Council approves rules to encourage local labor on city construction projects (IL)

Posted by National Alliance for Fair Contracting on

By Crystal Thomas – Staff Writer
Posted Sep 5, 2018 at 12:01 AM

Springfield City Council members unanimously voted Tuesday to strengthen an ordinance that encourages contractors to have city residents work on at least half of the hours needed for city construction projects worth more than $100,000.

With the changes, contractors who don’t make any effort to hire locally can be barred from bidding on city construction projects for up to three years, and those that do use a crew made up of more than 50 percent local workers will be awarded.

The changes were made to a local labor ordinance passed in 2016. It fined contractors who failed to utilize enough Springfield workers on city construction jobs. If a contractor used no local labor, it could be fined up to 2.5 percent of the total bid – a $25,000 penalty on a $1 million construction contract.

Now, contractors can be rewarded using the same formula. If all Springfield labor is used on a construction job, the company would receive an additional 2.5 percent of the total bid.

Ward 3 Ald. Doris Turner called the amended ordinance the “carrot and stick approach” to hiring local.

Turner and Ward 1 Ald. Chuck Redpath met with city officials last week to hammer out the changes council members wanted to see after Langfelder proposed his changes more than a month ago.

Turner said she saw the ordinance as way to promote work and careers for local residents. It establishes that a contractor would need to be affiliated with an apprenticeship program and use more minority workers.

(Read More)

unnamed

Former Wessman Development LLC could owe Kimpton project workers more wages (CA)

Posted by National Alliance for Fair Contracting on

Amy DiPierro
Palm Springs Desert Sun
Published 10:53 a.m. PT
Sept. 10, 2018

Kimpton Hotel and other real estate developments in downtown Palm Springs are subject to a prevailing wage, a state agency has found, due in part to more than $140 million in city funding and projected tax rebates to the complex. The California Department of Industrial Relations’ determination means the developer of the projects could owe untold amounts of additional wages to workers who built the hotel and shopping district.

The DIR’s August 13 letter, which determined the downtown project is subject to prevailing wage, could sully a tony new development that city officials have hailed for revitalizing the downtown corridor, even after the original developer of the project was charged with allegedly bribing city officials for a sweetheart deal.

Palm Springs Promenade LLC, the limited liability company formed by Wessman Development to build the Kimpton and Virgin hotels as well as office and retail space, received $46 million in city funding and could receive an additional $100 million in potential transient occupancy tax refunds, according to a detailed review of city contracts by DIR.

The prevailing wage rate is the hourly wage paid to a majority of like workers on public works projects in the same place or labor market. Essentially, a prevailing wage is a minimum wage for specific types of workers, when they work on projects that benefit from public funds.

While some cities exempt publicly-funded projects from prevailing wage because of their benefits to residents, DIR Acting Director André Schoorl concluded in the agency’s determination that the downtown complex is not exempt, because the project is neither built, owned nor operated by the city and has the primary purpose of private profit.
“The city’s decision to subsidize the profit margin of (a) private landowner in the city’s downtown is not equivalent in purpose, scale, or function, to the purely municipal acts of building a local fire station or fencing for a reservoir,” Schoorl wrote.

The DIR determination means construction workers that built the Kimpton and other downtown structures could get a boost if wages are found to be owed. Workers and other interested parties may file a complaint with DIR, according to the agency, which would then trigger an investigation into whether workers have already received the correct prevailing wages or not.

…

California charter cities can pass laws exempting locally-funding public works projects from state prevailing wage law if they are deemed to be purely “municipal affairs,” like a fire department or library.

But in an August 13 letter, DIR Acting Director André Schoorl noted the hotel and shopping development built by Palm Springs Promenade “has no such obvious public purpose” that would make it exempt from paying prevailing wage. And while the city sought to incentivize developers to invest in blighted properties downtown, Schoorl concluded construction in downtown Palm Springs “was primarily undertaken for private benefit and profit, with a subsidiary goal of removing blight.”

…

The Center for Contract Compliance, a nonprofit labor advocate founded by contractors unions, in January 2017 requested DIR review whether the downtown project is subject to prevailing wage.

Although DIR determinations do not set a precedent – meaning it is advice given to a specific project, not a precedent applying to subsequent cases – Center for Contract Compliance Executive Director Branden Lopez said the reasoning in the Palm Springs Promenade case could apply to other jobs, too.

“The reasoning in the case, it applies statewide if they have similar facts,” he said.

Multiple cities in California have subsidized proposed hotel developments on a case-by-case basis. Additionally, according to research commissioned by the city of Long Beach in May 2017, at least five cities and one county in California, including Cathedral City and Palm Springs, have formal economic incentive programs for hotels.

(Read More)

Does ‘right to work’ imperil the right to health? The effect of labour unions on workplace fatalities

Posted by National Alliance for Fair Contracting on

Michael Zoorob
Department of Government, Harvard University

Abstract

Objective – Economic policies can have unintended consequences on population health. In recent years, many states in the USA have passed ‘right to work’ (RTW) laws which weaken labour unions. The effect of these laws on occupational health remains unexplored. This study fills this gap by analysing the effect of RTW on occupational fatalities through its effect on unionisation.

Methods – Two-way fixed effects regression models are used to estimate the effect of unionisation on occupational mortality per 100,000 workers, controlling for state policy liberalism and workforce composition over the period 1992-2016. In the final specification, RTW laws are used as an instrument for unionisation to recover causal effects.

Results – The Local Average Treatment Effect of a 1% decline in unionisation attributable to RTW is about a 5% increase in the rate of occupational fatalities. In total, RTW laws have led to a 14.2% increase in occupational mortality through decreased unionisation.

Conclusion – These findings illustrate and quantify the protective effect of unions on workers’ safety. Policymakers should consider the potentially deleterious effects of anti-union legislation on occupational health.

(Read More)

(PDF Copy of Report)

New Maryland Law Exposes General Contractors and Subcontractors to Greater Wage and Hour Liability (MD)

Posted by National Alliance for Fair Contracting on

September 19, 2018
J.D.Supra

Effective October 1, 2018, general contractors with projects in Maryland will have a new headache to deal with. That’s when Maryland’s new law, the General Contractor Liability for Unpaid Wages Act, will go into effect. Under the Act, GCs will be jointly and severally liable for the failure of any subcontractors on the GC’s project to comply with Maryland’s existing wage and hour law. GCs will have to ensure that all of their subcontractors (including any sub-subcontractors or other firms they hire) pay their employees in accordance with Maryland law.

Under the new Act, an employee can sue both its employer and the GC on the job for up to three times the wages owed to the employee, plus attorneys’ fees and costs. This applies to any job involving “construction services”, which is broadly defined to include any work involving “building, reconstructing, improving, enlarging, painting, altering, and repairing” of property.

Subcontractors will not be spared the effects of this new law. They are required to indemnify a GC for “any wages, damages, interest, penalties, or attorneys’ fees owed as a result of the subcontractor’s violation.” That means the failure to comply with Maryland’s wage and hour laws can expose a subcontractor to significantly greater liability than before.

GCs should prepare for the new reality by reviewing their subcontractor agreements to ensure they are protected. They also will want to implement protocols for reviewing the pay records of subcontractors and any sub-subcontractors or suppliers they hire.
In addition to the above compliance controls, subcontractors should be on the lookout for new indemnification language in subcontracts and the partial releases that most GCs require in exchange for periodic payment on construction projects.

(Read More)

Study: Prevailing Wage Strengthens Minnesota’s Economy & Promotes a Skilled Workforce (MN)

Posted by National Alliance for Fair Contracting on

School Project Data Shows the Law Boosts Local Hiring and Has No Effect on Construction Costs

Date: July 16, 2018
Author: Frank Manzo IV

St. Paul: In the wake of Michigan’s controversial decision to repeal its prevailing wage law, new research shows that Minnesota’s prevailing wage law boosts the economy by almost a billion dollars every year, creates 7,200 jobs, strengthens apprenticeship programs, increases local hiring by 10%, and has no significant effect on the overall cost of publicly-funded construction projects. The research was completed by the Midwest Economic Policy Institute and University of Colorado State University-Pueblo economist Dr. Kevin Duncan.

“This study brings important, new evidence that Minnesota’s prevailing wage law maintains wages and benefits for Minnesota’s construction workers, reducing their need for public safety programs and helping to keep these working families in the middle class, and it does this without a detectable impact on public construction costs,” said University of Minnesota labor economist Dr. Aaron Soujourner. Soujourner is a former economic adviser to President Trump and President Obama who performed a peer review of the research.

Prevailing wage functions as a local minimum wage for different types of skilled construction work. It is typically applied to publicly-funded projects like roads, bridges, and schools, and is based on what skilled craft workers in the community are most often paid for comparable work. The state’s average full-time, blue-collar construction worker currently earns about $48,000 per year.

“Prevailing wage is a win-win-win for Minnesota taxpayers, the state’s economy, and the construction industry,” said study co-author and Colorado State University-Pueblo economist Kevin Duncan. “While the data consistently shows that overall project costs and bid competition are not affected by the law, its impacts on wages, local hiring, welfare reliance, workforce productivity, and the overall stability of the labor market are especially significant.”

The study analyzed more than 600 winning bids for school construction projects in the Twin Cities region between 2015 and 2017. While the majority of bids did not include prevailing wages, there was no statistically significant difference in the average total cost of prevailing wage bids and non-prevailing wage bids. However, prevailing wage bids utilized 10% more local subcontractors.

“In terms of project costs and local hiring, the new data out of Minnesota mirrors what’s been seen in other states,” said study co-author and Midwest Economic Policy Institute Policy Director Frank Manzo IV. “A repeal of Minnesota’s prevailing wage law would not save money, but it would export more tax dollars to businesses from out of town.”

(Read More)

(PDF Copy of Full Report)

(Executive Summary)

(Key Findings)

VIDEO: Protecting Prevailing Wages (MN)

Posted by National Alliance for Fair Contracting on

By Filiberto Nolasco Gomez
Workday Minnesota
October 1, 2018

MINNESOTA – The Fair Contracting Foundation works to elevate the legal enforcement of applicable laws to ensure quality contractors have the opportunity to compete fairly. One of their focuses is protecting prevailing wages.

“Working people in Minnesota are preserving part of the middle class through prevailing wage laws. Unfortunately, these laws have recently been repealed in several states, including Wisconsin, because some political leaders claim that construction wages are too high. Support the skilled people who build Minnesota; support your local economies; and support prevailing wages!”

(See Video)

unnamed

On issue of prevailing wage, Minnesota succeeds where neighboring states have failed (MN)

Posted by National Alliance for Fair Contracting on

By Frank Manzo IV and Kevin Duncan. July 30th, 2018

A legislative virus that is shrinking middle-class incomes, eliminating jobs and causing skilled workforce shortages is spreading across the Midwest. It’s called repeal of state prevailing wage laws.

Prevailing wage laws establish local minimum wage rates for the skilled workers that build our schools, highways, bridges and other critical infrastructure Since 2015, three Midwest states (Michigan, Wisconsin and Indiana) have repealed their prevailing wage laws, and even more have tried to weaken them.

Minnesota has not. And a growing body of evidence tells us why the Gopher State has it right.

First, eliminating prevailing wage doesn’t save taxpayers money. Recent research out of Indiana showed no difference in construction costs before and after repeal of prevailing wage. Additionally, that state’s Assistant Republican House leader has publicly acknowledged that repeal “hasn’t saved a penny.” This is because labor represents only 23 percent of the total cost of a construction project. It is simply not possible to find significant cost savings by cutting worker wages and benefits.

Instead, research shows that when you eliminate the wage floor, any savings disappear due to a host of new problems. For example, arbitrary wage cuts discourage local skilled workers from pursuing careers in the construction trades; and these workers are often replaced by lower-skilled workers from out of town. Costly impacts in the form of lower productivity, more jobsite injuries and increased reliance on social safety net programs more than offset any savings from paying lower wages.

And repeal invites even larger consequences for the local economy.

In a study released this month, we examined hundreds of school construction bids over a three-year period in the Twin Cities area. We found that prevailing wage increases the share of construction value completed by local contractors by 10 percent. If prevailing wage were to be repealed, the tax dollars that employ local workers – and the ripple effects from their spending as consumers – would be exported out of the local community. In fact, we found that Minnesota’s prevailing wage law ultimately strengthens the economy and creates 7,200 jobs statewide.

(Read More)

Register Now – 20th Annual NAFC Conference, August 19-22, 2018 – San Diego, CA

Posted by National Alliance for Fair Contracting on

July 2018

It’s our 20th Anniversary! Save the date and join NAFC at our upcoming Annual Conference in sunny San Diego, CA. The Conference will be held at the Hilton San Diego Bayfront Hotel, in downtown San Diego. This year’s Conference will be jointly sponsored by the Center for Contract Compliance and will have a national as well as a California specific focus. The NAFC National Conference is attended by participants from across the nation, including representatives from labor organizations, responsible contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

(Visit NAFC’s Conference Page)

(Download Joint Conference Registration Form)

unnamed

US prosecutors target construction firms that “institutionalise theft” from their own workers

Posted by National Alliance for Fair Contracting on

A recent spate of criminal prosecutions in New York and California against builders who don’t pay their workers the agreed wage suggests a hardening mood against corporate graft in the country.

27 June 2018 | By GCR Staff

In one case, a luxury home-builder in Manhattan has been charged with stealing more than $1.7m from 500 workers through payroll tricks.

Previously, failure to pay the correct wage was treated as a civil matter, putting the onus on the worker to bring a suit against their employer. But now state prosecutors seem more willing to treat the issue as a violation of criminal law.

Diana Florence, an assistant district attorney (DA) in Manhattan, said the aim was to stop companies in industries that rely on lots of low paid workers from “institutionalising theft as a business model”.

The new approach was illustrated most recently last week when authorities in New York announced that a Brooklyn construction company had pleaded guilty to second-degree grand larceny for underpaying 21 employees.

The Urban Group then made full restitution of $303,411 to the workers, all of whom were immigrants.

Contractors on public sector projects often commit to paying wages as a certain rate, and this case revolved around Urban’s falsely certifying that it had paid employees on a public schools contract at the prevailing wage rates of $63 an hour when in reality it had paid between $10 and $17, and had offered no overtime or benefits.

The discrepancy was revealed when the company was forced to post the legal wage on signs around its worksites.

As well as making restitution, Urban was debarred from public work in New York state as a contractor or subcontractor for five years.

(Read More)

unnamed

Brooklyn contractor pays more than $300K to settle worker wage theft claims (NY)

Posted by National Alliance for Fair Contracting on

Kim Slowey
June 21, 2018

Dive Brief:

Brooklyn District Attorney Eric Gonzalez, together with New York City Department of Investigation Commissioner Mark Peters, announced Monday that a Brooklyn construction company pleaded guilty to second-degree grand larceny for underpaying and committing wage theft against 21 employees. Brooklyn-based contractor The Urban Group made full restitution of $303,411. According to the New York Daily News, Gonzalez said the affected workers were immigrants.

Between 2014 and 2015, according to Gonzalez’ office, Urban employed six non-union workers to perform construction-related work – including demolition, masonry, carpentry and painting – at five schools in Brooklyn and the Bronx. Urban reportedly falsely certified that it paid those workers at prevailing wage rates ($62 to $63 per hour), but only paid between $10 and $17 per hour and no overtime or benefits. Urban ended up owing those workers more than $230,000 in restitution. Urban also reportedly underpaid non-union day laborers hired to perform construction work at other school sites by more than $71,000.

The pay discrepancies reportedly were revealed when the company was forced to post the legal wage on signs around its worksites. The Urban Group on June 13 was sentenced to a conditional discharge and is debarred from performing public work in New York state as a contractor or subcontractor for five years.

Dive Insight:

In December, New York city officials, led by Manhattan District Attorney Cyrus Vance, launched a crackdown on wage theft in the city by announcing the prosecution of area construction companies that had allegedly stolen more than $2.5 million in wages from approximately 400 of their workers by writing them bad checks, not paying them prevailing wage rates or overtime and, in some cases, withholding payment altogether. The DA’s office accused the companies involved of making total underpayments ranging from $13,000 to $700,000.

(Read More)