New Maryland Law Makes General Contractors Liable for Paying Their Subcontractors’ Employees (MD)

Posted by National Alliance for Fair Contracting on

May 25, 2018
JD Supra

At the tail-end of the 2018 legislative session, the Maryland General Assembly passed Senate Bill 853, making construction general contractors jointly and severally liable for the failure of their subcontractors to pay their employees in compliance with Maryland’s wage and hour laws. This new law will become effective October 1, 2018. California recently passed a similar measure, AB 1701, which is applicable to construction contracts entered into in that state on or after January 1, 2018.

This controversial new Maryland law contains both a multiplier and an attorneys’ fees provision, dramatically increasing its impact. Under existing law, an employer that fails to pay an employee in accordance with Maryland’s wage and hour laws may be liable to the employee for up to three times the wages owed, plus reasonable attorneys’ fees and other costs. Until now, this liability has largely been confined to the direct employer-employee relationship. SB 853 expands the reach of Maryland’s wage and hour law, making a general contractor on a construction services project jointly and severally liable for a subcontractor’s failure to properly pay its employees. The term “construction services” is broadly defined to include “building, reconstructing, improving, enlarging, painting, altering, and repairing” in connection with real property. Notably, the liability imposed by this new law is not limited to first-tier subcontractors; rather, it expressly applies “regardless of whether the subcontractor is in a direct contractual relationship with the general contractor.” So, a general contractor is now liable for every wage and hour law violation occurring on a construction project, including those committed by subcontractors far down the construction chain. The time frame for this liability is also expansive. A claimant may make a claim against both the general contractor and the non-paying party as soon as two weeks after a violation occurs, and as late as three years after the occurrence.

For balance, the new law requires subcontractors to indemnify the general contractor for “any wages, damages, interest, penalties, or attorney’s fees owed as a result of the subcontractor’s violation.” This protection, however, is only as strong as the subcontractor’s ability to pay such damages and costs. SB 853 increases the likelihood that employees will sue both the general contractor and their direct employer when they believe they have not been properly paid. Because general contractors are now a target for additional litigation, the potential costs subject to indemnification by subcontractors will be increased by the general contractor’s costs of defense. Additionally, because the general contractor will not always be the direct employer of the plaintiff bringing such a claim, it may not have in its possession the employee-related documents necessary to defend a claim, including a potentially fraudulent claim. Notably, the law outlines two express exceptions to indemnification: (1) when indemnification is provided for in a contract between the general contractor and the subcontractor; or (2) when a violation arose due to the general contractor’s failure to make timely payments to the subcontractor.

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May Day Parade Stands Up Against Wage Theft (DC)

Posted by National Alliance for Fair Contracting on

May 07, 2018
by Negin Owliaei

As buildings rise in Navy Yard, so too do rents. The rapidly gentrifying pocket of Washington, D.C. has been lining the pockets of developers for years, but the money doesn’t always make its way to the construction workers building the luxury apartments popping up around the neighborhood.

That’s especially true for the workers contracted out by Power Design, a Florida-based electrical company that’s been sued more than a dozen times for wage theft. Activists targeted the firm’s Navy Yard construction sites on May Day to educate workers on their rights and remind the companies working with Power Design that they’re responsible for wage theft that happens on their watch.

The local DC chapter of Jobs with Justice has been leading the charge to hold Power Design accountable for its poor labor practices and to push city officials to uphold the laws meant to keep the company in check. A report released by the group earlier this year highlighted the company’s “race to the bottom” mentality.

Power Design, the report says, has faced at least 13 lawsuits around the country for wage theft. The report also details the company’s practice of classifying workers as independent contractors rather than employees, cutting corners on crucial protections and taxes and allowing Power Design to underbid other companies that uphold labor standards.

DC Jobs with Justice Executive Director Elizabeth Falcon shared this information with parade-goers as she led the crowd to various construction sites that contract to Power Design around D.C.’s Navy Yard neighborhood. “We need these developers who are taking these bids to understand we see them,” Falcon said.

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Aldermen, labor renew push for fair work week ordinance (IL)

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05/10/2018, 07:09pm
By Fran Spielman

Armed with a new study that shows the devastating impact of “just-in-time scheduling,” a coalition of alderman and union leaders on Thursday made a renewed push for a “fair work-week” they called a “basic human rights issue.”

The City Council has approved three ordinances over the last five years aimed at confronting income inequality in Chicago.

They are: the anti-wage theft ordinance of 2013; the 2014 ordinance that raised Chicago’s minimum wage to $13-an-hour by 2019 and the ordinance mandating companies large and small – with the exception of construction companies – to provide their employees with at least five paid sick days each year.

But until workers have stable schedules – or guaranteed compensation if they don’t – the City Council’s “work is not done,” according to retiring Ald. Ameya Pawar (47th).

Pawar pointed to a survey of 1,700 workers across the state, 44 percent of them in Chicago, conducted by the University of Illinois and Penn State University.

One of every five hourly workers reported being scheduled for on-call shifts “regularly or often.”

Thirty-five percent of all workers have less than one week’s advance notice of their schedule, with 22 percent having three days or fewer notice. More than 25 percent of those surveyed are required to keep their schedules “open” with no guarantee of work.

Nearly 20 percent receive their work schedules, only after traveling to their workplaces.

“Imagine what it’s like not knowing whether you have to work in two hours. Imagine what it’s like not knowing what your schedule is like until the day before the week begins. Imagine what it’s like not knowing how you would arrange for child care if you’re working 12-to-8 on one day and 7-to-3 the next,” Pawar told a City Hall news conference.

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Proposed labor watchdog would give city’s worker protection laws some teeth (IL)

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April 18, 2018
By Matt Kiefer

A series of recent labor reforms promised to give Chicago workers wage theft protection, boost minimum wages and guarantee paid sick time. But those promises come up empty when it comes to enforcement, workers and labor advocates say.

Enter the Office of Labor Standards, a proposed new City Hall regulatory agency that would have the power to enforce city labor ordinances, investigate claims, process complaints, issue fines and recommend other penalties. Thirty-five alderman have signed in support of an ordinance establishing the new office.

At a Wednesday morning press conference, 47th Ward Ald. Ameya Pawar announced a proposed ordinance that would consolidate the city’s labor regulation authorities under the Office of Labor Standards.

“This is the logical conclusion to passing three major progressive policies to protect workers,” Pawar said, referring to the wage theft, minimum wage and sick time ordinances that City Council has approved over the past five years. “Because it doesn’t matter if you pass it if people aren’t receiving those benefits.”

…

“We need an office dedicated to taking reports from workers like me and looking into companies who systematically steal wages,” Guerrero, a member of the labor advocacy group Arise Chicago, recounted in Spanish through a translator at today’s press conference. “When workers like me know the city has our back, we will feel safer to come forward.”

…

As proposed, the Officer of Labor Standards would be responsible for collecting complaints without identifying workers to their employers. Unless the worker and employer agree to settle the case, the office would be required to complete investigations within 60 days. A business found in violation would be liable for unpaid wages and fines, and would become ineligible to bid on city contracts for one year. Those with “willful” or repeat violations could have their business licenses revoked.
Aldermen said they modeled the proposed labor standards office after similar municipal agencies in Seattle, New York and San Francisco.

They added that they will work with the mayor’s office to allocate funding for the office, which would include a director (appointed by the mayor and confirmed by City Council) and an unspecified number of investigators and lawyers. Part of the office’s funding would come from fines levied on businesses found in violation of city ordinances, though proceeds would also support community-based outreach programs to inform workers and employers of protections under city law.

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Mass. SJC Rules Independent Contractor Statute Doesn’t Apply in Workers’ Comp Case (MA)

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By Elizabeth Blosfield | May 16, 2018

The Massachusetts Supreme Judicial Court (SJC) has ruled the state’s independent contractor statute does not determine whether a claimant is an employee eligible for workers’ compensation benefits in a case that has led to questions about worker misclassification.

“Worker misclassification is a serious problem, both in our Commonwealth and across the nation,” SJC Chief Justice Ralph Gants wrote in a concurring opinion regarding the case.

This issue has come to light after a recent case involving claimant Ives Camargo, in which she sought review of a decision made by the reviewing board of the Department of Industrial Accidents regarding a claim she made for workers’ compensation benefits.

The board had affirmed the findings of an administrative judge by concluding Camargo was an independent contractor not entitled to workers’ compensation. Its decision was based on the definition of an employee in Massachusetts’ workers’ compensation statute.

“The law governing employment relations in this state remains far from uniform.”

After Camargo appealed, the case was transferred to the SJC, which upheld the decision that she is an independent contractor not eligible for workers’ compensation.

In the wake of the case, however, Gants called for the Massachusetts Legislature to consider greater uniformity among laws that classify workers. He added that part of the challenge in preventing misclassification is that there is no uniform definition of an employee. Instead, the law defines employees and independent contractors by several different standards depending on the context.

“In 2004, the Massachusetts Legislature took a significant step toward harmonizing these standards, amending the independent contractor statute…so that its presumption in favor of employee status applied not only to the wage and hour laws….but also to the minimum wage and overtime laws,” Gants wrote. “However, the law governing employment relations in this state remains far from uniform.”

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Somerville community groups demand union labor during Clarendon Hill construction (MA)

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Posted Apr 18, 2018 at 2:13 PM

A coalition of community groups and unions are campaigning to ensure that a for-profit developer pays prevailing wages and uses union labor on a public-private partnership to rebuild the public housing at Clarendon Hills.

The for-profit developer, Redgate, along with non-profit developers Preservation of Affordable Housing (POAH) and Somerville Community Corporation (SCC),are planning to renovate Clarendon Hill Apartments in Somerville and build market rate units to pay for it.

Public-private partnerships like this are part of a trend in to finance the redevelopment of existing public housing. The developers seek to minimize costs by getting a pass on the state’s prevailing wage law.

“We agree that the residents of Clarendon Hill should reside in the best housing possible, and that high quality affordable housing in Somerville should be accessible to all,” said Jaril Gauthier, a sheetmetal worker and Somerville resident. “However, we are opposed to the notion of betraying one important mission for another, especially when a private interest stands to make tens of millions of dollars off this so-called public-private “partnership.”

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High court puts prevailing wage repeal vote on hold (MI)

Posted by National Alliance for Fair Contracting on

Jonathan Oosting, Detroit News Lansing Bureau
Published 1:40 p.m. ET May 15, 2018

Lansing – A push to repeal Michigan’s prevailing wage law for construction workers hit a snag on Tuesday.

The Michigan Supreme Court suspended a lower-court order requiring the Board of State Canvassers to certify petition signatures as the seven justices decide whether to hear an appeal.

The high court did not rule on the merits of the case and could still reject an appeal by a coalition of unions and union-friendly contractors.

But the Tuesday afternoon “stay” prompted cancellation of a canvassers meeting and delays likely action in Michigan’s Republican-led Legislature, which is expected to take up the prevailing wage repeal measure if it reaches lawmakers. Approval would bypass a threatened veto by GOP Gov. Rick Snyder.

The 1965 law guarantees union-level pay and benefits for construction workers on projects funded by the state government. Repeal proponents argue prevailing wage inflates construction costs ultimately borne by taxpayers, while opponents maintain repeal would lower wages and limit training programs they fund.

The Michigan Court of Appeals last week ordered the Board of State Canvassers to certify the prevailing wage repeal petition after the panel deadlocked in late April in a 2-2 vote.

The Michigan Bureau of Elections had recommended certification of the prevailing wage ban ballot proposal, but both Democrats on the bipartisan panel voted against the prevailing wage repeal measure amid arguments over false addresses provided by circulators who had collected signatures.

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Repealing prevailing wage would be irresponsible (MI)

Posted by National Alliance for Fair Contracting on

2018-05-03 / Viewpoint

There’s been plenty of buzz lately around the need for Michigan to update its infrastructure. But when the state sends workers into our communities to fill our potholes, construct our bridges or renovate our schools, we expect the job will be done well. We don’t expect it to take years for them to repave a few blocks of our neighborhood, or that the cherry picker helping assemble an overpass will become part of the community’s scenery as the project lasts indefinitely.

We expect the job will be done on time and will be high quality, and that’s all thanks to Michigan’s prevailing wage laws.

Prevailing wage has gotten a bad reputation lately, but at the end of the day, all it means is that workers are getting paid the local average for construction projects in the area, guaranteeing the workers earn an honest day’s pay for an honest day’s work. That is just common sense.

Critics claim it’s too costly to pay state construction and skilled trades workers a fair wage, and if we repeal our prevailing wage laws, the state will save money and our economy will get on the right path.

But as simple as that sounds, studies show it simply isn’t true.

A study published earlier this year analyzed the effects of repealing prevailing wage on Indiana’s economy in the three years since it’s been eliminated. Rather than enjoying prosperous economic benefits as promised, the state has since suffered with higher worker turnover and lower productivity.

Tim Sneller, State Representative
Burton

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A Missouri ‘right-to-work’ law is more likely to harm black workers, who are more likely to be covered by a union contract than other workers (MO)

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Fact Sheet * By Valerie Wilson and Julia Wolfe * May 15, 2018

The phrase “right-to-work” (RTW) refers to laws that prohibit unions from collecting any fees from nonunion members in a bargaining unit despite the fact that these nonmembers are covered by-and thus would still receive the benefits of-the union contract. These benefits include the right to have the union provide costly legal representation should a worker in the bargaining unit find it necessary to file a grievance against his or her employer. Contrary to how the phrase sounds, RTW laws actually restrict the rights of workers by cutting the financial support going to unions, thus limiting the ability of unions to help workers bargain for better wages, benefits, and working conditions.

Currently, 28 states, predominantly in the Midwest, South, and Southwest, have right-to-work laws in place. Later this year, voters in Missouri will decide whether to adopt a new RTW law approved by the state’s general assembly last year.

This fact sheet illustrates the disproportionate impact that a Missouri RTW law could have on African American workers, by highlighting the group’s strong representation among unionized workers in Missouri. This analysis is based on union membership data available from the Current Population Survey (conducted by the U.S. Census Bureau for the U.S. Bureau of Labor Statistics) for 2010-2017, the period since the end of the Great Recession

In national studies that control for other factors than can influence wages statewide, including the cost of living, wages are still at least 3 percent lower in RTW states than in non-RTW states. While Missouri workers of every race will likely see the negative impacts of an RTW law, black Missourians would be disproportionately harmed by this right-to-work law. That is because black workers are more likely to be covered by a union contract (“unionized”) than other workers. As shown in Figure A, in Missouri, 13.9 percent of all black workers are unionized, compared with 10.3 percent of all white workers, and 9.3 percent of all Hispanic workers. Within the private sector alone, 10.5 percent of black workers, 8.0 percent of white workers, and 9.0 percent of Hispanic workers are covered by a union contract. Black Missourians’ participation in private-sector unions is slightly higher than participation by black workers in the private sector nationwide (9.4 percent)

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Construction Unions Ally with Striking Teachers to Fight for Prevailing Wage Laws (NC)

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BY: MIKE ELK
MAY 15, 2018

As North Carolina teachers go out on strike tomorrow, they will be joined by the ranks of the state’s construction unions. Much like teachers, who lack the right to collective bargaining in the state, construction workers employed on North Carolina’s state-funded projects, such as schools, lack the ability to have their wages set by union-endorsed prevailing wage standards.

They say the lack of collective bargaining rights for public employees in North Carolina is symptomatic of how the state also undervalues all workers employed on projects financed on the public’s dime.

“When your public employees are organized, it sets the standard and foundation for everybody else,” says North Carolina IBEW Local 379 President Scott Thrower. “When they are not, the private sector is setting the ground.”

While construction workers in other states enjoy the benefits of prevailing wage standards, construction workers in North Carolina do not. Under prevailing wage standards, contractors are forced to pay the median wage that construction workers are paid in that region as determined by a government survey-the idea being that government-funded projects are supposed to keep wages from falling.

“Prevailing wage levels the playing field,” says Thrower.

Without a prevailing wage, contractors on state-funded projects can simply pay their workers whatever they want.

While unionized electrical contractors in the state, working on federally funded projects that use prevailing wage standards, make a minimum of $25 an hour with retirement and health care benefits, non-union electrical contractors work on state-funded projects that often pay as little as $15-$20 per hour due to the lack of prevailing wage standards on state-funded projects.

Worse, union leaders say the lack of prevailing wage standards negatively affects high road contractors, who use higher training and safety standards.

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