AGC's Human Resource and Labor News - February 6, 2014 / Issue No. 01-14 (Print All Articles)

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NLRB Re-Proposes "Quickie Election" Rule

On February 5, 2014, the National Labor Relations Board (NLRB) re-issued a proposed rule that would expedite the election process in union representation cases, likely to unions’ advantage. The rule appears to be identical to a rule that was proposed in 2011. A shortened version was finalized and took effect in 2012 but was invalidated by a court on procedural grounds shortly thereafter. The NLRB recently withdrew its appeal of the court’s decision and formally rescinded the rule

On February 5, 2014, the National Labor Relations Board (NLRB) re-issued a proposed rule that would expedite the election process in union representation cases, likely to unions’ advantage. The rule appears to be identical to a rule that was proposed in 2011.  A shortened version was finalized and took effect in 2012 but was invalidated by a court on procedural grounds shortly thereafter.  The NLRB recently withdrew its appeal of the court’s decision and formally rescinded the rule.

The changes proposed in the re-issued, more comprehensive rule include:  shortening the time between the filing of the petition and the holding of the election, eliminating pre-election hearings, expanding the information that employers must disclose about employees to include e-mail addresses and telephone numbers, and rendering post-election review by the Board discretionary.

As AGC explained in comments to the 2011 proposed rule, the rule would be particularly difficult to apply in the construction industry. This is due to a number of unique aspects of the industry, including the complexity of bargaining unit and voter eligibility determination, and the decentralized nature of the workplace. Regarding the proposed mandatory disclosure of employee e-mail addresses and telephone numbers, recent cases have illustrated how construction unions might misuse such information. AGC is also concerned that the proposed rule might lead to unintended consequences in the realm of increased litigation and backlash legislation.

AGC is presently considering its response to the re-issued proposed rule, as is the AGC-supported Coalition for a Democratic Workplace.  Comments are due by April 7, 2014.


NLRB Abandons Notice-Posting Rule

The battle over the National Labor Relations Board’s notice-posting rule has effectively ended by Board forfeit. The rule would have required most private-sector employers to post a designated notice informing employees of the right to unionize and of other rights under the National Labor Relations Act (NLRA). The Board issued the final regulation in August 2011 but put implementation on hold as a result of legal challenges. In separate cases decided in May and June of 2013, both brought by AGC-supported organizations, the U.S. Courts of Appeals for the DC and the Fourth Circuits struck down the rule on different grounds. On Jan. 2, 2014, the Board let the deadline for seeking Supreme Court review of those decisions to pass without action.

The battle over the National Labor Relations Board’s notice-posting rule has effectively ended by Board forfeit. The rule would have required most private-sector employers to post a designated notice informing employees of the right to unionize and of other rights under the National Labor Relations Act (NLRA). The Board issued the final regulation in August 2011 but put implementation on hold as a result of legal challenges. In separate cases decided in May and June of 2013, both brought by AGC-supported organizations, the U.S. Courts of Appeals for the DC and the Fourth Circuits struck down the rule on different grounds. On Jan. 2, 2014, the Board let the deadline for seeking Supreme Court review of those decisions to pass without action.

In a statement issued on Jan. 6, 2014, the Board said that it “will continue its national outreach program to educate the American public about the statute.” The Board has also reminded employers that they may voluntarily post the designated notice, which remains available on the agency’s website.

The Board could issue a new notice-posting rule, but this would require restarting the formal rulemaking process from scratch, and, so far, the Board has made no indication that it intends to do so. This stands in contrast with indications from the Board that it very well might revisit its other embattled rulemaking effort, the so-called “Quickie Election” Rule. Click here for an update about that rule.

AGC members are reminded that, while the Board’s notice-posting rule is now defunct, many federal contractors must still comply with similar rules issued by the U.S. Department of Labor and the FAR Council.

For more information, contact Associate General Counsel Denise Gold at goldd@agc.org or (703) 837-5326.


Circuit Court Validates Class Action Waivers in Employment Arbitration Agreements

The U.S. Court of Appeals for the Fifth Circuit (LA, MS, TX) has overturned a National Labor Relations Board (“NLRB” or “Board”) decision prohibiting employers from requiring employees to sign arbitration agreements containing waivers of the right to pursue class action and collective action claims in court or arbitration. As reported earlier, the NLRB ruled that such a requirement interferes with employees’ rights under Section 7 of the National Labor Relations Act to engage in protected concerted activity. The court disagreed, finding that the NLRB failed to give proper weight to the Federal Arbitration Act (“FAA”).

The U.S. Court of Appeals for the Fifth Circuit (LA, MS, TX) has overturned a National Labor Relations Board (“NLRB” or “Board”) decision prohibiting employers from requiring employees to sign arbitration agreements containing waivers of the right to pursue class action and collective action claims in court or arbitration.  As reported earlier, the NLRB ruled that such a requirement interferes with employees’ rights under Section 7 of the National Labor Relations Act to engage in protected concerted activity.  The court disagreed, finding that the NLRB failed to give proper weight to the Federal Arbitration Act (“FAA”). 

The court acknowledged that some cases lend support to the NLRB’s finding that collective and class claims are protected by Section 7.  However, the FAA “has equal importance,” said the court, and “caselaw under the FAA points us in a different direction than the course taken by the Board.”  The FAA  generally requires enforcement of arbitration agreements according to their terms.  The two exceptions to the rule were at issue in this case:  (1) an arbitration agreement may be invalidated on any ground that would invalidate a contract under the FAA's "saving clause;” and (2) application of the FAA may be precluded by another statute's contrary congressional command.  After conducting a lengthy analysis, the court concluded that neither of the exceptions applied.

The court did uphold part of the Board’s decision, though.  It found substantial evidence to support the conclusion that the particular arbitration agreement involved in the case violated the NRLA because employees could reasonably understand it to preclude them from filing unfair labor practice charges with the NRLB.  The court, therefore, enforced the Board’s order requiring the employer to revise the agreement to clarify that employees remain free to pursue such charges with the NLRB.

Many observers think that this case, or another case like it, will go to the Supreme Court.  AGC will report on any significant developments.  Meanwhile, members are encouraged to seek legal counsel to review any mandatory arbitration agreements in place.

D.R. Horton, Inc. v. NLRB, Case No. 12-60031 (5th Cir., 12/3/13).


Supreme Court Clarifies Meaning of “Changing Clothes” Under The Fair Labor Standards Act

On Jan. 27, 2014, the U.S. Supreme Court held that the time spent by employees donning and doffing (putting on and taking off) certain protective gear is not compensable under Section 203(o) of the Fair Labor Standards Act (FLSA). This ruling will significantly impact the ability of employees to seek compensation for the donning and doffing of certain items in the unionized setting. Additionally, the Court made comments about the de minimis doctrine which could well impact employers in the nonunionized environment. Sandifer v. United States Steel Corp.

On Jan. 27, 2014, the U.S. Supreme Court held that the time spent by employees donning and doffing (putting on and taking off) certain protective gear is not compensable under Section 203(o) of the Fair Labor Standards Act (FLSA). This ruling will significantly impact the ability of employees to seek compensation for the donning and doffing of certain items in the unionized setting. Additionally, the Court made comments about the de minimis doctrine which could well impact employers in the nonunionized environment. Sandifer v. United States Steel Corp.

Background

In recent years, numerous courts have considered the issue of whether donning and doffing of certain items may be compensable.

In the nonunion setting, this has traditionally called for an analysis of, among other things, the type of items at issue and the length of time it takes to don and doff those items. But the analysis is somewhat different in a unionized facility. There, employees can bargain away their right to have any of the time considered to be “work” pursuant to Section 203(o) of the FLSA, which provides:

In determining for the purposes of [S]ections 206 and 207 of this title the hours for which an employee is employed, there shall be excluded any time spent in changing clothes or washing at the beginning or end of each workday which was excluded from measured working time during the week involved by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee.

The issue for the Court was the proper interpretation of the phrase “changing clothes” as set forth in Section 203(o).

Facts And History Of The Case

Unionized employees at U.S. Steel were required to don and doff certain items of personal protective equipment prior to walking to their work location. The personal protective equipment at issue consisted of, among other items, flame-retardant pants and a jacket, work gloves, metatarsal boots, a hard hat, safety glasses, ear plugs, a respirator, and a “snood” (a hood that covers the top of the head, the chin, and the neck). The employees were not compensated for this time and argued that such time should be compensable in a collective action under the FLSA that was filed on behalf of 800 former and current hourly workers in a federal district court.

The district court found that the FLSA did not require clothes-changing time to be compensable on these facts, but certified the issue of the compensability of the walking time for an interlocutory appeal to the U.S. Court of Appeals for the 7th Circuit. The district court also found that the Collective Bargaining Agreement (CBA) provided that the activities were non-compensable, which was not before the Supreme Court on appeal.

The 7th Circuit, in an opinion written by Judge Posner, found that the personal protective equipment constituted “clothes”. Posner stated, “[i]t would be absurd to exclude all work clothes that have a protective function from [S]ection 203(o), and thus limit the exclusion largely to actors’ costumes and waiters’ and doormen’s uniforms.”

Judge Posner did place some limitation on what items could be considered clothes. He noted that not everything a person wears, such as glasses, ear plugs, or a watch, could be considered clothing. The opinion then considered other issues, such as whether subsequent walking time was compensable, but the Supreme Court only granted certiorari on the first issue.

The Supreme Court Ruling

The Supreme Court unanimously agreed with Judge Posner. The Court began by reviewing the definition of the term “clothes,” as it was defined by dictionaries at the time of the enactment of Section 203(o) in 1949. The Court determined that “clothes” meant items that are both designed and used to cover the body and are commonly regarded as articles of dress. It found no reason to depart from that definition.

The Court rejected the employees’ argument that the term “clothes” is not sufficiently broad to include items designed and used to protect against workplace hazards. It further found that the employees’ position would overly limit the application of Section 203(o) and was incompatible with the FLSA’s historical context. While the Court acknowledged the difficulty in crafting a general definition for the term “clothes,” it noted that its construction “leaves room for distinguishing between clothes and wearable items that are not clothes, such as some equipment and devices.”

Having addressed the proper definition of the term “clothes,” the Court then considered the meaning of “changing.” The Court found that “while it is true that the normal meaning of ‘changing clothes’ connotes substitution, the phrase is certainly able to have a different import.” The Court concluded the broader statutory context encompasses both actual changing and also layering garments atop one another after arriving on the job site. Applying these principles, the Court found that nine of the twelve items at issue fit within the interpretation of “clothes,” while glasses, earplugs, and a respirator did not.

But the most meaningful and lasting aspect of the opinion may have come in the form of dictum regarding the de minimis doctrine. For over 60 years, courts have typically embraced the concept of the de minimis doctrine [which is Latin referring to a small or trivial amount] to conclude that certain instances of minimal donning and doffing at the beginning and end of each shift need not be compensated. The Court found that “[a] de minimis doctrine does not fit comfortably within the statute at issue here, which, it can fairly be said, is all about trifles . . .” (emphasis in original). The Court continued, “there is no more reason to disregard the minute or so necessary to put on glasses, earplugs, and respirators, than there is to regard the minute or so necessary to put on a snood.”

What Does This Mean For Employers?

As a result of this ruling, unionized employees should not be able to recover under Section 203(o) for most time spent donning and doffing standard protective gear when an applicable CBA expressly excludes this activity from measured working time, or where the time is excluded under that CBA by custom or practice. In a broader context, this case apparently undercuts the viability of the de minimis doctrine, at least in the donning/doffing context. The Court seemed to confine its discussion of the de minimis doctrine to the context of a case under Section 203(o), but lower courts may well apply the Court’s reasoning to nonunionized workforces.

This article was contributed by the law firm of Fisher & Phillips LLP.  It is not intended to be, and should not be construed as, legal advice for any particular fact situation.  For more information on Fisher & Phillips, visit www.laborlawyers.com.

 


OFCCP’s Disability and Veterans Rules Effective March 24, Mandatory Self-ID Form Released

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs’ (OFCCP) new rules will go into effect on March 24, 2014. Both rules increase the affirmative action requirements of direct federal contractors and subcontractors with regard to veterans and individuals with disabilities (IWD).

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs’ (OFCCP) new rules will go into effect on March 24, 2014. Both rules increase the affirmative action requirements of direct federal contractors and subcontractors with regard to veterans and individuals with disabilities (IWD).

The veterans rule, which updates regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), prohibits discrimination and requires contractors with contracts valuing $100,000 or more to take affirmative action in all personnel practices regarding covered veterans. In addition, covered contractors or subcontractors with 50 or more employees are required to develop and maintain a written VEVRAA affirmative action program.

The disabilities rule, which updates regulations implementing Section 503 of the Rehabilitation Act of 1973 (Section 503), prohibits discrimination and requires contractors to take affirmative action in all personnel practices for qualified IWDs. These requirements apply to contractors and subcontractors with a covered federal contract or subcontract valued in excess of $10,000. In addition, covered contractors and subcontractors with contracts valued at $50,000 or more and 50 or more employees must develop and maintain a written Section 503 affirmative action program.

Both rules require contractors to offer applicants the opportunity to self-identify as a protected veteran and/or IWD both pre- and post-offer. In addition, the Section 503 regulations require contractors to initially extend the offer to self-identify as an IWD to existing employees within one year of the regulation’s effective date and then again once every five years. Within the five year period, contractors must remind employees of their ability to self-identify as an IWD at anytime, should their disability status change. To comply, contractors must use the newly released Section 503 Self ID Form. For applicants or employees who don’t self-identify as an IWD, contractors may identify a person’s disability status if it is known or obvious, as is done under Executive Order 11246 with regard to race and gender.

For the Veterans rule, while sample invitations are available for contractors to use should they choose to, contractors are not required to use them. But contractors who choose to use a different form must ensure that the format used meets the criteria in the rule.

Contractors eager to learn how to comply with the requirements of the new rules in their entirety are encouraged to read AGC’s Affirmative Action Manual for Construction, published after the rules were final. For additional compliance assistance, review AGC’s recently recorded webinar on the rules, OFCCP’s Disability and Veterans Rules: What They Mean for Federal Construction Contractors. Information can also be found in the Labor and HR Topical Resources section of the AGC website. The primary category is “EEO” and the secondary category is “Affirmative Action/EEO.”


Recording of AGC’s Latest Davis-Bacon Webinar Series Now Available

AGC held its annual webinar to train construction contractors about the Davis-Bacon and Related Acts on Dec. 5 and 10, 2013. Archives of each session of the two-part series titled “Davis-Bacon: Understanding, Influencing, and Complying with Federal Prevailing Wage Requirements” are available for purchase and immediate viewing from AGC’s online bookstore.

AGC held its annual webinar to train construction contractors about the Davis-Bacon and Related Acts on Dec. 5 and 10, 2013.  Archives of each session of the two-part series titled “Davis-Bacon:  Understanding, Influencing, and Complying with Federal Prevailing Wage Requirements” are available for purchase and immediate viewing from AGC’s online bookstore

In the first session (product code WB232), Tim Helm, head of Davis-Bacon enforcement at the U.S. Department of Labor, and Deborah Wilder, prevailing wage attorney and consultant, addressed the Acts’ coverage and compliance issues such as “site of the work” and truck drivers, fringe benefits, apprentices and trainees, and travel-related expenses.  In the second session (product code WB235), Maria Duffy, National Survey Coordinator for the U.S. Department of Labor’s Wage and Hour Division, explained the survey process used to establish wage determinations, how to influence the outcome of that process, finding and interpreting the right wage determination, applying the correct classification, what to do if a classification is missing, and how to seek reconsideration of a wage determination.

Also available from the bookstore is the fourth edition of AGC’s Davis-Bacon Compliance Manual (product code 2010).  The 176-page book is a must-have reference for contractors with federal or federally assisted construction contracts.  AGC members can access additional resources on Davis-Bacon for free in the Labor & HR Topical Resources area of the AGC website by selecting the main category “Compensation” and subcategory “Davis-Bacon Act.”


Labor Department Provides Clarification on Application of Davis-Bacon to Survey Crews

In response to an August 20, 2013, letter from AGC, the U.S. Department of Labor’s Wage and Hour Division (WHD) has provided clarification on the application of the Davis-Bacon Act to survey crew workers. Due to widespread confusion among construction contractors, AGC’s letter requested a withdrawal and reissuance of All Agency Memorandum (AAM) 212. The AAM, regarding the application of the Davis-Bacon Act to survey crews, was issued by WHD on March 23, 2013.

In response to an August 20, 2013, letter from AGC, the U.S. Department of Labor’s Wage and Hour Division (WHD) has provided clarification on the application of the Davis-Bacon Act to survey crew workers. Due to widespread confusion among construction contractors, AGC’s letter requested a withdrawal and reissuance of All Agency Memorandum (AAM) 212. The AAM, regarding the application of the Davis-Bacon Act to survey crews, was issued by WHD on March 23, 2013.

While it did not withdraw and reissue the AAM, WHD provided clarification and additional guidance for determining which members of surveys crews are to be considered laborers and mechanics, and therefore, covered by the Davis-Bacon Act. According to the letter, survey crew members are considered laborers and mechanics and are covered by the Davis-Bacon Act on covered projects when they:

  • Perform primarily physical and/or manual duties (50% or more is considered primary);
  • Perform this work while employed by a contractor or subcontractor;
  • Perform this work immediately prior to or during actual construction;
  • Perform this work in direct support of construction crews; and
  • Perform this work on the “site of the work.”

To further explain, the letter states that survey crew members are generally not covered when:

  • Surveying work is performed during the design phase in which construction projects are envisioned and engineering plans are developed by architectural and engineering firms;
  • Survey crew members are not employed by a construction contractor or subcontractor; or when the worker is exempt under Sec. 541 of the Fair Labor Standards Act.

To make the appropriate determinations of coverage, it is important that contractors not consider job titles alone but, instead, evaluate actual job duties along with each of the determining requirements associated with the work that is being performed. Because survey crew classifications typically have not been listed in Davis-Bacon general wage determinations, contractors that determine they have covered survey crew workers will need to request a prevailing wage rate from the contracting agency through the conformance process, should one not be listed on the wage determination. WHD advises that the request should include information describing the duties of the workers on the project.

For additional information on the Davis-Bacon Act, visit AGC’s Labor & Topical Resources webpage. The primary category is “Compensation” and the secondary category is “Davis-Bacon & Related Acts.”


Updated Inventory of Construction-Industry Multiemployer Pension Plans Released as Advocacy Efforts for Reform Continue

The Mechanical Contractors Association of America (MCAA) and Horizon Actuarial Services have released a second edition of their Inventory of Construction Industry Pension Plans. The Inventory provides historical data from all multiemployer pension plans in the construction industry. It includes analyses of key trends in plan demographics, cash flows, investments, funding, costs, and expenses. One of the enhancements of the new edition is inclusion of plan features by specific craft.

The Mechanical Contractors Association of America (MCAA) and Horizon Actuarial Services have released a second edition of their Inventory of Construction Industry Pension Plans. The Inventory provides historical data from all multiemployer pension plans in the construction industry. It includes analyses of key trends in plan demographics, cash flows, investments, funding, costs, and expenses. One of the enhancements of the new edition is inclusion of plan features by specific craft.

“The result is a valuable tool that will assist the union sector of the construction industry in better understanding how multiemployer pension plans have evolved, and where they may be headed, to aid them in ensuring the plans’ futures,” MCAA stated in a Feb. 1 press release.

AGC and MCAA are working together, along with other stakeholders from both labor and management, to promote certain legislative reforms in laws governing multiemployer pension plans. The proposed reforms, known as Solutions Not Bailouts, are designed to stabilize and enhance the current multiemployer system, provide additional tools for deeply troubled plans, and encourage the development of innovative plan designs. AGC hopes to see legislative adoption of the proposed reforms this year, before the scheduled sunset of the Pension Protection Act of 2006 (PPA) at the end of 2014.


Collective Bargaining in 2013 Yields Average 1st-Year Increase of 2.2 Percent

Construction-industry collective bargaining negotiations settled during 2012 resulted in an average first-year increase in wages and benefits of $1.00 or 2.2 percent, according to the annual year-end Settlements Report issued by the AGC-supported Construction Labor Research Council. For newly negotiated multi-year contracts, the average negotiated second-year increase was $1.30 or 2.6 percent, and the average third-year increase was $1.34 or 2.6 percent

Construction-industry collective bargaining negotiations settled during 2012 resulted in an average first-year increase in wages and benefits of $1.00 or 2.2 percent, according to the annual year-end Settlements Report issued by the AGC-supported Construction Labor Research Council. For newly negotiated multi-year contracts, the average negotiated second-year increase was $1.30 or 2.6 percent, and the average third-year increase was $1.34 or 2.6 percent.

For all three contract yrs, the average increases negotiated in 2013 – whether measured by percentage or by dollar amount – were higher than those negotiated in 2012. As in 2012, though, there were significantly fewer settlements for zero-wage increase than in the prior year.

Regionally, the area reporting the lowest average first-year increase in 2013 was the Mountain-Northern Plains Region (CO, MT, ND, SD, UT, WY) at 1.3 percent, and the region reporting the highest was the New England Region (CT, MA, ME, NH, RI, VT) at 2.7 percent.

By craft, the lowest average percent was negotiated by the Insulators at 1.4 percent, and the highest was negotiated by the Teamsters at 2.7 percent.

The full report is available via the link embedded above and, along with other CLRC reports, via AGC’s online Labor & HR Topical Resources library at http://www.agc.org/topicalresources (under the main category “Collective Bargaining” and subcategory “Collective Bargaining Agreements Data”). It contains additional data and charts, as well as information about custom research and CLRC’s consulting services.

For more information, please contact Denise Gold, Associate General Counsel, at goldd@agc.org or (703) 837-5326.


Construction Union Membership and Members’ Earnings Both Rise in 2013, While Nonunion Workers’ Earnings Decline

Union representation in the construction industry rose to 14.9 percent (967,000 workers) in 2013 from 13.7 percent (850,000 workers) in 2012, the Bureau of Labor Statistics (BLS) reports. Union membership in the industry also rose, from 13.2 percent (820,000 workers) in 2012 to 14.1 percent (915,000 workers) in 2013. Total employment in construction increased by a significantly larger margin during the year – rising over 4 percent, from 6.205 million workers to 6.474 million.

Union representation in the construction industry rose to 14.9 percent (967,000 workers) in 2013 from 13.7 percent (850,000 workers) in 2012, the Bureau of Labor Statistics (BLS) reports. Union membership in the industry also rose, from 13.2 percent (820,000 workers) in 2012 to 14.1 percent (915,000 workers) in 2013. Total employment in construction increased by a significantly larger margin during the year – rising over 4 percent, from 6.205 million workers to 6.474 million.

Also on the rise in 2013 were the median weekly earnings of full-time workers in the industry who were members of, or represented by, a union. For union members, the median increased from $1,086 to $1,096. For union-represented workers, it increased from $1,069 to $1,081. At the same time, the median weekly earnings of nonunion workers declined from $722 to $713, causing the median for all workers in the industry to decline from $768 to $762.

The construction industry continues to have one of the highest union representation rates among private industries reported by BLS, exceeded only by the utilities, transportation and warehousing, and telecommunications industries. Union representation across all private-sector industries was 7.5 percent in 2013, as compared to 7.3 percent in 2012.

Assessments of BLS industry data should consider that such data cover surveyed employees at all levels and classifications, including personnel that are not typically organized, such as office clerical workers, professional staff, and executives. The data also cover all sectors of the industry, including residential construction.

BLS further reports that the percentage of union-represented workers in construction and extraction occupations – whether employed in the construction industry or another industry – also increased in 2013, from 19.9 percent to 20.3 percent. The total number of workers employed in such occupations rose from 5,567 million to 5,809 million.

For the full report from BLS, click here. For additional breakdowns of BLS data on union representation, including industry data broken down by state, click here.


Save the Date: 2014 Construction HR and Training Professionals Conference Set for Oct. 15-17 in Phoenix, Arizona

Once again, HR and Training Professionals in the Construction Industry will come together in October for AGC’s Construction HR and Training Professionals Conference. The Conference will take place October 15-17 in Phoenix, Arizona at the Sheraton Phoenix Downtown. Information about the event is located on the AGC website. Registration will open in the Spring.

Once again, HR and Training Professionals in the Construction Industry will come together in October for AGC’s Construction HR and Training Professionals Conference.  The Conference will take place October 15-17 in Phoenix, Arizona at the Sheraton Phoenix Downtown.   Information about the event is located on the AGC website.   Registration will open in the Spring.

The conference will continue to offer unique educational and networking opportunities for HR, training, and workforce development professionals in the construction industry.  Sessions for training professionals will cover the most cutting-edge techniques in training and development currently in use and envisioned for the future in the industry.  The HR sessions will help HR professionals in the industry remain up to date and compliant with employment laws and best practices.  Some sessions will interest both HR and training professionals alike.

Back by popular demand is the Federal Construction HR Workshop. This workshop is designed to help staff responsible for compliance on federal and federally assisted projects by providing practical information and best-practice advice from experts and peers experienced in the area.

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


Health FSA Rules Modified to Allow Carryover

The U.S. Department of the Treasury recently issued a notice modifying the longstanding “use-or-lose” rule for health flexible spending arrangements (FSAs). The updated guidance permits employers to allow plan participants to carry over up to $500 of their unused health FSA balances remaining at the end of a plan year. The modification was made in response to comments received pointing to the difficulty of predicting future needs for medical expenditures, the need to make FSAs accessible to employees of all income levels, and the desire to minimize incentives for unnecessary spending at the end of the year.

The U.S. Department of the Treasury recently issued a notice modifying the longstanding “use-or-lose” rule for health flexible spending arrangements (FSAs). The updated guidance permits employers to allow plan participants to carry over up to $500 of their unused health FSA balances remaining at the end of a plan year. The modification was made in response to comments received pointing to the difficulty of predicting future needs for medical expenditures, the need to make FSAs accessible to employees of all income levels, and the desire to minimize incentives for unnecessary spending at the end of the year.

Until the modification, any account balances remaining unused at the end of the year were forfeited by employees. Under current law, plan sponsors have the option of allowing employees a grace period permitting them to use amounts remaining unused at the end of a year to pay qualified FSA expenses incurred for up to two and a half months following year-end. The new rules give employers the option to allow employees to carry over up to $500 of the unused amounts left in their health FSAs for expenses in the next year. The existing option for plan sponsors to allow employees a grace period after the end of the plan year remains in place. However, a health FSA cannot have both a carryover and a grace period; it can have one or the other or neither. For this reason, employers cannot offer a grace period on the same plan year that it offers the carryover provision. So, employers may continue to allow the use of funds for up to two-and-a-half months after the end of the plan year or allow employees to carry over up to $500 of unused funds, but not both. It is ultimately the employer’s choice to provide either option, or no option at all.

The treasury department has posted a Fact Sheet on its website that can be shared with employees.


Counting the Cost of Payroll Cards: Are They Worth It for Employers?

Paying employees is a complicated business. For employers in retail and other industries where employees may not have bank accounts, payroll cards have emerged as a potential solution. But are payroll cards an answer, or just an illusion?

Paying employees is a complicated business. For employers in retail and other industries where employees may not have bank accounts, payroll cards have emerged as a potential solution. But are payroll cards an answer, or just an illusion?

Generally speaking, payroll cards (or pay cards) function as debit cards. The employer deposits the employee’s pay into an account, and the payroll card allows the employee to withdraw funds, authorize payments, or even write checks. The benefits to both parties are seemingly undeniable. Employees receive immediate access to their money. Payroll card accounts are often less expensive for the employer than cutting physical checks. Payroll cards are available to employees without bank accounts, and employees do not have to pay check-cashing fees. On the other hand, users of payroll cards may be charged fees for withdrawals, transfers, replacing cards, or even inactivity. These fees may run afoul of widely varying state laws that are often more onerous than federal regulations. For example, many states require that 100 percent of net payroll funds be made accessible to employees without cost on at least a pay-period basis. This year, the New York Attorney General launched an investigation into the use of payroll cards by many large retail employers within the state.

Some states allow pay cards to be the default method of payment, although restrictions may apply. However, in some states — specifically, Montana and Rhode Island — the departments of labor have taken the blanket enforcement position that any use of pay cards for wage payment is unlawful. (It is important to note that the statutes in these states are silent on the use of pay cards. Accordingly, it remains to be seen whether the courts would uphold the labor departments’ position, or whether the departments might choose to take a different enforcement position, in the future.)

The argument could also be made that the use of pay cards – if mandated by employers, and if unavoidable fees are charged – could impermissibly drop employees’ pay below the applicable minimum wage.

Another area of concern is the federal Electronic Fund Transfer Act and its implementation arm, Regulation E, both of which provide consumer protection related to the use of electronic funds. Among other things, the EFTA prohibits employers from mandating that employees’ wages be deposited at a particular financial institution. (Under the EFTA, an employer may require direct deposit, so long as the employee can choose the place of deposit.

According to a recent bulletin from the Consumer Financial Protection Bureau, many of the protections of the EFTA and Regulation E apply to payroll cards. Specifically, the Bureau advises that employers may not require employees to receive their wages on a payroll card of the employer’s choosing. The employer must offer at least one other way for the employee to receive wages. Other requirements that pertain to payroll cards include fee disclosure, access to account history, limited liability for unauthorized use and error resolution rights. The Bureau also notes that it has enforcement power over employers that it believes are violating the EFTA and Regulation E.

Despite all of this regulation and investigation, payroll cards may still be the best solution for many employers. The following are some tips that will help you protect your company.

Be aware of your state’s law. As previously noted, many states have requirements that are more restrictive than the federal requirements, and the rules diverge widely. For example, according to another recent public advisory bulletin, the State of Illinois requires that (1) employees voluntarily agree to the use of payroll cards; (2) all fees, penalties and costs associated with the use of such cards be disclosed in writing; and (3) employees be able to obtain “the full monetary value on the payroll card without discount.” In addition, Illinois employers must provide an itemized statement of hours, wages and deductions; and the use of a payroll card must be revocable with another alternative available for the payment of wages.

Freedom of choice. Employers should offer employees a choice regarding how they receive their wages. The Bureau specifically advises that employers offer one or more alternatives to the use of pay cards, such as direct deposit, paper check, or cash.

Be aware of your payroll card provider. Not all payroll cards are created equal in terms of the amounts and types of fees charged. All employers who use payroll cards – but especially those in states that require full disclosure – should make sure they know and disclose the terms and conditions associated with use of their providers’ cards.

As always, keep good records. With so many states and federal agencies taking the position that employers cannot mandate the use of payroll cards as the only means of delivering payroll, it is important to create and maintain records that will demonstrate that employees are offered multiple choices for how they receive their wages

Ultimately, the use of a payroll card is a highly fact-specific decision that should be made based on the needs of your company and the applicable state and federal regulations. If you have a question about use of payroll cards, please contact [a licensed attorney who is familiar with wage and hour issues in your state.]

Editor’s Note: This article was contributed by Susan Bassford Wilson, an attorney with the law firm of Constangy, Brooks & Smith, LLP. Ms. Wilson specializes in management-side employment law, particularly focusing on litigation prevention. She handles a wide range of employment matters in federal and state courts across Missouri and Illinois, as well as successfully representing employers in administrative matters and mediation.


Construction Firms Plan to Hire in 2014, Worry About Worker Shortages

Most construction contractors predict that the demand for construction services will either grow or remain stable in virtually every market segment this year, and many firms plan to start hiring again, according to AGC’s recently released survey results conducted as part of Optimism Returns: The 2014 Construction Industry Hiring and Business Outlook. The survey results reflect a generally upbeat outlook for the year, even as firms worry about growing worker shortages, rising costs, and the impact of new regulations and federal budget cutting.

Most construction contractors predict that the demand for construction services will either grow or remain stable in virtually every market segment this year, and many firms plan to start hiring again, according to AGC’s recently released survey results conducted as part of Optimism Returns: The 2014 Construction Industry Hiring and Business Outlook. The survey results reflect a generally upbeat outlook for the year, even as firms worry about growing worker shortages, rising costs, and the impact of new regulations and federal budget cutting.

According to the results, many firms plan to begin hiring again, while relatively few plan to start making layoffs. Contractors have a relatively positive outlook for virtually all 11 market segments covered in the Outlook, in particular for private-sector segments. For five of those segments, at least 40 percent of respondents expect the market to expand and fewer than 20 percent expect the market to decline in 2014. The difference between the optimists and pessimists – the net positive reading – is a strong 28 percent for private office, manufacturing and the combined retail/warehouse/lodging segments, and 25 percent for power and hospital/higher education construction.

Among public sector segments, contractors are more optimistic about demand for new water and sewer construction, with a net positive of 17 percent. Contractors are mildly optimistic about the market for highway construction, with a net positive of 10 percent. Respondents are almost equally divided regarding the outlook for the other four segments, ranging from net positives of 5 percent for public buildings, 4 percent for schools, 3 percent for transportation facilities other than highways, to a negative of 2 percent for marine construction.

Ninety percent of construction firms report they expect prices for key construction materials to increase in 2014. Most, however, expect those increases will be relatively modest, with 43 percent reporting they expect the increases to range between 1 and 5 percent. Meanwhile, 82 percent of firms report they expect the cost of providing health care insurance for their employees will increase in 2014. Despite that, only 1 percent of firms report they plan to reduce the amount of health care coverage they provide.

AGC’s chief economist, Ken Simonson, notes that as firms continue to slowly expand their payrolls, they are likely to have a harder time finding enough skilled construction workers. Already, 62 percent of responding firms report having a difficult time filling key professional and craft worker positions. Two-thirds of firms expect it will either become harder or remain as difficult to fill professional positions and 74 percent say it will get harder, or remain as hard, to fill craft worker positions.

According to Simonson, the worker shortages are already having an impact on the industry. Fifty-two percent of firms report they are losing construction professionals to other firms or industries and 55 percent report they are losing craft workers. As a result, a majority of firms report they have improved pay and benefits to help retain qualified staff. One reason they are likely worried is that nearly half of the firms believe training programs for new craft workers are poor or below average.

The Outlook was based on survey results from over 800 construction firms from every state and the District of Columbia. Contractors of every size answered over 40 questions about their hiring, equipment purchasing and business plans. Click here for the full report. Click here for the survey results. Click here for state-by-state survey results.


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