D.C. Circuit Declines to Extend Davis-Bacon Act
Some Washingtonians stroll through CityCenterDC on shopping sprees at “upscale retail stores such as Hermès, Boss, and Louis Vuitton,” or meet for lunch at “high-end restaurants such as DBGB and Centrolina.” Lawyers watch these scenes from our offices in the northwest corner of CityCenterDC, where they recently analyzed the D.C. Circuit’s opinion holding that we and our luxury-minded fellow tenants work in a mixed-use development that is not subject to the Davis-Bacon Act. The court’s opinion was a stern rebuff to the Department of Labor, which had “advanced a novel reading of the Davis-Bacon Act that would significantly enlarge the number and kinds of construction projects covered by the Act.”
The Davis-Bacon Act requires the payment of prevailing wages for employees on “every contract in excess of $2,000, to which the Federal Government or the District of Columbia is a party, for construction, alteration, or repair … of public buildings and public works….” The Labor Department argued that its long-term lease of land to the developers provided enough of a nexus to constitute a “contract … for construction” to which the District was a party. It argued further that the ancillary public benefits CityCenterDC is expected to generate made the project a “public work.” The court disagreed. Affirming the 2014 decision of the District Court, the D.C. Circuit held that CityCenterDC fell outside the Act’s coverage in two respects.
First, the D.C. government was not a party to the transaction. Instead, it leased the underlying land to private developers, who then entered construction contracts with the laborers. The District was neither a lessee nor lessor of the land, and its attenuated connection to those contracts did not make it a “party” to the contracts.
Second, CityCenterDC is not a “public work.” The project did not receive public funding, and the D.C. government does not own or operate the finished development. CityCenterDC met neither of those two elements of the public work test, so the conclusion in this case was relatively easy for the court to reach.
However, the court left open the question whether both elements must be present for a project to qualify as a “public work” under the Davis-Bacon Act. The court held only “that a project must possess at least one (if not both) of” those elements to be a public work. In other words, the opinion contemplates the possibility that a construction project might have some level of governmental involvement — either funding or ownership/operation — and still fall outside the Davis-Bacon regime.
Despite the lingering questions about the contours of the “public work” definition, the opinion provides helpful clarity about the Act’s coverage. The CityCenterDC developers can come visit some great restaurants to raise a celebratory toast.