AGC's Human Resource and Labor News - January 18, 2017 / Issue No. 01-17 (Print All Articles)

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Paid Sick Leave for Federal Contractors Takes Effect

On December 16, 2016, the Federal Acquisition Regulatory (FAR) Council issued an interim final to implement the Establishing Paid Sick Leave for Federal Contractors executive order and the related final rule issued by the U.S. Department of Labor (DOL) on September 30. The FAR Council rule took effect on January 1, 2017.

On December 16, 2016, the Federal Acquisition Regulatory (FAR) Council issued an interim final to implement the Establishing Paid Sick Leave for Federal Contractors executive order and the related final rule issued by the U.S. Department of Labor (DOL) on September 30.  The FAR Council rule took effect on January 1, 2017.

The requirements of the FAR Council rule will be included in federal contract solicitations issued on or after January 1, 2017, and resultant contracts by virtue of new FAR Clause 52.222-62 (the “new clause”).  In certain cases, the requirements may also be included in projects already underway, as the rule also (1) requires contracting officers to include the new clause in bilateral modifications extending the contract when such modifications are individually or cumulatively longer than six months; and (2) strongly encourages, but does not require, contracting officers to include the new clause in existing indefinite-delivery indefinite-quantity (IDIQ) contracts when the remaining ordering period extends at least six months and the amount of remaining work or number of orders expected is substantial.

AGC plans to work with the Trump administration and Congress to have the executive order and implementing regulations repealed, but the whether or when repeal will occur is uncertain at this time.  For now, contractors should be on the look-out for the new clause and be prepared to comply.  It is important to note that if a contracting officer fails to include the new clause in a covered solicitation or contract, the contracting officer, upon notification from DOL, must correct the mistake and incorporate the new clause retroactive to commencement of performance.  

For further guidance on this subject, see the following:

  • For an AGC article summarizing the executive order and DOL rule, click here.
  • To access the recording of AGC’s webinar on the executive order and DOL rule, click here.
  • For DOL’s frequently asked questions on the executive order and DOL rule, click here.
  • For all DOL resources on this EO, click here.
  • To read more about the regulatory road ahead between now and Inauguration Day, click here.

For more information, contact Denise Gold at goldd@agc.org or Jimmy Christianson at christiansonj@agc.org.


Federal Court Temporally Halts Overtime Rule

On November 22, a federal judge issued a nationwide injunction against the U.S. Department of Labor’s (DOL) overtime rule, which was scheduled to take effect on December 1, 2016. As a result of this court order, implementation of the rule is effectively halted. However, the injunction is a temporary measure that suspends the regulation until litigation comes to a close. DOL has said that it is currently “considering all of [its] legal options.” At this time, it is unclear if or when the rule will take effect.

On November 22, a federal judge issued a nationwide injunction against the U.S. Department of Labor’s (DOL) overtime rule, which was scheduled to take effect on December 1, 2016. As a result of this court order, implementation of the rule is effectively halted. However, the injunction is a temporary measure that suspends the regulation until litigation comes to a close. DOL has said that it is currently “considering all of [its] legal options.” At this time, it is unclear if or when the rule will take effect.

The most significant change under rule is a doubling of the standard salary threshold for exempt employees – from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). Many AGC contractors had already taken steps to implement this rule, such as by reducing employee hours or notifying employees of salary increases. Given the uncertain path ahead, those contractors may want to re-evaluate the overall impact of the changes made and either roll-back or keep those implementation efforts in place, considering both the impact on the company’s bottom line as well as employee morale.

It is not clear how President Trump will proceed as this is a rule that pits Trump, the populist, against Trump, the businessman.  On the campaign trail, he did not clearly oppose or support the rule. Nevertheless, AGC has and will continue to support legislation and regulatory changes to lower the overtime threshold and gradually phase in the requirement over several years.

For more AGC information on this rule, click here. For more AGC information on the regulatory road between now and Inauguration Day, click here.


AGC Recommends Improvements for Davis-Bacon Wage Survey Process

In response to a request for comments from the U.S. Department of Labor’s Wage and Hour Division, on Dec. 19, AGC notified the agency that improvements are needed to the way it collects wage data from construction contractors. The Wage and Hour Division is responsible for setting the prevailing wage rate for federal and federally assisted construction projects covered by the Davis-Bacon Act and currently uses wage surveys to collect wage data from contractors. The agency’s request for comments is a required part of the regulatory process as the agency seeks to extend the use of its current wage survey form (Form WD-10), which expires in 2017.

In response to a request for comments from the U.S. Department of Labor’s Wage and Hour Division, on Dec. 19, AGC notified the agency that improvements are needed to the way it collects wage data from construction contractors.  The Wage and Hour Division is responsible for setting the prevailing wage rate for federal and federally assisted construction projects covered by the Davis-Bacon Act and currently uses wage surveys to collect wage data from contractors.  The agency’s request for comments is a required part of the regulatory process as the agency seeks to extend the use of its current wage survey form (Form WD-10), which expires in 2017.

In its comments, AGC expressed that it understands the difficulty involved with getting contractors to voluntarily submit wage data to the government – particularly to the same agency that is authorized to take enforcement action against them.  Additionally, AGC explained that the twenty-minute time estimate to accurately complete the survey is grossly underestimated, particularly when there are multiple classifications, sub-classifications, and fringe benefits to include.  To ease the burden of submitting such data, help the agency fulfill its need to collect wage data to set prevailing wage rates, and improve the wage collection process overall, AGC made the following recommendations:

  • WHD should consider using third-party wage survey specialists with specific knowledge of the construction industry that already collect wage data from construction contractors;
  • WHD should collect construction contractor wage data more frequently to more accurately reflect the current conditions of the market (currently, the maximum is once every three years);
  • WHD must ensure that wages are solicited and incorporated by both public and private contractors to reflect the totality of the market; and
  • WHD should allow the adoption of state prevailing wage rates when the method for setting such wages meets WHD’s requirements.

To learn more about how the WHD determines Davis-Bacon prevailing wages and how contractors can influence those wages, read AGC’s whitepaper, Impacting Davis-Bacon Wage Determinations: A Guide for Contributing to the Accuracy of Published Prevailing Wage Rates in Construction.


AGC Convention to Feature Special Event at Renowned Carpenters International Training Center

If you have not yet registered for AGC of America’s 98th Annual Convention, do so today and be sure to sign up for the special event at the Carpenters International Training Center (CITC)! 

If you have not yet registered for AGC of America’s 98th Annual Convention, do so today and be sure to sign up for the special event at the Carpenters International Training Center (CITC)! 

The convention will take place March 7-9, 2017, at the Bellagio Hotel in Las Vegas, NV, coordinated with the CONEXPO-CON/AGG tradeshow to enable AGC members to take advantage of discounted passes to CONEXPO-CON/AGG.  On March 7 at 3:30 p.m., AGC’s Union Contractors Committee and the United Brotherhood of Carpenters will host a cocktail reception and tour of the CITC.  Transportation will be provided between the Bellagio and the CITC, with buses departing the hotel at 3:15 p.m.

Come see the latest enhancements to this outstanding facility that now boasts 1.2 million square feet of classrooms, guest rooms, dining rooms, conference rooms, shops, and event space on its 17-acre campus. See how the CITC provides training and course development in power-generation, turbine installation, interior systems, concrete formwork, leadership, and more to ensure rapid delivery of in-demand skills into the field.

The event is free and open to all convention registrants, but event pre-registration is required.  Visit http://convention.agc.org for more info about the convention and for registration.


Court Issues Permanent Injunction Blocking Labor Department's "Persuader Rule"

A federal district court on November 16 issued a nationwide permanent injunction preventing implementation of the U.S. Department of Labor's (DOL) persuader rule.” The ruling is good news for employers and for the associations, attorneys, and consultants that advise them on labor matters.

A federal district court on November 16 issued a nationwide permanent injunction preventing implementation of the U.S. Department of Labor's (DOL) persuader rule.”  The ruling is good news for employers and for the associations, attorneys, and consultants that advise them on labor matters.

The “persuader” rule expands the reporting obligations of labor relations “consultants” (which is defined to include attorneys and associations) who conduct activities to persuade employees about their rights to join a union or bargain collectively as well as the reporting obligations of employers who receive assistance from such consultants.  The rule is expected to have a substantial chilling effect on employers’ willingness and ability to seek needed advice from experts.  For more information on the current regulations and the changes imposed by the new rule, click here.

The U.S. District Court for the Northern District of Texas, Lubbock Division, ordered the permanent injunction while granting the plaintiffs’ motion for summary judgment in the case National Federation of Independent Business v. Perez.  The court previously issued a preliminary injunction in the case in June.  The court then found that the rule:  is arbitrary, capricious, and an abuse of discretion; violates constitutional rights to free speech and association; violates the Fifth Amendment’s due process clause as overly vague; and violates the Regulatory Flexibility Act.  The court adopted the same reasoning when it converted the preliminary injunction into a permanent one.

DOL filed an appeal of the preliminary injunction and could choose to appeal the permanent injunction.  However, the outcome of the presidential election diminishes the likelihood of appeal.  At this point, the relevant reporting obligations remain as they have been for many years, without the expansion attempted by the invalidated rule.

The case is one of three lawsuits challenging the rule in different courts.  AGC, as a member of the Coalition for a Democratic Workplace, is a plaintiff in one of the other cases.  AGC is also a member of the U.S. Chamber, which submitted amicus briefs in all three cases.

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


Double-Breasted Company Owners & Officers Can be Indicted for Underpaying Benefit Contributions

The U.S. District Court for the District of Massachusetts held in September that the shareholders and officers of a double-breasted (a.k.a. “dual-shop”) construction company can be indicted and could go to prison if the government proves they fraudulently misrepresented that their business was a lawful double-breasted operation with two separate companies. According to the indictment, the defendants, who failed to maintain the separateness of their two corporations, reported to the Massachusetts Laborers Benefit Funds (MLBF) the hours worked by employees of their union company but not their non-union company, and, based on these false reports, failed to make payments due to the MLBF.

The U.S. District Court for the District of Massachusetts held in September that the shareholders and officers of a double-breasted (a.k.a. “dual-shop”) construction company can be indicted and could go to prison if the government proves they fraudulently misrepresented that their business was a lawful double-breasted operation with two separate companies. According to the indictment, the defendants, who failed to maintain the separateness of their two corporations, reported to the Massachusetts Laborers Benefit Funds (MLBF) the hours worked by employees of their union company but not their non-union company, and, based on these false reports, failed to make payments due to the MLBF.

Normally, a dispute over whether an employer had properly reported and paid all the contributions it was obligated to make under a collective bargaining agreement (CBA) would be resolved by civil litigation or arbitration. The indictment of individual shareholders and officers in such a case represents a significant escalation of the risk of not properly setting up and properly operating double-breasted operations.

The Facts

Air Quality Experts Inc. (Air Quality) is an asbestos abatement company that was incorporated in 1987. AQE Inc. (AQE) is also an asbestos abatement company that was incorporated in 2005. Christopher and Kimberly Thompson together owned and operated Air Quality and AQE. Christopher was the president and treasurer of Air Quality. Kimberly, his wife, was the president of AQE and the clerk of Air Quality.

Since its formation, AQE was a party to a series of CBAs with the Massachusetts & Northern New England Laborers' District Council of the Laborers' International Union of North America. The CBA required the payment of fringe benefit contributions to a number of employee welfare and pension plans, some of which were subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA). Under the terms of the CBAs, AQE was required to send monthly "remittance reports" to the MLBF that reported the number of hours worked by union members for AQE and to pay benefit contributions to the MLBF based on these hours.

Air Quality was never a signatory to any of these CBAs.

The Indictment

The indictment alleges that Air Quality operated out of the same location as AQE under the same management, used the same equipment and employed the same workforce. As a result, the companies were actually "a single business," the indictment alleges.

"Whenever conditions permitted," the companies paid employees from the payroll of Air Quality rather than that of AQE because that was "generally financially advantageous," the indictment states. By doing so and reporting to the MLBF only the hours worked by union members paid from the payroll of the union-signatory AQE, the defendants failed to report all the hours they were obligated to report and failed to make the required amount of contributions to the MLBF, according to the government. The indictment also alleges that this "double-breasted shop" arrangement violated the CBA and that the defendants "concealed and caused to be concealed" from the MLBF the payment from the payroll account of Air Quality for hours covered by the CBA.

On Jan. 19, 2016, Christopher Thompson, Kimberly Thompson, Air Quality and AQE were indicted on multiple counts of mail fraud, theft or embezzlement from an employee benefit plan, and making false ERISA statements. Christopher and Kimberly Thompson were indicted individually and were the first-named defendants in the indictment in order to grab the attention of the construction industry.

The Decision

The defendants moved to dismiss the indictment. They argued that the indictment fails to state an offense because the remittance reports properly included only union members' work for AQE and not for Air Quality, which was not a union signatory. The defendants contended that only AQE's hours had to be reported to the MLBF because Air Quality and AQE were part of a lawful "double-breasted" operation.

The court and the government acknowledged that double-breasted arrangements, in which the non-union company bids on jobs that do not require a union contractor and the union company bids on union jobs, are common and lawful. That is a positive for construction contractors.

But the government alleges in this case that, under the defendants' fraudulent scheme, the union and non-union companies were not actually two separate companies but rather a single company with the same location, workforce, equipment and management. In sum, the government alleges that Air Quality and AQE were actually a single business in which Air Quality was bound by the CBAs that AQE signed, but that the defendants fraudulently misrepresented their business as a lawful double-breasted operation with two separate companies, one subject to the CBA and the other not.

The defendants also argued that there cannot be such liability because – contrary to the usual pattern in unlawful double-breasting cases where the non-union company is formed after the union company in order to escape pre-existing CBA obligations – the union company here was formed after the non-union company. The court rejected that contention, holding that the order of creation of the union and non-union companies of the double-breasted operation is not determinative.

The court denied the motion to dismiss and held that the indictment properly alleges violations of the mail fraud, theft, embezzlement and false statement statutes. Of course, the government still must prove those allegations beyond a reasonable doubt, and the defendants will have an opportunity to present their evidence. But the fact that a dispute over fringe benefit contributions resulted in criminal charges against individual shareholders and officers instead of a civil lawsuit or arbitration against the corporations should concern the contractor community. 

Lessons for Contractors

The good news is that double-breasting is still lawful – but it must be done right. That means setting up a non-union company with its own separate management, equipment, workforce, location and bank account, and not commingling assets or disregarding the separateness of the two companies. It also means rigorously maintaining that separateness in operation.

The bad news for double-breasted companies is that the decision in this case dramatically increases the risks if a double-breasted operation is found to be a single business. Instead of simply owing some money to the fringe benefit plans and maybe to the employees and the union, the owners and officers of the companies may be criminally indicted personally and face the prospect of prison. This risk gives the unions and their fringe benefit plans tremendous leverage in asserting claims against double-breasted employers that they have not paid fringe benefit contributions, paid union scale or paid union dues for the hours worked by employees of the non-union company. Unions will be emboldened to assert such claims, and fringe benefit plans may think that, after this case, they have a fiduciary duty to assert such claims.

Double-breasted contractors should review with their counsel the structure and actual operation of their double-breasting and evaluate their vulnerability to a claim that they are misrepresenting their business as a lawful double-breasted operation with two separate companies.    

Editor’s Note:  This article was written by attorneys Mark L. Shapiro and Andrew W. Stephenson of the law firm Holland & Knight, and is reprinted with permission.

For more background information on double-breasting, go to AGC’s online Labor & HR Topical Resources Library, log in as an AGC member, then select the main category “Unions/NLRA” and subcategory “Double-Breasted/Dual Shop Operations.”  Also see the article here.


AGC Fights Against Government Mandated Projected Labor Agreements

Urges Trump Administration to Repeal and Replace

Urges Trump Administration to Repeal and Replace 

This week AGC and others sent a letter urging President-Elect Trump’s administration to repeal President Obama’s executive order that encourages federal agencies to require project labor agreements (PLAs) on federal construction projects exceeding $25 million, and replace it with a policy that prevents agencies from forcing contractors to enter into a labor agreement as a condition for winning a federal construction contract.  AGC also requested this PLA reform when it recently shared its federal agency regulatory, compliance and enforcement plan with members of the Trump Presidential Transitional Team.

AGC neither supports nor opposes contractors’ voluntary use of PLAs on government projects, but strongly opposes any government mandate for contractors’ use of PLAs.  AGC strongly believes that the choice of whether to adopt a collective bargaining agreement should be left to the contractor-employers and their employees.  Such a choice should not be imposed as a condition to competing for, or performing on, a publicly funded project.

To view more details on AGC’s Regulatory Road ahead, click here.
To view more details on AGC efforts opposing government mandated PLAs, click here.

For more information, contact Jordan Howard at Jordan.Howard@agc.org or (703) 837-5368.


EEOC Publishes Guidance on Rights of Job Applicants and Employees with Mental Health Conditions

The Equal Employment Opportunity Commission (EEOC) has released a new “resource document” about the rights of employees and applicants with mental health conditions.  The document, Depression, PTSD, & Other Mental Health Conditions in the Workplace: Your Legal Rights, is written in question-and-answer format for an employee audience, but it is also useful for employers as it demonstrates the EEOC’s interpretation of the law and of employers’ obligations under the Americans with Disabilities Act (ADA).

The Equal Employment Opportunity Commission (EEOC) has released a new “resource document” about the rights of employees and applicants with mental health conditions.  The document, Depression, PTSD, & Other Mental Health Conditions in the Workplace: Your Legal Rights, is written in question-and-answer format for an employee audience, but it is also useful for employers as it demonstrates the EEOC’s interpretation of the law and of employers’ obligations under the Americans with Disabilities Act (ADA).

The document addresses such issues as when an employer may inquire about a mental health or other medical condition, when an employee has a right to a reasonable accommodation of a mental health condition, how an employee can seek such an accommodation, and what an employee can do if the employee believes he or she has been harassed or discriminated against on the basis of a mental health condition.

"Employers, job applicants, and employees should know that mental health conditions are no different than physical health conditions under the law,” said EEOC Chair Jenny R. Yang in a press release about the document.  The press release adds that charges of discrimination based on mental health conditions are on the rise. Preliminary data from the agency’s fiscal year 2016 show that the EEOC resolved almost 5,000 charges of discrimination based on mental health conditions, obtaining approximately $20 million for individuals with mental health conditions who were denied employment and reasonable accommodations.

For more info about ADA compliance, visit AGC’s Labor & HR Topical Resources library at www.agc.org/topicalresources.  Be sure to log in as an AGC member, then select main category “EEO” and subcategory “Americans with Disabilities Act.”


EEOC Issues Enforcement Guidance on National Origin Discrimination

The U.S. Equal Employment Opportunity Commission (EEOC) recently issued updated enforcement guidance on national origin discrimination. The new guidance replaces its 2002 compliance manual section on that subject.

The U.S. Equal Employment Opportunity Commission (EEOC) recently issued updated enforcement guidance on national origin discrimination.  The new guidance replaces its 2002 compliance manual section on that subject. 

The guidance addresses issues related to recruitment, hiring, promotion, harassment, citizenship requirement, and retaliation.  Additionally, it covers language issues in the workplace, including the use the “English-only” rules.

EEOC's enforcement guidance documents set forth the agency's interpretation of the law, and explain how federal anti-discrimination laws and regulations apply to specific workplace situations. The enforcement guidance on national origin discrimination discusses Title VII of Civil Rights Act of 1964’s prohibition on national origin discrimination as applied to a wide variety of employment situations and highlights “promising” practices for employers to prevent discrimination.

For additional resources, including a Question and Answer Document and Fact Sheet for Small Business, visit the EEOC website or AGC’s Labor and HR Topical Resources webpage.  The primary category is “EEO.”


New Form I-9 Required Beginning January 22, 2017

The U.S. Citizenship and Immigration Services (USCIS) recently published a revised version of the Employment Eligibility Verification Form (Form I-9). The new form, dated 11/14/2016, will be required for use by all employers beginning on January 22, 2017. Until then, employers may continue to use the version dated 3/8/2013 or the new version.

The U.S. Citizenship and Immigration Services (USCIS) recently published a revised version of the Employment Eligibility Verification Form (Form I-9).  The new form, dated 11/14/2016, will be required for use by all employers beginning on January 22, 2017.  Until then, employers may continue to use the version dated 3/8/2013 or the new version.

The new version of the form is designed to minimize user error, particularly when the form is completed electronically.  Among the changes, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals.  Other changes include the addition of prompts to ensure information is entered correctly, the ability to enter multiple preparers and translators, a dedicated area for including additional information rather than having to add it in the margins, and a supplemental page for the preparer/translator.  Additionally, the instruction have been separated from the form.

The revised Form I-9 is also easier to complete on a computer. Enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over. When the employer prints the completed form, a quick response (QR) code is automatically generated, which can be read by most QR readers.

Form I-9 requirements were established in November 1986 when Congress passed the Immigration Reform and Control Act (IRCA). IRCA prohibits employers from hiring people, including U.S. citizens, for employment in the United States without verifying their identity and employment authorization on Form I-9.

For more information on Form I-9 and immigration compliance for employers, visit AGC’s Labor and HR Topical Resources webpage or www.USCIS.gov/I-9central.


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