AGC's Human Resource and Labor News - February 19, 2010 / Issue No. 1-10 (Print All Articles)

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Building Trades President to Speak at AGC Convention

The shift in party power in Washington means that organized labor has more political clout today than it's had in years.  Whether you're a union contractor or not, you should care about what organized labor is up to.

The shift in party power in Washington means that organized labor has more political clout today than it's had in years.  Whether you're a union contractor or not, you should care about what organized labor is up to.  Find out by attending a special session during AGC's Annual Convention in Orlando, FL, where Mark Ayers, president of the AFL-CIO's Building and Construction Trades Department, will talk about the building trades' current activities and agenda.  The session, "State of the Union:  a Forum with the Building Trades," will take place on March 17, at 9:30 a.m.  All convention registrants are invited to attend.

For more information about the Convention or to register, go to http://convention.agc.org/.


Contractor Bound to PLA Breached Contract by Assigning Work to Carpenters

A subcontractor that assigned roofing work on a project covered by a project labor agreement (PLA) to workers represented by a union that was not signatory to the PLA is liable for breach of contract under state common law, despite a National Labor Relations Board (NLRB) decision upholding the assignment under Section 10(k) of the National Labor Relations Act, the U.S. District Court for the District of New Jersey has held.

A subcontractor that assigned roofing work on a project covered by a project labor agreement (PLA) to workers represented by a union that was not signatory to the PLA is liable for breach of contract under state common law, despite a National Labor Relations Board (NLRB) decision upholding the assignment under Section 10(k) of the National Labor Relations Act, the U.S. District Court for the District of New Jersey has held.

The case involves the construction of a public community center in Egg Harbor Township, NJ.  Pursuant to a state statute authorizing PLAs on public works, the Township required all parties working on the project to be signatories to a particular PLA.  The general contractor on the project, Sambe Construction Co., signed the PLA and subcontracted roofing work to E.P. Donnelly , Inc. (Donnelly), which signed a letter of assent binding it to the PLA.  Donnelly had an area-wide collective bargaining agreement (CBA) with the Carpenters and used employees represented by that union to install metal roofing and perform related tasks.  The Carpenters, however, were not signatory to the PLA, leading to a jurisdictional dispute with the Sheet Metal Workers, who claimed jurisdiction over the work under the PLA.  The Sheet Metal Workers filed a grievance and received a favorable arbitration award under the PLA procedures for resolution of jurisdictional disputes.  Prior to issuance of the arbitration award, the Carpenters threatened to picket if Donnelly reassigned the work, leading Donnelly to initiate 10(k) proceedings before the NLRB, and the NLRB ruled that the Carpenters were entitled to the work.  The Sheet Metal Workers later filed the present lawsuit against both Sambe and Donnelly in U.S. district court.

The court found that the Sheet Metal Workers established a breach of contract by showing that the PLA was a valid contract, that Sambe and Donnelly failed to meet their contractual obligations under the PLA, and that the union suffered damages.  In deciding that the contractors violated the PLA, the court relied on the arbitrator's decision, including findings regarding contractual requirements that all work must be assigned to a PLA signatory and must be made based on area practice.  In deciding that the PLA was a valid contract, the court relied on the NJ statute authorizing PLAs and on the seminal Boston Harbor case, in which the Supreme Court held that a PLA mandated by a state agency was not preempted by federal law because the agency was acting as a market participant rather than as a regulator. 

Having found that the PLA is a valid contract and that its obligations were unfulfilled, and that the Sheet Metal Workers' suffering of damages was undisputed, the court considered whether the PLA was enforceable.  Sambe and Donnelly argued that the PLA is unenforceable because enforcement would conflict the NLRB's 10(k) decision.  The court acknowledged that the arbitrator's and NLRB's decisions conflicted with regard to which union's members should have been assigned the work.  However, the court explained, the Sheet Metal Workers' lawsuit does not seek enforcement of that portion of the work (which was already completed by the Carpenters by this time).  Rather, it seeks only monetary damages for breach of the PLA. 

"Enforcement of the PLA with an award of monetary damages against Sambe and Donnelly does not conflict with the NLRB's 10(k) decision resolving the jurisdictional dispute," said the court.  The court noted that the NLRB's decision itself included the qualification that "an award of the disputed to work to [the Carpenters does] not...invalidate the PLA.  [Donnelly] continue[s] to be bound under the terms of the PLA, and the parties to the PLA...retain any rights they may have under state law to bring a suit for damages...for any breach of the PLA."  The NLRB further commented that both unions "have separate binding contracts with [Donnelly], and [Donnelly's] obligations under one contract cannot be used to void its obligations under the other." 

The court observed that the letter of assent signed by Donnelly is only a page long and contains only three substantive provisions of one sentence each:  that Donnelly agrees to be bound by the PLA, that Donnelly certifies that it has no commitments or agreements that would preclude compliance with the PLA, and that all project participants sign an identical letter of assent.  "Despite these simple terms," said the court, Donnelly signed the letter of assent with an existing conflicting commitment - its CBA with the Carpenters.  In response to Donnelly's defense that it never saw the PLA itself and was not aware that the Carpenters were not included, the court remarked, "Walking blindfolded through one's business affairs does not excuse the ensuing collision."

The case serves as a reminder to all contractors to carefully read all contracts to which they may become obligated and to ensure that, considering other contracts, they are not creating conflicting commitments.  With certain unions, especially the Carpenters, setting themselves apart from the other trades lately and refusing to sign some PLAs, this reminder becomes even more important. 

Sheet Metal Workers Local 27 v. E.P. Donnelly, Inc., Case No. 07-3023 (D. NJ, 12/3/09).


IRS to Randomly Audit 6,000 Employers

Beginning in February, the Internal Revenue Service (IRS) will begin to randomly audit an estimated 6,000 U.S. companies.  As one of the agency's largest campaigns since 1984, the results of the audits are expected to generate revenues for the agency as well as provide statistical data on employer tax compliance.

Beginning in February, the Internal Revenue Service (IRS) will begin to randomly audit an estimated 6,000 U.S. companies.  As one of the agency's largest campaigns since 1984, the results of the audits are expected to generate revenues for the agency as well as provide statistical data on employer tax compliance.

The first round of audits, which is expected to begin in February 2010, will affect 2,000 companies selected randomly, with another 2,000 companies selected for both 2011 and 2012 audits.  Companies selected for review will vary in size and business structure, and will include both for-profit and non-profit organizations.  The audits will primarily focus on five critical areas:  worker classification (e.g. employee vs. independent contractor or exempt vs. non-exempt), fringe benefits, reimbursed expenses, owner/officer compensation and non-filers.

The IRS will use 200-300 of its most experienced agents to conduct line-by-line reviews of each company's employment tax returns, income tax returns and forms issued to workers, such as forms W-2 and 1099.  While the auditors will focus primarily on calendar years 2007 and 2008, the audits may be expanded to cover additional years.

To prepare, companies are urged to review current payroll practices as well as their three most recent years' employment tax returns.


OFCCP to Focus on Affirmative Action Compliance; Construction Industry Targeted Yet Again

According to the Bureau of National Affairs (BNA), the U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP), which is responsible for ensuring that those doing business with the federal government don't discriminate and take affirmative action, this year, plans to hire more staff, conduct more onsite reviews, and place a greater emphasis on affirmative action compliance.  Specifically, OFCCP has announced plans to develop proposed rules to strengthen recruitment and hiring goals for military veterans and persons with disabilities, and to propose new affirmative action standards for the construction industry.

According to the Bureau of National Affairs (BNA), the U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP), which is responsible for ensuring that those doing business with the federal government don't discriminate and take affirmative action, this year, plans to hire more staff, conduct more onsite reviews, and place a greater emphasis on affirmative action compliance.  Specifically, OFCCP has announced plans to develop proposed rules to strengthen recruitment and hiring goals for military veterans and persons with disabilities, and to propose new affirmative action standards for the construction industry.

BNA reports that OFCCP's director Patricia A. Shiu plans to "implement full-scale, aggressive enforcement efforts" that include "renewing [their] commitment to strengthening affirmative action, combating discrimination against veterans and people with disabilities, as well as continuing to resolve systemic discrimination cases.  For fiscal year 2010, OFCCP received a $103 million budget, for which it plans to hire 213 new employees, restoring its staff to pre-2001 levels. As a result, federal contractors can expect more on-site reviews, including more thorough reviews of affirmative action plans.  Other areas likely for review are contractors' job advertisements, recruitment practices, hiring decisions and pay.  As mentioned in an AGC article last year, OFCCP had previously announced increased enforcement initiatives by detailing its Recovery Act Plan for all contractors who received funding through the American Recovery and Reinvestment Act of 2009 (ARRA).  In the plan, the construction industry is specifically mentioned as the primary target for enforcement, since billions of ARRA dollars are earmarked for construction projects.

BNA also reports that Harold Busch, a former OFCCP career employee turned executive director for a national non-profit employer association, stated that one of the biggest challenges among officials is determining "realistic goals" for the employment of women and minorities in construction, similar to the Clinton administration's desire to make changes, since data isn't readily available outlining the desire for and availability of women interested in working in construction.

AGC plans to work closely with OFCCP as they begin the process of producing a proposed rule to amend current construction industry affirmative action requirements.   For a summary of current construction contractor responsibilities and goals, review DOL's Technical Assistance Guide for Construction Contractors.  In addition, AGC has many resources to help you stay compliant with OFCCP's regulations, including a newly revised Affirmative Action Manual for Construction, and other resources available on AGC's Labor and HR Topical Resources Web page.


2010 HR Professionals Conference and Training & Development Conference to be Co-Located in Arizona

Planning is under way for two of AGC's most sought-after annual conferences, the HR Professionals Conference and the Training & Development Conference.  For 2010, the conferences will be co-located in Scottsdale, Arizona, October 18-20, with separate tracks for each conference.

Planning is under way for two of AGC's most sought-after annual conferences, the HR Professionals Conference and the Training & Development Conference.  For 2010, the conferences will be co-located in Scottsdale, Arizona, October 18-20, with separate tracks for each conference.

The conferences offer unique opportunities for HR, training, and workforce development professionals in the construction industry.  The Training and Development Conference (T&D) will offer sessions related to the most cutting-edge techniques currently in the industry and envisioned for the future.  Offering a combination of roundtable sessions and expert speakers, the HR Professionals Conference will help HR professionals remain up to date and compliant with employment laws and best practices.

Last year, the conferences were held concurrently with many overlapping sessions.  This year, the conferences will have one full day of sessions each, plus one joint plenary session, along with several opportunities for participants at both conferences to network socially.  This adjustment will allow participants to attend each or both conferences, without having to choose between HR and T&D sessions.  As many budgets are still financially strained, a discount will be available for those who choose to attend both conferences.

Mark your calendars now and stay tuned for more details.  We look forward to seeing you in Scottsdale!


Social Networking Policy May Protect Employers From Federal Trade Commission Violations

The Federal Trade Commission (FTC), the agency responsible for protecting consumers from fraudulent, deceptive and unfair business practices, has for the first time since 1980 published new guidelines about the use of endorsements and testimonials.  While the issue may seem broad, the mention of 'social media' and 'blogging' and the perception that employees may be considered by consumers as 'paid endorsers' is a reminder for employers who haven't already created effective social media policies to do so.

The Federal Trade Commission (FTC), the agency responsible for protecting consumers from fraudulent, deceptive and unfair business practices, has for the first time since 1980 published new guidelines about the use of endorsements and testimonials.  While the issue may seem broad, the mention of 'social media' and 'blogging' and the perception that employees may be considered by consumers as 'paid endorsers' is a reminder for employers who haven't already created effective social media policies to do so.

The new guidelines, which went into effect December 1, 2009, suggest that the use of social media, such as Facebook and Twitter, may increase an employers potential liability for violation of the Federal Trade Commission Act, making cause for the FTC to take actions against a company whose employees comment on company products or services without disclosing the employment relationship, even if the comments are not authorized or sponsored by the company.  The presumption is that they are doing so with the company's blessing or for the company's benefit.  Social networking sites reach millions of people at a time, which increases employer exposure to liability under the guidelines if consumers later claim they were misled into purchasing dangerous or defective products by an employee's comments.

While the FTC says it is not likely to take action against a company for the conduct of a single "rogue" employee who violated company policy, they have already taken action against companies "whose failure to establish or maintain appropriate internal procedures" resulted in a consumer injury.  As a result, employers who do not already have a social media policy in place should consider one that specifically outlines what conduct is permitted by employees, and describes how to clearly post a disclosure statement when discussing an employer or the employer's products or services.  Having such a policy may help to minimize an employer's liability under the guidelines.


COBRA Subsidy Extended; New Notice Requirement

According to a news statement issued by the U.S. Department of Labor on December 21, 2009, the program that offers insurance premium reductions to certain employees that were involuntarily terminated and their dependents (collectively known as assistance eligible individuals or AEIs) has been extended.  The extension, which amends the American Recovery and Reinvestment Act of 2009 (ARRA), relates to the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the 65 percent premium reduction that it offers to AEIs.

According to a news statement issued by the U.S. Department of Labor on December 21, 2009, the program that offers insurance premium reductions to certain employees that were involuntarily terminated and their dependents (collectively known as assistance eligible individuals or AEIs) has been extended.  The extension, which amends the American Recovery and Reinvestment Act of 2009 (ARRA), relates to the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the 65 percent premium reduction that it offers to AEIs.

There are a few key points that employers need to be aware of:

  • The eligibility period for the program for AEIs is now extended for an additional two months; from December 31, 2009 to February 28, 2010. Originally, only employees who were involuntarily terminated between September 1, 2008 and December 31, 2009 and their qualifying dependents were eligible for the subsidy.
  • COBRA premium subsidy payments have been extended for an additional six months. Originally, AEIs were only able to receive the 65 percent premium reduction for nine months, but this has now been extended to 15 months.
  • AEIs who had reached the end of their premium reduction period will have until February 17, 2010, or 30 days after notice of the extension is provided, whichever is later, to pay the 35 percent reduced premium amount for each payment not made during their transition period.
  • AEIs who paid full premiums after the subsidy expired for them are entitled to reimbursement (or ARRA approved credit), minus the 35 percent reduced premium amount required for continuing coverage.
  • Employers must provide notices of the new extension rights by February 17, to individuals who became AEIs between October 31, 2009 and December 21, 2009, or experienced a qualifying event "consisting of termination of employment" relating to COBRA coverage on or after October 31, 2009. For cases of qualifying events occurring after 12/21/2009, the general timing of COBRA notice requirements apply. Notices are also required for individuals who stopped paying for coverage because they could no longer afford it; explaining that they are now eligible to reinstate their coverage retroactively.

On a side note, the same law that extends the COBRA premium reduction program also increases unemployment insurance for an additional 13 to 20 weeks while increasing the amount of unemployment insurance compensation by $25 per week.

For additional information and questions regarding COBRA and the premium subsidy, contact the Employee Benefits Security Administration at 1-866-444-3272.


DOL Releases New Version of Employment Law Guide

The U.S. Department of Labor (DOL) recently released an updated version of its Employment Law Guide, an online publication for workers and employers that describes the major employment laws administered by the department.

The U.S. Department of Labor (DOL) recently released an updated version of its Employment Law Guide, an online publication for workers and employers that describes the major employment laws administered by the department.

According to a press release issued by DOL on November 30, 2009, the Guide is said to be "especially helpful for employers without dedicated legal or human resources staff" and "helps small businesses develop wage, benefit, safety and health, and nondiscrimination policies."

The updated version addresses recent and important changes in employment laws, including:

  • the increase in the federal minimum wage;
  • expansion of the Family and Medical Leave Act;
  • child labor regulations in the agriculture industry; and
  • changes to the Defense Base Act, which provides workers' compensation benefits to civilian employees working outside the United States on U.S. military bases or under certain contracts with the U.S.

Designed to be used along with DOL's FirstStep overview advisor, an online system that allows employers to determine which federal employment laws apply to them by answering a few simple questions about relevant variables, each chapter in the Guide "addresses each of the laws in the FirstStep advisor, outlines coverage under the law, its basic requirements, employee rights, recordkeeping, reporting, notice and poster requirements, penalties and sanctions for non-compliance, relation to state, local and other federal laws, and contact information for further assistance."  Both the Employment Law Guide and FirstStep overview advisor are available at www.dol.gov/elaws.


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