Supplemental Information: Implementation of the Midway Decision - 12/24/1991 Memo - Contract Administration - Construction

This memo is superseded by the Department of Labor Final Rule 12/20/2000

Supplemental Information Relative to Implementation of the Midway Decision

The following information is offered as supplemental guidance in response to questions and scenarios that have been brought to our attention from the various field offices since the Midway Decision was issued.

Questions:

What is the effective date for implementation of policy changes arising from the Midway Decision?
May 17, 1991, the date of the court's decision, is the effective date, since all motions for rehearing were denied and the parties in question never petitioned to the Supreme Court.
What projects may the Midway Decision affect?
The decision may affect Federal-aid construction projects that were authorized on or after May 17, 1991, as well as work that occurred on or after May 17 on projects authorized prior to that date.

The impact of Midway to existing and completed projects will depend upon the number of contractors who desire to make adjustments in payments made to truck drivers pursuant to the ruling and States' reactions to such requests. States with their own minimum wage legislation may find that such statutes preclude any adjustment.
Does the Midway Decision have applicability to owner/operators?
No, there is no impact on owner/operator trucking agreements. Davis-Bacon wage rates do not apply to any type of owner/operator transaction, including trucking.
Has the Midway Decision ruling affected the Department of Labor's (DOL's) policy involving hauling operations from the project site to a "non-dedicated" off-site facility?
Yes, the Court's decision held that DOL's regulation, 29 CFR Section 5.2(j), defining "construction" to include the hauling of materials to and from a construction site, is invalid because it conflicts with the language of the Davis-Bacon Act in that such hauling is not performed "directly on the site of the work." As a result, the Court concluded that truck drivers engaged in hauling materials and supplies to and from a construction site are not employed "on the site of the work" and, therefore, the DOL is without statutory authority to extend the prevailing rate requirement to such drivers. It is noted that this application is in reference to only those hauling operations to and from an "off-site" facility that has been determined to be "non-dedicated."
In view of the Midway Decision, a number of inquiries have been made regarding applicability of Davis-Bacon wage rates under several scenarios of truck/hauler operations involving various "off-site facilities." To properly address each scenario, the "off-site facility" must be evaluated to assure it meets the criteria for "site of the work" as defined in DOL's regulations (29 CFR 5.2). The criteria is as follows:
An "off-site" facility that comes under the definition of "site of the work" must be considered "dedicated exclusively" to the performance of the contract, and be so located in proximity to the actual construction location that it would be reasonable to include it.

An evaluation of the "off-site" facility should address the following issues:
1. Does the "off-site" facility exist because of the Federal-aid project? If the answer is yes, then it probably meets the "dedicated exclusively" criteria, which means all truckers hauling from this facility to the project site and from the project site to the facility, regardless of whom they are employed by, are covered by Davis-Bacon wage rates.
  However, when it comes to certain "off-site" facilities, such as borrow or waste pits, one must also examine whether or not it has a "commercial nature". This can be done by answering the following questions:
  - Was the "off-site" facility established by a commercial supplier or materialman prior to award of the project?
  - Will the "off-site" facility be used for multiple purposes (by other projects, i.e., State or the private sector)?
  If the answer is yes to either of these questions, then the "off-site" facility most likely cannot be considered "dedicated exclusively" and be included as part of the "site of the work", even when the operations for a period of time may appear dedicated exclusively, or nearly so, to the performance of the contract.
2. If the "off site" facility being evaluated is determined to meet the "dedicated exclusively" portion of the criteria, it next must be tested to assure it also meets the "in proximity to" portion. To accomplish this, several factors should be examined. These include:
  - the type/nature of the project, and
  - the geographical elements involved (i.e., geological and whether the project is in an urban or rural location).
  The key word in this test is "reasonable." The determination of reasonableness is very subjective and best left to be determined at the local or State level based on the factors involved. For this reason, no specified distance limitations have been developed as they may vary from State to State and region to region.
3. Scenarios that involve major route/corridor type work that consists of multiple adjacent contracts/projects and/or different contractors represent a unique set of circumstances. As a general rule, if such a group of projects have "off-site" facilities that meet the test criteria noted above for being "dedicated exclusively" and "in proximity to" for the "group of projects" only, then such facilities can be considered to be included in the definition of "site of the work." This would include "shared" facilities from different contracts/projects by the same contractor, as well as, the possibility of "shared" facilities from different contracts/projects by different contractors.
In light of the Midway Decision, how will determinations be made with regard to "split-trip" operations?
Due to the Midway Decision, contractors will need to establish payroll records that indicate the times that truck drivers are hauling under conditions that meet the criteria for Davis-Bacon coverage and the times when conditions do not meet the criteria. Since wage determinations are usually based on hourly increments, the wage rate that dominates for any given hour of the day will depend on the type of operation that dominates for that given hour of the day.

In cases where the legs of the trip are split (i.e., hauling from a commercial site to the project site in one leg of the trip, then hauling from the project site to a "dedicated exclusively" off-site facility in the other leg), DOL has in the past ruled the trip-leg that meets the criteria for Davis-Bacon wage rate coverage will dominate the wage coverage determination for that entire operation. It is noted that the impact of the Midway Decision on this "split-trip" issue is currently being examined in the Ames Construction Case. Until a decision is conclusively reached on this matter, DOL's current policy will stand with respect to the Midway Decision.

Application Scenarios:

Using the guidance provided above, the following scenarios furnished by the field offices are now examined to demonstrate the application of Davis-Bacon to truck drivers under Midway:

(Remember, whether or not the truck drivers are directly employed by the government contractor is no longer a relevant factor.)

Scenario 1:	A trucking firm is contracted to haul materials from a commercial production source. The contract may be with the supplier or the prime contractor. (The work is not covered under the Davis-Bacon Act.)
Scenario 2:	The prime contractor hires drivers to operate trucks from a commercial production source. (The work is not covered under the Davis-Bacon Act.)
Scenario 3:	A project involves milling a bituminous overlay from concrete pavement, rubblizing and hauling off old concrete pavement, re-compacting the subgrade, placing a lime treatment on the subgrade, placing a Portland cement treated base, followed by Portland Cement Concrete Pavement. A trucking firm is subcontracted to do the following: to haul millings, dirt, debris, etc., from the project site to a State designated location adjacent to or near the project; (The designated location is an "off-site" facility which meets the criteria for "site of the work." Therefore, the hauling of millings, dirt and broken concrete to this location is covered and subject to the prevailing Davis-Bacon wage rates.) to haul Portland cement treated base from a plant located in a commercial quarry which is set up specifically for the project; (The plant used to produce Portland cement treated base was set up "off-site" specifically for the project, therefore it meets the criteria for "site of the work." Thus, work done at the plant and hauling from and to the plant from the actual site of work is covered and subject to the prevailing Davis-Bacon wage rates.) to haul concrete aggregate from a commercial quarry to the concrete plant location. (The source of concrete aggregate is a bona fide commercial quarry, (i.e., a commercial supply source not dedicated exclusively to the project). It, therefore, is not considered a part of the "site of work." Work performed by drivers hauling from this source and to this source from the actual site work is not subject to the prevailing Davis-Bacon wage rates.)
Scenario 4:	The project involves hauling excavated earth from various locations on the project to other locations on the same project and from a borrow site established by the contractor at the same location as the commercial hot mix plant. The hot mix plant is located within a reasonable hauling distance to the project site. The prime contractor owns several trucks capable of hauling both dirt and bituminous material and does the following work: Drivers employed by the contractor haul excavated material within the project limits for construction of the roadway embankment; (Since the hauling of excavated materials involves working within the actual site of the work, the hauling is covered and subject to the prevailing Davis-Bacon wage rates.) After hauling all available embankment material within the project limits, the contractor's drivers haul excavated overburden from a commercial borrow site, owned by the contractor, to complete the roadway embankment; (The contract plans required the contractor to furnish embankment material for the project. The location that the contractor furnished embankment borrow from is a commercial supply source. The source, even though owned by the contractor, does not meet the "dedicated exclusively" criteria. Thus, the hauling work is not covered by the provisions of the Davis-Bacon Act.) After completion of the roadway embankment and trimming of the subgrade to the proper grade, the contractor placed a surface of bituminous material which was hauled from his commercial hot mix plant and dumped into a laydown machine. (The material delivery truck drivers who came onto the site of the work merely to drop off construction materials are not covered by the Davis-Bacon Act regardless if employed by the prime contractor or subcontractor. The source of the materials is of a commercial nature not "dedicated exclusively" to the project.)
Scenario 5:	The project involves grading and bituminous surfacing of an existing roadway for a distance of 16 km (10 miles) with limited right of way. The plans call for the roadway to be widened and the shoulders to be stabilized. Included in the plans is a requirement for the contractor to furnish embankment from a location approved by the State. The contractor locates an area approximately 3.2 km (2 miles) from the nearest point of the project. The haul road from the borrow area intersects the project midway through the project. The contractor is required to strip vegetation from the area and, by an agreement with the land owner, stockpile the top soil which will be replaced after use of the borrow pit is no longer needed. The contractor subcontracts a trucking firm to: haul embankment from the borrow location to the project site; (The borrow pit was required by the construction plans and was not open to commercial sales. Therefore, it is considered to be included in the "site of the work" and the drivers hauling from the site are covered by the Davis-Bacon Act.) to haul aggregate from a commercial quarry to the hot mix plant that was set up adjacent to the project site at the intersection with the borrow pit haul road; (The hauling of the aggregate from a commercial quarry to the hot mix plant site is considered a supply activity. Therefore, the drivers of these trucks are not covered by the provisions of the Davis-Bacon Act.) to haul a portion of the bituminous surfacing material from the hot mix plant to the job site; (The hot mix plant was set up specifically (i.e., dedicated exclusively) for this project. Therefore, all drivers hauling from the plant are covered by the provisions of the Davis-Bacon Act.) The contractor used his own forces to haul AS-1 shoulder material from a plant set up in a commercial quarry specifically for this project. (Even though the AS-1 was hauled from a commercial supply source, truck drivers are covered by the provisions of the Davis-Bacon Act because the plant used to produce the material was set up specifically for the project.)
Scenario 6:	A contract is awarded to a company who has just completed a similar project during the later part of the preceding construction season. This project abuts one end of the project completed the preceding season and is of the same design. The contractor cannot locate an acceptable borrow pit site within reasonable hauling distance, however, there is a commercial quarry located within an acceptable distance from the project. An agreement is made with the quarry owner to allow the prime contractor to remove overburden from part of his quarry to be purchased and used for roadway embankment material. The owner of the quarry will take both original and final cross sections for measurement of the site of which borrow is purchased. The contractor moves in his own fleet of trucks to: haul embankment from the borrow site to the project site; (The contract plans require the contractor to furnish embankment material for the project. The location of the contractor furnished material is a commercial supply source. The source is not considered to be included in the "site of the work" and the drivers are merely dropping off material to the project location. Therefore, they are not covered by the provisions of the Davis-Bacon Act.) to haul Portland cement treated base from a plant located in a commercial quarry which is set up specifically for the project; (The plant used to produce Portland cement treated base was set up "off-site" specifically for the project, therefore it meets the criteria for "site of the work." Thus, work done at the plant and hauling from and to the plant from the actual site of work is covered and subject to the prevailing Davis-Bacon wage rates.) to haul concrete aggregate from a commercial quarry to the concrete plant location. (The source of concrete aggregate is a bona fide commercial quarry, (i.e., a commercial supply source not dedicated exclusively to the project). It, therefore, is not considered a part of the "site of work." Work performed by drivers hauling from this source and to this source from the actual site work is not subject to the prevailing Davis-Bacon wage rates.)
Scenario 7:	A contract is awarded to a company who has just completed a similar project during the later part of the preceding construction season. This project abuts one end of the project completed the preceding season and is of the same design. The contractor cannot locate an acceptable borrow pit site within reasonable hauling distance, however, there is a commercial quarry located within an acceptable distance from the project. An agreement is made with the quarry owner to allow the prime contractor to remove overburden from part of his quarry to be purchased and used for roadway embankment material. The owner of the quarry will take both original and final cross sections for measurement of the site of which borrow is purchased. The contractor moves in his own fleet of trucks to: haul embankment from the borrow site to the project site; (The contract plans require the contractor to furnish embankment material for the project. The location of the contractor furnished material is a commercial supply source. The source is not considered to be included in the "site of the work" and the drivers are merely dropping off material to the project location. Therefore, they are not covered by the provisions of the Davis-Bacon Act.) haul bituminous material from the plant at the same location as it was for the previous project; (Even though the plant was set up specifically for a project that was completed the previous construction season, it did not produce any bituminous material for commercial sale. Therefore, the drivers hauling from the plant are covered by the provisions of the Davis-Bacon Act.) A subcontract is approved for a trucking firm to haul the AS-1 for shoulders from a plant set up specifically for the project completed the previous construction season to the project site, dump the material into a shouldering machine; (Even though the plant was set up specifically for a project that was completed the previous construction season, there was no material produced for commercial sales by the plant during that time. Therefore, the drivers are covered by the provisions of the Davis-Bacon Act.) to haul aggregate from a commercial quarry to the hot mix plant. (Drivers of trucks hauling aggregate from commercial quarries to the hot mix plant are not covered by the provisions of the Davis-Bacon Act.)

Construction

Supplemental Information Relative to Implementation of the Midway Decision

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