US judge blocks Biden wage rule for construction projects

[June 25, 2024]  By Daniel Wiessner

(Reuters) - A federal judge on Monday temporarily blocked a Biden administration rule expanding the cases in which construction contractors are required to pay workers prevailing wages that apply to $200 billion of federally funded infrastructure projects.

U.S. District Judge Sam Cummings in Lubbock, Texas, said the U.S. Department of Labor lacks the power to impose prevailing wage requirements when government agencies do not explicitly include them in contracts and to extend them to truck drivers who work on construction sites.

"Presidents and their agencies ... do violence to the Constitution when they attempt to unilaterally amend Acts of Congress to suit their policy choices," wrote Cummings, an appointee of Republican former President Ronald Reagan.

Cummings blocked the rule, which took effect last October, from being enforced nationwide pending the outcome of a lawsuit by Associated General Contractors of America, a major construction trade group.

The Labor Department and Associated General Contractors did not immediately respond to requests for comment.

A New Deal-era law, the Davis-Bacon Act, tasks the Labor Department with establishing wage floors for federally funded construction projects, which are based on the prevailing wages for certain jobs in specific geographic areas.

Today, prevailing wages apply to more than 1 million construction workers on $200 billion worth of projects.

The Biden administration rule revived a method for calculating those wages that excludes many lower-paid workers and leads to higher wage floors, which was abandoned by the Reagan administration in the 1980s. Other trade groups are challenging those changes in a separate pending lawsuit.

Highway construction known as "Project Neon" is shown in Las Vegas, Nevada, U.S., August 28, 2018. Picture taken August 28, 2018. REUTERS/Mike Blake/File Photo

The rule made several other key changes including giving prevailing wage standards the "operation of law," meaning they are always in effect and agencies no longer have to explicitly include them in contracts, and expanding the definition of "mechanics and laborers" covered by the law to include truck drivers who make deliveries to work sites.

Associated General Contractors challenged those two provisions in a lawsuit filed in November, saying they went beyond the Labor Department's powers to set the level of prevailing wages.

Cummings on Monday agreed and said the rule would cause irreparable harm to construction businesses, including pricing some of them out of federal contracts, if it remains in effect.

In adopting the rule, the Labor Department said it was necessary to modernize prevailing wage regulations to reflect changes in the law and the economy.

That was echoed by unions and other supporters of the rule, who said it would guarantee workers fair pay and deter wage theft, particularly on the growing number of clean energy construction projects.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Leslie Adler)

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