AGC's Human Resource and Labor News - October 16, 2015 / Issues No. 05-15 (Print All Articles)

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NLRB Expands Definition of “Joint Employer;” AGC to Host Free Webinar on Implication for Construction Contractors Nov. 3

The National Labor Relations Board's (NLRB or Board) recent decision in the Browning-Ferris Industries California, Inc. case relaxes the standard for determining when two companies constitute "joint employers" under the National Labor Relations Act.

The National Labor Relations Board's (NLRB or Board) recent decision in the Browning-Ferris Industries California, Inc. case relaxes the standard for determining when two companies constitute "joint employers" under the National Labor Relations Act.  On November 3, 2:00-3:15 p.m. EASTERN Time, AGC will host a free, members-only webinar featuring a presentation by attorney Larry Marquess of Littler Mendelson on the implications of the ruling for employers in the construction industry and how such employers can minimize the risk of being deemed a joint employer of workers employed by their subcontractors, staffing firms, and others.  The presentation will be part of the AGC Open Shop Committee's Quarterly Web Meeting, which will also include a broader labor law and activities update.  The event is open to all AGC members regardless of committee membership.  Click here for event details and registration.   

The question in the case was whether Browning-Ferris Industries of California (BFI) and a company it used to supply labor were joint employers of the supplied workers or whether the labor supplier was the sole employer during a Teamsters organizing drive to represent the workers.  Companies that are joint employers may be held jointly responsible for any unfair labor practices and collective bargaining obligations related to the workers. The Board concluded that the two companies were indeed joint employers based on its findings of indirect and direct control that BFI possessed over essential terms and conditions of employment of the supplied workers as well as Browning-Ferris’s reserved authority to control such terms and conditions.

As reported here, AGC submitted a joint amicus brief in the case with other employer groups last year. The brief urged the Board to maintain the then-current standard, under which separate entities would be considered joint employers only if they share direct control over, or co-determine, essential terms and conditions of employment.  The brief also urged the Board to refrain from relaxing the standard to the point where indirect or potential control would be enough.  Consistent with the present Board’s penchant for expanding employer liability, the Board changed the standard to require consideration of whether an employer has exercised indirect control over terms and conditions of employment through an intermediary, or has reserved the right to do so.


Year-to-Date Collective Bargaining Yields Average First-Year Increase of 2.5%

The AGC-supported Construction Labor Research Council (CLRC) has released its second report of the year on collective bargaining settlements in the industry.

The AGC-supported Construction Labor Research Council (CLRC) has released its second report of the year on collective bargaining settlements in the industry.  Settlements reported between January and September 2015 resulted in an average first-year wage-and-benefit increase of 2.5 percent or $1.25.  For newly negotiated multiyear agreements, the average second-year increase was 2.6 percent or $1.32, and the average third-year increase was 2.6 percent or $1.38.  The average first-year increase is higher in both percentage and dollar amount than that of recent years, but the second- and third-year increases are relatively flat, CLRC reports.  CLRC further observes that the most common first-year increase amounts to date in 2015 lie in the $1.21-$1.40 range, which is much higher than those of the prior two years, which lie in the $0.81-$1.00 range.  The percentage of settlements with no increase has significantly declined – from 8 percent in both 2014 and 2013 to just 2 percent so far this year.

Regionally, the highest average first-year increase reported so far this year came from the Northwest Region (AK, ID, OR, WA) at 2.9 percent or $1.57, while the lowest came from the Southeast Region (AL, FL, GA, KY, MS, NC, SC, TN, VA) at 1.4 percent or $0.50.  It is worth noting that data from the Northwest Region covers only six reported agreements out of the 165 total agreements analyzed in the report.  The greatest number of settlements, 109, came from the East North Central Region (IL, IN, MI, MN, OH, WI, WV), which had an average first-year increase of 2.6 percent or $1.31.

The craft with the highest first-year increase on a percentage basis in settlements reported so far this year is the Carpenters at 3.0 percent, while the Painters had the lowest at 2.2 percent.  The Painters also had the lowest dollar amount average at $1.01, while the Ironworkers had the highest at $1.65.

The full report, which contains additional information and graphs, is available to AGC members in the Labor & HR Topical Resources area of AGC’s website under the main category “Collective Bargaining” and subcategory “Collective Bargaining Agreement Data.”  An updated report is scheduled for release in December.

AGC’s collective bargaining chapters are reminded to please send settlements information to CLRC at clrc@clrcconsulting.org promptly after completion of bargaining.  Chapters and members are also reminded that CLRC is available to assist with custom projects, such as analyses of local market share, contract language costs, union vs. nonunion wage and benefits comparisons, and wage and benefits benchmarks, at a discount for AGC affiliation.  For more information about these services, please call CLRC directly at (202) 347-8440.


OFCCP Issues Regulations on Pay Transparency

On September 11, the U.S. Office of Federal Contract Compliance Programs (OFCCP) issued its Final Rule implementing Executive Order 13665, which prohibits federal contractors from discriminating against employees and applicants who ask about or discuss compensation. The regulations are effective January 11, 2016.

On September 11, the U.S. Office of Federal Contract Compliance Programs (OFCCP) issued its Final Rule implementing Executive Order 13665, which prohibits federal contractors from discriminating against employees and applicants who ask about or discuss compensation. The regulations are effective January 11, 2016.

Which contractors are covered?

The pay transparency requirements will apply to all contractors and subcontractors covered by the non-discrimination and affirmative action provisions of Executive Order 11246, including contractors who are not required to develop written Affirmative Action Plans. Thus, an organization that meets the criteria will be covered if it:

  • Has a single federal contract, subcontract, or federally assisted construction contract worth more than $10,000, or
  • Has federal contracts or subcontracts that, combined, are worth more than $10,000 in any 12-month period, or
  • Has government bills of lading, or
  • Serves as a depository of federal funds, or
  • Is an issuing and paying agency for U.S. savings bonds and notes in any amount.

The Final Rule will apply to contracts entered into or modified on or after January 11, 2016. Contracts are considered “modified” if there is any alteration in their terms and conditions, including supplemental agreements and extensions.

What conduct is protected?

Employees cannot be disciplined for asking about or discussing their own or other employees’ pay and benefits, and applicants cannot be discriminated against for asking about or discussing employees’ compensation. Specifically, the Equal Opportunity Clause is revised to include the following language:

“The contractor will not discharge or in any manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant…”

This non-discrimination provision does not apply if the employee has access to the employer’s compensation information as part of his or her job responsibilities. The following language is also included in the revised Equal Opportunity Clause:

“This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”

The OFCCP modified its proposed definition of “essential job functions” in a way that benefits contractors. Under the proposed definition, a contractor would have violated the provision if it had disciplined an employee who had authorized access to compensation information but such access was not a “fundamental” part of the employee’s job responsibilities. Heeding concerns from the contractor community, the Final Rule defines a job function as essential if:

(i) the access to compensation information is necessary in order to perform that function or another routinely assigned business task; or

(ii) the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information.

Thankfully, the OFCCP recognized that the main issue is whether an employee has authorized access to compensation information, rather than the importance of that access in performing the job.

How is "compensation" defined?

“Compensation” is defined as “any payments made to, or on behalf of, an employee or offered to an applicant as remuneration for employment, including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing and retirement.”

“Compensation information” is defined as “the amount and type of compensation provided to employees or offered to applicants, including, but not limited to, the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor’s profit or productivity, the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analysis, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation.”

Do contractors have any defenses to claims alleging retaliation for discussing compensation?

Yes, as long as the defense is not based on a policy that prohibits, or tends to prohibit, employee or applicants from discussing compensation. A contractor can take advantage of this defense by showing that it has consistently and uniformly disciplined similarly situated employees.

In addition, the “essential job functions defense” – which the OFCCP describes as a “complete defense” – provides protection to contractors who take adverse action against an employee who has access to compensation information and discloses the information to individuals who do not otherwise have access to it. However, the employee’s disclosure would still be protected if it was “in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the contractor, or is consistent with the contractor’s legal duty to furnish information.”

Are contractors required to provide any notice to applicants or employees?

Contractors must use language prescribed by the OFCCP in notifying applicants and employees of their rights. This mandatory language must be included in existing employee handbooks or other manuals, and must be posted electronically or in conspicuous places. The OFCCP will also be updating the “EEO is the Law” poster to include this notice. Presumably, this required language and the updated poster will be provided before the January 11, 2016, effective date.

Editor’s Note: The content of this article was contributed by Cara Crotty, a partner with the law firm of Constangy, Brooks, Smith & Prophete, LLP.  This information should not be relied upon as legal advice.

AGC submitted comments on the proposed rule in December of 2014.  AGC’s comments asked OFCCP to implement compliance requirements that are simple and non-burdensome for construction contractors.  Specifically, AGC requested that OFCCP eliminate any management training requirements listed in the proposed rule.  AGC also suggested that OFCCP revise the current Federal Poster to include language associated with this rule and allow contractors to post the new poster in lieu of the policy dissemination requirements proposed.  OFCCP accepted AGC’s suggestion to eliminate the management training requirements altogether, as well as the request to revise the Federal Poster.  However, OFCCP declined to allow the use of the Federal Poster in lieu of the dissemination policies. 

Additionally, AGC asked OFCCP to insert language into the final rule that would eliminate risks to prime contractors and project efficiency when subcontractors and vendors are removed for noncompliance.  OFCCP declined to implement those requests.


Minimum Wage for Federal Contractors Increases to $10.15

On September 16, the U.S. Department of Labor’s Wage and Hour Division (WHD) published a notice in the Federal Register announcing a new minimum wage rate of $10.15 for direct federal contracts and subcontracts covered by Executive Order 13658. Federally assisted contracts are not affected.  The rate goes into effect on January 1, 2016.

On September 16, the U.S. Department of Labor’s Wage and Hour Division (WHD) published a notice in the Federal Register announcing a new minimum wage rate of $10.15 for direct federal contracts and subcontracts covered by Executive Order 13658. Federally assisted contracts are not affected.  The rate goes into effect on January 1, 2016.

Executive Order 13658 was signed by President Obama in 2014, and its corresponding regulations implemented an hourly minimum wage for workers performing work on covered federal contracts of $10.10 per hour beginning on January 1, 2015.  The order mandated that the Secretary of Labor determine a new minimum wage annually, based on the annual percentage increase in the Consumer Price Index for urban wage and clerical workers.  Notice is required to the public at least 90 days before the new wage goes into effect each year. 

Impacted workers include those whose wages are governed by the Davis-Bacon Act , the Service Contract Act, and non-exempt workers whose wages are governed by the Fair Labor Standards Act (FLSA) for all time spent directly supporting a covered contract.  FLSA-covered workers who do not spend at least 20% of the workweek directly supporting a covered contract are excluded. 

Covered contractors with existing projects or awards are entitled to an adjustment by federal agencies if the annual inflation increase was not covered by the existing contract or award. 

For more information on Executive Order13658 including AGC’s impact on the final rule, click here.


Federal Contractors Must Provide Paid Leave Under New Executive Order

On September 7 (Labor Day), President Obama announced a new executive order (EO) that will require federal contractors and subcontractors to provide up to seven days of paid leave for sickness and other covered purposes to covered employees annually.

On September 7 (Labor Day), President Obama announced a new executive order (EO) that will require federal contractors and subcontractors to provide up to seven days of paid leave for sickness and other covered purposes to covered employees annually. The new requirement will impact new federal contracts or contract-like instruments entered into on or after January 1, 2017.  Federally assisted contracts are not impacted.

The EO will require federal contractors and subcontractors to provide a minimum of one hour of paid leave for every 30 hours worked and will prohibit setting a limit on accrued leave of less than 56 hours (or seven days).  The leave may be used for an absence resulting from physical or mental illness, injury or medical condition, obtaining diagnosis, care or preventative care from a health care provider, and caring for a child, parent, spouse, domestic partner or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.  The EO also requires the allowance of such leave for reasons associated with domestic violence, sexual assault, or stalking.  Requests for leave may be made verbally or in writing, and such leave must be granted without the contingency that the employee find his or her own replacement.  Additionally, contractors may require documentation only if the absence lasts for three or more consecutive workdays. 

Like other recent presidential directives, this EO covers Davis-Bacon Act and Service Contract Act-covered contracts and contract-like instruments and the workers whose wages are governed by those Acts.  Workers under such contracts whose wages are governed by the Fair Labor Standards Act, including employees who qualify for an exemption from its minimum wage and overtime provisions, are also covered.  However, with regard to Davis-Bacon Act and Service Contract Act workers, contractors may not receive credit toward prevailing wage or fringe benefit obligations under those Acts for any paid sick leave provided for the purpose of satisfying the obligations of the EO.  

“Use-or Lose” requirements are not permitted by the EO and the EO requires that any accrued and unused paid leave be carried over from one year to the next.  While contractors are not required to pay out unused leave when an employee separates from the company, the company is required to reinstate the employees’ leave if they are rehired within one year.

The President has tasked the U.S. Department of Labor’s Wage and Hour Division with issuing proposed regulations by September 30, 2016.  The regulations will fine-tune the details of the requirements, including exclusions, definitions, and recordkeeping requirements.  AGC will continue to monitor developments and will advocate for member interests as needed. 


AGC Opposes Salary Threshold Increase to $50,440 in Proposed Overtime Rule

On September 4, AGC submitted comments to the U. S. Department of Labor’s Wage and Hour Division (WHD) regarding proposed changes to the overtime regulations under the Fair Labor Standards Act (FLSA).

On September 4, AGC submitted comments to the U. S. Department of Labor’s Wage and Hour Division (WHD) regarding proposed changes to the overtime regulations under the Fair Labor Standards Act (FLSA).  If implemented, the proposed rule would increase the salary threshold for the executive, administrative and professional exemptions from $455 per week ($23,660 per year) to $970 per week ($50,440 per year) – an increase of more than 100%.  The threshold for highly compensated employees would also increase from $100,000 per year to $122,148 per year.  Both thresholds would be adjusted annually based on one of two proposed methods. 

The White House has stated that the proposal “would guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year” and will result in higher wages for such workers.  A survey of AGC members, however, indicates otherwise.  When asked during a recent survey how companies would comply with a new threshold at the proposed level, 74% of AGC-surveyed construction contractors responded that they would likely reclassify some or all of the impacted exempt workers to a non-exempt hourly status at their current salaries.  The survey results also show that:  over 60% of respondents expect the proposed rule to result in the institution of policies and practices to ensure that affected employees do not work over 40 hours a week, 40% expect affected employees to lose some fringe benefits, 33% expect some positions to be eliminated, and 23% expect to exchange some full-time positions for more part-time positions.  Furthermore, about 80% of respondents expect employee morale to be damaged because employees who are reclassified to hourly, non-exempt status will feel as if they have been demoted despite eligibility for overtime pay.

The concerns of AGC member companies were expressed via joint comments submitted by the Partnership to Protect Workplace Opportunity coalition; a diverse group of associations, businesses, and other stakeholders representing employers with millions of employees across the country in almost every industry.  The coalition’s letter asks WHD to: 

  • Lower the proposed minimum salary threshold to account for regional economic and market differences; lessen the impact on an employee’s ability to work in a part-time exempt capacity; and lessen the impact on employee compensation, flexibility and morale; 
  • Allow bonuses and commissions to count toward the minimum salary threshold;
  • Phase any salary increase in over time;
  • Leave the minimum required salary threshold for application of the Highly Compensated Employee exemption at $100,000;
  • Abandon the proposal to automatically increase the salary threshold;
  • Keep the current duties test in place for now;
  • Do not adopt California law or any other percentage of time requirement for the duties test;
  • Do not re-implement the short- and long duties test model;
  • Do not make revisions to the concurrent duties roles; and
  • Re-evaluate the economic analysis of the proposed rule.

AGC also submitted an independently-drafted letter to highlight the impact that the proposed rule would have in the construction industry as expressed in the AGC survey results. 

AGC will continue to monitor developments and will notify members once final regulations are issued.  For more information on the proposed rule, click here.  For AGC information and resources, visit AGC’s Labor & HR Topical Resources webpage at www.agc.org/topicalresources.  The primary category is “Wages and Benefits” and the secondary category is “Overtime.”  Additional resources may be found in the secondary category “Fair Labor Standards Act.”


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AGC Letter Prompts IRS to Clarify ACA Reporting Requirements for Multiemployer Plans

The Internal Revenue Service (IRS) on August 6 issued an updated Form 1095-C and instructions following a June 9 letter from AGC of America and the Food Marketing Institute urging the agency to make the revisions.

The Internal Revenue Service (IRS) on August 6 issued an updated Form 1095-C and instructions following a June 9 letter from AGC of America and the Food Marketing Institute urging the agency to make the revisions.  Form 1095-C is one of the forms used by employers to report information regarding the cost and level of health coverage offered to employees under the employer mandate provisions of the Affordable Care Act (ACA). The form allows the IRS to verify whether an employer is subject to penalties under the employer mandate provisions of the ACA.   A draft version of the updated form and instructions are available on the IRS website.

In order to enforce the employer mandate, the ACA requires large employers to file an information return with the IRS regarding health coverage offered to full-time employees beginning on January 1, 2015.  Together, IRS Forms 1094-C and 1095-C constitute the information return.  Form 1094-C is a transmittal form requiring information about a large employer’s corporate structure and payroll.  Form 1095-C requires information for each full-time employee (one form per employee) regarding the cost and level of health coverage offered, if any.

When the IRS initially released Form 1095-C and its accompanying instructions, it was unclear how an employer should report coverage offered through a multiemployer plan.  The initial instructions to Form 1095-C indicated that an employer should report, on Line 14, whether or not a bargaining unit employee was actually eligible for coverage in a multiemployer plan. The form required this information even if the employer qualified for a safe harbor under the “multiemployer interim rule” and reported this on Line 16.  This made Form 1095-C confusing, since the very reason the IRS issued the “multiemployer interim rule” – which AGC played a key in securing – was to provide relief to employers offering coverage through a multiemployer plan because they generally do not have information on employee coverage. 

To address this discrepancy in Form 1095-C, the IRS updated the instructions by clarifying that an employer relying on the “multiemployer interim rule” on Line 16 (by entering Code 2E) does not need to report an employee’s eligibility for coverage on Line 14.  Rather, the IRS instructs such an employer to enter the code for “no offer of coverage” (Code 1H) on Line 14 regardless of whether the employee was eligible to enroll in coverage under the multiemployer plan.  This update will substantially simplify the reporting process with respect to multiemployer plans in 2015. 

For additional ACA resources, visit AGC’s members-only webpage at www.agc.org/ACA

Editor’s Note: The content of this article was heavily contributed by the attorneys of Susanin, Widman and Brennan, lawyers in the areas of labor and employment law, employee benefits, and construction law. This information should not be relied upon as legal advice.


Construction HR & Training Professionals Encouraged to ‘Partner with Executives’ at AGC Event

AGC’s 2015 Construction HR & Training Professionals Conference wrapped up Oct. 9 after two-and-a-half days of education, sharing of best practices and networking in St. Louis, MO. The conference continues to be a must-attend event for HR and training professionals in the construction industry.

AGC’s 2015 Construction HR & Training Professionals Conference wrapped up Oct. 9 after two-and-a-half days of education, sharing of best practices and networking in St. Louis, MO.  The conference continues to be a must-attend event for HR and training professionals in the construction industry.

This year’s conference was preceded by a Strategic Management Workshop for construction HR and training professionals.  During the workshop’s opening session, Partnering with the C-Suite, panelists Clay Kubicek from Crossland Construction in Columbus, KS, Grady Bland from Metro Waterproofing in Atlanta, GA, Rachel Fitch from PC Construction in Burlington, VT, and Rachel Miller from S.M. Wilson Construction in St. Louis, MO, explained the value of partnering with company executives to learn what they need from HR and training. During the session, panelists shared examples of how they were able to use the HR and training departments to help solve big-picture problems that directly impact the company’s bottom line. The session was moderated by Bryan May of Birddog.  In other workshop sessions, Construction industry HR professionals Dina Cox of CAS Constructors and Suzanne Benoit of Wright Ryan Construction shared their experiences applying the use of workforce analytics and financial statements for problem solving and creating a positive workplace culture for positive bottom-line results.  Another highlight of the workshop was the session Team Leadership when Developing a Strategic Plan.  During the session, Dr. Robin Wentworth of Organizational Excellence International teamed up with Caddell Construction’s HR Director, Matt Abele, to share Caddell’s case study of the process used to implement their new strategic plan.

The official opening day of the Conference started off with an entertaining and engaging session led by Galen Emanuele of Shift Yes.  Galen’s high-energy presentation captivated the audience as he taught them how to implement the “Yes, And” concept within their organizations to improve communication, interpersonal behavior and high-level engagement. Breakout sessions throughout the day covered such topics as construction compensation, the impact of the current economy on construction, developing a pipeline of skilled workers, an employment law update, creating high-performing teams, managing wellness programs, transitioning from classroom training, and avoiding employee handbook mistakes. 

There were several engaging and interactive sessions at the conference as well. For example, in the keynote session, industry favorite Kelly Riggs shared secrets of how ordinary people create uncommon performance.  Additionally, HR and training panelists Robin Renschen of McCarthy Building Company, Ann Michalski of i+iconUSA, and Nancy Libardoni of Gilbane Construction shared details about how their companies have implemented mentoring programs, leadership succession plans, and knowledge transfer programs as solutions to their company’s workforce development issues.  During the closing session, FMI consultant Randy Nemchin unveiled the company’s long-awaited 2015 Talent Development and Acquisition Survey results.  The report is based on responses nationwide from a mix of general contractors and construction managers at firms of all sizes and specialties.

The conference was sponsored by the National Center for Construction Education & ResearchPAS, Inc., CSM, Inc., eMars Inc., the AGC Alternative and BirddogHR

The 2016 conference will be held October 5-7 at the Hyatt Regency Hotel in Chicago, IL.  Stay tuned for more details.


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