AGC's Human Resource and Labor News - April 23, 2010 / Issue No. 2-10 (Print All Articles)

Back to Graphical Version | Search back issues


DOL Issues Guidance on Use of Unpaid Interns

As employers struggle keep business operating expenses low, the number of unpaid internships has increased in recent years, causing the federal government to express concern that employers may be unknowingly violating wage and hours laws when using unpaid interns.  While the U.S. Department of Labor (DOL) continues to enforce wage-hour laws, the agency is digging deeper with the announcement of its desire to eliminate the unlawful use of unpaid interns by "for-profit" companies.  The problem is that most "for-profit" companies that use unpaid interns may not be aware they are violating wage and hour laws, leading DOL to issue guidance on the subject.

As employers struggle keep business operating expenses low, the number of unpaid internships has increased in recent years, causing the federal government to express concern that employers may be unknowingly violating wage and hours laws when using unpaid interns.  While the U.S. Department of Labor (DOL) continues to enforce wage-hour laws, the agency is digging deeper with the announcement of its desire to eliminate the unlawful use of unpaid interns by "for-profit" companies.  The problem is that most "for-profit" companies that use unpaid interns may not be aware they are violating wage and hour laws, leading DOL to issue guidance on the subject. 

Students often seek out opportunities for unpaid internships in order to gain valuable experience relative to a particular career ambition and for many employers, this practice is a welcomed one as budgets remained strained and the cost of employing additional workers continues to increase.  But according to a Fact Sheet issued by DOL in April 2010, "internships in the 'for-profit' sector will most often be viewed as employees," and those who "qualify as employees rather than trainees typically must be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek."  So, with a few exceptions for work performed as a part of an education program, "for-profit" companies will be required to pay interns for any work performed, and offer additional protections extended to employees, such as workers compensation, unemployment insurance, and protection under employment discrimination laws.

According to DOL, a worker for a "for-profit" company may be considered for an unpaid internship only if all of the following six criteria are met: 

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an educational environment. DOL explains that the more an internship program is structured around a classroom or academic experience as opposed to the employer's actual operations, the more likely the internship will be viewed as an extension of the individual's educational experience. Specifically referenced is oversight of the program by a college or university where educational credit is provided.  
  2. The internship experience is for the benefit of the intern.
  3. The intern does not displace regular employees but works under close supervision of existing staff. This also includes temporary work done by the intern. For example, if the intern fills in for the receptionist or any other regular worker during specific time periods or when the regular employee is on vacation or sick leave, then the intern status will be lost. In addition, if the employer would have hired an employee to perform the work that an intern is doing, the intern must be declared an employee. DOL specifically states that if the intern "performs no or minimal work, the activity is more likely to viewed as a bon fide education experience" and if the intern receives the same level of supervision as the regular employees, it is likely that the intern is actually an employee as well. 
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded. The agency describes the work that an intern can perform; specifically stating that the work should not be routine work of the business on a regular and recurring basis, and the business should not be dependent on the intern. If the intern is engaged in such work as filing, clerical work, or assisting customers, then the employer would be considered the beneficiary of the intern's work and must therefore declare the intern an employee. 
  5. The intern is not necessarily entitled to a job at the conclusion of the internship. The internship should be limited to a specific period of time that is determined before the start of the internship, and should not be used as a working interview or trial period for those seeking employment.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If the internship meets all of the criteria listed above, then an employment relationship does not exist and the intern can work, unpaid, for the duration of the internship.  Like with most wage-related claims, employers that are in violation may be subject to both federal and state penalties as well as worker lawsuits. 

Employers that use unpaid interns are encouraged to use the six criteria listed above in order to determine the correct status of interns.  As a general practice, add a completed checklist (completed by the HR Manager or the requesting supervisor) to each eligible unpaid intern's file once their status has been confirmed along with a copy of the intern's learning curriculum and expectations.  For quick access, you might also want to keep a separate binder specifically for this information.  This may help to show that you made a "good faith effort" to determine the appropriate status of the worker.  If uncertainty exists, or for a review of your company's complete internship program, it is recommended that you contact an employment law attorney licensed to practice in your state, who is also familiar with the wage-hour issues of employers.


Labor Department Campaign Encourages Workers to Report Employers That Violate Worker Rights

On April 1, 2010, Secretary of Labor Hilda L. Solis unveiled "We Can Help," a new campaign designed to educate workers on their workplace rights and encourage them to report employers that are violating those rights.  This effort is being spearheaded by the U.S. Department of Labor's (DOL) Wage & Hour Division (WHD), which is responsible for enforcing some of our nation's most comprehensive federal labor laws on topics including the minimum wage, overtime pay, and the payment of prevailing wages for government service and construction contracts, to name a few.

On April 1, 2010, Secretary of Labor Hilda L. Solis unveiled "We Can Help," a new campaign designed to educate workers on their workplace rights and encourage them to report employers that are violating those rights.  This effort is being spearheaded by the U.S. Department of Labor's (DOL) Wage & Hour Division (WHD), which is responsible for enforcing some of our nation's most comprehensive federal labor laws on topics including the minimum wage, overtime pay, and the payment of prevailing wages for government service and construction contracts, to name a few.

According to remarks made by the Secretary, DOL "will use public service announcements, worker rights videos, posters, publications, and billboard advertisements" to "inform workers of their rights, and encourage them - regardless of immigration status - to report violations of wage and hour laws that occur on the job."  She also noted that she has increased the number of additional field investigators by 250 over the past year and is "not done yet!"  A DOL-issued news release notes that the campaign will "place a special focus on reaching employees in such industries as construction, janitorial work, hotel/motel services, food services and home health care.  It will also address such topics as rights in the workplace and how to file a complaint with the Wage and Hour Division to recover wages owed."

The videos, posters and other materials used to reach workers are available in several languages, including Spanish, Chinese, and Polish, and DOL has partnered with several well-known public figures and entertainers, such as Latino actor Jimmy Smits, to catch the attention of workers.  DOL will also work with faith-based organizations, unions and other groups to distribute materials in the field.  In an April 6 article, The Wall Street Journal reported that an AFL-CIO representative said that the labor federation's affiliates would not only distribute announcements and other materials to workers, but would arrange meetings between workers and WHD staff, and hold forums at union halls where workers can watch videos about minimum wage and learn how to track the number of hours they work.  To view the videos and other materials, visit www.dol.gov/wecanhelp.

The Associated General Contractors of America encourages construction contractors to comply with the laws enforced by the WHD and the entire U.S. Department of Labor, including the payment of minimum and prevailing wages, and offers many compliance assistance tools.  These tools are available in the compensation section of AGC's Labor & HR Topical Resources Web page.  Employers may also consult WHD's Field Operations Handbook or contact DOL directly.  Contractors faced with a sudden WHD audit or worker complaint, are advised to promptly contact an employment law attorney licensed to practice in the state for immediate guidance.


COBRA Subsidy Extended to May 31, 2010; May Be Extended Yet Again

Since the enactment of the American Recovery and Reinvestment Act of 2009, the original law that offered a 65 percent premium subsidy to help certain individuals pay for continuing health coverage (also known as COBRA), the eligibility period and qualifications required for individuals to receive the subsidy have been extended several times and will likely be extended again.

Since the enactment of the American Recovery and Reinvestment Act of 2009, the original law that offered a 65 percent premium subsidy to help certain individuals pay for continuing health coverage (also known as COBRA), the eligibility period and qualifications required for individuals to receive the subsidy have been extended several times and will likely be extended again.

Earlier in the year, Congress extended the subsidy eligibility period to March 31, 2010, but then recessed before extending it further, causing many individuals who were involuntarily terminated after that date to lose health coverage for themselves and their qualifying dependents, or pay the full COBRA premium.  On April 15, Congress passed the Continuing Extension Act of 2010, which extended the COBRA subsidy eligibility period to May 31.  Because of the gap between March 31 and the April 15 enactment date, eligibility is extended retroactively so that individuals involuntarily terminated after March 31, 2010, but before April 15 are now eligible to receive the 15-month subsidy.  The announcement of the extension came shortly after Congress's decision to allow individuals who had a reduction in hours on or after September 1, 2008, followed by an involuntary termination of employment between March 2, 2010 and March 31, 2010, to take advantage of the premium subsidy.  Originally, individuals who had elected COBRA due to a reduction in hours were not permitted to take advantage of the subsidy.  As a result, employers are expected to notify qualifying individuals and their dependents of their new or extended eligibility status and model notices have been made available.   

The U.S. Department of Labor has made available a Fact Sheet with guidelines for employers.  For additional information and questions regarding COBRA and the premium subsidy, contact the Employee Benefits Security Administration at 1-866-444-3272.


The Health Care Reform Bill Is Final... Now What?

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590) and shortly thereafter the Health Care and Education Reconciliation Act of 2010 (H.R. 4872), which changes health care as we know it.  In the coming years there are many adjustments that construction companies need to be aware of in order to comply with the new law.

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590) and shortly thereafter the Health Care and Education Reconciliation Act of 2010 (H.R. 4872), which changes health care as we know it.  In the coming years there are many adjustments that construction companies need to be aware of in order to comply with the new law.

The Process

On March 21, 2010, the House voted to pass the health care reform bill that was previously passed by the Senate in December 2009, which made the bill available for the president to sign into law.  After passing the Senate bill, as is, the House then passed a "reconciliation" bill that made several changes to the law. It was then sent to the Senate, modified and passed again by the House.

While there is a lot of information and commentary about state lawsuits and other efforts to repeal portions of the law, the fact of the matter is that on March 23, 2010, health care reform became "the law" and employers will have to begin complying.  Now that the dust has settled on the bill, AGC will continue to seek regulatory guidance and compliance assistance tools for its members as information becomes available.

Is your company required to provide health insurance to employees?

The quick answer is "No," companies don't have to provide health insurance to employees. But if your company chooses not to, beginning on January 1, 2014, there may be stiff penalties to pay.  Under the new law, employers with 50 or more employees who choose not to offer qualified health coverage to employees will have to pay $2,000 per full-time employee, excluding the first 30 employees from the assessment, each year if at least one full-time employee receives income-based premiums assistance to purchase coverage through an Exchange.  The number of full-time employees can be determined by adding the number of employees who work an average of 30 hours per week in a month to the calculated number of part-time workers.  This calculation requires employers to divide the total number of hours worked in a month by employees who work fewer than 30 hours per week, by 120.  Originally, there was a requirement that only construction contractors with fewer than five employees be exempt from the penalty, but AGC worked with other construction trade groups to repeal this provision that targeted the industry.  Now, all companies with fewer than 50 employees are exempt from the penalty.

Available small business pooling options and tax incentives designed to entice those small businesses to offer health coverage may do just that.  For example, by 2014, a Travelocity-like health care exchange system will be created for businesses with fewer than 100 employees to pool together and shop for affordable healthcare plans.  Until then, companies with 10 or fewer employees earning less than an average of $25,000 will be eligible for a tax credit of 35 percent of health insurance costs.  Companies with 11-25 employees with an average wage up to $50,000 are eligible for partial tax credits. Once the exchange is created, the tax credit will increase to 50 percent for the first two years coverage is purchased through the exchange and then the credit would end.  While these tax credits are retroactive to January 1, 2010, it has not been determined how the credit will be claimed.

In addition to the tax credits, grant programs will also be created to help small and mid-sized companies develop and strengthen workplace wellness programs.

What if your company already provides health insurance?

If your company already provides health insurance coverage for employees, there are still a few things to consider and anticipate.  For example, beginning in 2014, employers who offer health benefits but have at least one employee who applies for a federal subsidy to purchase insurance on their own would be subject to a an annualized penalty of $3,000 for each employee who has qualified for subsidized coverage.  Employees are eligible for the federal subsidy if the employer provided plan does not have an actuarial value of at least 60 percent or if the employee share of the premium exceeds 9.5 percent of their income.  In addition, employers may still be required to help low and middle-wage earners who opt out to buy coverage on their own.  Specifically, an employee who earns less than four times the federal poverty level, $88,200 for a family of four, will have the option to purchase coverage through the exchange.  In turn, the company would have to provide a "free-choice voucher," which must be equal to the amount paid to provide coverage to all other participating employees.  Furthermore, companies with more than 200 employees will be required to automatically enroll new hires into the health plan, but the new hire can voluntarily opt-out after enrollment if they choose.  There is no penalty for workers in a waiting period, but employers must limit the period to 90 days beginning in 2014.

Plans that were in effect on the date of enactment, March 23, 2010, are grandfathered-in and able to keep their existing coverage; however, they must still comply with the following requirements on their respective effective dates: no lifetime limits, restrictions on annual limits, restrictions on coverage rescissions, coverage of dependent adult children, coverage of dependent children with pre-existing conditions, coverage of adults with pre-existing conditions, and maximum 90 day waiting periods.

So, what should be done now?

The good news is that most of the major changes won't occur until January 1, 2014, so there isn't much that employers have to do right away.  There are several plan changes that insurance companies are required to make on your plan's renewal date, so expect to receive communication regarding these changes and communicate them to your employees and new hires appropriately.  The timeline below provides an explanation of when changes are expected to occur that may affect employers.

Tax Years 2010-2013
  • Employers with fewer than 25 employees many take advantage of tax credits in exchange for providing healthcare benefits.
June 23, 2010 through December 31, 2013
  • Employers will be able to participate in an incentive program to provide coverage for retirees over the age of 55 who are not eligible for Medicare.
  • A temporary high-risk insurance pool will be created to provide health care to individuals with pre-existing medical conditions who have been uninsured for at least six months.
Effective for plan years beginning on or after September 23, 2010 or for calendar year plans beginning January 1, 2011.
  • Insurers will not be able to deny coverage to children who have pre-existing medical conditions.
  • Insurance companies will have to provide coverage for dependent children up to the age of 26, regardless of educational or marital status. However, the adult child must not be eligible to enroll in another eligible employer-sponsored health plan.
  • Plans can no longer set "lifetime limits" on essential benefits regarding how much they will pay, except in cases of fraud.
  • Health insurance plans will be required to cover preventative services such as immunizations for children and cancer screenings for women.
  • Policies cannot be cancelled for those who get sick.
January 1, 2011
  • The federal tax on individuals who spend money from Health Savings Accounts (HSAs) on ineligible medical expenses will double to 20 percent.
  • The Aggregate cost of applicable employer-sponsored coverage must be reported annually on the employee's Form W-2.
January 1, 2013
  • The limit on how much individuals can contribute to flexible spending accounts (FSAs) will be set at $2500.
  • The Medicare tax rate will increase from 1.45% to 2.35% on earnings over $200,000 for individuals and $250,000 for families.
January 1, 2014
  • Companies with 50 or more employees will be required to pay a penalty ($2,000 annualized) for each employee if the company does not provide a health insurance plan. (The threshold for construction companies was increased from 5 to 50 as a part of the reconciliation process.)
  • Companies with 50 or more employees would pay a fine if any of their full-time workers qualified for federal health care subsidies.
  • A state-based health care exchange system will be created as a marketplace for uninsured individuals and small businesses to comparison shop for insurance policies.
  • Health plans will be required to meet minimum benefits standards covering a minimum of 60 percent of costs.
  • All annual limits must be eliminated from health plans.
  • Adults with pre-existing conditions can no longer be denied coverage.
  • Employers must automatically enroll employees into the company's health plan. Employees may opt out later.
  • Waiting periods of more than 90 days are not permitted.
January 1, 2018
  • A 40 percent tax would be imposed on healthcare plans that cost more than $11,850 for individual coverage and $30,950 for family coverage. This amount is higher for construction employers than most other industries because construction is one of many high-risk industries and excludes the value of stand-alone dental and vision benefits.
  • States may choose to allow large companies with 200 or more employees to purchase coverage through the exchanges.

Note: While this article focuses mainly on the requirements for employers, for companies that self-insure, both the insurer and employer requirements are applicable.


Online Compensation Reports Now Available to AGC Members with Six-Month Free Trial

AGC general and specialty contractor members can now subscribe to a new interactive Web-based compensation reporting product from FMI called Compensation Interactive.  The new offering provides AGC member companies the ability to create real-time, customized reports for key professional positions in 21 separate job categories including business development, contract administration, project administration, project management, project superintendent, safety engineer and estimating engineer.

AGC general and specialty contractor members can now subscribe to a new interactive Web-based compensation reporting product from FMI called Compensation Interactive.  The new offering provides AGC member companies the ability to create real-time, customized reports for key professional positions in 21 separate job categories including business development, contract administration, project administration, project management, project superintendent, safety engineer and estimating engineer.

Subscribers of Compensation Interactive are expected to submit company compensation data, which is then confidentially maintained and extensively reviewed to ensure data integrity and accuracy.  Users are then able to filter data by contractor type, revenue and region, state or metro area, as well as run and print reports as often as necessary.

The regular price for a Compensation Interactive subscription is $500 annually, but AGC members who subscribe before June 30, 2010, will receive a six-month free trial. Members choosing to activate a full subscription before the end of the six-month trial would then pay just $250 for an additional 12-month subscription.  To register, download the flyer for instructions and more information.


2009 Collective Bargaining Yields Lowest Increases in 13 Years

Collective bargaining negotiations completed during 2009 in the nonresidential construction industry resulted in the lowest average first-year increase in wages and fringe benefits since 1996, according to the year-end settlements report issued by the Construction Labor Research Council (CLRC).  CLRC reports that the average first-year increase negotiated last year was $1.23 or 2.8 percent, as compared to $1.95 or 4.6 percent in 2008 - the highest percentage increase since 1999.  The average second-year increase negotiated for multi-year agreements was $1.55 or 3.2 percent in 2009, and $2.25 or 4.7 percent in 2008.

Collective bargaining negotiations completed during 2009 in the nonresidential construction industry resulted in the lowest average first-year increase in wages and fringe benefits since 1996, according to the year-end settlements report issued by the Construction Labor Research Council (CLRC).  CLRC reports that the average first-year increase negotiated last year was $1.23 or 2.8 percent, as compared to $1.95 or 4.6 percent in 2008 - the highest percentage increase since 1999.  The average second-year increase negotiated for multi-year agreements was $1.55 or 3.2 percent in 2009, and $2.25 or 4.7 percent in 2008.

The lower level of increases negotiated in 2009 was influenced by the almost 10 percent of settlements for zero increase, CLRC notes.  Including those negotiations, 49¢ of the $1.23 average first-year increase was designated for pension fund contribution increases.

Settlements varied less by region than usual, CLRC found, with a few individual states as stand-outs, such as Illinois on the high end and Michigan on the low end. 

Also noteworthy is the greater-than-usual number of contracts negotiated for only a one-year duration.  Typically, about 40 percent of newly negotiated agreements are for three-year terms, but, in 2009, over half were negotiated for just a one-year term. 

Click here to view CLRC's full report.

Click here for information about open-shop wage increases.


Final Rule on Federal PLAs Gives Agencies Broad Discretion

The Federal Acquisition Regulation (FAR) Council has issued a final rule implementing Executive Order 13502 on the use of project labor agreements  (PLAs) on federal construction projects, giving contracting agencies broad discretion to determine whether to impose a PLA mandate on a project, when the PLA should be executed, and what terms the PLA will contain.

The Federal Acquisition Regulation (FAR) Council has issued a final rule implementing Executive Order 13502 on the use of project labor agreements  (PLAs) on federal construction projects, giving contracting agencies broad discretion to determine whether to impose a PLA mandate on a project, when the PLA should be executed, and what terms the PLA will contain. 

The rule implements the executive order's stated policy to "encourage" executive agencies to "consider" requiring the use of project labor agreements in connection with large-scale construction projects, which are defined as projects with a total cost to the federal government of $25 million or more.  Mimicking the Executive Order, the rule provides that an agency "may" require that every construction contractor and subcontractor on a particular project agree to negotiate or become a party to a PLA if the agency decides that use of a PLA will (1) advance the government's interest in achieving economy and efficiency in federal procurement, producing labor-management stability, and ensuring compliance with laws and regulations governing safety and health, equal employment opportunity, labor and employment standards, and other matters; and (2) be consistent with the law.  The rule adds several other factors that agencies may consider in their project-by-project evaluation of whether a PLA is appropriate, but it neither requires the agencies to consider those factors nor limits their consideration to those factors.  The added factors include whether:

  1. The project will require multiple construction contractors and/or subcontractors employing workers in multiple crafts or trades;
  2. There is a shortage of skilled labor in the region in which the construction project will be sited;
  3. Completion of the project will require an extended period of time;
  4. PLAs have been used on comparable projects undertaken by federal, state, municipal, or private entities in the geographic area of the project;
  5. A PLA will promote the agency's long-term program interests, such as facilitating the training of a skilled workforce to meet the agency's future construction needs; and
  6. Any other factors that the agency decides are appropriate.

If an agency decides that it will impose a PLA, then the rule provides the agency with three options for going forward.  The agency may require submission of an executed PLA (1) when offers are due; (2) prior to award, by the apparent successful offeror; or (3) after award.  If the agency decides to permit execution of the PLA after award, then the contractor "will be required to submit an executed copy of the agreement to the contracting officer."  This is a troubling change from the proposed rule, which required only that the contractor "bargain in good faith to a PLA."  Requiring settlement of a contract rather than just good-faith bargaining may give the unions involved extraordinary bargaining leverage, as the contractor must execute a PLA or it will be in breach of its contract with the government. 

Moreover, the rule allows agencies to include in the contract solicitation specific PLA terms and conditions and to require the successful offeror to become a party to a PLA containing those terms and conditions.  This is another troubling change from the proposed rule, which expressly prohibited the contracting agency from participating in the negotiations of any PLA.  The final rule notes that that the agency "may seek the views of, confer with, and exchange information with prospective bidders and union representatives" in its efforts to identify appropriate terms and conditions and to facilitate agreement on those terms and conditions.

Every PLA must meet certain minimum requirements like those established in the executive order:

  1. Bind all contractors and subcontractors engaged in construction on the construction project to comply with the project labor agreement;
  2. Allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements;
  3. Contain guarantees against strikes, lockouts, and similar job disruptions;
  4. Set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement;
  5. Provide other mechanisms for labor-management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and
  6. Include any additional requirements as the agency deems necessary to satisfy its needs.

Yet another disconcerting change from the proposed rule is the final rule's clarification  that any PLA executed pursuant to the rule will not change the terms of the government contract or provide for any price adjustment by the government, even if negotiated after contract award.

On a more positive note, the FAR Council adopted AGC's recommendations that the final rule clarify that agencies must notify contractors of a PLA mandate prior to contract award and that they are prohibited from initiating a PLA mandate after contract award.  The FAR Council also encouraged agencies to make their evaluations about whether to impose a PLA mandate early in each project's planning process.

The final rule is expressly limited to direct federal contracts over $25 million, as covered in the executive order.  The FAR Council did not (and could not) expand coverage to projects below that cost threshold or to federally funded projects, although it points out that the executive order states that agencies are not precluded from using PLAs on projects not covered by the order.

"We appreciate that the Administration accepted our counsel to avoid retroactively imposing government-mandated labor agreements once contracts have already been awarded," responded AGC Chief Executive Officer Stephen Sandherr .  However, we continue to strongly oppose any effort by government officials, who often have little or no experience in construction labor relations, to undermine existing relationships between contractors and construction workers by imposing project labor agreements.  Any comprehensive review of existing construction worker benefits and current federal contracting guidelines will prove that government mandated labor agreements are as unnecessary as they are costly and counterproductive.  That is why we will continue to encourage agency officials to exercise the broad latitude provided by these rules to avoid imposing these agreements."

For more information on the rule, contact Denise Gold, Associate General Counsel, at (703) 837-5326 or goldd@agc.org, or Marco Giamberardino, Senior Director, Federal and Heavy Construction Division, at (703) 837-5325 or giamberm@agc.org.

For more information on PLAs, go to AGC's Labor & HR Topical Resources Web page, then select the category "Collective Bargaining" and subcategory "Project Labor Agreements."


NLRB Recess Appointments Signal Labor Policy Changes Ahead

On Saturday, March 27, the first day of the congressional recess for Easter, President Obama made several recess appointments to federal agencies, including a controversial appointment to the National Labor Relations Board (NLRB) that could have a significant impact on federal labor law.

On Saturday, March 27, the first day of the congressional recess for Easter, President Obama made several recess appointments to federal agencies, including a controversial appointment to the National Labor Relations Board (NLRB) that could have a significant impact on federal labor law. 

Obama appointed to the NLRB two Democrats, Craig Becker, an attorney for the AFL-CIO and the Service Employees International Union in Washington, D.C., and Mark Pearce, a partner in the union-side labor law firm of Creighton, Pearce, Johnsen & Giroux in Buffalo, N.Y.  Their terms will expire at the conclusion of the next session of Congress in late 2011.  While the five-member Board traditionally includes three members from the president's party and two members from the opposing party, it had been operating with only two members - Democrat Chairman Wilma Liebman and Republican Peter Schaumber - for over two years.  The president had earlier nominated Becker, Pearce, and Republican Brian Hayes, who is the minority labor policy director with the Senate Health, Education, Labor and Pensions Committee, for regular appointments, but Senate confirmation of the package failed amid strong opposition to Becker.  On February 9, the Senate voted against cloture on Becker's appointment, marking a victory for AGC and others in the business community who opposed Becker because of his demonstrated anti-employer, pro-union bias and apparent interest in radically changing labor law through NLRB rather than legislative action.  AGC actively lobbied against the appointment via letters to and direct discussion with the Senate, along with a grassroots campaign yielding about 1,400 letters from AGC members. 

Pearce and Hayes have not received any significant opposition.  The fate of Hayes' nomination remains to be seen, but it is likely to become embroiled in negotiations over the filling of vacancies to occur in August, when the terms of Schaumber and of NLRB General Counsel Ronald Meisburg will both expire. 

Hence, the Board is now operating with three Democrats and only one Republican.  The change in Board composition may lead to significant policy changes over time.  The Board - which is responsible for administering the National Labor Relations Act (NLRA), the federal statue governing relations between private-sector employers and unions, has a great deal of power in setting labor relations mandates.  As administrations and party power change, often so does the approach of the Board, leading to shifting positions on various matters subject to statutory interpretation. 

Liebman has publicly stated that she considers the NLRA to be a "living document" that should be interpreted dynamically.  Many commentators have speculated about the panoply of Board decisions (especially those decided during the Bush administration) that might be overturned by the Liebman Board, such as decisions concerning:

  • employer rights to prohibit supervisors from engaging in pro-union activity and the standards for determining who is a statutory supervisor;
  • representation rights of nonunion workers;
  • limitations on liability for back pay to union "salts;"
  • employer rights to permanently replace economic strikers;
  • whether an employer's reasonably based but unsuccessful lawsuit against a union constitutes an unfair labor practice when initiated with a retaliatory motive; and
  • the standards for combining in one collective bargaining unit temporary workers jointly employed by a staffing company and a client employer with regular workers solely employed by the client employer.

Cases already pending before the Board that Liebman has specifically cited as key issues include cases concerning:

  • whether union bannering - a common practice by the Carpenters union in the construction industry - should be subject to the free-speech protections accorded handbilling or the stricter secondary boycott restrictions placed on picketing;
  • whether an employer that knowingly employs undocumented workers must pay back pay if the workers are unlawfully terminated for pro-union activity;
  • the lawfulness of an employer's pre-recognition bargaining with a union that does not represent a majority of its employees; and
  • property access rights of a contractor's employees working on another employer's premises.

Liebman has also expressed a strong interest in the Board engaging in administrative rulemaking - i.e., promulgating regulations, which the Board has traditionally eschewed - and has already brought in experts to educate Board staff about the process.  According to Liebman, rulemaking would be useful because it would allow the Board to get input from the public about the "real-world" impact of the Board's positions.  Critics, however, charge that rulemaking would enable the Board to advance pro-union policies - such as expediting the union representation election process or requiring recognition of minority unions - in the absence of an appropriate pending case or statutory amendment.  Liebman has shown particular interest in a petition pending since 1993 asking the Board to issue a rule requiring employers to post workplace notices informing employers of their rights under the NLRA.

In short, significant pro-union changes may be on the horizon, despite the stalling or failure of the Employee Free Choice Act in Congress.  AGC will continue to monitor developments and keep you informed.  In the meantime, employers are well-advised to examine employee relations and promptly address problem areas, such as substandard wages and ineffective managers.  Employers should also train supervisors about what they lawfully may and may not do in the face of union organizing activity.  Information on supervisor "do's and don'ts" is available to AGC members on AGC's Labor & HR Topical Resources Web page under the main category "Unions/NLRA" and the subcategory "Union Organizing Campaigns & Representation Elections."


Open Shop Contractors Discuss Labor Developments at AGC Convention

AGC's Open Shop Committee held an active roundtable discussion at a meeting during the Annual Convention on March 17.  Contractors and Chapter staff from across the country shared recent experiences regarding labor relations and labor-related government affairs in their respective areas.

AGC's Open Shop Committee held an active roundtable discussion at a meeting during the Annual Convention on March 17.  Contractors and Chapter staff from across the country shared recent experiences regarding labor relations and labor-related government affairs in their respective areas.

Participants from several areas, including Atlanta, East Tennessee, New Mexico, Dallas, and Portland, Ore., talked about apparent area standards and corporate campaigns by the United Brotherhood of Carpenters, especially targeting drywall contractors.  The campaigns often involve bannering, blow-up rats, letters, handbilling and picketing.  Instead of at the offices of the owner or general contractor, the activity in some cases is taking place in those companies' officers' neighborhoods, children's schools, and other locations that are not work-related, reported meeting attendees.  Last August, a federal judge in Atlanta upheld a $1.7 million jury award to an interior contractor against the Southeastern Regional Council of Carpenters for illegal secondary boycott activity. 

A member from East Tennessee reported that the Carpenters' bannering campaign there was followed by legislation providing a five percent preference in procurement for companies that meet certain labor standards. 

Several participants said that they had been told by Carpenters locals and others that the bannering and corporate campaigns were being directed and funded by the international.  Also, several participants observed that the campaigns were not having a positive impact for the unionized sector.  The approach is not an effective road to market recovery, asserted one participant, as it is giving owners a bad impression of unions and making them want to avoid union contractors.  It does not seem to be resulting in actual organizing of open-shop companies or increased hiring of union companies.

Atlanta participants also relayed that the Bricklayers union has caused the Georgia legislature to turn its attention to illegal immigration, after the union allegedly uncovered the employment of an illegal work force at a county courthouse job site.

Another topic of conversation was increased enforcement activity by federal agencies, such as the Department of Labor's Office of Federal Contract Compliance Programs and Wage and Hour Division, the Department of Homeland Security's Immigration and Customs Enforcement, and the Internal Revenue Service.  Staff associate Denise Gold reported that the Wage and Hour Division last year hired about 250 new investigators to monitor such practices as overtime, min wage, prevailing wage, and child labor law compliance, and that the Labor Department's budget request for fiscal year 2011 includes funds to hire at least 350 new employees, including 177 investigators and other enforcement staff.  It also includes $25 million to support a joint initiative with the Treasury Department to combat such the misclassification of employees as independent contractors - a hot enforcement issue right now, particularly since it is a revenue-producer for Treasury. 

Some meeting attendees expressed frustration that Labor Department auditors seem more interested in playing "gotcha" with employers than they do with helping to ensure compliance.

Gold noted that AGC is working to help members stay informed of enforcement initiatives, such as via reports in the Human Resource & Labor News, and stay compliant with the law, such as via a recent webinar series on Davis-Bacon and an  upcoming webinar series on worker misclassification.  The latter series will cover misclassification of non-exempt employees as exempt employees as well as independent contractors as employees.  Details and registration are not yet available but will be announced soon on AGC's Web site and in other media. 

AGC members and Chapter staff can share information about open-shop labor matters throughout the year via the Open Shop Contractors e-Forum, an e-mail-based discussion group.  To join the e-Forum, send a request including full contact information to Crystal Yates at yatesc@agc.org.


Building Trades President Outlines Political and Business Priorities at AGC Convention

It's true that the building trades have heightened influence in Congress and the administration these days, AFL-CIO's Building and Construction Trades Department (BCTD) President Mark Ayers (left) acknowledged to a standing-room-only audience at a forum presented by AGC's Union Contractors Committee during the Annual Convention, and they're using that influence to encourage the enactment of policies that address one central goal:  "to provide a significant jump-start to the U.S. construction economy."  While these policies have been "mischaracterized as "special interest giveaways," Ayers stated, the true objective is "getting our members and our signatory contractors back to work." 

It's true that the building trades have heightened influence in Congress and the administration these days, AFL-CIO's Building and Construction Trades Department (BCTD) President Mark Ayers (left) acknowledged to a standing-room-only audience at a forum presented by AGC's Union Contractors Committee during the Annual Convention, and they're using that influence to encourage the enactment of policies that address one central goal:  "to provide a significant jump-start to the U.S. construction economy."  While these policies have been "mischaracterized as "special interest giveaways," Ayers stated, the true objective is "getting our members and our signatory contractors back to work."

While the federal stimulus program may not have included as much infrastructure funding as it should have, "the fact of the matter is that the injection of stimulus funds helped to keep our economy from falling into an economic abyss," he said.  Going forward, the primary goal of a long-term economic recovery program must "focus on finding big sources of new growth that can replace personal consumption as the main driver of a new economy."  With that in mind, the unions have been "aggressively pressing for a national energy policy that will ignite investments in the development of domestic energy sources."  They are pushing Congress and the administration "to pivot away from a consumption-based economic model to one that is grounded in a renewed emphasis upon investment, innovation and productivity," Ayers said.  An example of that is their support for recently awarded federal loan guarantees for the construction of two new nuclear reactors at the Plant Vogtle facility in Georgia.

The agenda also includes pressing for project labor agreements (PLAs) at the federal, state and local level.  According to Ayers, a business model that embraces PLAs offers increased jobsite efficiencies through labor-management cooperation; ensures a steady, local supply of safe, highly skilled, and productive craft workers; ensures that those workers receive wages and fringe benefits reflective of their skill and productivity; and promotes access to career training opportunities for women and minorities.

Many in the audience - both union contractor and open-shop representatives - espoused a different point of view on PLAs.  Participants challenged Ayers with questions and comments regarding the need for contractors to be involved in the negotiation of a PLA, the impact of PLAs on area bargaining, and the problem of trades not affiliated with the BCTD (the Carpenters and Operating Engineers) refusing to sign onto BCTD PLAs.  Regarding the latter issue, Ayers reported that the relationship between the BCTD and the Carpenters has improved and that they are making progress on the matter.  When told that PLAs are undermining master area agreements, Ayers replied that that is not the intent or the norm, and that PLAs should only add provisions that union contractors would appreciate, such as no-strike provisions and penalties for violations.

Audience members also expressed strong concerns about struggling multiemployer pension plans.  Ayers agreed that the matter is a top priority, reiterating an earlier report by AGC's Associate General Counsel Denise Gold that AGC and the BCTD are working together with other stakeholders in a broad-based coalition to seek legislative relief.  Ayers also took note when one audience participant urged him to push hard for a proposal providing blanket relief from Internal Revenue sanctions where a pension plan had pre-Pension Protection Act amortization extensions but missed its asset targets due to 2008 market losses.

Another top priority on the BCTD's political agenda has been Davis-Bacon, reported Ayers.  He said he thinks that, within the next year, the BCTD will have achieved their goal of ensuring that all projects with any federal funding will include Davis-Bacon requirements without having to attain the requirements ad hoc.

Ayers acknowledged that the trades' own business model needed to be changed too.  The BCTD has spent over two years instituting a new internal culture based on the motto "Value on Display.  Every Day," he said.  The new approach includes partnering with owners and contractors, embracing innovation, and instituting local union accountability measures as well as membership codes of conduct and excellence.  When members of the audience expressed admiration for the goal but strong concern that the message is not penetrating at the local level in some areas, Ayers conceded that problems persist in some places but that he is delivering his message of culture change to locals throughout the country.  Culture change was his number one priority when taking office, he said, and invited contractors to view a union best practices video on the BCTD Web site.

To view the full text of Ayers' speech, click here.


John Flynn Retires as President of Bricklayers, Succeeded by Jim Boland

John J. Flynn, president of the International Union of Bricklayers and Allied Craftworkers, announced his retirement on February 22 at a meeting of the union’s Executive Council.   Immediately following the announcement, he swore in Secretary-Treasurer James Boland as president, who then appointed new officers.

John J. Flynn, president of the International Union of Bricklayers and Allied Craftworkers, announced his retirement on February 22 at a meeting of the union’s Executive Council.   Immediately following the announcement, he swore in Secretary-Treasurer James Boland as president, who then appointed new officers.

Flynn, who served as president since 1999, promised to continue to support and “be available to serve the union in any capacity” in his retirement.   Boland, a member of Local 3 in California, is a former Local Officer and worked as a bricklayer, and stone and marble mason.  A member of the International’s Executive Board since 1995, Boland was appointed as Secretary-Treasurer in 1999, and subsequently elected in 2000 and re-elected in 2005.

BAC represents roughly 100,000 skilled masonry-trowel trades craftworkers in the U.S. and Canada. Click here for more information.


Tax Incentives Expected to Encourage Hiring; Seasonal Hires Qualify

On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act to encourage employers to hire workers who were previously unemployed for at least 60 days immediately prior to hiring.  Consisting of two parts, a "tax holiday" and an "additional business tax credit," employers may claim these credits beginning on April 1, 2010, with a special catch-up period in the second quarter of 2010 for qualifying first quarter wages paid after March 18.

On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act to encourage employers to hire workers who were previously unemployed for at least 60 days immediately prior to hiring.  Consisting of two parts, a "tax holiday" and an "additional business tax credit," employers may claim these credits beginning on April 1, 2010, with a special catch-up period in the second quarter of 2010 for qualifying first quarter wages paid after March 18.

The "tax holiday" exempts employers from a portion of the social security (FICA) taxes normally paid by employers.  Employer-paid FICA taxes consist of a 6.2 percent Old Age Survivor Disability Insurance tax (OASDI), which is paid on wages paid up to the social security wage base of $106,800 for 2010, plus a 1.45 percent Medical Hospital Insurance tax (HI).  The "tax holiday" exempts qualified employers from the OASDI tax, but not the HI tax.  Employers are also still required to withhold the employee's share of social security taxes as well as both shares of Medicare taxes.  Employers may take advantage of the "tax holiday" beginning on April 1, 2010, using Form 941, which has not been released in its final version, for wages earned after March 18, 2010, for any eligible new hire who begins after February 3, 2010 and before January 1, 2011.  While employers do not have to elect to receive the incentive, employers who are taking advantage of the Work Opportunity Tax Credit (WOTC), which in some cases may be more generous than the "tax holiday," will need to opt out of the HIRE Act provisions.

In addition to the "tax holiday," qualified employers may also earn an additional one-time business tax credit of the lesser of $1,000 or 6.2 percent of wages for each of the newly hired workers that the employer retains for at least 52 consecutive weeks.  In order to qualify for the additional tax credit, which can be claimed on the employer's 2011 income tax return, the worker's pay must not significantly decrease in the second half of the year. 

Construction employers will also be able to take advantage of these incentives for the many seasonal construction workers who are beginning to return to the workforce.  According to guidance issued by the Internal Revenue Service (IRS), "an employer may apply the tax exemption to wages paid to a rehired employee who is otherwise a qualified employee," which includes the rehiring of seasonal workers as long as they meet all of the other eligibility requirements. 

The HIRE Act requires that employers get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than 40 hours for anyone during the 60 day period.   IRS Form W-11 is now available on the IRS website and can be used for that purpose.


WEBINAR: Advanced Issues about Worker Misclassification: What Every Construction Contractor Needs to Know

The Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) have announced in recent months that the construction industry will be the primary target for audits and other enforcement activities when it comes to worker misclassification.  As a result, construction HR professionals have been burdened with the responsibility of properly classifying workers and protecting construction companies from these enforcement activities. 

A Double-Header - May 18 & 20 - 2:00pm-3:30pm ET

May 18: Independent Contractor vs. Employee

May 20: Exempt vs. Non-exempt

The Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) have announced in recent months that the construction industry will be the primary target for audits and other enforcement activities when it comes to worker misclassification.  As a result, construction HR professionals have been burdened with the responsibility of properly classifying workers and protecting construction companies from these enforcement activities. 

Do you know which workers in the construction industry are often misclassified as independent contractors instead of employees, even by the most experienced HR professionals?  Once it is determined that a construction worker is an employee, is the worker exempt or non-exempt?  These can sometimes be tough determinations to make, and with wage and hour lawsuits on the rise and record allocation of government agency funds for enforcement and random audits, all construction companies are at risk.  You already know the basics; now uncover the advanced issues about worker misclassification in a contractor-friendly manner.

  • Help your company avoid devastating fines and penalties by correctly classifying workers
  • Discover where even seasoned HR professionals are likely to make mistakes
  • Know how to respond to confusing issues surrounding government audits and lawsuits
  • Review best practices to help protect and ensure compliance
  • Learn the best way to "correct" misclassifications that you've discovered
  • Determine how to distinguish temporary workers from independent contractors
  • Learn why written contracts may not protect independent contractor status'
  • Discover keys to writing job descriptions that will protect your company
  • Learn to build a "good faith" defense with evidence to support exempt classifications
  • Know when and how to legally dock an exempt employee's pay
  • Discover how rest periods, off-the-clock work, Blackberries and cell phones can affect a worker's status

Don't miss this double-header, packed with practical construction-specific examples, recent case settlements and more!

Download the flyer for speaker information and register online today!

*Both webinars have been submitted to HRCI & IACET for review.


Construction Labor Law Developments Covered at AGC's Annual Symposium

The AGC Labor and Employment Law Council - a network of labor lawyers who represent AGC members and chapters - held its 26th Annual Construction Labor Law Symposium on April 16 in Washington, DC.  Attorneys and chapter labor relations managers from across the country attended.

The AGC Labor and Employment Law Council - a network of labor lawyers who represent AGC members and chapters - held its 26th Annual Construction Labor Law Symposium on April 16 in Washington, DC.  Attorneys and chapter labor relations managers from across the country attended.

Council members and guest speakers provided presentations on various developments in construction labor and employment law, including: 

  • The Latest Info on Project Labor Agreements and How to Negotiate Them
  • Labor Requirements for Federal & Federally Assisted Contracts
  • Interesting Issues in Multiemployer Pension Plans
  • Primer on Handbilling, Picketing & Bannering
  • Primer on §§8(b)(4)(D) and 10(k) - Jurisdictional Disputes
  • Conducting I-9 Self-Audits
  • Workplace Violence:  "Terror, Trials, and Trends"
  • Workplace Pandemic Planning

Handouts from those presentations are posted on the Labor & HR Topical Resources page of AGC's Web site, integrated into their respective topic areas.

Guest speaker Wilma Liebman, chairman of the National Labor Relations Board, addressed recent controversies involving the Board, asserting that controversial decisions issued by the George W. Bush-appointed Board led to the controversy over the latest Board appointments made by Pres. Obama.  The upside of the battle over the nomination of recent Board appointee Craig Becker as well as that over the Employee Free Choice Act is that they have brought labor issues to the public's attention, according to Liebman, while the downside is that they may have made labor-management relations even more divisive and hostile then they had been.

The Obama Board will take a fundamentally different approach to decision-making than the Bush Board, Liebman said.  Under her chairmanship, the Board will take a more "dynamic" approach, viewing the National Labor Relations Act as a "living document" and taking into consideration happenings in the "real-world."  However, fears of imminent, wholesale changes in the law by the Obama Board are unrealistic, Liebman maintained, due to constraints such as judicial review of Board decisions, statutory restrictions on economic analysis by the Board, frequent turnover of Board membership, and case processing delay.  If fundamental change in labor law is to occur, she said, it must come from Congress.  She further explained that, while she is exploring the idea of the Board engaging in formal rule-making -- issuing regulations in addition to deciding cases - she is not sure whether the Board will actually conduct rule-making.  The Board's inexperience in the area, restrictions on economic analysis, and the time-consuming nature of the process present obstacles.

The Board's first priority will be to issue decisions in cases that have been pending for a long time but had to be put aside during the two years that the five-member Board had only two members, Liebman said.  These include cases on union bannering, pre-recognition bargaining, job targeting, the rights of workers hired by employers who knew of their illegal status, the rights of union objectors, and the property access rights of a contractor's employees working on another employer's premises.

Kyle Hicks, minority labor counsel for the U.S. Senate Committee on Health, Education, Labor and Pensions, delivered the Charles E. Murphy Keynote Address.  She spoke about recent developments in Congress and prospects for pending labor and employment legislation, particularly in light of upcoming mid-term elections.  The address is named in memory of "Chuck" Murphy, a long-time member and past chairman of the Council who passed away last year.

Make sure that your in-house and outside labor and employment lawyers are Council members, so that they will stay on the cutting edge of construction labor and employment developments.  For information about Council membership, click here or contact Denise Gold, AGC associate general counsel for labor and employment law, at goldd@agc.org or (703) 837-5326.

 

 

 

 

NLRB Chairman Wilma Liebman

 





Senate Minority Labor Counsel Kyle Hicks
 

 

 

 

 


(L-R:) LELC Member Mike Boldt of Ice Miller; Senior Compliance Specialist Bill Isokait of U.S. Department of Labor, Wage and Hour Division; AGC Associate General Counsel Denise Gold; NLRB General Counsel Ron Meisburg


Web-Based Collective Bargaining Seminar Now Available 24/7

Recordings of AGC’s recent Collective Bargaining for Construction Contractors three-part webinar series are now available for purchase from AGC’s online bookstore.  Member discounts apply. 

Recordings of AGC’s recent Collective Bargaining for Construction Contractors three-part webinar series are now available for purchase from AGC’s online bookstore.  Member discounts apply. 

The first session, Legal Framework, covered such topics as the duty to bargain, unfair labor practices, 8(f) vs. 9(a) relationships, multiemployer bargaining, bargaining impasse, and strikes and lockouts. 

The second session, Understanding & Quantifying Contract Terms, covered such topics as subcontracting clauses, anti-dual shop clauses, PAC check-off clauses, industry fund clauses, substance abuse testing clauses, hiring hall clauses, and jurisdictional dispute clauses, as well as how to “cost out” a contract. 

The third session, Preparing for and Negotiating at the Bargaining Table, covered such topics as bargaining team organization, planning logistics, deciding strategy, reviewing background information, setting objectives, preparing proposals, gathering and using data, negotiation strategies and techniques, bargaining table "do's and don'ts," and activity between sessions.  Boldt and Gasperow

Faculty included Mike Boldt, a partner in the law firm of Ice Miller LLP, Bob Gasperow, executive director of the Construction Labor Research Council, and moderator Denise Gold, associate general counsel for AGC of America.


For more information or to contact us directly, please visit agc.org | © AGC, 2004 – All rights reserved