AGC's Human Resource and Labor News - February 4, 2016 / Issue No. 01-16 (Print All Articles)

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AGC Webinar Explains Mandatory ACA Reporting Forms; IRS Announces Reporting Extension

AGC recently hosted a webinar to educate construction contractors on the reporting requirements and supporting forms for the Affordable Care Act’s (ACA) Employer Mandate. The webinar, Affordable Care Act Update for Construction Employers: Employer Shared Responsibility Reporting and Legislative Changes, highlighted the mandatory reporting obligations of IRS forms 1094-C and 1095-C with respect to 2015. A recording of the webinar is available in the AGC Store.

AGC recently hosted a webinar to educate construction contractors on the reporting requirements and supporting forms for the Affordable Care Act’s (ACA) Employer Mandate. The webinar, Affordable Care Act Update for Construction Employers: Employer Shared Responsibility Reporting and Legislative Changes, highlighted the mandatory reporting obligations of IRS forms 1094-C and 1095-C with respect to 2015.  A recording of the webinar is available in the AGC Store

The reporting obligations are mandatory with respect to 2015, and forms were originally due to affected employees and the Internal Revenue Service (IRS) in early 2016. However, just 11 days after the webinar, the IRS announced an extension.     

During the webinar, Mark Levengood, Jennifer Abrams, and Elizabeth Schlax, attorneys with the law firm of Susanin Widman & Brennan, P.C., walked participants through the process of completing each of the required forms and answered questions about the reporting requirements for all applicable employers, including employers that contribute to multiemployer health and welfare plans.

Additionally, the webinar covered the following topics:

  • Which employers are required to report;
  • When must the required reporting be completed;
  • What information does an employer need to complete the reporting;
  • For which employees must an employer submit a report; and
  • How an employer should report on behalf of its union-represented employees.

The presenters also discussed legislative updates to the ACA including the Protect Affordable Coverage for Employees (PACE) Act’s repeal of the “small employer” definition for non-tax related purposes, the recent repeal of the ACA’s auto-enrollment requirement, and the two-year delay of the Cadillac tax (a controversial excise tax on high-cost employer-sponsored health plans).

The webinar was pre-approved for 1.5 general recertification credits by the HR Certification Institute (HRCI).

To purchase a recording of the webinar, visit the AGC Bookstore.  AGC members may access AGC’s online library of ACA information and resources at www.agc.org/aca.


Affordable Care Act Cadillac Tax Delayed

On December 18, 2015, President Obama signed the Consolidated Appropriations Act, 2016 (Act) delaying the effective date of the “Cadillac Tax” until 2020 and making the tax deductible. Leading opponents of the tax have said they would continue to press for it to be rescinded altogether.

On December 18, 2015, President Obama signed the Consolidated Appropriations Act, 2016 (Act) delaying the effective date of the “Cadillac Tax” until 2020 and making the tax deductible.  Leading opponents of the tax have said they would continue to press for it to be rescinded altogether.

The “Cadillac Tax” is a 40% excise tax that the Affordable Care Act (ACA) imposes on employers to the extent the value of employer-sponsored health coverage for an employee exceeds a threshold amount.  As originally enacted under the ACA, the tax was to be nondeductible and would have taken effect in 2018.  The initial threshold amounts would be $10,200 for an employee with “self only” coverage, and $27,500 for an employee with coverage other than “self only” coverage.

The threshold amounts are subject to a variety of adjustments, including an upward adjustment to the annual limits to the extent the age and gender characteristics of the employer’s workforce differ from that of the national workforce, using the Blue Cross/Blue Shield standard benefit option under the Federal Employees Health Benefits Plan (FEHBP) as the comparison point. There was a concern in the industry that utilizing the claims data with respect to the FEHBP could provide employers with a less than full adjustment value since the population covered by the FEHBP may not reflect the age and gender characteristics of the national workforce.  Consequently, the Act requires the Comptroller General of the United States, in consultation with the National Association of Insurance Commissioners, to report to the House of Representatives and the Senate (within 18 months from the date of enactment) on the suitability of the use of the premium cost of the FEHBP as a benchmark for the age and gender adjustment of the dollar limits. 

Additionally, as explained here, the ACA imposed an annual fee on entities engaged in the business of providing health insurance, which was presumably passed through as a premium increase for insured plans.  (The fee is not applicable to self-funded plans.)  The fee applied beginning in 2014.  The Act provides for a one-year moratorium on the annual fee imposed on health insurance providers. The fee will not apply for calendar year 2017.

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

Editor’s note: This article was written by guest author Joy Sellstrom.  Joy is senior counsel in the Employee Benefits Department of Seyfarth Shaw’s Employee Benefits and Executive Compensation Division.  This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.


Percentage and Earnings of Non-Union Workers in Construction Rose in 2015, While Those of Union Workers Fell

Union representation in the construction industry (covering all occupations) fell from 14.7 percent to 14.0 percent in 2015, according to an annual report recently issued by the Bureau of Labor Statistics (“BLS”). The number of union-represented employees in the industry also declined over the year, from 1,023,000 to 992,000. Likewise, both the percentage and number of employees in the industry who were members of a union decreased over the year – from 13.9 percent to 13.2 percent, and from 968,000 to 940,000 people.

Union representation in the construction industry (covering all occupations) fell from 14.7 percent to 14.0 percent in 2015, according to an annual report recently issued by the Bureau of Labor Statistics (“BLS”).  The number of union-represented employees in the industry also declined over the year, from 1,023,000 to 992,000.  Likewise, both the percentage and number of employees in the industry who were members of a union decreased over the year – from 13.9 percent to 13.2 percent, and from 968,000 to 940,000 people.

Union representation and membership among workers in construction and extraction occupations (whether employed in the construction industry or another industry) also declined in 2015.  Union representation declined from 1,167,000 to 1,133,000 employees in such occupations, constituting a decline from 18.8 percent to 18.3 percent.  Union membership declined from 1,104,000 to 1,067,000 employees, and from 17.8 percent to 17.2 percent. 

Despite these declines, the construction industry continues to be among the private industries with the highest rates of union membership.  The industry’s 13.2 percent is outpaced only by the utilities (21.4 percent), transportation and warehousing (18.9 percent), educational services (13.7 percent), and telecommunications (13.3 percent) industries. Union representation across all private-sector industries dropped to just 6.6 percent in 2015.  This compares to 35.2 percent in the public sector.

The BLS report also addresses earnings.  According to BLS, the median weekly earnings of all employees in the construction industry rose from $775 to $784 in 2015.  In 2014, the median weekly earnings rose for both union-affiliated and non-union workers in the industry, with union-affiliated workers’ earnings rising at a higher rate than non-union workers’.  However, that was not the case in 2015.  The median weekly earnings of non-union workers in the industry increased from $724 to $743 in 2015, while those of union-represented workers in the industry declined from $1,108 to $1,093, and those of union members declined from $1,123 to $1,099.  For workers employed in construction and extraction occupations across industries, the median weekly earnings declined among both union and nonunion workers.

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.

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.


Collective Bargaining in 2015 Yields Average First-Year Increase of 2.5%

Construction-industry collective bargaining negotiations completed during 2015 resulted in an average first-year increase in wages and benefits of $1.10 per hour or 2.5 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 $1.40 or 2.7 percent, and the average third-year increase was $1.50 or 2.7 percent. 

Construction-industry collective bargaining negotiations completed during 2015 resulted in an average first-year increase in wages and benefits of $1.10 per hour or 2.5 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 $1.40 or 2.7 percent, and the average third-year increase was $1.50 or 2.7 percent.

For all three contract years, the average increases negotiated in 2015 were higher than those negotiated in 2014, in terms of both dollar amounts and percentages.  The volume of settlements for a zero-increase in compensation – which reached a recent high point of 20 percent in 2010 – continued to decline to only 3 percent in 2015.

Regionally, the area reporting the lowest average first-year increase in 2015 on a percentage basis was the New England Region (CT, MA, ME, NH, RI, VT) at 2 percent, and on a dollar-amount basis was the South Central Region (AR, LA, NM, OK, TX) at $0.65.  The Northwest Region (AK, ID, OR, WA) reported the highest average first-year increase on a percentage basis at 2.7 percent, and the Southwest Pacific Region (AZ, CA, HI, NV) reported the highest on a dollar-amount basis at $1.66.

By craft, the lowest average first-year increase on a percentage basis was negotiated by the Bricklayers at 2.1 percent, and on a dollar-amount basis was negotiated by the Laborers at $0.96.  The Teamsters negotiated the highest average first-year increase on a percentage basis at 3.3 percent, and the Plumbers and Pipefitters negotiated the highest on a dollar-amount basis at $1.30.

The full report is available via the link embedded above and, along with other CLRC reports, in AGC’s online Labor & HR Topical Resources library at https://www.agc.org/industry-priorities/labor-hr/resources (under the main category “Collective Bargaining” and subcategory “Collective Bargaining Agreements Data”).  The report 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.


Davis-Bacon Training Available On Demand

Looking for training on the Davis-Bacon and Related Acts but missed AGC of America’s recent webinar on the topic? An archive of each session of the two-part webinar “Understanding Davis-Bacon Compliance and Enforcement Act” held December 10 and 15 is now available for purchase and immediate viewing from AGC’s online store. Visit http://store.agc.org/ and search for product codes WB355 and WB357. Be sure to log in to see discounted AGC-member pricing.

Looking for training on the Davis-Bacon and Related Acts but missed AGC of America’s recent webinar on the topic?  An archive of each session of the two-part webinar “Understanding Davis-Bacon Compliance and Enforcement Act” held December 10 and 15 is now available for purchase and immediate viewing from AGC’s online store.  Visit http://store.agc.org/ and search for product codes WB355 and WB357.  Be sure to log in to see discounted AGC-member pricing.

In the first session (product code WB355), Bill Isokait, Senior Compliance Specialist for the U.S. Department of Labor Wage and Hour Division’s Branch of Government Contracts Enforcement, talked about coverage and compliance issues that present pitfalls for many construction contractors.  In the second session (product code WB357), Judy Kramer of the law firm Fortney Scott LLC discussed legal issues and best practices in classifying workers, seeking wage determination conformances, keeping records, responding to Labor Department investigations, and more.

Also available from the AGC store is the fourth edition of AGC’s Davis-Bacon Compliance Manual.  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 “Wages and Benefits” and subcategory “Davis-Bacon Act.”


OFCCP Final Rule on Pay Transparency Takes Effect

On January 11, 2016, the final rule issued by the Office of Federal Contract Compliance Programs (OFCCP) implementing Executive Order 13665 (EO) took effect. Issued in April 2014, the EO amended Executive Order 11246 by prohibiting federal contractors and subcontractors from retaliating or discriminating against employees and applicants who inquire about, discuss, or disclose his or her own compensation or the compensation of other employees or applicants.

On January 11, 2016, the final rule issued by the Office of Federal Contract Compliance Programs (OFCCP) implementing Executive Order 13665 (EO) took effect. Issued in April 2014, the EO amended Executive Order 11246 by prohibiting federal contractors and subcontractors from retaliating or discriminating against employees and applicants who inquire about, discuss, or disclose his or her own compensation or the compensation of other employees or applicants.

As part of the current Administration’s efforts to ensure equal pay for equal work, the EO and implementing final rule impact federal contracts and subcontracts in excess of $10,000 that are entered into or modified on or after January 11, 2016. For more information on the specifics of the final rule, click here

OFCCP has made training and educational resources available for contractors that are required to comply with the rule’s requirements.  Contractors may visit the OFCCP website to download a webinar recording and transcript as well as frequently asked questions.  Also available are new language required for employee handbooks and postings and a revised “EEO is the Law poster supplement.


EEOC Proposes to Add Pay Data and Hours Worked to EEO-1 Report

The U.S. Equal Employment Opportunity Commission (EEOC) announced a proposal that would revise the Employer Information Report (EEO-1).  The new report would require all employers with 100 or more employees to submit compensation data and hours worked in addition to racial, ethnic and gender status data that is currently required by the federal government.  The new form would also apply to federal contractors with more than 100 employees, and, if implemented, will replace the Office of Federal Contract Compliance Program’s (OFCCP) proposed Equal Pay Report for federal contractors

The U.S. Equal Employment Opportunity Commission (EEOC) announced a proposal that would revise the Employer Information Report (EEO-1).  The new report would require all employers with 100 or more employees to submit compensation data and hours worked in addition to racial, ethnic and gender status data that is currently required by the federal government.  The new form would also apply to federal contractors with more than 100 employees, and, if implemented, will replace the Office of Federal Contract Compliance Program’s (OFCCP) proposed Equal Pay Report for federal contractors

According to the EEOC’s website, the new data required by the report “would provide the EEOC and OFCCP with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination.”  A copy of the proposal is available in the Federal Register.  AGC is preparing to submit comments on the proposed changes before the April 1 deadline.

For more information on the proposed revisions to the form, including a Fact Sheet for Small Business and a Question and Answer document, visit the EEOC website


AGC Announces Keynote Speakers for 2016 Construction HR & Training Conference

AGC’s Construction HR & Training Professionals Conference will feature two of the most sought-after presenters in workforce development today: Buddy Hobart and J. Doug Pruitt. Both speakers have a passion for attracting and retaining the next generation of workers.

AGC’s Construction HR & Training Professionals Conference will feature two of the most sought-after presenters in workforce development today: Buddy Hobart and J. Doug Pruitt.  Both speakers have a passion for attracting and retaining the next generation of workers.

Buddy Hobart, author of Gen Y Now, will kick off the conference with his session on Millennials and the Evolution of Leadership.  As founder and President of Solutions 21, a global company that provides services in leadership development, strategic planning, and employee life cycle, Buddy works with companies to build, shape, and prepare them to compete in a modern marketplace while preserving their business legacy. He has led Solutions 21 in providing leadership and management solutions to companies around the world, ranging from startups to Fortune 500 enterprises, and is a frequent on-site training provider for companies throughout the United States.  Ann Michalski, senior HR professional for AGC member-company  i+icon USA, says, “Buddy helped bring the concept of managing multiple generations in the workplace to life for our company.  Because of his involvement, we have learned how to work together more effectively and productively.” 

A visionary leader for training and development in construction, J. Doug Pruitt, former chairman and CEO of Sundt Construction, will close the first day of the conference with his session based on the book Level Headed: Inside the Walls of One of the Greatest Turnaround Stories of the 21st Century.   Sundt Construction was known as a company that was very innovative, often leading the industry in the utilization of technology, delivery methods, driving productivity and quality, but suddenly found itself in financial trouble, almost going broke.  Pruitt will share the story of Sundt’s amazing turnaround while under his leadership.  He will share what went wrong, the changes he made, and the process Sundt went through to address these changes and put the company back on the path of success, including changes that required partnering with HR and training and development.  This session is ideal for HR and training professionals who are interested in taking a more strategic approach to construction HR and training management by understanding the needs of a CEO who is working to build or maintain a profitable construction company with a far-reaching reputation and long-lasting legacy. 

This year’s conference will be located in Chicago, IL, October 5-7 at the Hyatt Regency Chicago hotel and will offer unique opportunities for HR, training, and workforce development professionals in the construction industry.   A Federal Construction HR Workshop will be held October 5, in conjunction with the conference. 

For more information or to register, visit the conference website at www.agc.org/hr_ted


Homeland Security Issues Guidance for Employers Conducting Internal Form I-9 Audits

On February 1, the U.S. Department of Homeland Security (DHS) issued guidance for employers regarding internal audits of Employment Eligibility Verification forms, also known as Forms I-9. All employers are required to complete a Form I-9 to verify their new hires' identity and employment eligibility. Immigration Customs and Enforcement – a division within DHS – and the Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices partnered to publish the guidance in compliance with the Immigration and Naturalization Act.

On February 1, the U.S. Department of Homeland Security (DHS) issued guidance for employers regarding internal audits of Employment Eligibility Verification forms, also known as Forms I-9.  All employers are required to complete a Form I-9 to verify their new hires' identity and employment eligibility.  Immigration Customs and Enforcement – a division within DHS – and the Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices partnered to publish the guidance in compliance with the Immigration and Naturalization Act.

The guidance is intended to help ensure that internal audits are conducted properly and do not unlawfully discriminate against employees.   Information included for employers includes:

  • The purpose and scope of an internal audit;
  • Considerations before conducting internal audits;
  • How to avoid conducting internal audits that are discriminatory;
  • What information should be communicated to employees during an internal audit; and
  • Procedures for correcting errors or omissions.

To download the guidance document, click here.  For more information on Form I-9, visit I-9 Central on the DHS website.  For information on Form I-9 audits and compliance, visit the Labor & HR Topical Resources Section of the AGC website. The primary category is “Other Legal Issues” and the secondary category is “Employment Eligibility and Verification.”


Labor Department Releases Broad "Joint Employment" Interpretation Under FLSA

The Wage and Hour Division of the U.S. Department of Labor (USDOL) has taken the next step in its nearly-six-year-old "fissured industries" initiative by releasing Administrator’s Interpretation No. 2016-1, dealing with concepts of "joint employment" under the federal Fair Labor Standards Act (FLSA) and the federal Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

The Wage and Hour Division of the U.S. Department of Labor (USDOL) has taken the next step in its nearly-six-year-old "fissured industries" initiative by releasing Administrator’s Interpretation No. 2016-1, dealing with concepts of "joint employment" under the federal Fair Labor Standards Act (FLSA) and the federal Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

Companies that are engaged in multi-participant arrangements such as subcontracting, joint ventures, staffing services, employee leasing, temporary help, certain kinds of "job sharing," dedicated vendors/suppliers, and so on should take heed:  more of you could be on the hook for alleged FLSA (or MSPA) violations affecting the workers performing services in these arrangements. "Joint employment" is not a new concept, of course, but USDOL's new guidance portends both an expansive interpretation of those principles and an aggressive agency enforcement posture.

What Is "Joint Employment?"

Under the FLSA and MSPA, a worker can be employed by two or more employers simultaneously. In this situation, each joint-employer shares the same compliance responsibility as every other one vis-a-vis the jointly-employed worker. The Administrator’s Interpretation focuses on two joint-employment scenarios: "horizontal" and "vertical."

The "Horizontal" View

USDOL says that the "horizontal" variety exists when two or more employers separately employ a worker, but the employers share a sufficiently close association or relationship with respect to the employee's work. It suggests that this might be the case where, for instance, two restaurants owned by different legal entities operate under the same brand, share a common majority owner, coordinate the employee's schedule, share supervision over her, and pay her through the same payroll processor.

The Administrator’s Interpretation provides some relevant considerations, including (among others):

  • Whether and to what extent there is common ownership, and/or overlapping officers, directors, executives, or managers, and/or shared or intermingled operational control, and/or shared clients or customers;
  • Whether the potential joint-employers share supervisory authority over employees or treat them as members of a pool of employees available to both employers;
  • Whether there are any relevant agreements between the potential joint-employers that shed light on the relationship.

The "Vertical" View

"Vertical" joint-employment might exist, USDOL says, when one company contracts for workers who are directly employed by what the agency calls the "intermediary" company supplying their labor. Illustrations USDOL gives include (a) a construction worker who is employed by a subcontractor but who is also economically dependent upon the general contractor; and (b) a manufacturer's production worker is employed and paid by a staffing agency but is also employed by the manufacturer.

The Administrator’s Interpretation embraces an "economic realities" analysis to determine whether there is a vertical joint-employment. It says that the ultimate question is whether the worker is "economically dependent on the potential joint employer who, via an arrangement with the intermediary employer, is benefitting from the work."  It states that this test differs from the common-law control test that applies under other labor statutes, such as the National Labor Relations Act and the Occupational Safety and Health Act, noting that courts analyzing joint employer status under the FLSA and MSPA “have found economic dependence under a multitude of circumstances where the alleged employer exercised little or no control or supervision over the putative employees.”  (For more information on the National Labor Relations Board’s joint-employer standard under the National Labor Relations Act, click here and here.)

USDOL identifies seven relevant factors tending to favor economic dependency:

  1. Directing, controlling, or supervising the work performed:  Is the individual's work controlled or supervised by the potential joint-employer beyond a reasonable degree of contract-performance oversight?
  2. Controlling employment conditions:  Does the potential joint-employer have the power to hire or fire the employee, modify the employment conditions, or determine the rate or method of pay?
  3. Permanency and duration of the relationship: Is the relationship permanent, long-term, or indefinite?
  4. Nature of the work:  Is the employee's work repetitive and rote or relatively unskilled, and/or does it require little or no training?
  5. Services are integral:  Is the employee's work an integral part of the potential joint-employer's business or activity?
  6. Work performed on the premises:  Does the employee perform the work on premises owned or controlled by the potential joint-employer?
  7. Performing administrative functions commonly performed by employers:  Does the potential joint-employer perform administrative functions for the employee, such as handling payroll, providing workers'-compensation insurance, providing necessary facilities and safety equipment, housing, or transportation, or providing tools and materials required for the work?

As these factors suggest, the determination will depend heavily upon the facts in each situation.

The Bottom Line

Although the Administrator’s Interpretation is sub-regulatory, it demonstrates that the USDOL clearly sees this as a high-priority matter, and it provides a valuable indicator of the approach the agency will take in enforcement actions.  Given that the document references multiple examples in the construction industry, contractors are well-advised to conduct a careful review of their business relationships to see whether this heightened attention to joint employment presents a potential threat to their bottom-lines.

Editor’s Note:  This article was written by guest author Corey Goerdt of the law firm Fisher & Phillips, LLC, and reprinted from the original with permission.  It is not intended to be, and should not be construed as, legal advice for any specific fact situation.


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