’s long-standing annualization principle. Subject to limited exceptions, the hourly credit for benefit plan contributions is calculated based on all hours an employee works during the year — including hours on both DBA-covered and noncovered projects.
As a result, you could receive less credit than expected for benefits provided to an employee who divides time between public and private work. And you may need to make up the difference through additional benefits or cash wages.
Covered projects and workers
The regulations address DBA coverage beyond work performed at a project’s primary construction site. Depending on the circumstances, coverage may extend to certain secondary sites, including locations where prefabricated or modular components are produced specifically for a covered job.
The rules also address energy infrastructure projects, work involving portions of buildings, and certain demolition, remediation and removal activities. In addition, the DBA rules may apply to some flaggers, survey crew members and other employees working away from the primary site if their duties are sufficiently connected to a covered job.
Bottom line: Don’t assume that an employee falls outside the DBA rules merely because the person’s work takes place off-site or involves transportation, surveying or support services. Transportation work requires a particularly careful, fact-specific analysis.
Important regulatory update
In June 2024, a federal district court issued a nationwide preliminary injunction preventing the DOL from implementing or enforcing three portions of the 2023 regulations. The affected provisions address:
- The distinction between materials suppliers and contractors or subcontractors,
- DBA coverage of contractor-employed delivery truck drivers who spend more than minimal time at a covered worksite, and
- The automatic application of DBA requirements to covered contracts when the government contracting agency mistakenly omits the required clauses.
The remaining provisions continue to apply. Although the injunction remains in effect as of this writing, consult current DOL guidance and, if necessary, legal counsel when evaluating suppliers, delivery drivers or contracts that don’t expressly include DBA requirements.
Potential cost of noncompliance
The consequences of noncompliance may include liability for unpaid wages and fringe benefits, withholding of contract payments, contract termination, and debarment from future federal contracts. Additional penalties may apply under related laws or in cases involving falsified certified payrolls, false statements or other misconduct.
The regulations also prohibit retaliation against workers who report possible violations or participate in an investigation. When pursuing state- or locally funded work, you should separately determine whether the project is subject to another prevailing-wage law. State and local requirements may differ significantly from federal rules.
Build compliance into the bid
Keep DBA compliance in mind when considering federally funded construction projects. Evaluating the requirements early can help you prepare more reliable bids, establish appropriate payroll and recordkeeping procedures, and reduce costly surprises. Contact us for help evaluating all the financial details.
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