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Task Force Makes 15 Recommendations to Combat Employee Misclassification (PA)

Posted by National Alliance for Fair Contracting on

December 4, 2022 – by MyChesCo

PENNSYLVANIA — Pennsylvania Department of Labor & Industry (L&I) Secretary Jennifer Berrier on Thursday announced that the Joint Task Force on Misclassification of Employees, a bipartisan-nominated group of volunteers representing business, labor, and government perspectives, has submitted its final report to the General Assembly with 15 unanimous recommendations.

The Joint Task Force was created by Act 85 of 2020 to study the misclassification of workers and its impact on the Commonwealth. Misclassification of employees occurs when a business wrongfully classifies a worker as an independent contractor when the nature, type, and oversight of their work determines they should be considered an employee under the law.

“Misclassification harms everyone except the lawbreakers. Misclassified workers are denied the protections and benefits to which the nature of their work entitles them. Law-abiding businesses lose out on business and contracts to unscrupulous businesses engaged in knowing and rampant misclassification. Taxpayers suffer because misclassification deprives the Unemployment Compensation Trust Fund and General Fund of revenue, which results in higher tax rates for everyone,” Berrier said. “I urge the General Assembly to act on the Joint Task Force’s recommendations to address this glaring problem.”

The Joint Task Force report estimates:

  • 48,939 employers in Pennsylvania currently misclassify at least one employee annually;
  • 259,000 Pennsylvania workers are misclassified annually;
  • $91 million in annual lost revenue to the UC Trust Fund due to misclassification;
  • Between $6.4 and $124.5 million in lost revenue in 2019 to the General Fund due to misclassification;
  • $383 thousand in estimated losses to the Uninsured Employer Guaranty Fund (UEGF) due to misclassification in 2021;
  • 10,892 misclassified employees who suffered injury or illness at work and were denied Workers’ Compensation in 2021;
  • $153 million in estimated losses to misclassified employees who suffered injury or illness at work in 2021 without workers’ compensation insurance.

The Joint Task Force has held monthly meetings since January 2021 to study misclassification and will continue to meet through December 2022, when its authority under Act 85 expires. In addition to members appointed by the four caucuses in the General Assembly, the representatives from the Office of the Attorney General and the departments of Revenue and Labor & Industry also serve on the seven-member task force.

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Austin City Council passes wage theft protection ordinance

Posted by National Alliance for Fair Contracting on

Author: KVUE Staff
Published: December 2, 2022

The ordinance includes three elements that aim to protect workers and help them get full payment for the work that they do.

AUSTIN, Texas — On Thursday, the Austin City Council voted on a way to protect laborers.

The council unanimously passed an ordinance that it says will help prevent wage theft.

According to the Workers Defense Project, the ordinance will create a wage theft coordinator position to assist workers that come forward with reports of wage theft violations. The council said this will help make sure workers get full payment for the work that they do.

The ordinance will also create a publicly available database of employers that have a record of wage theft doing business with the City of Austin. It will also bar any employer identified in the database from entering into contracts with the City.

The Austin Monitor reports that the City does not have the authority to prosecute wage theft violators. That responsibility lies with the state and local governments.

Employers who are proven to have committed wage theft can be fined and even sentenced to jail time.

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Treasury, IRS Release Guidance on Wage and Apprenticeship Requirements, Commenced Construction Standard

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JD Supra | December 5, 2022

On Nov. 29, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) published Notice 2022-61, Prevailing Wage and Apprenticeship Initial Guidance under Section 45(b)(6)(B)(ii) and Other Substantially Similar Provisions (Notice). The Notice provides initial guidance on the prevailing wage and apprenticeship requirements taxpayers must satisfy to qualify for increased energy credits or deduction amounts enacted in the Inflation Reduction Act (IRA) (P.L. 117-169).

The prevailing wage and apprenticeship requirements apply to the following tax incentives:

  • Advanced Energy Project Credit (§ 48C)
  • Alternative Fuel Refueling Property Credit (§ 30C)
  • Credit for Carbon Oxide Sequestration (§ 45Q)
  • Clean Fuel Production Credit (§ 45Z)
  • Credit for Production of Clean Hydrogen (§ 45V)
  • Renewable Energy Production Tax Credit (§ 45, § 45Y)
  • Renewable Energy Investment Tax Credit (§ 48, § 48E)
  • Energy Efficient Commercial Buildings Deduction (§ 179D)

The prevailing wage requirements also apply to the following tax incentives:

  • New Energy Efficient Home Credit (§ 45L)
  • Zero-Emission Nuclear Power Production Credit (§ 45U)

Under the statute, prevailing wage and apprenticeship requirements apply to qualifying facilities that begin construction 60 days or more after the Treasury and IRS publish guidance. This Notice starts the clock on the statutory 60-day period, meaning the requirements will be in effect for facilities that begin construction on or after Jan. 29, 2023. For facilities the construction of which begins prior to that date, the increased credit amount applies without regard to these labor requirements.

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Employers short Iowa workers $900 million annually, report says

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Erin Murphy | The Gazette
Nov. 25, 2022

Iowa Workforce Development says it works hard to ensure employees are paid fairly

DES MOINES — Iowa workers are not paid an estimated $900 million owed to them annually, affecting one in seven workers in the state, and state oversight agencies are doing little to enforce violations, according to a report from a liberal-leaning issue advocacy group.

The report is from Common Good Iowa, which describes itself as a nonpartisan, not-for-profit organization. The group is staffed by policy advocates and researchers, and advocates for “people-centered policy solutions for our state’s most pressing issues.”

According to the report, 250,000 Iowa workers are not paid $900 million owed to them annually:

  • $501 million in overtime violations
  • $241 million in minimum wage violations
  • $163 million in other violations, including the forced sharing of tips, forcing people to work off the clock, making illegal deductions from paychecks or mis-classifying employees as contractors.

The report was written for Common Good Iowa by Sean Finn, whose focus for the group is on labor standards and practices.

Finn analyzed data from the federal Bureau of Labor Statistics and Iowa Workforce Development, and U.S. Department of Labor enforcement records.

“This insidious and growing problem costs Iowans 10 times more than all other forms of theft combined,” Finn said in a news release.

According to the report, in addition to those unpaid wages, state and federal government agencies are doing little to punish businesses for any violations. For every $1,000 in wage theft, only $2 is recovered by government agencies — less than 1 percent — the report says.

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City Council bans Cleveland from doing business with companies that practice wage theft

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Published: Dec. 05, 2022 | Cleveland.com

By Courtney Astolfi

CLEVELAND, Ohio – Cleveland City Council approved on Monday an ordinance banning the city of Cleveland from doing business with companies found to practice wage theft and those that commit payroll fraud.

The new law bars Cleveland from granting financial assistance to such companies or entering into contracts with them for city services or construction.

The measure is a victory for advocacy group Guardians for Fair Work, which has been lobbying city officials this year to deliver wage-theft protections for Cleveland workers.

“This is an important step forward for working people in Cleveland. We believe the only way we succeed as a city and region is to put workers at the center of our economic development strategies. Without this worker centered approach we will not have shared prosperity,” organizer Nora Kelley said in a news release. She added that workers with the lowest wages are often the ones victimized by wage theft.

Businesses seeking city contracts or financial assistance will have to report to the city’s Fair Employment Wage Board any instances of a government agency finding that they or a subcontractor committed wage theft or payroll fraud within the last three years. Businesses that self-report those instances would not be eligible to receive city money or contracts.

FY 2023 Davis-Bacon Act Wage Survey Plan

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Davis-Bacon Act Wage Survey Plan

The U.S. Department of Labor’s Wage and Hour Division will be asking the highway, heavy and building construction industries to participate in Davis-Bacon Act wage surveys in FY 2023 to help the agency establish prevailing wage rates, as required under the Davis-Bacon and Related Acts (DBRA).

The DBRA directs the department to set the prevailing wage rates that reflect the actual wages and fringe benefits paid to construction workers in the local area where the work is performed.

The survey plan for FY 2023 includes active construction project wage data in the following areas and is not limited to federally funded construction projects. Data collection periods are to be determined and posted online. The Wage and Hour Division strongly encourages all stakeholders to participate in these surveys.

State Construction Type Area
North Carolina Highway Statewide
Arizona Highway Statewide
Arizona Heavy Statewide
New Hampshire Building Statewide
Texas Building Metropolitan Counties: Greater San Antonio and Greater Austin
Guam All Types All Areas

Full participation by contractors and interested parties is key to setting accurate prevailing wages and developing complete wage determinations. Accurate wages and complete determinations also reduce the need for contractors to request additional labor classifications.

The best way to participate in the survey is online. The Wage and Hour Division will send notification letters to interested parties and contractors known to the agency. To be included, please submit all data by the survey-specific cutoff date. Contractors and other interested parties do not need to have received a letter to participate in the survey.

Visit our website to learn more about Davis-Bacon and Related Acts and WHD’s Davis-Bacon survey program.

Prevailing Wage and the Inflation Reduction Act

Posted by National Alliance for Fair Contracting on

November 29, 2022 – USDOL

On August 16, 2022, President Biden signed Public Law 117-369, 136 Stat. 1818, also known as the Inflation Reduction Act of 2022, into law. The Inflation Reduction Act is by far our nation’s largest investment in clean energy to date. By pairing climate investment with the creation of good-paying jobs, the Inflation Reduction Act’s unparalleled investments to fight the climate crisis will help improve job quality in clean energy industries and incentivize the expansion of workforce training pathways into these jobs.

Critical to providing good paying jobs, the Inflation Reduction Act offers enhanced tax benefits for a range of clean energy projects when taxpayers pay Davis-Bacon Act prevailing wages and utilize registered apprentices, in accordance with the Inflation Reduction Act.

Learn More

On November 30, 2022, the U.S. Department of Treasury and the Internal Revenue Service will publish guidance on the Inflation Reduction Act’s prevailing wage and apprenticeship requirements. The publication of this guidance means that in order to receive increased incentives, taxpayers must meet the prevailing wage and apprenticeship requirements for facilities where construction begins on or after January 29, 2023.

The U.S. Department of Labor invites you to register for one of two educational webinars on the labor standards provisions contained in the Inflation Reduction Act and Treasury Guidance. The webinars are being offered at the following times:

Register Now: Wednesday, Dec. 14 from 1–2:30 p.m. EST
Register Now: Thursday, Dec. 15 from 1–2:30 p.m. EST

If you require an accommodation or language interpretation to attend this listening session, please email whd-events@dol.gov at least five (5) business days prior to the event so we can make arrangements.

Please direct any questions to WHD-Events@dol.gov.

Columbus council creates advisory committee for diversity hiring on construction projects

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New panel to recommend city diversity targets on union construction projects costing over $5 million

Bill Bush | The Columbus Dispatch
Nov. 15, 2022

The Columbus City Council on Monday created a nine-member committee designed to make recommendations on adding goals for hiring female, minority and local workers on larger city construction projects that utilize “project labor agreements,” which are pre-hire agreements with trade unions.

The new Community Benefits Agreement Advisory Committee will make nonbinding recommendations to the mayor on when such inclusion goals should be sought from construction companies and labor unions. But it doesn’t appear the city will have to worry about unwelcome proposals: four of the nine members will represent the mayor’s office or various departments under the mayor, while the fifth and deciding member will represent City Council.

The other four committee members will represent trade unions and “groups historically underrepresented” in the construction industry, the ordinance says.

The committee can also review plans and make recommendations on how newly constructed facilities get used, and on mitigation of the effects of construction on the neighborhood. It can make recommendations on dedicating green space, sports courts and occasional uses of the new space for art or youth programming, the ordinance says.

“This new chapter will promote a diverse workforce, efficient construction timelines, greater consideration of environmental impacts, and overall community benefits related to large city construction projects and renovation projects,” Council member Rob Dorans, who is employed as an attorney for a labor union, said during the meeting.

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US Department of Labor Announces Proposed Rule on Classifying Employees, Independent Contractors; Seeks to Return to Longstanding Interpretation

Posted by National Alliance for Fair Contracting on

Agency: Wage and Hour Division
Date: October 11, 2022
Release Number: 22-1526-NAT

Misclassification continues to deny workers’ rightful wages; hurt businesses, economy

WASHINGTON – The U.S. Department of Labor will publish a Notice of Proposed Rulemaking on Oct. 13 to help employers and workers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

The proposed rule would provide guidance on classifying workers and seeks to combat employee misclassification. Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.

The NPRM proposes a framework more consistent with longstanding judicial precedent on which employers have relied to classify workers as employees or independent contractors under the FLSA. The department believes the new rule would preserve essential worker rights and provide consistency for regulated entities.

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers,” said Secretary of Labor Marty Walsh. “Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

Specifically, the proposed rule would do the following:

  • Align the department’s approach with courts’ FLSA interpretation and the economic reality test.
  • Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
  • Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
  • Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control and opportunity for profit or loss factors. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
  • Assist with the proper classification of employees and independent contractors under the FLSA.
  • Rescind the 2021 Independent Contractor Rule.

The department is responsible for ensuring that employers do not misclassify FLSA-covered workers as independent contractors and deprive them of their legal wage and hour protections. Misclassification denies basic worker protections such as minimum wage and overtime pay and affects a wide range of workers in the home care, janitorial services, trucking, delivery, construction, personal services, and hospitality and restaurant industries, among others.

Before publication of today’s proposed rulemaking, the department’s Wage and Hour Division considered feedback shared by stakeholders in forums during the summer of 2022 and will now solicit comments on the proposed rule from interested parties. The division encourages all stakeholders to participate in the regulatory process. Comments, which must be submitted from Oct. 13 to Nov. 28, 2022, should be submitted online or in writing to the Division of Regulations, Legislation and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Ave. NW, Washington, DC 20210.

Learn more about the Wage and Hour Division.

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Gov. Carney signs wage theft and other labor protection bills into law

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Delaware Public Media | By Paul Kiefer
Published October 10, 2022

Gov. John Carney signed a bill into law on Friday defining wage theft as a crime and setting financial penalties for violators.

The new wage theft law is one of the most detailed in the country, targeting an array of strategies used by employers to avoid paying taxes or underpay workers. Its sponsor, State Sen. Jack Walsh (D-Christiana/Newark), says wage theft, including misclassifying workers as part-time or contractors, is widespread and often leaves workers without access to key benefits.

“Having them work off-the-clock, paying them under the table – which presents problems down the road because they can’t access worker’s compensation or unemployment,” he said. “Basically, they’re misclassifying people, 1099-ing them, when they’re actual employees and should be treated as such.”

Delaware’s Department of Labor is responsible for investigating wage theft allegations and can refer cases to the Department of Justice for prosecution.

The law also sets financial penalties, including fines between $20,000 and $50,000 for retaliating against employees who report wage theft.

Carney also signed a bill into law on Friday that holds employers liable for damages if they do not provide a paycheck within one pay period after an employee is laid off or discharged, or after the employee resigns or quits.

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