AGC's Human Resource and Labor News - June 11, 2015 Issue No. 03-15 (Print All Articles)

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Davis-Bacon Contractors May Be Required to Cover Actual Employee Lodging Costs

The U.S. Department of Labor’s (DOL) Administrative Review Board (ARB) released its long-awaited opinion in the Weeks Marine case.

The U.S. Department of Labor’s (DOL) Administrative Review Board (ARB) released its long-awaited opinion in the Weeks Marine case.  In that decision, ARB announced a rule that is an important development for contractors working on Davis-Bacon projects:  when contractors use employees who must travel away from their homes and live near the job site, the Davis-Bacon Act requires that contractor pay for their housing. At least that is the case when the employees’ traveling to, and living near, the job site is for the benefit of the employer/contractor. The obligation does not arise if the travel and lodging is primarily for the benefit and convenience of the employees rather than the employer, and either the company regularly furnishes such lodging to all of its employees or such lodging is customarily furnished by other employers in the same type of business.  Furthermore, the ARB made clear that, where the lodging is for the benefit of the employer, the employees need to be awarded their actual costs, less any payment specifically made to defray those costs that were not used to otherwise satisfy the Davis-Bacon prevailing wage and benefit obligations.

The case concerns a Davis-Bacon contract that included dredging of the Fire Island inlet in New York. Weeks Marine had a collective bargaining agreement (CBA) with a union that gave to union members, living in certain states, priority to work on the Fire Island project. Generally, all of the employees who were referred to Weeks Marine through the CBA needed to travel from their homes to the worksite in New York. While the CBA required, and the company provided, the payment of a $35 per day per diem, the employee’s lodging expenses exceeded that amount.

Among other things, the Davis-Bacon Act forbids a contractor’s requiring an employee to “kick back” any portion of the prevailing wages and benefits paid to that employee on the Davis-Bacon project. DOL took the position that requiring the employees to pay for their lodging expenses near the job site primarily benefitted Weeks Marine, and, therefore, its failure to fully reimburse those employees for the lodging costs was a de facto kickback of a portion of their Davis-Bacon wages and benefits.

At the original administrative hearing, the administrative law judge (ALJ) agreed with DOL, but, instead of ordering payment of employees’ full out-of-pocket expenses (less the subsistence allowance), the ALJ created a formula based, among other things, on the lowest price paid for lodging by any employee.  Both Weeks Marine and DOL appealed the ALJ’s ruling to the ARB.

The ARB held that, if the employees’ lodging was “for the benefit of the employer,” Weeks Marine’s failure to reimburse the lodging expenses was, indeed, a de facto kickback. However, it remanded to the ALJ to gather further evidence to establish whether the employees’ lodging was for the “benefit of the employer.”  The ARB also reversed the ALJ’s method of computing damages. Rather than the ALJ’s formula, the ARB directed that the employees were to be reimbursed their actual lodging costs, less the CBA’s per diem, if the ALJ concluded through her fact-finding that the lodging was for the “benefit of the employer.”

To avoid the uncertainty and burden of unlimited reimbursement costs but still be compliant, the ARB said, contractors have numerous options.  For example, the company may directly provide reasonable lodging to employees, or it may identify reasonable housing for employees to pay for and be reimbursed. 

AGC is keeping a close eye on this case and will consider supporting the employer in the event that the case is eventually appealed in court.

Editor’s Note:  This article is largely based on an article written by attorneys Glenn Schlabs and Joe Hunt of the law firm Sherman & Howard LLC and is reprinted with permission.  Like all AGC articles, this article does not provide legal advice for any specific situation and does not create any attorney-client relationship.


Labor Department Schedules Prevailing Wage Seminars for 2015

The U.S. Department of Labor’s Wage and Hour Division (WHD) has scheduled five upcoming seminars throughout the country to educate federal and federally assisted contractors on the Davis-Bacon and Related Acts and other federal contracting wage laws the agency enforces.

The U.S. Department of Labor’s Wage and Hour Division (WHD) has scheduled five upcoming seminars throughout the country to educate federal and federally assisted contractors on the Davis-Bacon and Related Acts and other federal contracting wage laws the agency enforces.  Each two-and-a-half day seminar will address such topics as the process of obtaining wage determinations and adding classifications, compliance assistance and enforcement procedures, and the process of appealing wage rates.  Topics for a series of special sessions on the final day of the seminars will be announced on site.

The upcoming seminars will be held on the following dates:

  • July 14-16 in Charlotte, NC;
  • July 28-30 in Wichita, KS;
  • August 11-13 in Colorado Springs, CO;
  • August 25-27 in Baltimore, MD; and
  • September 15-17 in Sacramento, CA.

Interested participants should email their name, title, company name, mailing address, email address and phone number, along with the date and location of the seminar they are interested in attending, to whdpws@dol.gov.  A confirmation email will be sent to registrants who have been accepted to participate.  There is no cost to attend, but space is limited.

Because this is not an AGC-affiliated event, interested parties should contact WHD at 1-866-487-9243 for more information.


Hiring Benchmark Now Seven Percent for OFCCP’s VEVRAA Regulations

The Office of Federal Contract Compliance Programs (OFCCP) recently announced that the annual national percentage of veterans in the civilian labor force for 2015 is 7 percent. The new number is a slight decrease from 7.2 percent and is based on 2014 end-of-year data from the Bureau of Labor Statistics.

The Office of Federal Contract Compliance Programs (OFCCP) recently announced that the annual national percentage of veterans in the civilian labor force for 2015 is 7 percent. The new number is a slight decrease from 7.2 percent and is based on 2014 end-of-year data from the Bureau of Labor Statistics.

OFCCP’s revised VEVRAA regulations implementing new affirmative action requirements of federal contractors and their subcontractors went into effect on March 24, 2014. At that time, OFCCP announced the national percentage of veterans in the civilian labor force as 8 percent. Since the final rule was implemented, the percentage has decreased from 8 percent to 7.2 percent.  Now, employers responsible for complying with the regulations by having a written affirmative action plan should use the new 7 percent benchmark, or an independently derived benchmark as outlined in the regulations. 

The benchmark is subject to change annually and will be published in OFCCP’s VEVRAA Benchmark Database.  For more information on OFCCP’s veterans rule and other issues related to affirmative action requirements for construction employers, visit the Labor and HR Topical Resources section of the AGC website.  The primary category is “EEO” and the secondary category is “Affirmative Action/EEO.”  Logging-in is required to access all available resources.


Union Contractors Conference Call Scheduled for June 25

The next quarterly conference call of AGC of America’s Union Contractors Committee will take place on June 25, 2015, at 3:00 p.m. Eastern Daylight Time.

The next quarterly conference call of AGC of America’s Union Contractors Committee will take place on June 25, 2015, at 3:00 p.m. Eastern Daylight Time.  The agenda includes AGC staff updates on legal and labor developments and a roundtable discussion of activities of interest to union contractors.  Participation is open to all AGC-member union contractors and their chapter staff. 

To register for the call, click here.  Call-in information will be sent one or two days prior to the call to those who register using the preceding link.

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


AGC Testifies in Support of New Plan Design during House Multiemployer Pension Hearing

On April 29, AGC CEO Stephen Sandherr testified during a hearing held by the House Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions on ways to further strengthen the multiemployer pension system.

On April 29, AGC CEO Stephen Sandherr testified during a hearing held by the House Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions on ways to further strengthen the multiemployer pension system. The bipartisan, noncontroversial hearing focused on the recommendations outlined in the joint labor-management proposal, Solutions Not Bailouts, to create a new “composite” type of multiemployer benefit plan that is distinct from either defined-benefit or defined-contribution plans. The new plan design was not included in last year’s bill that overhauled much of the multiemployer system, the Multiemployer Pension Reform Act of 2014, which tracked other policy recommendations from Solutions Not Bailouts.

Sandherr’s testimony urged Congress to allow collective bargaining parties or plan trustees the option to decide whether to adopt the composite plan model, which more equally distributes some of the risks associated with retirement plans so employers don’t have to shoulder the entire burden. He also stated the new plan design is essential to the shared goal of protecting both those who earn benefits and those employers that contribute retirement benefits to them. The “composite” plan design concept would be conservatively funded; have rules for adjusting benefits (either up or down), based on funding levels; include no withdrawal liability, ensuring that accrued benefits will always remain fully funded; continue legacy liabilities in original plan, but include options to realistically pay off the liabilities; and, the plan design would apply only to future benefit accruals.

AGC views last year’s bill as a step in the right direction and provides many needed reforms to the multiemployer system. But, Congress needs to enact additional reforms to the pension system that allow multiemployer plans to modernize by choosing from additional retirement plan models, including the composite plan concept. The proposed amendments to the law are not a union bailout. They would remain completely voluntary and ensure that both employers and the pension system are fiscally viable in the future. Finally, the design change further alleviates future financial strains on the PBGC.

AGC will continue to advocate for adoption of the new plan design concept and remains hopeful for legislative action in the current Congress.

For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133.


AGC Requests Clarification from IRS on Multiemployer Health Plans

On June 9, AGC submitted a letter to the Internal Revenue Service asking for clarification on the reporting process for employers that contribute to multiemployer health plans and the requirements to provide detailed information on the health care coverage employers’ offer.

On June 9, AGC submitted a letter to the Internal Revenue Service asking for clarification on the reporting process for employers that contribute to multiemployer health plans and the requirements to provide detailed information on the health care coverage employers’ offer. Employers participating in multiemployer health plans are subject to additional complexity while trying to comply because many decisions and requirements are bound by the employer’s collective bargaining agreements. Under the multiemployer plan model, a plan administrator has access to the information required by the IRS and reports this information, despite the reporting obligation remaining with the employer.

Previous guidance from the IRS has recognized the unique nature of these plans but the IRS has been inconsistent on the requirements for these employers. The rules issued by the agency and the actual instructions on the form employers must complete differ and are ambiguous. AGC and similar stakeholders are asking the IRS to change the reporting form and eliminate the ambiguity between the reporting forms and its guidance in the regulation.

For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133.


Open Shop Web Meeting Covers Preparing for “Quickie Election” Rule

As previously reported, the “quickie” or “ambush” election rule refers to new procedures that expedite the process for unions to represent a group of workers in a manner expected to make union organizing easier. The rule took effect on April 14 despite pending legal challenges

During the May 18 web meeting of AGC of America’s Open Shop Committee, attorney Rick Samson of Ogletree Deakins provided a Quick Learn presentation on Preparing for the National Labor Relations Board’s New “Quickie Election” Rule.  Click here to access an audio recording of the presentation, a copy of the presentation slides, and a supplementary handout originally distributed at AGC's Annual Convention.  The web meeting also featured an update on legal developments by AGC Associate General Counsel Denise Gold.

As previously reported, the “quickie” or “ambush” election rule refers to new procedures that expedite the process for unions to represent a group of workers in a manner expected to make union organizing easier.  The rule took effect on April 14 despite pending legal challenges.  On June 1, a federal district court dismissed a challenge brought by Texas chapters of the Associated Builders and Contractors (ABC) and of the National Federation of Independent Businesses (NFIB).  The court found that the challengers failed to show that the rule, on its face, violates the law.  ABC and NFIB have filed an appeal. 

Meanwhile, a separate lawsuit brought by two AGC-supported employer organizations, the U.S. Chamber of Commerce (Chamber) and the Coalition for a Democratic Workplace, and other interested parties is still pending in federal district court in the District of Columbia.  In April, the case was consolidated with another case brought by construction company Baker DC and some of its employees.  The day after the new rule went into effect, United Construction Workers Local Union No. 202, Metropolitan Regional Council of Carpenters, filed a petition to represent Baker DC’s carpenters and laborers.  The company and several employees sued to challenge the legality of the rule.  The consolidation of the cases should help the Chamber’s case, as it raises the gravity of the case from being only a facial challenge (like the ABC lawsuit, a challenge brought before the rule has been applied based on a claim that the rule is unlawful in all of its applications) to including an “as-applied” challenge (one brought after the rule has been applied based on a claim that the application causes harm to that particular plaintiff).

AGC will continue to keep a close eye on developments in this area.


Registration Open for Construction HR & Training Professionals Conference

Registration is now open for AGC’s 2015 Construction HR and Training Professionals Conference. The conference, for HR, training and workforce development professionals in the construction industry, will be held Oct. 7-9 at the Hyatt Regency at The Arch hotel in St. Louis, Missouri. For more information or to register visit www.agc.org/CHRTPC.

Registration is now open for AGC’s 2015 Construction HR and Training Professionals Conference.  The conference, for HR, training and workforce development professionals in the construction industry, will be held Oct. 7-9 at the Hyatt Regency at The Arch hotel in St. Louis, Missouri.  For more information or to register visit www.agc.org/CHRTPC.

The conference will 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 of 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 Strategic Management Workshop for training and HR professionals, which will be held the afternoon of Oct. 7. This pre-conference workshop will help participants understand their firm’s top business challenges and align HR and training with strategic corporate goals.

HRCI Credits have been requested for the conference and workshop.

For complete session descriptions, schedule, registration, and hotel information, visit the AGC website.


Latest Developments in Construction Labor Law Covered at LELC’s Annual Symposium

The AGC Labor and Employment Law Council (LELC) recently held its 31st Annual Construction Labor Law Symposium in Washington, DC. Attorneys and chapter labor relations managers from across the country learned about the latest developments in labor and employment law and their impact in the construction industry.

The AGC Labor and Employment Law Council (LELC) recently held its 31st Annual Construction Labor Law Symposium in Washington, DC.  Attorneys and chapter labor relations managers from across the country learned about the latest developments in labor and employment law and their impact in the construction industry.

The event began with a pre-symposium Federal Contractor Labor Laws Workshop covering the onslaught of new mandates for employers with federal and federally assisted construction contracts.  A panel of LELC-member attorneys provided information on new and revised executive orders, presidential memoranda, and regulations such topics as Fair Pay and Safe Workplaces (a.k.a. “Blacklisting”), minimum wage for federal contractors (a.k.a. “10.10 Rule”), affirmative action for veterans and individuals with disabilities, the equal pay report, pay transparency, human trafficking, and false claims.

The symposium took place the next day, kicking off with a presentation by Solicitor of Labor Patricia Smith, the third-highest ranking official in the U.S. Department of Labor.  She said that the Department is engaged in enterprise-wide enforcement, meaning investigating all worksites of a given employer.  In construction, particularly in the enforcement of the Davis-Bacon Act, the Department is also engaged in project-wide enforcement, meaning investigating all contractors at a given worksite.  The goal is to “get [the contractors] into compliance, not to debar them,” she said, adding that the Department wants general contractors to pay more attention to their subcontractors’ compliance.  She acknowledged the existence of problems with wage determinations and said that the Department is trying to improve the process but that increased contractor participation in the agency’s wage surveys is critical.  Among other topics, Solicitor Smith also commented on misclassification of independent contractors and the “active program” that her office has to enforce the law in this area.

Hon. Robert Giannasi, the National Labor Relations Board’s (NLRB) Chief Administrative Law Judge, provided the Charles E. Murphy Keynote Address.  He shared his views on attorney best practices in handling cases before an NLRB administrative law judge, providing useful guidance to labor law practitioners. 

LELC members delivered presentations on many other timely subjects, such as:  implications of the NLRB's "Quickie Elections Rule” and "micro-unit" decisions in the construction industry; implications of the NLRB’s pending joint-employer cases for construction employers; the meaning of the term “supervisor" under the National Labor Relations Act, Fair Labor Standards Act, and Title VII;  recent developments in labor antitrust law; practical Tips for Handling Family and Medical Leave Act, Americans with Disabilities Act, and workers’ compensation issues in the construction industry; developments in multiemployer pension reform; and the duty to bargain under the NLRA.

Handouts from the symposium and pre-symposium workshop are posted in the Labor & HR Topical Resources area of AGC’s website, organized by topic.  Click here for information on where to find each handout.  You must first login to the AGC website at www.agc.org as an AGC member to access the documents. 

The LELC is a private network of labor lawyers who represent AGC members and chapters.  The LELC provides its annual symposium and other activities to facilitate the sharing of information and the best possible representation of AGC affiliates.  To ensure that your in-house and outside labor and employment lawyers stay on the cutting edge, make sure that they are members of the LELC. To view a list of current LELC members, click here.  For a searchable directory of LELC members, click here.  For information about LELC membership, click here, or contact Denise Gold at goldd@agc.org or (703) 837-5326.

 
NLRB Chief ALJ Robert Giannasi


Solicitor of Labor Patricia Smith


Workshop Panelists Robert Roginson, Shafeeqa Giarratani, David Fortney, and Andrew Stephenson


New FMLA Forms Available

In recent days, the U.S. Department of Labor (DOL) published new forms recommended for administering the Family and Medical Leave Act (FMLA). Since March 1, 2015, employers have been using forms that expired on February 28. The new forms can be found on DOL’s website.

In recent days, the U.S. Department of Labor (DOL) published new forms recommended for administering the Family and Medical Leave Act (FMLA).  Since March 1, 2015, employers have been using forms that expired on February 28.  The new forms can be found on DOL’s website

The new forms are the same as the old forms, except for the addition of a reference to the Genetic Information Nondiscrimination Act (GINA) in the instructions to health care providers.  The new instructions include information for health care providers that prohibit them from sharing information derived from genetic tests or diseases or disorders associated with an employee’s family members.  The new forms are valid through May 31, 2018.

For more information on the FMLA, including guidance, fact sheets, posters and interpretive guidance, visit the DOL website.  Information is also available on AGC’s Labor & HR Topical Resources webpage.  The primary category is “Leave” and the secondary category is “Family and Medical Leave Act.”


ERISA Fiduciaries Must Continuously Monitor 401(k) Investment Choices

The U.S. Supreme Court has held unanimously that a plan fiduciary has a continuing duty to monitor investments offered under a 401(k) plan, a duty that is separate and apart from the duty to exercise prudence in selecting investments in the first place.

The U.S. Supreme Court has held unanimously that a plan fiduciary has a continuing duty to monitor investments offered under a 401(k) plan, a duty that is separate and apart from the duty to exercise prudence in selecting investments in the first place. The Court overturned a decision by the U.S. Court of Appeals for the 9th Circuit, which held that a claim for breach of fiduciary duty with respect to a fund selection was time barred unless made within six years of the date the fund was originally selected for inclusion in the plan. (Tibble v. Edison International)

The decision confirms that employers have a continuing duty to monitor the investments offered through their 401(k) plans and the fees attached to them. The Supreme Court declined to comment on what type of review a fiduciary must undertake to satisfy ERISA’s “prudent man” requirement, remanding the case to the 9thCircuit for further proceeding consistent with the Court’s analysis. This decision opens the door for additional litigation against plan sponsors who have failed to monitor investments on an ongoing basis.

Background
Edison International owns subsidiaries that generate and distribute electric power, and invest in energy services and technologies. Beginning in 1999, the company offered some retail-class mutual funds as part of its 401(k) plan, even though otherwise identical institutional-class funds that charged lower fees could have been offered. In 2007, Glenn Tibble and other employees sued the company under ERISA, claiming the company’s failure to offer identical funds with lower fees was a breach of its duty to manage the plan prudently for the exclusive benefit of its participants. The employees argued that by offering the higher cost funds, the company committed a “continuing violation” of ERISA.

In affirming a district court ruling, the 9th Circuit found that ERISA’s statute of limitation bars claims filed more than six years after the date a fund is first offered under a plan and that there is no “continuing violation” theory under ERISA. The court of appeals held that the selection of an investment for inclusion started the six-year period and “only a significant change in circumstances” could give rise to a new breach of fiduciary duty.

Legal Analysis
In this case, the Supreme Court held that ERISA’s fiduciary duty is derived from the common law of trusts, which creates a continuing duty – separate and apart from the duty to exercise prudence in selecting investments in the first place – to monitor funds and remove imprudent investments. ERISA’s six-year statute of limitation had become a roadblock for participants challenging investment decisions, because many funds remain in a retirement plan’s fund line-up for years after their initial selection. Three federal circuit courts had held that plan fiduciaries are not liable for investments selected before this six-year window.

The disagreement between the parties focused on the scope of the duty to monitor. But the Court declined to determine the scope required in these circumstances, recognizing only that under trust law, “a fiduciary is required to conduct a regular review of its investment with the nature and timing of the review contingent on the circumstances.”  The case is remanded back to the 9th Circuit to determine if the company breached its fiduciary duty given the particular facts of the case.

Significance For Employers
For employers who maintain 401(k) plans, this decision confirms that there is a duty to monitor the investment funds offered under a 401(k) plan and the fees associated with those funds. If not previously undertaken, employers should review their practices with respect to selecting, monitoring, and removing funds offered under 401(k) plans.

It’s important to ensure that the funds being offered to participants have been reviewed for the level of fees charged to the fund, the performance of the funds against their appropriate benchmarks, and the fiduciary’s adherence to the plan’s investment policy statement. With tougher Labor Department scrutiny on fees paid by 401(k) plan participants, it is more important than ever that employers maintain an active and sophisticated benefits committee to oversee the selection and monitoring of investments for their plans.

Editor’s Note: This article was reprinted with permission from the law firm of Fisher & Phillips LLP and should not be construed as legal advice.  For more information, feel free to contact attorneys Tabatha L. George and Sandra Mills Feingerts in Fisher & Phillip’s New Orleans office.


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