Construction Legislative Week in Review
www.agc.org May 19, 2016
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On the Inside
LABOR
Overtime Rule Doubles Salary Threshold; Increases Burden on Contractors
Anti-PLA Mandate Legislation Fails in House
TRANSPORTATION
The Fight Isnít Over. Tell Your Congressman to Fix the Highway Trust Fund
Senate Committee Passes AGC-Supported Bill Reauthorizing the Diesel Emission Reduction Act
Transportation Funding Bills Advance; Includes AGC-Backed Pilot Program
FEDERAL CONTRACTING
AGC Wins Another Round Against Blacklisting Executive Order
AGC-Backed Design-Build Rule Finalized
House Panel Advances AGC Procurement Reform Priorities
TAX
Take Advantage of the AGC Financial Issues Committee Room Rate
LABOR
Overtime Rule Doubles Salary Threshold; Increases Burden on Contractors
AGC Plays Vital Role in Attempting to Limit Burden, Will Continue to Pursue Corrective Action
 

On May 18, the U.S. Department of Labor released its final rule implementing changes to the Fair Labor Standards Act (FLSA) overtime regulations.  The most significant change 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).  The rule takes effect on Dec. 1, 2016. In 2015, AGC sent both individual comments and signed ontocoalition comments on the proposed rule. These comments raised strong concerns that the proposed salary threshold of $970 per week ($50,440 per year) would be too large an increase for employers to absorb all at once. While not all of AGC’s and the coalition’s recommendations were accepted, the final rule does establish a lower salary threshold than originally proposed.  The final rule’s concession for bonuses and commissions and its abstinence from changing the duties test are also consistent with AGC’s recommendations.

Other key aspects of the rule include:

  • Employers will be able to use nondiscretionary bonuses and incentive payments, including commissions, to satisfy up to 10 percent of the standard salary level, provided payments are made on at least a quarterly basis. 
  • The salary threshold for highly-compensated individuals will increase from $100,000 to $134,004. Bonus and incentive payments still may not count toward this threshold. 
  • The salary thresholds (for both the standard and highly-compensated employee exemptions) will automatically increase every three years.
  • No changes were made to the highly-debated duties test.

AGC will continue to monitor any developments in Congress or the courts that stop or limit the rule, and will notify members accordingly.   Meanwhile, members should begin carefully reviewing compensation practices to determine whether any employees currently classified as exempt are paid a salary of at least $455 per week but less than $913 per week, as such employees will no longer qualify for exemption. Under the new rule, employers must either (1) track such employees’ work hours and pay them overtime in accordance with FLSA mandates, or (2) increase their pay to meet the new salary threshold.  AGC recommends seeking the assistance of an employment lawyer licensed to practice in your state with any concerns or complications.

For more information, contact Tamika Carter at cartert@agc.org or Denise Gold at goldd@agc.org. Return to Top

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Anti-PLA Mandate Legislation Fails in House
 

The House of Representatives today failed—on a vote of 209-216—to pass AGC-supported legislation that would block further implementation of President Obama’s 2009 executive order encouraging federal agencies to consider government-mandated project labor agreements (PLAs) on construction projects. AGC, along with other industry allies, urged members of the House to support this initiative and will continue to advocate against government-mandated PLAs.

AGC neither supports nor opposes contractors’ voluntary use of PLAs on government projects, but strongly opposes any government mandate for use of PLAs. AGC has sent over 100 letters to federal agencies opposing PLA mandates and bid preferences during the Obama administration, most in response to agency announcements that a PLA mandate or preference was under consideration for a particular project or an anticipated set of projects in a particular area. Of those, only one PLA mandate has been issued to date.

For more information, please contact Jimmy Christianson at christiansonj@agc.org or (703) 837-5325. Return to Top

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TRANSPORTATION
The Fight Isnít Over. Tell Your Congressman to Fix the Highway Trust Fund
 

The long-term highway & transit bill – known as the FAST Act – that passed at the end of last year was only possible because Congress transferred $70 billion in general fund money into the Highway Trust Fund in order to pay for the five-year bill. A letter is currently circulating in the House of Representatives asking House Ways & Means Committee Chairman Kevin Brady (R-Texas) and Ranking Democrat Sander Levin (Mich.) to address the trust fund’s financial shortfall as part of the legislative effort to reform the tax code. AGC is asking House members to show their support for fixing the Highway Trust Fund by signing the Graves/Norton letter. Please contact your representative and ask them to be included as a signatory on the Graves/Norton letter.

The FAST Act was the latest transfer to the Highway Trust Fund, resulting in over $144 billion in non-user fee revenue to support transportation investments since 2008. When the FAST Act expires in 2020, Congress will need to find – at a minimum – an additional $107 billion in new revenue just to maintain current funding levels. AGC continues to support the user-fee approach to funding our transportation infrastructure and is urging Congress to begin working to address this looming problem.

For more information, please contact Brian Deery at deeryb@agc.org or (703) 837-5319. Return to Top

Senate Committee Passes AGC-Supported Bill Reauthorizing the Diesel Emission Reduction Act
 

This week, the Senate Environment and Public Works Committee passed a bipartisan bill reauthorizing the Diesel Emission Reduction Act (DERA) program through 2021 at $100 million per year.  This bill is identical to a provision that legislators included in the recently passed Senate Energy Modernization Act. AGC and our coalition partners will continue to push for a DERA reauthorization prior to the expiration of the current program on Sept. 30, 2016. Further updates on DERA status and grant availability can be found here.

For more information, please contact Sean O’Neill at oneills@agc.org or (202) 547-8892. Return to Top

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Transportation Funding Bills Advance; Includes AGC-Backed Pilot Program
 

This week, the House and Senate both made progress in moving their respective transportation funding bill for fiscal year 2017.  Both bills include a key, AGC-backed provision that sets restrictions on the use of aU.S. DOT pilot program that enables state or local grant recipients to utilize local or geographical, economic-based, and veterans hiring preferences on federal-aid highway and federal transit projects.

On the funding side, both bills provide FAST Act investment levels for federal-aid highways ($43.266 billion) and transit ($9.734 billion). A key difference between the House and Senate bills is that the House does not rescind $2.2 billion in unobligated highway funding in fiscal year 2017 as the Senate bill does.

As the appropriations process moves forward AGC will work to ensure that the provision restricting local hiring preferences remain and that FAST Act funding levels are provided without the $2.2 billion cut provided in the Senate bill.

For more information, please contact Sean O’Neill at oneills@agc.org or (202) 547-8892. Return to Top

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FEDERAL CONTRACTING
AGC Wins Another Round Against Blacklisting Executive Order
 

In what may be a 12-round bout, AGC has scored another victory on the path to expunging President Obama’s Blacklisting Executive Order. On May 19, the House of Representatives approved legislation that includes an AGC-backed provision to the National Defense Authorization Act—a bill that has been annually enacted into law for 54 consecutive years—that ensures the EO would not apply to Department of Defense and National Nuclear Security Administration contracts. AGC will work with Congress to limit the Executive Order.

Under the EO, both prime and subcontractors must report violations and alleged violations of 14 federal labor laws and “equivalent” state labor laws—which have not been articulated yet—during the previous three years, and again every six months, on federal contracts over $500,000. Prime contractors would also be responsible for evaluating the labor law violations of their subcontractors at all tiers during both contract solicitation and contract performance. A single violation, or a combination of multiple violations, could lead a contracting officer to either (1) deny a prime contractor the right to compete for a federal contract; or (2) remove a prime contractor or subcontractor from an ongoing project. Such determinations would be made on an individual contracting officer basis with assistance from newly-created agency labor law compliance advisers.

For more information, please contact Jimmy Christianson at christiansonj@agc.org or (703) 837-5325. Return to Top

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AGC-Backed Design-Build Rule Finalized
 

On May 16, the Federal Acquisition Regulation (FAR) Council issued an AGC-supported final rule that effectively limits the second-step (“short-list”) of the two-step design-build procurement process to no more than five teams. Through AGC’s efforts, this reform was passed by Congress in 2014. For AGC’s comments on that proposed rule, click here.

For more information, please contact Jimmy Christianson at christiansonj@agc.org or (703) 837-5325. Return to Top

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House Panel Advances AGC Procurement Reform Priorities
 

On May 17, the House Oversight and Government Reform Committee unanimously approved AGC-supported legislation that would (1) require civilian federal agencies—non-Department of Defense agencies—to utilize the two-step design-build selection process for design-build projects greater than $3 million, thereby limiting one-step design-build procurements; and (2) help prohibit reverse auctions for certain construction services. Introduced by Rep. Mark Meadows (R-N.C.), the bill—H.R. 5199—is nearly identical to the AGC-backed legislation passed by a Senate Committee in February. AGC will continue to push for enactment of these procurement reforms.

For more information, please contact Jimmy Christianson at christiansonj@agc.org or (703) 837-5325. Return to Top

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TAX
Take Advantage of the AGC Financial Issues Committee Room Rate
Guaranteed Room Rate Ends Tomorrow, May 20!
 

We are just 24 days away from the 2016 Summer Financial Issues Committee Meeting, which will be held June 13-14 in Washington, D.C. at the Madison Hotel. Please register and make your hotel reservations by tomorrow to guarantee the AGC committee rate.

The meeting is geared toward member company CFOs, CEOs and other senior accounting professionals – in which attendees have an opportunity to network and hear from tax experts and congressional representatives on a wide variety of topics.

For more information, please visit meetings.agc.org/fic or contact Brian Lenihan at lenihanb@agc.org Return to Top

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