Labor Law -- 2016

In re Space Exploration Technologies Corp.   (Dept. of Labor Admin. Rev. Bd.)

Scope of Davis-Bacon Act coverage when government property is involved

On 2/18/2014 the NAM led a coalition of associations filing an amicus in support of Space X. The brief highlights the adverse consequences of the Department of Labor’s Wage and Hour Division, Deputy Administrator’s misapplication of the Administrative Review Board’s (ARB) decision in CityCenterDC, No. 11-074, 2013 WL 1874818 (ARB 2013), which is currently being challenged in District of Columbia v. Department of Labor, 13-cv-00730 (D.D.C.). The decision finds that the Space X Florida launch facility project is subject to the 1931 Davis-Bacon Act, which requires "prevailing wages" for construction workers on public buildings.

The decision is exceedingly troubling, and the amici contend that the Deputy Administrator’s decision improperly expands the coverage of the Davis-Bacon Act (DBA) beyond the limited scope intended by Congress and calls into serious question the validity of the holding(s) in CityCenterDC itself. The brief argues that the plain language of the DBA shows that Congress intended the scope of the Act’s coverage to be limited to publicly funded construction projects. Congress never intended the Act to apply to privately funded, privately owned, and privately occupied construction projects, or else the statute would not have been limited by its terms to “public buildings and public works.” Prior to CityCenterDC, the Act had never been applied to a privately funded, owned and occupied construction project in its 80-year history. The ARB’s holding is almost limitless in scope and perverts the plain meaning of “contract for construction” of “public works” as used by Congress in the Davis-Bacon Act. This dramatic expansion of the Act to private development projects has vastly detrimental implications for industry.

Further, the amici argued that Space X should be distinguished from CityCenterDC. Unlike CityCenterDC, Space X did not have a contract or lease with a federal entity but merely a license issued by the Air Force. The license does not require Space X to engage in construction and does not incorporate a master plan for such construction to be specified or approved by the government as was the case in CityCenterDC.

On June 16, 2016, the NLRB remanded this case to the Wage and Hour Division for further proceedings in light of the CityCenterDC case. This decision means that privately funded, owned and occupied construction projects that do not have leases with federal entities will be subject to the prevailing wage requirement of the Davis-Bacon Act.

Related Documents:
NAM amicus brief  (February 18, 2014)


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