Northam releases recommendations to protect Virginia workers from misclassification, payroll fraud

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Published Sunday, Nov. 24, 2019, 7:52 pm

Gov. Ralph Northam this week released the final report of his Inter-Agency Taskforce on Worker Misclassification and Payroll Fraud, which outlines 11 recommendations to ensure Virginia workers receive the pay, workplace protections, and benefits they have earned.

The report is the result of Executive Order Thirty-Eight signed by Governor Northam in August, which directed the Taskforce to produce updated recommendations to measure and combat misclassification ahead of the 2020 General Assembly session.

An estimated 214,000 Virginia employees are currently misclassified as “independent contractors” by their employers. Among other remedies, the Taskforce recommends increased education for employers and employees, additional funding for investigations into possible wrongdoing, and harsher penalties for businesses that illegally misclassify their workers.

“It’s clear that misclassification is robbing Virginia workers of the pay, benefits, and protections they have earned,” said Northam. “These concrete policy changes will make a tremendous difference for thousands of Virginians and their families, and I look forward to working with the General Assembly to turn these recommendations into law.”

Misclassification keeps workers from receiving fair workplace protections and benefits, creates a competitive disadvantage for Virginia businesses that follow the law, and deprives the Commonwealth of an estimated $28 million in tax revenues each year. The General Assembly has considered the harm of worker misclassification for over a decade.

“After engaging with workers, businesses, and stakeholder groups over the last year, it’s clear that worker misclassification needs to be addressed,” said Chief Workforce Development Advisor Megan Healy. “I am ready to take action to support all workers in Virginia.”

The Taskforce is co-chaired by Secretary of Commerce and Trade Brian Ball and Chief Workforce Development Advisor Megan Healy. Members include representatives from the Virginia Employment Commission, the Workers’ Compensation Commission, the Department of General Services, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the Department of Small Business and Supplier Diversity, the Department of Taxation, and the Office of the Attorney General.

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Punching In: Slowing Down the DOL Apprenticeship Train

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Bloomberg Law
Nov. 12, 2019

Ben Penn: With National Apprenticeship Week upon us, Team Trump surely would like the public to believe the Labor Department has cleared up an appropriations error surrounding the administration’s principal job training initiative.

The DOL recently admitted to misusing about $1.1 million on the Industry-Recognized Apprenticeship Program that still hasn’t been finalized, dipping into a pot of money designated for a separate apprenticeship program that’s been around for decades. The snafu took place under former Labor Secretary Alexander Acosta, based on orders from an ex-policy adviser. The department says it already has taken multiple steps to correct the issue. Besides, the $1.1 million in question is a drop in the bucket relative to the DOL’s overall budget.

Nothing left to see here, right?

Were it only that simple.

Not everyone’s certain the DOL has resolved the spending mistake. Lingering questions could slow the White House’s effort to put together a final rule to establish the new, industry-led job training model.

We already know the department’s inspector general looking into the potential budget violation and the Democrat-controlled House Education and Labor Committee is continuing its oversight requests.

Now we can add North America’s Building Trades Unions to the list of groups demanding answers. The construction union umbrella organization is one of the few labor groups that have found a way to work on certain issues with the Trump White House. Lately, however, it’s using the IRAP proposal to ramp up attacks on this administration.

Mike Monroe, chief of staff of the building trades group, called news of the misspent money “frustrating.” The department’s Employment and Training Administration vowed during the Acosta regime that it wouldn’t use the new IRAP system to undermine the longstanding registered apprenticeship system, a crucial job training source for the building unions. Monroe wants to be sure the department is weighing all of the public feedback it received on a proposed rule to establish the IRAP system.

The union led a public comment blitz slamming the industry-friendly IRAP proposed rule, with thousands of blue-collar union members opposing the rule.

“If there are ethical lapses in the misuse of funds then we’re rightfully concerned there may well be ethical lapses in the review and consideration of all the public comments-which is to say they’ve already made their minds up here,” Monroe said. “Our membership is watching this issue really closely” and “we are highly concerned that this undefined process that is now being funded inappropriately, it seems, may undermine their ability to safely earn a living in the construction crafts.”

Even if only $1.1 million was misspent, the ongoing scrutiny offers a convenient vehicle for NABTU, Democratic lawmakers, and others on a mission to stop the White House apprenticeship push in its tracks.

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Sean McGarvey column: Don’t leave construction workers in regulatory limbo

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Bloomberg Law
Nov. 12, 2019

The union construction industry plays a critical role in the American economy, representing not only viable middle-class career opportunities with labor protections, benefits and economic security for American workers and their families. It also provides debt-free registered apprenticeship education for the highest-skilled trade workforce to build and maintain the country’s infrastructure.

North America’s Building Trades Unions (NABTU) bring these pieces together and are thriving. In 2018 alone, our unions gained more than 70,000 active new members, with a net gain of 375,000 active members since the last recession.

Today, large energy infrastructure projects are vital to sustainable job growth for our members and, by extension, our industry partners. These relationships help promote economic development and public safety in communities across the United States. But what happens when these opportunities are threatened by politics and outside special interests? That’s exactly the situation our nation’s critical energy infrastructure, and particularly pipelines, are in.

A prime example is the Atlantic Coast Pipeline (ACP) – a 600-mile natural gas pipeline that was bringing jobs, local tax income and, above all, economic opportunity for rural communities surrounding the project that otherwise have few job creation options.

Earlier this year, NABTU and other unions involved in the project swiftly lost around 4,500 jobs after construction on the ACP came to a halt due to a decision by the 4th U.S. Circuit Court of Appeals questioning the pipeline’s crossing of the Appalachian Trail. The court vacated a decision from the U.S. Forest Service that would allow the pipeline to safely cross hundreds of feet beneath the Appalachian Trail. This decision came after the project already passed through an extensive, four-year environmental review dating back to the Obama Administration. In fact, the ACP already granted necessary rights-of-way by the Department of Interior and the Department of Agriculture. Additionally, more than 50 pipelines are built and operating across the Appalachian Trail for decades now.

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Is Your Employer Stealing From You?

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Millions of workers lose billions in stolen wages every year-nearly as much as all other property theft.

By Michael Hill, Correspondent
November 8, 2019, 3PM EST

Since assuming office in Philadelphia last year, Larry Krasner has earned a national reputation as a radical new kind of district attorney. He’s pushed the sort of criminal justice reform that typically comes from activists or public defenders, like ordering prosecutors to stop pursuing criminal charges for marijuana possession, or directing them to no longer seek cash bail for low-level offenses. Last October, he took another bold step: He created a task force focused on crimes against workers.

One of the primary crimes this task force will focus on is wage theft. At the absolute simplest, wage theft is as it sounds-a worker doesn’t get fully paid for the work they’ve done. Often employers pull this off by paying for less than the number of hours worked, not paying for legally required overtime, or stealing tips. That’s money that workers are legally entitled to and that their bosses find some way of pocketing.

Wage theft isn’t one of the crimes most prosecutors and politicians refer to when they talk about getting “tough on crime,” but it represents a massive chunk of all theft committed in the U.S. A 2017 study by the Economic Policy Institute (EPI) found that in the ten most populous states, an estimated 2.4 million people lose a combined $8 billion in income every year to theft by their employers. That’s nearly half as much as all other property theft combined last year-$16.4 billion according to the FBI. And again, EPI’s findings are only for ten states. According to the institute, the typical worker victimized by minimum-wage violations is underpaid by $64 per week, totaling $3,300 per year. If its figures are representative of a national phenomenon, then EPI estimates that the yearly total for American wage theft is closer to $15 billion.

There are some overt ways that employers rob their workers, like taking money directly out of their paychecks, but wage theft can take more complicated and subtler forms. Deliberately mislabeling workers as independent contractors in order to avoid paying higher wages for the same responsibilities as regular employees, for example, or asking employees to work while off the clock, or denying meal breaks, all technically fall under wage theft. Amazon, for instance, is currently being sued for not paying its employees for the amount of time they spend going through lengthy security checkpoints when they arrive at and leave work. It’s hard to mount civil lawsuits against employers who violate minimum-wage laws, because typically the victims of these crimes don’t have the time or resources to fight for their lost wages. And last year’s Supreme Court decision in Epic Systems Corp. v. Lewis, which ruled that it’s legal to require employees to sign away their rights to join class-action lawsuits, makes going after employers for wage theft much more difficult.

As author Kim Bobo explains in her book Wage Theft in America, the people affected by wage theft are spread across a wide variety of industries, working in construction, nursing homes, garment factories, farms, poultry-processing plants, restaurants, landscaping, and more. But more professional workers are at risk, too, like nurses, pharmaceutical sales reps, and financial advisers. Freelancers are also especially susceptible. A 2018 report by Good Jobs First found that the overwhelming majority of companies caught committing wage theft are “the giant companies included in the Fortune 500, the Fortune Global 500 and the Forbes list of the largest privately held firms.” That includes Walmart, FedEx, Bank of America, Wells Fargo, JPMorgan Chase, and State Farm Insurance.

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HUD ISSUES REQUEST FOR INFORMATION ON ELIMINATING REGULATORY BARRIERS TO AFFORDABLE HOUSING

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HUD No. 19-171
HUD Public Affairs
(202) 708-0685
Tuesday, November 26, 2019

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today published a Request for Information (RFI) seeking public comment on Federal, State, local, and Tribal laws, regulations, land use requirements, and administrative practices that artificially raise the costs of affordable housing development and contribute to shortages in America’s housing supply.

This RFI is a request for members of the public to share their knowledge and provide recommendations to HUD regarding regulations, and practices that unnecessarily impede housing supply and information on innovative practices that promote increased housing supply. Read the RFI here.

“Owning a home is an essential component of the American Dream. It is imperative that we remove regulatory barriers that prevent that dream from becoming a reality,” said HUD Secretary Ben Carson. “Through this request, communities across the country will have the opportunity to identify roadblocks to affordable housing and work with State, Federal, and local leaders to remove them.”

In this RFI, HUD is seeking information on the following:

-Specific HUD regulations, statutes, programs, and practices that directly or indirectly restrict the supply of housing or increase the cost of housing;
-Policy interventions, solutions, or strategies available to State, local, and Federal decision makers to incentivize State and local governments to review their regulatory environment or aid them in streamlining, reducing or eliminating the negative impact of State and local laws, regulations, and administrative practices;
-Ways that State-level laws, practices, and programs contribute to delays in the construction industry and specific laws, practices, and programs that could be reviewed;
-Common motivations or factors that underlie local governments’ adoption of laws, regulations, and practices that demonstrably raise the cost of housing development, and whether such factors vary geographically;
-Peer-reviewed research and/or representative surveys that provide quantitative analyses on the impact of regulations on the cost of affordable housing development;
-Performance measures, quantitative and/or qualitative, the Council should consider in assessing the reduction of barriers nationally or regionally and advantages and disadvantages of each measure; and
-Recommendations on how to best utilize HUD’s Regulatory Barriers Clearinghouse for States, local governments, researchers and policy analysts who are tracking reform activity across the country.

This RFI is a part of the work Secretary Carson is undertaking as the Chair of the White House Council on Eliminating Regulatory Barriers to Affordable Housing. The Council’s eight Federal member agencies are engaging with governments at all levels-State, local, and tribal-and other private-sector stakeholders on ways to increase the housing supply so more Americans have access to affordable housing.

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Executive Order on Improving Federal Contractor Operations by Revoking Executive Order 13495

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AlasBy the authority vested in me as President by the Constitution and the laws of the United States of America, including the Federal Property and Administrative Services Act, 40 U.S.C. 101 et seq., and in order to promote economy and efficiency in Federal Government procurement, it is hereby ordered as follows:

Section 1. Revocation of Prior Order. Executive Order 13495 of January 30, 2009 (Nondisplacement of Qualified Workers Under Service Contracts), which requires that successor Federal contractors in certain circumstances offer a right of first refusal of employment to employees employed under the predecessor contract, is hereby revoked.

Sec. 2. Agency Implementation. The Secretary of Labor (Secretary), the Federal Acquisition Regulatory Council, and heads of executive departments and agencies shall, consistent with law, promptly move to rescind any orders, rules, regulations, guidelines, programs, or policies implementing or enforcing Executive Order 13495.

Sec. 3. Enforcement. The Secretary shall terminate, effective immediately, any investigations or compliance actions based on Executive Order 13495.

Sec. 4. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department, agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

DONALD J. TRUMP

THE WHITE HOUSE,
October 31, 2019.

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City apprenticeship program raises standards for workers and taxpayers (AZ)

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By Jennifer Grøndahl| Karla Walter
November 5, 2019

It’s no secret that Phoenix has become a Baby Boomer mecca. America’s largest generation has been flocking here for years, bringing with them revenue for local businesses and tax dollars for the city, but also their garbage. Garbage that the city now needs to collect.

Phoenix, like many cities, has struggled to keep up with the growing demand for government services like garbage collection, while also facing high retirement rates among aging municipal workers.

But unlike many cities, Phoenix has also come up with an original solution to meet this demand. When the city and LIUNA Local 777, which represents many municipal workers, realized they were facing a shortage of qualified sanitation workers, they partnered to create an innovative apprenticeship program that trains area residents to become skilled sanitation workers while maintaining a high level of service for taxpayers.

As a local leader who helped implement these apprenticeships and a researcher at a national think tank focused on policies to make government work better, we believe the Phoenix-LIUNA Local 777 partnership should serve as a national model.

Through the city’s solid waste equipment operator apprenticeship, workers obtain their commercial driver’s license and receive specialized instruction on operating trucks through narrow city streets and customer service skills. Previously, the city required applicants to have a commercial driver’s license before being hired, which was a significant barrier to employment, because tuition for commercial trucking schools costs thousands of dollars.

By giving sanitation workers an opportunity to earn these skills and credentials while on the job, the city ensures that workforce training is of high quality. Moreover, the Phoenix-LIUNA Local 777 partnership focuses recruitment on women, veterans and youth, attracting employees who reflect Phoenix’s diversity and who might not otherwise have had access to high-quality city jobs.

For apprentices, who are often transitioning from near minimum-wage jobs, city employment offers a significant earnings boost and a clear career path. The involvement of existing city employees makes the apprenticeships a success. Veteran employees help with recruitment and program graduates informally mentor new apprentices.

As a result, the apprenticeship graduates have higher levels of loyalty and motivation to both the City of Phoenix and the union. Nearly all who start the program finish, and despite their more junior status, graduates are among the most successful employees, at times outshining more senior workers.

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How California’s AB5 protects workers from misclassification (CA)

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Fact Sheet * By Celine McNicholas and Margaret Poydock * November 14, 2019

In September, California adopted a new law aimed at combatting the misclassification of workers. The legislation, Assembly Bill (AB) 5, will take effect on January 1, 2020. AB5 adopts the “ABC” test that has been used by courts and government agencies to determine employee status. Under this test, workers can only be classified as independent contractors when a business demonstrates that the workers:

1. Are free from control and direction by the hiring company;
2. Perform work outside the usual course of business of the hiring entity; and
3. Are independently established in that trade, occupation, or business.

Workers who don’t meet all three of these conditions must be classified as employees for purposes of state wage and hour protections. AB5 will help ensure that California’s workers who perform core work under company control versus as independent businesses have access to basic labor and employment protections and benefits denied independent contractors, including minimum wage and overtime protections, paid sick days, workers’ compensation benefits, and unemployment insurance benefits. Further, the legislation will protect law-abiding businesses that properly classify workers from unfair competition from companies that cut costs by misclassifying workers: AB5 will make it more difficult for companies to avoid paying their fair share of Social Security, Medicare, and unemployment insurance taxes and avoid providing state workers’ compensation insurance. In contrast, employers would not be held accountable under a ballot initiative backed by digital platform companies.

Misclassification is widespread

The misclassification of workers as independent contractors is a serious and persistent problem nationwide. A 2000 study commissioned by the U.S. Department of Labor found that between 10% and 30% of audited employers misclassified workers and that up to 95% of workers who claimed they were misclassified as independent contractors were reclassified as employees following review.

Misclassification robs millions of workers of labor and employment law protections and deprives federal and state governments of billions in tax revenues

How a worker is classified has serious implications. For workers, the costs of misclassification are high. Most federal and state labor and employment protections are granted to employees only, not independent contractors. So, when an employer misclassifies a worker as an independent contractor, the employer robs that worker of the basic protections intended to serve as foundational standards for all workers. For example, a misclassified worker loses access to a minimum wage and overtime pay, and is no longer protected from discrimination and sexual harassment. Further, workers face additional financial responsibilities, including taxes and insurance obligations (see Table 2). For these reasons, independent contractor status should apply only to those workers who have made the decision to go into business for themselves and where the firms that they contract with do not control the way they get their job done.

State and federal governments also lose when workers are misclassified. As noted, companies that misclassify workers avoid paying their fair share of Social Security, Medicare, and unemployment insurance taxes and avoid providing state workers’ compensation insurance. The state of California estimates that the annual state tax revenue loss due to misclassification is as high as $7 billion.

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Anaheim considers ‘local hire’ agreement for about $260 million in projects (CA)

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By ALICIA ROBINSON
PUBLISHED: December 2, 2019

A proposed new agreement would push contractors who bid on city projects in Anaheim to hire more veterans, formerly homeless people and residents of the city or Orange County.

Called a community workforce agreement, the five-year contract – which the Anaheim City Council will consider Tuesday, Dec. 3 – is a first for the city but not unique in the region or the state. Santa Ana, Long Beach and Sacramento all have used such agreements, according to a report to the Anaheim council; the Anaheim Union High School District also adopted one as part of a 2014 school improvement bond measure.

Anaheim has not pursued “local hire” provisions so broadly before, but it has incorporated them into a few specific projects in recent years, including a new electrical substation and the latest expansion of the Anaheim Convention Center.

It’s unknown exactly how many projects the agreement would apply to, but city spokesman Mike Lyster wrote in an email that they’ll generally be large public works or utility jobs, typically costing at least $1 million, and the total for the term of the agreement is estimated at $260 million. A list attached to the city’s proposed agreement mentions new soccer fields at La Palma Park, a fire station and emergency operations center in the Platinum Triangle, roof replacement at the convention center, and large water, sewer and road projects.

The agreement, which was negotiated with the Los Angeles/Orange Counties Building and Construction Trades Council, sets an aspirational goal – not a mandate – that at least 35% of work hours on specified projects be done by people who are: Anaheim or Orange County residents; graduates of Anaheim high schools; veterans; or economically disadvantaged people (such as the formerly homeless).

“The goal of the agreement is to ensure that major publically funded projects are helping to meet city priorities,” including providing jobs to local residents and people in need, Lyster’s email said.

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Pro-Labor Bill Becomes Law Without Mayor’s Signature (HI)

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Caldwell informed the council he wants to work on “legal concerns.”

By Chad Blair
Oct. 25, 2019

Legislation that requires union labor for all city public works projects of $2 million will become law at the end of May 2020.

In the interim, Honolulu Mayor Kirk Caldwell – who let Bill 37 become law without his signature – told the Honolulu City Council he wants to work with them to address “legal concerns.”

“I appreciate Councilmember Joey Manahan for introducing and working hard on Bill 37 along with other City Council members, as the goal of Community Workforce Agreements is to promote efficient and timely construction projects without disruptions and to do so using local labor,” the mayor said in a press release Friday.

He added: “I look forward to working with all of the stakeholders to resolve the legal concerns pertaining to this bill, including amending the bill where necessary and passing legislation at the state level, thus allowing all counties greater flexibility in implementing Community Workforce Agreements.”

Under the legislation, CWAs – also known as project labor agreements – will be used for all large public works contracts.

Bill 37 was widely supported by labor groups. But opponents – many nonunion contractors – said the bill will hurt their own businesses because it amounts to a sweetheart deal for unions.

In Caldwell’s letter to Council Chair Ikaika Anderson, the mayor wrote, “Unfortunately, the mandatory nature of Bill 37 goes beyond the enactment of enabling legislation and infringes upon the authority of the Executive branch to conduct procurements and negotiate an appropriate CWA to the benefit of the City.”

The mayor added, “It is my understanding that the proponents of Bill 37 will seek to address this concern during the upcoming 2020 State Legislative session by amending the State Procurement Code.”

Caldwell also expressed concern that federal funding “may be jeopardized” for projects “due to the inclusion of certain provisions that may not be appropriate for all contracts.”

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