Giving America a Raise: A Progress Report

Posted by National Alliance for Fair Contracting on

In this year’s State of the Union address, President Obama called on Congress to raise the minimum wage from $7.25 to $10.10 an hour-a move that would boost the bottom lines of businesses and increase the earnings of 28 million hardworking Americans.

It’s a commonsense proposal that Republicans in Congress continue to block-which is why President Obama took action to raise the minimum wage for workers on new federal contracts. And states, cities, and businesses across the country are doing their part, too.

A new White House report released today looks at the progress businesses and communities are making in raising the minimum wage for millions of workers. In fact, since the President first called for a minimum wage increase in 2013, 13 states and the District of Columbia have passed laws to increase their minimum wage, which will benefit about 7 million workers.

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OFCCP Proposes Rule to Collect Summary Compensation Data from Contractors in New Equal Pay Report

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On August 6, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a Notice of Proposed Rulemaking requiring covered federal contractors and subcontractors with more than 100 employees to submit an annual Equal Pay Report on employee compensation.  The rule will be published shortly in the Federal Register.

The data will enable OFCCP to direct its enforcement resources toward federal contractors whose summary data suggests potential pay violations, while reducing the likelihood of reviewing companies that are less likely to be out of compliance.  OFCCP will also release aggregate summary data on the race and gender pay gap by industry and EEO-1 category to enable contractors to review their pay data using the same metrics as OFCCP and take voluntary compliance measures.  By using existing reporting frameworks contractors already maintain in electronic payroll records, including W-2 earnings, and the longstanding categories and definitions that apply to the EEO-1 Report, the agency is avoiding costly new recordkeeping requirements and minimizing to the extent feasible the compliance burden on federal contractors and subcontractors.

The deadline for submitting comments will be 90 days from the date of publication in the Federal Register.

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Labor Bureau Recovers Lost Wages

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The Oregon Bureau of Labor and Industries has secured more than $20,000 for 10 workers for a Salem contractor not paid wages to which they were entitled on a Pearl District park project.

The overtime and prevailing wage violations stem from work performed by Salem contractor Green Thumb Landscaping on The Fields Neighborhood Park in Portland’s Pearl District. Green Thumb Landscaping was a subcontractor on the public works project.

During investigation, Green Thumb initially refused to provide investigators with documents necessary to determine the accuracy of the workers’ claims. The bureau subpoenaed Green Thumb to provide it with the material, including payroll records and contact information for potentially affected employees.

The wages recovered represent the latest unlawful practice from the contracting firm. The bureau has secured more than $70,000 in unpaid wages from Green Thumb Landscaping and Maintenance, Green Thumb Yard Maintenance Inc., Green Thumb LLC and Green Thumb and Maintenance Inc. for previous wage and hour violations.

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Misclassified Employees Force Taxpayers To Subsidize Costs, Harm Economy

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CHICAGO – Illinois employers wrongly classified nearly 20,000 of their workers as independent contractors rather than full-time employees in 2013, skipping out on more than $250 million in wages and contributions to funds that support laid-off and injured workers, the Illinois Department of Employment Security said today.

Taxpayers ultimately cover the costs of misclassified workers because it robs the state of payroll taxes normally removed from a worker’s paycheck. Those funds typically are not removed from payments given to independent contractors. In some cases, a homeowner could be responsible for costs incurred if a misclassified worker is injured while working on the owner’s dwelling.

“The consequences of misclassification are easy to see when a worker is hurt or an honest business owner is under-bid for a project. What hides in plain sight are the socialized costs that occur when a dishonest employer deceives a customer and cuts corners by not playing by the rules,” IDES Director Jay Rowell said.

“The labor movement is about creating strong communities and protecting workers from unscrupulous employers,” said Chicago Federation of Labor President Jorge Ramirez. “Tactics like worker misclassification erodes that by violating workers’ employment and labor rights.”

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Non-Union Contractor Caught Shaving $50/hour Off Worker Paychecks on City Funded Project in NY

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As contractor on the Sugar Hill housing project in Harlem, MountCo construction was supposed to be paying its workers the prevailing wage (nearly $65 an hour).  The reality? Workers on the project were making closer to $15 and being forced to lie about their earnings to inspectors who were there to monitor the company because of its history of failing to do so.

Construction of taxpayer subsidized projects is big business, regulated to ensure maximum positive economic impact on the community.  The name of MountCo’s non-union game, sadly, is inflating profits by drastically underpaying workers. The city is now looking to recover nearly $300,000 in back wages owed to the workers, the New York Daily News writes.

Workers told NDN that on that day of the project’s press conference completion, they were kept in the top half of the building so they would not be seen by the press or reveal to the Mayor the problems with the contractor.  What’s worse, many of them were paid for only half days and told the reason was how little work there was to do on those top floors.

“They told us we had to work on the ninth floor or higher. We couldn’t work any lower than that. They were going to tell us when we could go downstairs,” one worker, who did not want to be identified, told The News. “They wouldn’t let us see him.”

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VA Governor Signs Executive Order Establishing Inter-Agency Task Force on Worker Misclassification

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Governor Terry McAuliffe has signed Executive Order 24 establishing an interagency task force on worker misclassification and payroll fraud.

“Every Virginian who works hard and follows the rules should get the pay and benefits that they deserve,” said Governor McAuliffe “This executive order will begin a process to ensure that employers throughout the Commonwealth follow the same rules when it comes to benefits and pay for their employees.”

The text of executive order number 24 is as follows:

 Importance of the Issue

The misclassification of employees as “independent contractors” undermines businesses that follow the law, deprives the Commonwealth of millions of dollars in tax revenues, and prevents workers from receiving legal protections and benefits.

A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) found that one third of audited employers in certain industries misclassify their employees. By failing to purchase workers’ compensation insurance, pay unemployment insurance and payroll taxes, or comply with minimum wage and overtime laws, employers lower their costs up to 40%, placing other employers at a competitive disadvantage.

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Self-Sufficient Construction Workers

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This study explores the impact of prevailing wage laws (PWLs) on tax revenues and government assistance. The analysis has resulted in the following key findings:

Prevailing wage laws support the local economy.

  • Prevailing wage laws build local middle-class jobs by paying a living wage and protecting the use of in-state contractors.
  • Prevailing wage laws drive economic development through increased consumer demand. Workers making a decent living spend locally, driving the need for additional employment in local businesses.
  • Prevailing wage laws are they best deal for taxpayers. Prevailing wage projects are done right the first time, on time and within budget. Workers receiving the prevailing wage pay more in taxes (protecting the tax base) and are less dependent on government assistance subsidized by taxpayers.

Prevailing wage laws contribute to government budgets.

  • Construction workers earn an average income (from wages) of $29,984 per year in non-PWL states and $32,064 per year in PWL states.
  • Better wages mean a stronger tax base, helping policy makers balance budgets without the need to raise taxes.
  • While construction workers earn 8.0 percent more in PWL states than their counterparts in non-PWL states, they contribute 35.7 percent more in after-credit federal income taxes.
  • Construction workers in PWL states account for 75.4 percent of all federal income tax revenues after credits and deductions, 71.8 percent of after-credit state income taxes, and 77.4 percent of property taxes contributed by blue-collar construction workers.

Taxpayers subsidize the low-wage, low-skill, low-quality system in non-PWL states.

  • Construction workers in non-PWL states account for just 24.6 percent of after-credit federal income tax revenues. By contrast, they receive disproportionately more government assistance: they get 33.0 percent of all Earned Income Tax Credit (EITC) assistance and 31.8 percent of all food stamp benefits paid to blue-collar construction workers.
  • Due to lower rates of health insurance and retirement coverage, the absence of a PWL also increases construction worker reliance on government programs during times of illness, injury, and old age. This can be, for example, emergency room care subsidized by the taxpayer.
  • Construction workers in non-PWL states receive $0.603 in non-health, non-retirement government assistance per dollar of federal income tax contributions compared to $0.580 per dollar for PWL workers. The comparable figures are $0.543 per dollar in Indiana and $0.272 per dollar in Illinois.
  • Higher percentages of construction workers in non-PWL states have no health insurance coverage (45.0 percent to 40.9 percent) and no pension plan at work (77.8 percent to 72.2 percent).
  • Higher percentages of construction workers in non-PWL states live in public housing (2.2 percent to 1.8 percent) and receive food stamps (12.3 percent to 10.7 percent) at the expense of the taxpayer.

Prevailing wage laws are the best deal for taxpayers. A PWL keeps construction costs down by promoting a high-skilled, high-quality construction workforce that completes jobs on time, the first time. A PWL also supports in-state contractors and builds local middle-class jobs while driving economic development. Ultimately, prevailing wage laws protect worker incomes and raise tax revenues while reducing reliance on government assistance. Prevailing wage laws should be enacted or strengthened in states across America to protect the middle class and support strong budgets.

16th Annual NAFC Conference – September is Fast Approaching, Register Today While Space is Still Available!

Posted by National Alliance for Fair Contracting on

The National Alliance for Fair Contracting will be holding its 16th Annual Conference this year in the lakeside city of Chicago, IL, September 17-19, 2014.

The NAFC Conference provides a national forum for those committed to combating noncompliance of state and federal public contracting laws and draws attendance from contractors, labor unions, fair contracting organizations, attorneys and various officials from local, state and federal governments around the nation.

This year’s conference will be hosted at the Sheraton Chicago Hotel and Towers. NAFC Chairman Rocco Davis and the rest of NAFC’s Board of Directors are diligently planning content and speakers to ensure this will be our most successful conference to date.

Register Now

Executive Order Will Make It Harder For Federal Contractors To Violate Workers’ Rights

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A new executive order from President Obama will make it harder for companies to win federal contracts if they violate their workers’ rights and withhold their wages, the White House announced Thursday.

Under the new rules, companies that apply for federal contracts larger than half a million dollars will have to disclose any major labor law violations they or their subcontractors have committed in the previous three years. Agencies will prioritize companies with clean records over those that abuse their workers’ rights when weighing contract bids. Each executive branch agency will have a specific bureaucrat in charge of determining whether a company’s lapses “rise to the level of a lack of integrity or business ethics,” according to a White House fact sheet on the rules.

The package of reforms will also prohibit companies that do business with the government from requiring their workers to agree to arbitration processes for workplace harassment or civil rights complaints, guaranteeing that workers who are sexually harassed or discriminated against can get their day in court.

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With One Case Before State Supreme Court, 2nd IN Judge Rules “Right-to-Work” Unconstitutional

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An Indiana Judge has ruled that the state’s “Right-to-Work” law is unconstitutional, the second such blow to the legislation since its passage in 2012.

Lake County Circuit Judge George Paras decided against the state in United Steelworkers vs. Zoeller on July 17th, ruling that the law was “null and void in its entirety” and the state is “permanently enjoined” from enforcing it.  The law is already before the state Supreme Court as a result of a challenge from the International Union of Operating Engineers (IUOE) Local 150.  Oral arguments in that case are set to be heard on September 4th.

Following the decision, Indiana Attorney General Greg Zoeller said he would ask for a stay to prevent the decision from immediately taking effect.  He also argued that the law’s fate is still truly in the hands of the state Supreme Court.  From his statement:

“Strong opinions exist on both sides about involuntary union dues, but the attorney general’s office has a duty to defend the laws the legislature passes from legal challenges plaintiffs file.  If a trial court finds a law unconstitutional, then the appropriate action is to stay its ruling pending the appeal.”

The IUOE Local 150 case was originally decided last fall – in favor of the union – by Lake County Superior Court Judge John Sedia. He stayed the verdict to allow it to go to the Supreme Court.

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