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Murphy Administration Provides Guidance to Public Entities on Recent Changes to Prevailing Wage Laws

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Department of Labor & Workforce Development
June 21, 2022

TRENTON – With the summer construction season upon us, the Murphy Administration is reminding local governments and school boards of their role in protecting workers and expanding skilled apprenticeship programs, and their obligations under the New Jersey Prevailing Wage Act.

The New Jersey Department of Labor and Workforce Development (NJDOL) and its partners at the New Jersey Department of Community Affairs’ Division of Local Government Services (DLGS), and the New Jersey Department of Education (DOE), recently sent a letter reminding local governments and boards of education of their responsibilities under the New Jersey Prevailing Wage Act.

The New Jersey Prevailing Wage Act (N.J.S.A. 34:11-56.25 et seq.) establishes a prevailing wage for workers engaged in public work to safeguard workers and employers alike from unfair competition due to detrimental wage levels. The act requires the payment of minimum rates of pay to laborers, craftsmen, and apprentices employed on public works projects. Covered workers must receive the appropriate craft prevailing wage rate as determined by the Commissioner of Labor and Workforce Development.

“We have a responsibility to safeguard our workers and protect employers paying fair compensation and developing our workforce from being undercut by unfair competition,” said Labor Commissioner Robert Asaro-Angelo. “Our most important partners are the public bodies themselves who must also follow the law. Public contracting is a privilege, not a right, and it comes with certain responsibilities to other employers and our whole workforce.”

“Building a stronger and fairer New Jersey means ensuring that every hardworking individual in New Jersey receives the wages they should be earning in accordance with the law,” said Lt. Governor Sheila Oliver, who serves as Commissioner of the Department of Community Affairs. “This letter serves as a reminder to employers that wage theft and unfair competition will not be tolerated in New Jersey.”

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The Intersection of the Bipartisan Infrastructure Law and Davis-Bacon Act Requirements for Federal Contractors and Subcontractors

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The National Law Review
Friday, June 17, 2022

On November 15, 2021, President Joe Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act into law, which is popularly known as the Bipartisan Infrastructure Law (“BIL”).

The BIL is estimated to create an additional 800,000 jobs. The United States Department of Labor (“DOL”) contends that such new jobs will “expand the middle class, revitalize our nation’s transportation, communications and utility systems and build a more resilient, reliable, and environmentally sound future.” The White House asserts that the BIL will provide protection to “critical labor standards on construction projects,” as a substantial portion of the construction projects included in the BIL will be subject to requirements of the Davis-Bacon Act (“DBA” or the “Act”).

While the BIL provides new revenue sources and opportunities for construction projects, federal contractors and subcontractors should ensure that their businesses comply with the DBA’s prevailing wage rates and labor standards requirements.

…

Practical Consideration in Compliance with DBA
Federal contractors and subcontractors should ensure that covered workers are properly classified for the work such individuals perform and paid in accordance with the prevailing wage rate for their classification.

Employers will often face recordkeeping challenges when they have nonexempt employees who perform covered (manual) work and non-covered (administrative) work in the same workweek.

In such instances, the employer must determine whether the employee is salaried or paid hourly. If the employee is salaried, the employer must determine whether the employee’s salary is greater than or equal to the prevailing wage rate for the employee’s classification. If not, the employer contractor is required to increase the employee’s pay for the week the covered work is performed.

Likewise, if the employee is paid hourly, then the employer must ensure the employee’s hourly rate is greater than or equal to the prevailing wage rate for the employee’s classification.

Federal contractors and subcontractors could face various consequences due to their failure to comply with the DBA, ranging from termination of the federal contract and debarment to a contracting agency withholding money due to the contractor to cover back wages due to employees as well as criminal prosecution. Accordingly, federal contractors and subcontractors should consult with legal counsel to ensure they comply with the various DBA requirements for any covered contracts.

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Illinois Joins Trend Making General Contractors Liable for Paying Subcontractors’ Workers

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June 14, 2022
JD Supra

On June 10, 2022, Governor J.B. Pritzker signed into law two related bills, HB 5412 and HB 4600, sent to him the previous month by the Illinois legislature that will hold a primary contractor (one who has a contract with an owner) liable for the unpaid wages and other amounts owed to employees of subcontractors, of any tier, on Illinois private construction projects. The bills, enacted as, Public Acts 102-1076, and 102-1065 (the “Acts”), will supplement the existing remedies in the Illinois Wage Payment and Collection Act (“WPCA”) for contracts made on or after July 1, 2022. Primary contractors already have liability for employee wages owed by their subcontractors on public projects covered by the Federal Davis Bacon Act, and the same responsibility is owed under the prevailing wage acts of many states, including Illinois. Primary contractors may also have liability for subcontractors’ wages on private projects pursuant to some states’ mechanics lien acts (including Illinois), as well as obligations contained in union collective bargaining agreements to which a primary contractor may be signatory. However, these amendments to the WPCA represent a significant departure from the well-established legal concept known as privity of contract, which provides that a contractor, with few noted exceptions, is not liable for obligations (including debts to workers) of its independent contractors, such as subcontractors on construction projects. This law will impose far-reaching and unpredictable liability for primary contractors in Illinois and, as a result, some construction industry experts foresee fundamental changes in the role of subcontractors on Illinois private construction projects. This article will discuss the new law as well as important exceptions within it. …

The enactments would expand a primary contractor’s liability to include debts due a subcontractor’s employee for “unpaid wages or fringe or other benefit payments or contributions, including interest owed, penalties assessed by the Department, and reasonable attorneys’ fees, but shall not extend to liquidated damages.” HB 5412, § 13.5 (c). Actions against a primary contractor may be brought by the unpaid wage earner or others on behalf of the wage earner, including the Illinois Department of Labor, which has the authority to impose civil penalties and seek criminal sanctions against liable parties for failure to pay compensation to employees. Under the WPCA, a liable party must pay, in addition to other amounts, attorneys’ fees incurred by the employee, interest, and an additional sixty percent (60%) per year for as long as the debt is unpaid. If a court interprets the 60% per year imposed by Section 14 of the WPCA to be liquidated damages, then a primary contractor would not be liable for that amount because liquidated damages are exempted. Further, though the liability imposed on a primary contractor under the new law includes “penalties assessed by the Department” of Labor, it does not expressly authorize criminal sanctions, which may be imposed under the WPCA against recalcitrant direct employers found guilty of not paying a wage earner.

The intent of some other provisions likewise is uncertain. For example, Section 13.5 (b) of HB 5412 includes this language: “A property owner who acts as a primary contractor related to the erection, construction, alteration, or repair of his or her primary residence shall be exempt from liability under this Section.” Since a primary contractor is defined as a party who has a contract with a property owner, it is difficult to imagine what was intended by the foregoing exemption, especially because the amendments impose no liability on owners. Also, it is unclear whether the following is intended to impose liability on the first-tier subcontractor, or on the subcontractor who fails to pay its employee, which could be a lower-tier subcontractor. Section 13.5 (d) of HB 5412 provides, in part:

Except as otherwise provided in a contract between the primary contractor and the subcontractor, the subcontractor shall indemnify the primary contractor for any wages, fringe or other benefit payments or contributions, damages, interest, penalties, or attorney’s fees owed as a result of the subcontractor’s failure to pay wages or fringe or other benefit payments or contributions as provided in this Section, unless the subcontractor’s failure to pay was due to the primary contractor’s failure to pay moneys due to the subcontractor in accordance with the terms of their contractual relationship.

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Notice of Proposed Revision to the Davis-Bacon Survey Collection

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Today, June 10, 2022, the Wage and Hour Division (WHD) submitted to the Office of the Federal Register for publication a notice of proposed revision to the information collection titled “Report of Construction Contractor’s Wage Rates.” WHD is proposing changes to the WD-10 form to improve the overall efficiency of the Davis-Bacon and Related Acts (DBRA) survey process. The proposed changes aim to streamline the collection of data required for the survey and make the collection less burdensome for respondents. The proposed revision rearranges questions and data requests to enable respondents to quickly gather and report information.

WHD is also proposing to add a new WD-10A collection instrument, which is a companion form to the revised WD-10 form. This new form will primarily be used pre-survey to identify potential respondents that performed construction work within the survey period in the survey area so that the Department can more effectively solicit survey participation.

There are 71 DBRA laws applicable to federal and federally assisted construction projects that require the payment of locally prevailing wage rates to approximately 1.2 million U.S. construction workers. The requirements currently apply to approximately $217 billion in federal and federally assisted spending on construction each year.

The DBRA requirements also protect workers under the unprecedented federal investments in infrastructure across the country. These projects involve clean energy, power and water infrastructure improvements, legacy pollution remediation, and renovation to the nation’s broadband and transportation infrastructures.

WHD encourages interested parties to submit comments on this proposal. Interested parties will have 60 days to submit their comments following notice in the Federal Register. Please submit comments by email to WHDPRAComments@dol.gov or by mail to the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210.

For more information on WHD’s proposed revision, please visit the U.S. Department of Labor’s website. A complete listing of the proposed changes to the information collection is posted at https://www.dol.gov/agencies/whd/government-contracts/construction/surveys/wd10pra.

Polis signs wage theft bill into law

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June 10, 2022
by Robert Davis | The Center Square

(The Center Square) – Colorado Governor Jared Polis signed a bill Thursday that increases penalties for businesses that withhold earned wages from workers without warrant.

Senate Bill 22-161 classifies wage theft as criminal theft and imposes automatic penalties of up to twice the withheld amount or $1,000, whichever is greater, against employers who violate the law. It also requires employers to pay an estranged employee’s earned wages within 14 days of receiving a written demand.

The bill was sponsored by Democrat Sens. Jessie Danielson, D-Wheat Ridge, and Sonya Jacquez Lewis, D-Boulder, and Reps. Monica Duran, D-Wheat Ridge, and Meg Froelich, D-Englewood.

“Wage theft is far too prevalent in Colorado, and it often hits working families the hardest,” Danielson said in a statement. “It’s essential that we support the folks who work hard to keep Colorado’s economy running. This law will ensure workers receive the full wages they have earned.”

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US Department of Labor Recovers $348k in Back Wages, Liquidated Damages for 144 Arizona Construction Workers Willfully Denied Overtime Pay

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VW Connect assessed $48K in penalties for intentional violations

Agency: Wage and Hour Division
Date: June 9, 2022
Release Number: 22-1136-SAN

PHOENIX – A federal investigation has recovered $348,380 in back wages and liquidated damages for 144 underpaid workers of an Arizona construction employer who failed to pay their overtime wages.

The U.S. Department of Labor’s Wage and Hour Division determined that VW Dig LLC – operating as VW Connect – automatically deducted 30-minute meal break periods every day even when employees worked through these periods, a violation of the Fair Labor Standards Act. The employer also failed to pay all hours worked due to improper recordkeeping that resulted in work hours often missing from payroll.

The investigation found the employer owed workers $174,190 in overtime wages earned for hours worked over 40 in a workweek. In addition to back wages and an equal amount of damages, the department assessed VW Connect with $47,926 in penalties for the willful nature of the violations.

“Manipulating timesheets to avoid paying a worker’s full earnings illegally denies them the wages on which they depend to care for themselves and their families. It also deprives them the dignity they are due,” said Wage and Hour Division District Director Eric Murray in Phoenix. “The outcome of this investigation shows that employers who violate the law can face costly consequences in the form of damages and penalties.”

In fiscal year 2021, the Wage and Hour Division recovered more than $36 million in wages owed to more than 21,000 construction industry workers. The Bureau of Labor Statistics projects more than 220,000 industry workers quit their jobs in April 2022 – the third highest number since 2012 – and 449,000 job openings in the industry, all of which makes for a job market in which employers must compete for workers.

“Employer who don’t pay workers all of the wages they’ve earned are likely to find it increasingly difficult to retain and recruit the people they need,” Murray explained. “Companies that comply with the law by paying full wages and benefits – and treating workers with the dignity and respect they deserve – will have a competitive advantage over those who cheat workers.”

Employers and workers can call the division confidentially with questions regardless of their immigration status. The department can speak with callers in more than 200 languages through the agency’s toll-free helpline at 866-4US-WAGE (487-9243). Learn more about the Wage and Hour Division, and its search tool if you think you may be owed back wages collected by the division.

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We Need to Talk About Wage Theft

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Ericka Cruz Guevarra, Farida Jhabvala Romero ,Alan Montecillo, Maria Esquinca
June 8, 2022 – KQED

In California, tens of thousands of workers aren’t getting paid what they’re owed by their employers. Many of these workers are low-wage earning immigrants in industries like construction, home care, and food service.

The state actually has a system in place where people can file claims of wage theft. But the system currently has a huge backlog, leaving people waiting years before they can try and and recover their money. In some cases, workers claim their employers stole tens or even hundreds of thousands of dollars from them.

The result? Many low-wage Californians miss out on rent, food, and can even lose their homes.

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Biden issues executive orders to spur clean energy construction

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Published June 7, 2022 – Construction Dive
Julie Strupp, Editor

Dive Brief:

President Joe Biden announced on Monday three executive orders under the Defense Production Act to increase domestically manufactured clean energy technology and boost clean energy construction projects.

The orders aim to expand manufacturing of critical clean energy technologies and put the financial power of federal procurement behind clean energy. It also seeks to boost solar panel supply in order to accelerate solar projects, which are one of the priorities in the $1.2 trillion Infrastructure Investment and Jobs Act.

America’s solar industry is facing tariffs on solar panels imported from Cambodia, Malaysia, Thailand and Vietnam, which supply about 80% of U.S. panels and parts. The tariffs have delayed or canceled hundreds of utility-scale solar projects; one of Biden’s orders provides a two-year tariff exemption to support construction projects in the United States right now, according to the White House press release.

Dive Insight:

The president can invoke the 1950 DPA to order private businesses to prioritize the production of materials that have been deemed necessary for national defense. In addition to pausing tariffs amid an ongoing Commerce Department probe to shore up the solar supply chain and prioritizing federal purchase of U.S.-made solar systems, Biden authorized the Department of Energy to rapidly expand domestic manufacturing of:

  • Solar panel parts.
  • Building insulation.
  • Heat pumps for buildings.
  • Equipment to make and use clean electricity-generated fuels.
  • Critical power grid infrastructure like transformers.

The administration said the new orders will help the government meet its goal of eliminating carbon from the country’s power supply by 2035, and will protect clean energy jobs and builds.

“Together, these actions will spur domestic manufacturing, construction projects and good-paying jobs – all while cutting energy costs for families, strengthening our grid, and tackling climate change and environmental injustice,” the White House release said.

The executive actions come after the Biden administration in May launched the IIJA-funded Interconnection Innovation e-Xchange to get more sources of clean energy connected to the national power grid. The Act includes $65 billion in clean energy investments.

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Ariz. Contractor Faces Big Fines Over Alleged Worker Pay Infractions

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June 7, 2022 – Jim Parsons
ENR Southwest

A federal judge has ordered a Tempe, Ariz., plastering and stucco contractor to rectify longstanding worker recordkeeping violations or face weekly coercive fines of up to $10,000.

The May 27 order, issued by US District Court Chief Judge G. Murray Snow against Valley Wide Plastering Inc., its owners and vice president, marks the latest chapter in a long-running effort by the U.S. Dept. of Labor to force firm compliance with the federal Fair Labor Standards Act.

According to court documents, separate department investigations, conducted in 2012 and 2017 into allegations of payroll discrepancies at Valley Wide, found that owners Jesse Guerrero and Rose Guerrero, and vice president J.R. Guerrero, intentionally allowed inaccuracies in the recording of employees work hours.

Examples included filling in false hours or manually altering the number of hours employees recorded without adequate justification. Evidence also suggested that Valley Wide failed to maintain daily time and payment records, including paying wages from non-payroll accounts, and intentionally reduced regular employee rates to give the false appearance of overtime pay.

A February 25, 2021, preliminary injunction, also issued by Judge Snow, ordered Valley Wide to implement a reliable timekeeping system and maintain accurate and complete records of each employee’s gross wages, deductions and net pay. The company subsequently converted from a piece-rate to an hourly wage system, with employees documenting time using a paper-and-pencil system.

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Commerce Fraud Bureau to get new powers to investigate wage theft, other financial crimes

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Max Nesterak
May 25, 2022

Labor leaders are calling a bill that passed the state House and Senate on Sunday the most significant piece of legislation for combating wage theft since it was made a felony in 2019.

The bill (HF 3255), which is awaiting Gov. Tim Walz’s signature, gives the Commerce Fraud Bureau new powers to criminally investigate financial crimes along with more than $800,000 a year to hire five more investigators.

“This is a very big deal,” said state Rep. Zack Stephenson, DFL-Coon Rapids, who authored the bill in the House. “All across the state, white collar crimes are in desperate need of more enforcement.”

Until now, the Commerce Fraud Bureau has been restricted by law to insurance fraud investigations — a function of the department being entirely funded by a tax on insurance companies.

The new law maintains that at least 70% of the department’s work must continue to focus on insurance fraud, but allows the department to investigate all financial crimes with money appropriated from the general fund.

That puts new power behind the state’s ability to criminally investigate labor violations that are rampant in construction and hospitality — yet seldom prosecuted. Payroll fraud in the construction industry alone costs the state upwards of $136 million a year in lost tax revenue, according to one estimate by the Midwest Economic Policy Institute.

“Wage theft and tax fraud are business models,” said Adam Duininck, director of governmental affairs for the North Central States Regional Council of Carpenters. “When we see it in such a concerted manner, the only way to patrol that is with aggressive enforcement.”

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