The Answer to America’s Skilled Labor Problem

Posted by National Alliance for Fair Contracting on

Katherine S Newman, Hella Winston
Jul 24, 2017

Very few policy ideas excite both parties in this period of political polarization. Apprenticeship and the renaissance of technical education is, however, one of them. The Obama administration invested millions to launch a federal apprenticeship office, while President Trump has made it one of his signature ideas as he tries to address the re-industrialization of economically depressed regions of the country.

Twin goals are at play on the right and the left: the revival of manufacturing industries, which are desperate for skilled labor, and the need to develop pathways to good jobs-especially for non-university-bound youth-that technical high schools, community colleges, and training programs have been trying to forge. Virtually everyone in the policy world accepts that we must do more to move the American labor force toward the kind of high-skilled foundation that is common in Germany and Austria.

Despite this consensus, the U.S. is very far behind in expanding apprenticeship and the technical education that underpins it. We currently have 506,000 federally registered apprentices and have allocated $2.7 billion dollars to support them. In Germany, with an economy one quarter the size of the U.S., there are 1.4 million apprentices and the annual expenditure for them is $9 billion. The skill of the German labor force is unparalleled in the world and has helped that country become a dominant force in international trade. Its investment has paid off handsomely.

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Lies surrounding Davis Bacon compliance land concrete contractor jail time

Posted by National Alliance for Fair Contracting on

WHD News Release: 07/27/2017
Release Number: 17-1028-SAN

PORTLAND, Ore. – The owner of an Oregon concrete company that contracted with the federal government recently started a two-month prison sentence for lying to federal investigators. The crime occurred when he told U.S. Department of Labor officials that he had paid employees more than $93,000 in back wages that the Department’s Wage and Hour Division found the company owed its workers following a 2014 investigation.

The Department’s investigation revealed that Westwind Concrete had failed to pay the proper prevailing wage rates on a project in Tualatin in violation of the Davis Bacon and Related Acts, which applied because the U.S Department of Housing and Urban Development financed the project. Westwind Concrete is based in Cloverdale.

Westwind owner Jeffery Hurliman assured the division that he would pay more than $93,000 in back wages he owed to 27 workers and later provided certifications that he claimed were from his employees attesting to having received back wages.

The Department’s Office of Inspector General investigated Hurliman after officials in the division’s Portland office noted discrepancies on the proofs of payment. The investigation revealed that the certifications were falsified and that when Hurliman learned about the investigation, he offered money to employees to lie to investigators.

The Department’s findings led to federal criminal prosecution against Hurliman and a two-month prison sentence. Hurliman agreed to a deal in January 2017 in which he pleaded guilty to witness tampering and providing false statements to the government, both felonies, and began his sentence on June 15, 2017. He will be on supervised release for three years following his release from prison on Aug. 15, 2017. In the meantime, the department has sued to prevent him from obtaining future government contracts.

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2017 SCA Health & Welfare Fringe Benefit Increase

Posted by National Alliance for Fair Contracting on

Wage and Hour Division (WHD)

The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor’s collective bargaining agreement. The Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract.

The health and welfare fringe benefit is one of the required SCA fringe benefits. Effective August 1, 2017, the prevailing health and welfare fringe benefits issued under the SCA will increase to a rate of $4.41 per hour.

Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors (EO 13706), requires certain employers that contract with the federal government to provide their employees with up to 56 hours (seven days) of paid sick leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking. EO 13706 applies to new contracts with the federal government that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017).

To comply with EO 13706, an alternate health and welfare rate has been established that excludes the sick leave portion of the calculated health and welfare rate. The SCA health and welfare fringe benefits level for employees performing on contracts covered by EO 13706 will be $4.13 per hour.

(Dol.gov- SCA Home Page)

Why You Should Care About Compliance

Posted by National Alliance for Fair Contracting on

Forbes.com
POST WRITTEN BY Gene Zaino
JUL 27, 2017 @ 08:00 AM

As the on-demand economy grows, independent professionals are becoming a larger and more essential part of the workforce. The number of self-employed Americans rose to nearly 41 million in 2017 and is predicted to rise to 47.6 million in just five years. This shift away from traditional employment allows independents to work on their own terms while organizations that engage them fill skills shortage gaps, gain staffing flexibility, and realize lower costs.

Coupled with this growth, however, we’ve seen an increase in federal and state government efforts to combat employees being misclassified as independent contractors. In June, the Department of Labor (DOL) removed the Obama-era guidance about joint employment and independent contractors. While it has been widely reported that this withdrawal does not change the legal responsibilities of employers under the Fair Labor Standards Act (FLSA), it may indicate that the current administration is taking a more traditional view of employment relationships, as opposed to past interpretation of these documents that assumed most workers were employees.

We’ve seen the results of these actions in the increase in class-action lawsuits, such as Citigroup’s $325,000 settlement for misclassification of technology workers, Zenefits’ $3.4 million payment to misclassified employees for unpaid overtime, and FedEx’s $228 million settlement for misclassification of delivery drivers.
Lawsuits like these are just one of many very real consequences of misclassification, but avoiding a misclassification suit isn’t the only reason to care about how one should engage independent talent.

Here are three reasons compliance should be top of mind for all organizations that engage independent professionals.

Compliance Aids In Proper Classification

Classification of independent contractors is not a clear-cut process. Federal, state and local government agencies use a variety of tests to determine whether or not a worker is a true independent contractor.

Just because independent contractors call themselves an independent contractor doesn’t mean they are one in the eyes of the law. Independents come from various backgrounds and experience levels and have different levels of self-employability. When engaging independent talent, it’s up to organizations to make a final determination of classification, but because tests vary from agency to agency and because regulations are constantly changing, these decisions can be complex.

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Labor Secretary to Start Building Apprenticeship Task Force

Posted by National Alliance for Fair Contracting on

Jul 25, 2017
Thomasnet.com

The U.S. Secretary of Labor Alexander Acosta has opened up nominations for the Task Force on Apprenticeship Expansion. According to a recent news release from the Department of Labor, creating the task force is the first step in implementing President Donald Trump’s executive order to expand apprenticeships.

In June, President Trump said that apprenticeships could help fill millions of open jobs, however he was reticent to dedicate additional taxpayer money to the program.
According to the Department of Labor (DoL), the current number of active apprenticeships in the United States is 505,371.

In March, Salesforce.com CEO Marc Benioff challenged the president to create five million apprenticeships over the next five years. President Trump accepted the challenge, and his proposed budget includes a $5 million increase ($95 million overall) in spending appropriated for apprenticeships.

Secretary Acosta will chair the task force, which has been charged with identifying ways to promote apprenticeships, particularly in sectors where apprenticeship programs are currently insufficient.

The task force will create a final report for President Trump that will include:
  • Recommendations on federal initiatives to promote apprenticeships.
  • Administrative and legislative reforms that will facilitate the formation and success of apprenticeship programs.
  • The most effective strategies for creating industry-recognized apprenticeships.
  • The most effective strategies for amplifying and encouraging private-sector initiatives to promote apprenticeships.

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Worker Classification Update

Posted by National Alliance for Fair Contracting on

J.D.Supra
Labor & Employment Law, Taxation
July 26, 2017

On July 20, 2017, the Internal Revenue Service (“IRS”) issued a reminder for small businesses on the importance of correctly classifying workers as employees or independent contractors. Employers failing to do this correctly may face penalties, including trust fund penalties, from the IRS, which can be assessed not only against the employer but also against officers and directors. Classification is important because an employer must withhold income taxes and pay Social Security, Medicare taxes, and unemployment tax on wages paid to workers who are employees, but independent contractors are instead subject to self-employment tax.

Employers must look at the facts in each situation. The IRS has reminded small businesses to focus on three categories to properly classify workers: (1) behavioral control, (2) financial control, and (3) the relationship of the parties. A worker is properly classified as an employee if the employer exercises significant behavioral and financial control over the worker such as controlling the manner of work by giving the worker instructions or training and providing the worker with the tools necessary to complete the work. Also, if the employer and the worker have a permanent working relationship and the employer provides the worker with benefits such as a pension plan or vacation pay, the worker properly would be classified as an employee. On the other hand, a worker should be treated as an independent contractor if the worker has autonomy on deciding the manner of work and amount of hours to work, works for multiple employers, or does not retain a permanent relationship with the employer. These factors all reflect a 20-factor test established by the IRS in Revenue Ruling 87-41.2

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D.C. ‘Rolled Out the Red Carpet’ for a Company Accused of Wage Fraud

Posted by National Alliance for Fair Contracting on
Councilmember, others call foul.

 

Jeffrey Anderson
JUL 27, 2017 – 5 AM

With the building boom unabated, one issue D.C. voters can expect to hear a lot about come election year is jobs. Every public land sale, commercial project, mixed-use development, or residential complex comes with mayoral promises of opportunities for a growing labor force.

But the D.C. Apprenticeship Council’s recent certification of an out-of-state contractor and accusations of wage fraud have prompted an investigation by Attorney General Karl Racineand claims by unions and labor advocates that a bad actor is going unchecked. At-large D.C. Councilmember Elissa Silverman worries that the District isn’t enforcing its own labor laws.

“We don’t want to be approving apprenticeships for companies that don’t follow the law, don’t pay employees a fair wage, and engage in bad labor practices,” she says. “We don’t want to rely on bad actors to train employees.”

The apprenticeship council is an 11-member body within the Department of Employment Services that is supposed to ensure compliance with local and federal labor laws and standards. In order to bid on major projects, contractors must have a certain number of licensed skilled workers and apprentices on the job. Certification as an apprenticeship sponsor helps contractors compete for those projects.

Certifying companies that fail to meet wage and overtime standards, labor sources say, is a disincentive for those companies to properly classify and train electricians, plumbers, and drywall and HVAC installers. Profit margins become irresistible to unscrupulous contractors at the expense of workers who are underpaid and struggling to advance in their trades.

Power Design, a Florida-based electrical contractor, received certification from the apprenticeship council last month. The firm has contracts at 16 major building sites in D.C., some publicly funded and most run by the city’s top construction companies. Clark Construction and its related CBG Building Company have hired the firm as an electrical contractor at six of those sites. Other major companies such as Hitt Construction, Davis Construction, Donohoe Construction, and Walsh Construction have also hired Power Design.

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Labor Commissioner’s Office Files $6.3 Million Misclassification and Wage Theft Lawsuit against Glendale Construction Company (CA)

Posted by National Alliance for Fair Contracting on
PR Newswire

Aug. 14, 2017, 01:55 PM

LOS ANGELES, Aug. 14, 2017 /PRNewswire-USNewswire/ — The Labor Commissioner’s Office has filed a lawsuit against Calcrete Construction, Inc. seeking $6,300,338 for multiple wage theft violations affecting a group of 249 construction workers and the willful misclassification of 175 workers as independent contractors.

An investigation launched in October 2016 uncovered the Glendale-based company’s failure to pay the workers for overtime hours, allocate pay for sick leave and provide proper wage statements. The lawsuit, filed in Los Angeles Superior Court, also seeks civil damages and penalties.

Beginning in August 2016, Calcrete forced its workers under threat of termination to sign contracts stating they were independent contractors. The company then used staffing agencies Dominion Staffing and Southeast Personnel Leasing to pay the workers.

“It is illegal for employers to use subcontractors to distance themselves from the obligation to pay workers, and we will use every tool to dissuade employers from this scheme,” said Labor Commissioner Julie A. Su. “This lawsuit aims to recover the money these misclassified workers should have been paid after years of wage theft.”

Calcrete employees typically worked 10-12 hours Monday through Friday and eight hours on Saturday. They were paid only their regular hourly rate and not for the 18-28 hours of overtime they regularly worked. This underpayment occurred for a nearly two- year period from 2014-16, the lawsuit specifies.

The lawsuit seeks:
  • Wages and damages of approximately $2,596,438 payable to the workers:
    • $352,000 in overtime wages
    • $1,244,438 in waiting time penalties
    • Over $1,000,000 (specific amount to be determined at trial) for unpaid sick leave and liquated damages
  • Penalties of approximately $3,703,900 payable to the state:
    • $2,625,000 in statuary penalties for willful misclassification
    • $78,900 in civil penalties.
    • Over $1,000,000 (specific amount to be determined at trial) for failure to provide proper wage statements

(Read More) 

Labor Commissioner’s Office Cites Oakland Construction Company Over $3.5 Million for Wage Theft Violations (CA)

Posted by National Alliance for Fair Contracting on

NEWS PROVIDED BY
California Department of Industrial Relations
Jul 25, 2017, 15:43 ET

OAKLAND, Calif., July 25, 2017 /PRNewswire-USNewswire/ — The Labor Commissioner’s Office cited an Oakland contractor more than $3.5 million in wages and penalties for multiple wage theft and labor law violations. Attic Pros is ordered to pay $2,109,480 in wages, liquidated damages and waiting time penalties for 119 workers who were misclassified as independent contractors, and $1,481,600 for civil penalties.

“This is an egregious case of wage theft, with workers misclassified and denied a just day’s pay,” said Labor Commissioner Julie A. Su. “My office enforces California’s labor laws to stop employers willing to cheat employees of their pay as a means to gain an unfair advantage over their law-abiding competitors.”

The Labor Commissioner’s Office launched its investigation of the company and its owner, Leonid Molchanov, after receiving a Private Attorneys General Act claim. Investigators found that Attic Pros’ employees worked 10-14 hours per day up to six days a week, and were paid a daily rate regardless of the actual number of hours worked-putting their earnings below minimum wage.

Su ordered Attic Pros to pay $191,400 in unpaid minimum wages, $321,330 in unpaid overtime wages, $191,400 in liquidated damages on unpaid minimum wages, $1,405,350 in waiting time penalties, and $1,481,600 in civil penalties for minimum and overtime wage violations, wage statement violations and employee misclassification. The citations were issued for violations that occurred during the 32-month period from July 2014 to March 2017.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest. Waiting time penalties are imposed when the employer fails to provide workers their final paycheck after separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days. The civil penalties collected will be transferred to the State’s General Fund as required by law.

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Opinion Build more affordable housing, but don’t stiff construction workers in the process (CA)

Posted by National Alliance for Fair Contracting on
Robbie Hunter, Sacramento
The writer is president of the State Building Construction and Trades Council of California.

July 17, 2017, 9:10 am

To the editor: Your editorial is wrong to suggest that removing the requirement in SB 35 that workers be paid the prevailing wage – the common wage paid to construction workers in any given area – will somehow ease the affordable housing crisis in California. Instead, it would help drive more than 400,000 construction workers and their families out of the shrinking blue-collar middle class. Try supporting a family of four in California on a residential construction worker’s average pay of around $42,000 on prevailing wage projects. (“Affordable housing at an impasse,” editorial, July 22)

Removing the prevailing wage mandate would force the families of plumbers, carpenters and other construction workers to compete in the underground economy where developers hire workers from street corners and pay no state or federal tax, no Social Security, no Medicare and of course no benefits. We cannot obtain affordable housing by driving millions more Californians into poverty.

Labor makes up about 15% of the total cost of any given prevailing wage residential project. Construction workers are not driving the housing shortage. The real culprit is the greed of developers and speculators. We see no editorials to curtail their massive profits.

Does anyone really believe that the money saved from restricting construction workers’ pay will wind up anywhere other than in developers’ pockets?

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