Dive Brief:

• The Nevada chapters of the two largest nonresidential construction trade groups are suing Labor Secretary Marty Walsh, claiming the Labor Department did not adhere to its own rules nor the federal Davis-Bacon Act when it used compensation data from Las Vegas to determine prevailing construction wages in northern Nevada counties, inflating pay rates there by nearly 100%.
• The Associated General Contractors and Associated Builders and Contractors of Nevada filed suit in federal Nevada District Court Sept. 27, saying that the DOL "acted in an arbitrary and capricious manner, and in violation of the law" in its 2017 wage survey for Carson City and 13 northern Nevada counties.
• The wage survey set prevailing wages at $56.17 per hour for dump truck drivers in northern Nevada, versus the $31.22 that the AGC argued was the appropriate rate. The suit is an appeal of a decision in July from DOL's Administrative Review Board, which sided with the DOL, saying that the agency used the higher pay scale because northern Nevada pay rates weren't submitted for its wage survey in a timely manner.  

Dive Insight:

The suit, which also includes the Nevada Trucking Association as a plaintiff, alleges data for northern Nevada was publicly available and that DOL should have put in the legwork to obtain it. Walsh, in his official capacity, was named as the suit's sole defendant. 

The Davis-Bacon Act, which was passed in 1931, requires federal contracts for buildings or public works to pay local prevailing wages, as determined by the DOL's administrator. The Nevada suit hinges on the 2017 wage survey, which sought to establish prevailing wages for highway projects in the state.

While the Nevada Office of the Labor Commissioner had the wage data for the northern counties, according to the July ruling from the DOL review board, it didn't submit it for the DOL's wage survey, even after DOL sent a letter detailing the process for doing so.

Instead, the suit argues that the onus was on DOL's administrator to proactively collect that data.  

"The administrator failed to consider the publicly available data, based on the specious ground that the NOLC bore the responsibility to submit such data, though it was publicly available to the administrator during the survey period, as the administrator knew or should have known," the plaintiffs alleged in the suit.

But the DOL's review board decision determined the administrator had wide-ranging discretion on setting pay rates.

The DOL's guidelines at the time required the administrator to consider wage data for at least six workers paid by three contractors – known as the 6/3 rule – to set a prevailing rate.

The administrator argued it couldn't get that level of detail for northern Nevada counties, however, and that the NOLC's available data wasn't usable anyway, because it didn't distinguish between basic and fringe benefit rates, and wasn't exclusively based on highway projects.

In its review board ruling, the DOL said the prevailing wage of $56.17 consisted of a base rate of $29.45 per hour, with an additional $26.72 per hour fringe benefits. The AGC's $31.22 pay rate didn't break out base pay and benefits.