--
higher than the CPS data but a much lower incidence than the
Department's economic impact analysis in 1987 and 1989 would suggest.
However, the OES figure is based on a helper definition which appears
to correspond to what is commonly considered to be laborer's or
tenders' work and does not appear to envision that helpers use tools of
the trade--an important component of the definition in the suspended
regulation.
Potential Cost Savings
The potential cost savings to be realized from implementation of
the helper regulation was cited by many of the commenters who opposed
the temporary continuation of the suspension. Many claimed that
implementation of the helper regulation could save the government up to
$600 million a year, based on the Department's earlier economic impact
analysis.
LIUNA expressed its view that implementation of the helper rule
would not significantly reduce the cost of federal and federally-
assisted construction projects. They believe the cost estimates
developed in the course of rulemaking on the helper regulations were
overly simplistic, failing to account for the productivity costs of
replacing higher wage, skilled workers with lower wage, less skilled
workers. Another commenter stated the view that semi-skilled workers
increase project costs due to increased safety violations and worker's
compensation claims, and lower productivity.
The data discussed above indicate that helpers may be found to
prevail at a much lower rate than previously assumed. The Department is
preparing a preliminary regulatory impact analysis which will discuss
the Department's updated estimate of costs and benefits relating to the
proposed regulation in preparation, and will include projected savings
if the suspended helper rule were implemented. This analysis will be
published for notice and comment with the proposed rule.
Potential for Abuse
Both the ABC and the AGC challenged the Department's concern 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. The AGC does not believe there is
any more potential for abuse with respect to the helpers regulation
than there is with respect to the Department's procedures for
identifying other classifications, calculating prevailing wages, or
conforming classifications. The ABC stated that if helpers prevail in
only a few areas, the position it ascribes to the Department, then it
is not likely that there would be any significant amount of abuse.
The extent to which helpers prevail in particular areas does not
bear on whether the use of helpers will be abused where they do
prevail. Moreover, the issue of what, if any, changes need to be made
to prevent potential abuse is one of the primary reasons the Department
has decided to reexamine the helper rule. The Department notes that the
helper classification as currently defined is unique in being based on
subjective standards such as skill level and supervision, rather than
an objective test of work performed. The Department is concerned that
such a subjective standard may be more difficult to enforce.
Three commenters, all of whom supported the proposal to continue
the suspension, expressed their concern that the definition of a helper
contained in the regulation would lead to abuse and misclassification.
One commenter submitted anecdotal evidence of intentional
misclassification under a State wage determination law that allowed the
use of helpers, and the two others believe it will be very difficult to
enforce the regulation against contractors who would call the majority
of their workforce helpers, including workers whose skill-levels
qualify them as journeymen.
Both the ABC and the AGC reject the notion that the regulation is
more difficult to administer without the ratio provision, and neither
finds it relevant that the public never had the opportunity to comment
on the possible impact on the regulation of eliminating the ratio.
LIUNA on the other hand believes the regulation without such a ratio is
significantly different from what was originally proposed, and believes
that the failure to submit the regulation without the ratio for public
comment renders it legally deficient.
The elimination of the ratio cap provisions from the helper
regulation, under which there could be no more than two helpers for
every three journeymen, is one of the primary reasons the Department is
concerned that the regulations may be more difficult to enforce than
anticipated, and more subject to abuse. As the proposed rules published
in 1981, 1987 and 1996 uniformly reflect, this ratio provision was
intended specifically to limit the potential for abuse of the helper
classification. 46 FR 41456 (Aug. 14, 1981); 52 FR 31366 (Aug. 1987);
61 FR 40367 (Aug. 2, 1996). The D.C. Circuit echoed the Secretary's
concern with potential abuse of the helper regulations in its 1983
decision when the Court observed that ``[t]he change may mean that some
unscrupulous contractors will find it easier to shift what the
prevailing practice denominates journeyman work
[[Page 68646]]
onto helpers * * * .'' 712 F.2d at 629. The Court, like the Secretary,
concluded that the numeric ratio ``increase[s] the likelihood that
gross violation will be caught, or at least that evasion will not get
too far out of line * * * .'' Id. at 630. While the D.C. Circuit
invalidated the specific ratio selected by the Secretary in its 1992
decision, nothing in that opinion suggests that a ratio is not an
important element of the regulation, nor does it purport to preclude
the Secretary from adopting such a measure designed to curb the
potential for abuse so long as the Secretary adequately explains his
actions. See Building & Construction Trades Dept., 961 F.2d at 276-277.
The regulation was modified as a result of the 1992 court decision,
to eliminate the numerical ratio of helpers to journeymen. Although
that ratio was one of the principal protections against abuse of the
new helper definition, the public never had an opportunity to comment
on whether other changes to the regulation, or an alternative ratio,
was appropriate in light of the elimination of the ratio provision.
In the course of attempting to develop enforcement guidelines for
the regulations while they were in effect, it became apparent that the
helper definition may be more difficult to administer and enforce than
anticipated, and more difficult to administer than other aspects of the
wage determination structure. Because a helper as defined in the
suspended regulation is the only classification with duties that are
specifically intended to overlap with the duties performed by other
classifications, the Department believed that the ratio cap was a
necessary buffer against potential contractor abuse and
misclassification. The Department is concerned that the elimination of
the ratio provision may greatly increase the possibility that
misclassifications will go unchecked. The Department therefore
continues to be concerned that the suspended regulation as written
should be reexamined through notice and comment rulemaking.
Effect on Apprenticeship and Training
Several of those who supported the proposed continuation of the
suspension believe that the helper regulation would have a negative
impact on formal apprenticeship and training programs. They claim that
the ability to pay apprentices a wage lower than that paid to
journeymen is a significant incentive for contractors to participate in
formal training programs. They also claim that the availability of
lower paid helpers would cause contractors to withdraw from such
programs and would threaten private funding for apprenticeship and
training. They believe that this poses a threat both to the industry,
which would face shortages of skilled, trained labor, and to the
individual workers who would find themselves in dead-end, low skilled
jobs without adequate opportunity to increase their skills. Both the
ABC and the AGC, however, believe such concerns are unfounded, and both
observe that the Department provided no new evidence on this topic in
the proposal.
The contractors who wrote to oppose the suspension proposal did not
directly address the impact the helper regulation would have on
apprenticeship and training. But some of them did describe how they use
helpers, suggesting that they view helpers not as a separate and
distinct classification but as an entry-level position in which workers
acquire skills to move up to the journey level, much like an
apprentice. These commenters endorsed the helper regulations (and
opposed their continued suspension, even temporarily) because they
allow workers to gain experience; promote training of unskilled
workers; provide the semi-skilled with an opportunity to gain
experience; and provide the unskilled with a first step to higher
paying jobs.
Some of these commenters, however, described helpers in a way that
is not incompatible with apprenticeship programs. One company noted
that it is not practical to enroll abundant numbers of semi-skilled
workers in apprenticeship training programs. Another viewed the helper
position as a pre-apprentice opportunity for unskilled workers to
acquire the skills necessary to enter an apprenticeship program.
These comments taken together confirm the Department's view that
the potential impact of the helper regulation on apprenticeship
programs is not fully understood, and should be revisited through
further rulemaking.
Additional Comments
A large number of those opposed to the proposed rule also raised
two additional issues. First, commenters stated that contractors that
use helpers would be more able to compete for federal construction
contracts if the helper regulation were implemented immediately.
Second, commenters contend that women and minorities are more likely to
be employed as helpers; therefore immediate implementation of the
helper regulations would increase employment opportunities for those
groups. LIUNA, on the other hand, stated that women and minorities are
more likely to be employed as laborers and therefore would be harmed by
implementation of the helper regulation.
LIUNA also stated its view that the Department's position on the
impact of the helper regulation on other occupational classifications
shifted without explanation during the prior rulemaking on the
suspended regulation. LIUNA notes that throughout the rulemaking the
Department had assumed that helpers would replace laborers as well as
journeymen, but significantly changed its position in the 1989 final
rule, in which it assumed that helpers would replace only journeymen.
They also cite developments within the industry that have rendered
obsolete the understanding of laborers as unskilled workers, making it
more difficult to use skill-level as a basis for distinguishing between
laborers and helpers. Thus, it is LIUNA's view that the impact of the
helper regulations upon laborers should be reexamined before the
regulations are implemented.
That certain contractors, who utilize ``helpers'' as that term is
defined in the suspended regulations, may benefit from implementation
of the helper regulations, does not negate either the need to reexamine
the practicality and enforceability of such regulations or the
advisability of continuing the suspension of these regulations during
such reexamination. Moreover, the disagreement among the commenters as
to the degree and nature of the potential effect of the helper
regulations upon the employment of women and minorities, as well as the
employment of laborers, provides even additional support for the
Secretary's decision to further reexamine the helper regulations
through additional rulemaking.
Conclusion
For the foregoing reasons and after consideration of all of the
comments submitted in response to the proposed rule published on August
2, 1996, in the Federal Register (61 FR 40366), the helper regulations
previously issued under the Davis-Bacon and Related Acts at 29 CFR
1.7(d), 29 CFR 5.2(n)(4) and 29 CFR 5.5(a)(1)(ii) and suspended at 58
FR 58954 (Nov. 5, 1993), are suspended until the Department either (1)
issues a final rule amending (and superseding) the suspended helper
regulations; or (2) determines that no further rulemaking is
appropriate, and issues a final rule reinstating the suspended
regulations. The Department expects these proceedings to be completed
within approximately one year.
V. Administrative Procedure Act
The APA at 5 U.S.C. 553(d)(3) requires that the effective date for
a
[[Page 68647]]
regulation be not less than 30 days from the date of publication unless
there is ``good cause'' shown for an earlier date. This rule does not
require affected persons to take any actions to prepare for its
implementation. Furthermore, a delay in the effective date could cause
confusion among the affected public as to whether the previously
suspended rule is in effect in the meantime. Therefore the Department
finds good cause to have this rule effective immediately.
VI. Executive Order 12866; Sec. 202 of the Unfunded Mandates Reform Act
of 1995
As stated in the notice of proposed rulemaking, the Department is
treating this rule as a ``significant regulatory action'' within the
meaning of sec. 3(f)(2) of Executive Order 12866 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 AGC contends that the proposal for further rulemaking is
inconsistent with Executive Order No. 12866, Section 202 of the
Unfunded Mandates Reform Act of 1995, the Small Business Regulatory
Enforcement Fairness Act and the Regulatory Flexibility Act. The AGC
claims that the concerns expressed by the Department in the proposed
rule regarding implementation of the helper regulations are ``vague''
and not ``supported by reliable data.'' Relying upon the Department's
own previous cost analysis conducted in 1987 and published along with
the final rule at 54 FR 4242 (1989), the AGC claims that ``the
Department's contention that no cost would be incurred by continuing
the suspension of the helper regulations is simply not true,'' and that
failure to implement the helper regulations will ``cost the federal
government, taxpayers and the construction industry hundreds of
millions of dollars.'' Finally, the AGC asserts that ``the Department's
proposal is a `major rule' and requires both an economic and regulatory
flexibility analysis in full compliance with Executive Order No. 12866
and the Small Business Regulatory Enforcement Fairness Act.''
The AGC's comments address potential savings of implementation of
the helper regulations, rather than the impact of continuing the
suspension. As noted above, the Department is preparing a preliminary
regulatory impact analysis which will discuss the Department's estimate
of the costs and benefits of the proposed rule in preparation,
including any savings that might be realized from implementation of the
helper regulations as they now stand. This analysis will be published
for notice and comment concomitant with the Department's regulatory
proposals concerning the employment of helpers on Davis-Bacon projects.
As discussed above, the Congressional action of lifting the
prohibition against implementing the regulation did not itself
reinstate the suspended regulation, and a notice or other rulemaking
action by the Department was necessary to lift the suspension on the
helper regulation. It is the Department's view, therefore, that the
suspension has continued in effect since October 1993, and that the
suspension continues in effect today. This rule, which continues the
previously existing suspension, merely preserves the status quo.
Therefore the Department concludes that there will be no cost savings
from the continuation of the suspension of the helper regulations that
has been in effect since November 1993 during the substantive
rulemaking proceedings.
Moreover, as discussed above, a substantial period of time is
required before the regulations would be implemented by their
incorporation into contracts, and the Department's experience in the
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 potential savings that would be lost from a
failure to implement the helper regulations during the rulemaking
period would be minimal.
Accordingly, the Department has concluded that this rule, which
continues the suspension of the helper rule and therefore is a
continuation of the status quo, will not 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 Sec. 804(2) of the
Small Business Regulatory Enforcement Fairness Act.
VII. Regulatory Flexibility Act
The AGC contends that the Department's conclusion that the proposed
continuation of the suspension ``will have no significant impact on
small entities is also contradicted by its 1987 estimate. * * *''
Again, the AGC's comments address the potential savings of
implementation of the helper regulations, rather than the costs or
savings of continuing the suspension. This regulation is merely a
continuation of the status quo. Therefore the Department has determined
that the rule does not have a significant economic impact on a
substantial number of small entities.
Furthermore, the Department has determined that if the current
suspension were lifted and the helper 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 rule is 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.
VIII. 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 23rd day of December 1996.
Gene Karp,
Deputy Assistant Secretary for Employment Standards.
[FR Doc. 96-33054 Filed 12-27-96; 8:45 am]
BILLING CODE 4510-27-M