SAVE THE DATE – 22nd NAFC National Conference, September 20-22, 2020 – Chicago, IL

Posted by National Alliance for Fair Contracting on

November 2019

Just announced! NAFC’s 22nd National Conference will be held on Sept. 20-22, 2020, in Chicago, Illinois, at the Palmer House Hotel. Please save the date and ensure to join NAFC members and affiliates at the most comprehensive fair contracting conference in the nation. The NAFC National Conference is attended by hundreds of 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 our website for further information.

(Visit NAFC’s Conference Page)

Study Finds Apprenticeships Are on the Rise in Minnesota (MN)

Posted by National Alliance for Fair Contracting on

Overall participation in apprenticeships grew by 27 percent between 2014 and 2017. About 96 percent of those are in construction.

SEPTEMBER 16, 2019
AMANDA OSTUNI

Apprenticeships are becoming an increasingly popular way for Minnesotans to kickstart their careers.

A study by the Midwest Economic Policy Institute (MEPI) and Dr. Robert Bruno of the University of Illinois at Urbana-Champaign found that participation in apprenticeships in Minnesota grew by 27 percent between 2014 and 2017, with 11,500 individuals enrolled in a program in 2017.

Apprenticeships are largely utilized as an alternative to college. MEPI policy director Frank Manzo says they have grown in popularity alongside the rising costs of college.

“An apprenticeship program offers the ability to earn while you learn,” Manzo says. “You go through roughly the same amount of classroom and on-the-job hours as you would through a bachelor’s degree program… but you’re getting paid to do it instead of accumulating debt.”

Citing data from policy research organization Mathematica, Manzo says apprenticeships provide an average annual earnings boost of $4,700-greater than most boosts provided by a bachelor’s or associate’s degree.

In addition to helping the individual, the MEPI study finds that apprenticeships serve as a significant boost to Minnesota’s economy.

“The data shows that every dollar spent on apprenticeship programs increases Minnesota’s GDP by $21,” says study researcher Robert Bruno, in a press release. “That makes apprenticeships one of the most effective investments we can make-not just in workers, but in the economy.”

The construction industry is at the heart of Minnesota’s apprenticeship participation. Even though construction accounts for just 11 percent of national occupations suited to apprenticeships, about 96 percent of the total number of individuals actively enrolled in Minnesota apprenticeships between 2015 and 2017 were working in skilled construction trades. This amounts to an annual industry investment of $30 million.

Manzo says this disproportion comes from the fact that construction is the only industry in the state to fully embrace apprenticeships thus far. He adds that the industry has been motivated by the impacts of the widespread labor shortage.

“They’re having difficulty finding qualified craft workers, so the solution is either pay people more and attract more workers into the industry or invest in training more workers and build up their skill sets,” Manzo says.

With the training approach, Manzo says many construction companies readily got on board with apprenticeships, working together to establish programs where workers could bounce between companies as jobs were available since the industry is naturally volatile and different companies win different bids at different times.

Manzo says he’d like to see state initiatives broaden the breadth of apprenticeship opportunities, particularly into fields like healthcare, IT, agriculture, and manufacturing.

“[Construction apprenticeships] have produced skilled construction workers that build our infrastructure, ensure schools are built safely,” Manzo says. “These programs could be replicated in other industries.”

(Read More)

(PDF Copy of Study)

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AG Nessel Joins Effort Urging Regulators To Protect Workers From Harmful Anticompetitive Labor Practices

Posted by National Alliance for Fair Contracting on

July 18, 2019 at 10:20 am

LANSING, Mich. – Michigan Attorney General Dana Nessel joined 17 other Attorneys General earlier this week in urging collaboration between Federal Trade Commission (FTC) regulators and state attorneys general to protect workers from anticompetitive labor practices that depress wages and limit job mobility and opportunities for advancement.

In a comment letter filed in connection with the FTC’s hearings on competition in the 21st Century, the coalition argues that the FTC should increase its focus on antitrust enforcement in labor markets and use their authority to crack down on non-compete and no-poach contract agreements-in addition to considering how workers are impacted by proposed mergers.

“In an era where wages continually decline and workers’ protections, like prevailing wage, are routinely stripped, we must begin reviving antitrust regulation in labor markets,” said Nessel. “We must do this to protect workers from harmful anticompetitive practices such as targeting low-income workers by forcing them to sign non-compete agreements and ultimately limiting their earning potential.”

(Read More)

Murphy’s Task Force Takes Hard-Line Approach Against Employee Misclassification (NJ)

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The governor’s task force issued a report outlining a comprehensive and aggressive approach that includes nine key recommendations to combat misclassification.

By Brittany E. Grierson

September 12, 2019 at 12:00 PM

New Jersey Governor Phil Murphy’s attention to employee-friendly workplace laws shows no sign of waning. In May 2018, Gov. Murphy signed Executive Order No. 25, which established the Task Force on Employee Misclassification. The Task Force, charged with advising the governor’s office on strategies to effectively combat employee misclassification and ensure compliance with wage and hour laws, comprises representatives from various state governmental agencies, including the Departments of Labor and Workforce Development (DOL), Treasury, Agriculture, Banking and Insurance, and Transportation. On July 9, 2019, after the Task Force held public forums throughout the state, where it allowed employers, employees and subject matter experts to voice comments and concerns about misclassification, it published a report with its recommendations to combat misclassification.

The report defines misclassification as “the practice of illegally and improperly classifying workers as independent contractors, rather than employees,” and claims that there has been an uptick in the number of misclassifications throughout the country, and specifically in New Jersey. Significantly, minimum wage and overtime laws apply to employees, but do not apply to independent contractors. Currently, the “ABC test,” adopted by the New Jersey Supreme Court in Hargrove v. Sleepy’s, 220 N.J. 289 (2015), is used to determine whether a worker should be classified as an employee or independent contractor. The “ABC test” presumes that an individual is an employee, unless the employer demonstrates:

(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
(B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

In its report, the Task Force outlines a comprehensive and aggressive approach that includes nine key recommendations to combat misclassification. The recommendations are outlined below:

1. Targeted Education and Public Outreach

First, the Task Force recommends focusing on spreading awareness about the illegality of misclassification. The Task Force suggests that a press strategy be developed to educate employers on their obligations under the wage and hour laws, and to reinforce that misclassification is closely monitored by the state and that findings of misclassification may result in harsh penalties. Further, the Task Force recommends that a DOL hotline, webpage and email address be created to enable individuals to report instances of misclassification, and that employers be required to post notices in the workplace about misclassification to inform workers of the illegal practice.

2. Strengthening State Contracting

The Task Force proposes that all employers who contract with or receive funding from the state contractually affirm that they are aware of the laws regarding worker classification and that their workers will be paid the proper rates for all hours worked. Further, the report states that in the event such employers misclassify workers, they should be at risk for losing their state contracts or state funding.

3. Interagency Coordinated Enforcement

Central to the Task Force’s strategy to combat misclassification is a call to all state agencies to coordinate interagency enforcement efforts. Such efforts may include interagency on-the-ground investigations and joint enforcement sweeps. For example, the report notes, state agencies like the Office of the Attorney General’s Division of Alcoholic Beverage Control, which presently collects and reviews payroll records, should share those records with the DOL. The Task Force points out that coordinated interagency efforts will help to pool together agency resources and ensure that investigation efforts are not duplicated.

4. Data Sharing

To assist with coordinated interagency enforcement efforts, the Task Force recommends that a network be established to allow for data sharing, subject to applicable confidentiality requirements, among state agencies. This network of shared information would serve as the basis for interagency investigations and would include information collected from regular field visits. It was further suggested that a Memorandum of Understanding that details the obligations of the data sharing network be implemented.

5. Cooperation with Neighboring States

Because many companies have operations in neighboring states, the Task Force recommends that neighboring states commit to help each other with wage enforcement efforts. Note that immediately after the release of the Task Force’s report, New Jersey acted on this recommendation. On July 9, 2019, the DOL entered into a reciprocal agreement, effective immediately, with Pennsylvania’s and Delaware’s Departments of Labor to “maximize each state’s wage and hour enforcement efforts.” The memorandum states that each state’s Department of Labor will: share relevant wage enforcement information, which includes, but is not limited to, wage claims, audit reports, investigation reports, payroll records, employer registration records, and internal labor department records; notify each other of potential violations of the others’ statutes; and assist each other with enforcement activities, such as investigations. The agreement is effective for three years and may be extended by agreement of the participating state agencies.

6. Cross-Training

The Task Force emphasizes that interagency cross-training is essential for coordinated enforcement efforts. As such, to support effective identification and referral of potential misclassification issues to the DOL, the report recommends that field investigators at various agencies be trained on the ABC test and other relevant laws. In a nod to the Task Force’s work, starting in January 2019, investigators from the Division of Consumer Affairs began to receive training on identifying employee misclassification.

7. Criminal Referrals

Although New Jersey law provides for criminal action against offending employers, legal
action is generally limited to civil proceedings. However, this may soon change. The Task Force recommends that particularly egregious cases of misclassification be referred to the Office of the Attorney General to be criminally prosecuted.

8. Using Existing Workers’ Comp Laws to Bolster Misclassification Enforcement

The Task Force notes that independent contractors are generally not eligible for workers’ compensation coverage. As such, the Task Force recommends that the enforcement offices responsible for workers’ compensation laws add relevant misclassification laws to their focus.

9. Utilizing DOL’s Power to Revoke and Suspend Licenses

Lastly, under N.J.S.A. 34:15-57.4, the Commissioner of Labor has the authority to suspend or revoke any licenses held by an employer, if that employer is found to be in violation of the state wage, benefit, and tax laws; however, the Task Force holds that this power has never been used. The Task Force encourages the DOL to exercise this authority to combat misclassification.

(Read More)

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This Labor Day, parade passes West Virginians by (WV)

Posted by National Alliance for Fair Contracting on

Sep 1, 2019

The first Labor Day was celebrated in New York City in 1882. The highlight of the day included a parade by thousands of workers from city hall to Union Station. But with the repeal of prevailing wage, the parade is passing most West Virginians by this holiday weekend.

Prevailing wage is the local “going rate” for construction work. Essentially, it is a market-based minimum wage with benefits for local construction workers.
Since 1931, both under Republican and Democratic control, Congress has made a federal prevailing wage the law of the land. Prevailing wage receives strong bipartisan support because it creates a level playing field for contractors by ensuring that public expenditures reflected local market standards for compensation and craftsmanship.

But leaders in the West Virginia Legislature decided to march to the beat of a different drum by tossing out the going rate altogether.

Many argued the state could further stretch its tax dollars by building five new schools for the price of three. However, a recently released study finds that West Virginia taxpayers saved absolutely nothing from prevailing wage repeal.

Conducted by the University of Missouri-Kansas City and the Midwest Economic Policy Institute, the study determines that not only has the state failed to save any money, it backs up a previous report by the West Virginia School Building Authority (SBA).

(Read More)

STUDY: UNIONIZATION FELL LAST YEAR, BUT ILLINOIS’ MIDDLE CLASS STILL DEPENDS ON UNIONS

Posted by National Alliance for Fair Contracting on

For Immediate Release: September 2 2019
Contact: Frank Manzo IV, 708-375-1002, fmanzo@illinoisepi.org

Chicago: On Labor Day 2019, researchers from the Illinois Economic Policy Institute, University of Illinois at Urbana-Champaign, and University of California, Irvine released the sixth annual State of the Unions report for Illinois. The study finds that unions play an important role in Illinois’ economy communities, despite declining union membership over the past decade.

Read the entire report, The State of the Unions 2019: A Profile of Unionization in Chicago, in Illinois, and in the United States, here.

Since 2009, Illinois’ union membership rate has declined by 2 percentage points. After a one-year uptick, Illinois’ unionization declined from 15.0% in 2017 to 13.8% in 2018. Unionization decreased in the Chicago metropolitan area by about 12,000 members over the year.

 

“Labor unions have recently faced many legislative and judicial setbacks including the Supreme Court decision in Janus v. AFSCME, which may have affected unionization rates,” said Professor Robert Bruno, who serves as Director of the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign.

However, public sector workers continue to have high rates of union density. About half of all public sector workers are unionized in both Illinois (46.4%) and the Chicago metropolitan area (46.2%) as of 2018, exceeding the national public sector unionization rate (33.9%). In comparison, fewer than one-in-ten private sector workers (8.7%) are now union members in Illinois.

Despite declines in union membership, the report concludes that labor unions boost worker incomes by lifting hourly wages by an average of 11%. In addition, the authors find that African Americans, military veterans, and rural workers are disproportionately more likely to be union members in Illinois.

“Unions raise wages for everyone, but especially for low-income and middle-class workers,” said Frank Manzo IV, Policy Director of the Illinois Economic Policy Institute. “Unions reduce inequality, provide family-supporting careers for our nation’s heroes, and foster a strong middle class in communities across Illinois.”

(Visit ILEPI’s Website)

(See PDF of Study)

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SWACCA President to Testify Before House Committee on Misclassification in the Construction Industry

Posted by National Alliance for Fair Contracting on

Business Wire
September 25, 2019 11:22 AM

WASHINGTON – On Thursday, Sept. 26, at 10:15 a.m. EDT, Matt Townsend, the President of the Signatory Wall and Ceiling Contractors Alliance (SWACCA) and Chief Executive Officer of OCP Contractors, Inc., located in Holland, Ohio, is scheduled to testify before the U.S. House of Representatives’ Committee on Education and Labor Workforce Protections Subcommittee at a hearing titled Misclassification of Employees: Examining the Costs to Workers, Businesses, and the Economy

In his testimony, Townsend will outline how the misclassification of employees impacts the construction industry, particularly the competitive disadvantage it creates for law-abiding employers.

“SWACCA appreciates the opportunity to highlight for Members of Congress the pervasiveness of employee misclassification in the construction industry,” said Townsend. “Law-abiding employers like the ones SWACCA represents do not wish to be complicit in misclassification in order to compete. I look forward to sharing with Congress exactly how these misclassification schemes tilt the playing field against law-abiding employers in the construction industry while also harming workers and taxpayers.”

SWACCA has established itself as a leader in the fight against misclassification in the construction industry. Last Congress, SWACCA strongly opposed passage of legislation that would have eliminated barriers to misclassifying workers as independent contractors. A letter submitted on behalf of SWACCA opposing passage of the bill was cited in a House Committee report and on the floor of the House of Representatives during debate. SWACCA also fought to ensure that an IRS rulemaking initiated by the passage of the 2017 tax reform legislation did not create a financial incentive for workers to accept being misclassified in exchange for a favorable “pass-through” tax deduction.

The Misclassification of Employees: Examining the Costs to Workers, Businesses, and the Economy hearing will take place in the House Education and Labor Workforce Protections Subcommittee on Thursday, Sept. 26 at 10:15 a.m. EDT in the Rayburn House Office Building Room 2175. A livestream will be available here.

The Signatory Wall and Ceiling Contractors Alliance (SWACCA) is a national organization of signatory wall and ceiling contractors committed to working in partnership with its workforce to provide the highest-quality, most efficient construction services possible to its customers. SWACCA prides itself on representing companies that fully embrace their commitment to their customers and their employees.

(Read More)

Building better communities through construction workforce development

Posted by National Alliance for Fair Contracting on

PUBLISHED – Sept. 23, 2019

A Growing Workforce Trend

More and more often, public agencies are incorporating workforce hiring requirements into their construction contracts. For those who are unfamiliar, these stipulations typically require the contractors that are awarded contracts by the agency to employ a workforce that meets certain thresholds of demographic criteria. For example, one of the more common trends that local entities push for is an increased rate of local hires.

Typically, the contracting agency sets a benchmark on a project that the contractors must meet. In this example, contractors must maintain that a certain percentage of the workers on the project must reside within the city or county in which the project takes place (alternatively, the percentage of total hours worked on the project can be used as a measure). The primary motive of the agency here would be to ensure that the residents of the community are the ones benefiting most from public funds used on this project to maximize the return on taxpayer dollars. This discourages the outsourcing of skilled labor, a not-so-uncommon tactic that some contractors might try in order to cut recruiting and hiring costs. (Remember, the use of local labor is one of the reasons the Davis-Bacon Act was created in 1931.) The benefit that the public entity realizes from these hiring requirements is compounded. Not only are stable career opportunities created for local residents, but the workers’ disposable income may contribute to the local economies and provide additional tax revenue that would have otherwise been displaced along with the transplanted workers once the project was complete.

Another commonly tracked statistical measure that is vital to the longevity of the industry’s success is that of apprentices or on-the-job trainees (OJTs). These recruits are crucial because of the industry’s dependency on new labor entering the market. As many government professionals might already be aware, one of the most common obstacles contractors face daily is obtaining and retaining a sufficient quantity of skilled labor to complete their projects on time and on budget. It has been no secret that the industry has struggled to replenish voids left by retiring workers as socio-economic pressures have increasingly influenced youth to pursue college degrees and white-collar jobs over manual labor (even despite its enticing stability and benefits). This obstacle, among a plethora of others, has kept the industry in a constant battle searching for new skilled labor to keep up with the demand for construction projects.

A New Opportunity

This struggle, however, has positioned the industry in a unique situation. In fact, many feel that this challenge has presented a potential goldmine opportunity. It has left the door open to target new sources of untapped potential in traditionally under-utilized pockets of demographics, giving industry players a chance to fill the labor deficit while also providing career opportunities to individuals who need them the most.

Some localities have taken these hiring requirements to the next level to address these under-represented communities like minorities, the economically impoverished, or other disadvantaged groups. By working together with workforce training programs and supportive services that cater to these individuals, various entities across the country have successfully made a difference in lifting up the most deserving members in their communities with stable careers.

(Read More)

Renewed Push Coming for Worker Misclassification Crackdown

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by Scott Braddock | September 26, 2019

Later this year, Democrats in the US House of Representatives plan to restart their push to penalize companies that compensate their workers as independent contractors when, by law, they should be classified as employees and compensated as such.

Of course, there are many legitimate uses of contract labor. But the issue arises when employers abuse the classification to skirt payroll taxes and benefits like health care and retirement plans.

Unscrupulous employers often use the practice to be able to submit much lower bids for projects, undercutting responsible contractors. Several states have already passed laws to penalize those who cheat workers and taxing agencies in this way. California is pressing ahead with major reforms and Texas, several years ago, passed a targeted crackdown on misclassification on taxpayer-funded construction.

Bloomberg has more on the new push by House Democrats in Washington:

The bill comes as Uber, Lyft, and other gig economy companies have been embroiled in legal disputes over their classification of workers as independent contractors. That designation means the workers aren’t protected by minimum wage and overtime pay requirements, don’t have the right to unionize, and aren’t eligible for workers’ compensation and unemployment insurance benefits.

Gig companies recently led an unsuccessful lobbying blitz against a new California law that makes it harder to classify workers as contractors.

Classification questions have also plagued construction and a wide range of other industries.

Previous versions of the bill would have amended the Fair Labor Standards Act to require employers to accurately classify workers and double the liquidated damages for unpaid wages owed to those wrongly treated as contractors. The bill also would have banned businesses from retaliating against workers for challenging their classification.

Here is a copy of the bill as proposed.

(See Article)

INSIGHT: Employment Tax Fraud in Construction-How to Avoid Accidentally Crossing the Line

Posted by National Alliance for Fair Contracting on

Sept. 13, 2019, 9:01 AM

Tax fraud in the construction industry has caught the attention of federal and state tax authorities across the nation. Recently, a Long Island construction business owner failed to pay nearly $1 million in payroll tax withholdings and now faces a maximum five year prison sentence.

Although most employers do not intentionally break the law, employment tax compliance is often a focus for tax authorities, and in addition to incarceration of responsible persons, construction companies can face thousands of dollars in penalties for failure to comply with tax laws. Construction businesses can reduce the risk of an audit by understanding employment tax rules and avoiding common pitfalls.

Employment Tax Basics

Construction companies, like most businesses, are generally required to withhold from their employees’ paychecks and pay to the IRS federal employment taxes. The term “employment taxes” generally is used by the IRS to refer to:

  • Amounts withheld from employees’ paychecks for federal income taxes;
  • Amounts withheld from employees’ paychecks for Federal Insurance Contribution Act (FICA) taxes, which are Social Security and Medicare taxes that are matched by amounts employers are required to contribute for Social Security and Medicare; and
  • Federal Unemployment Tax Act (FUTA) taxes, which are taxes paid by employers into workers’ compensation and unemployment funds.

These taxes are commonly referred to as “trust fund” taxes because the money withheld is being held in trust by the employer for the benefit of government. Employers generally must electronically deposit theses taxes with the IRS either monthly or semiweekly and file a Form 941 or 944. The IRS’s employment tax rules can be found in IRS Publication 15. State employment tax laws vary by jurisdiction and construction companies should consider any local laws as well

(Read More)