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State, Delco join forces to battle construction misclassifications (PA)

Posted by National Alliance for Fair Contracting on

Alex Rose
Mar 10, 2020

CHESTER – Delaware County District Attorney Jack Stollsteimer joined state Attorney General Josh Shapiro Monday in announcing a novel joint pilot program aimed at combatting the misclassification of construction workers through criminal prosecutions.

Stollsteimer explained that Act 72 of 2011, also known as the Construction Workplace Misclassification Act, was designed to protect construction workers from being forced to misidentify as “independent contractors” rather than employees and provides certain monetary penalties.

Misclassification of workers across numerous industries is a problem not only for employees who should be receiving certain benefits, but also for society at large when payroll tax, unemployment insurance and workers compensation go unpaid.

“Whether you’re a laborer or not, this issue impacts you in a big way, in a really big way, and we will not tolerate it,” Shapiro told a group of about 30 labor leaders and politicians assembled at the Laborers Union 413 hall on Penn Street.

Much of the problem can be laid at the feet of dishonest “labor brokers” who recruit workers and send them out to fill temporary positions for contractors or subcontractors. The brokers are supposed to take care of things like pay, tax withholdings and workers compensation coverage, but often forgo those formalities, pay workers under the table and pass the savings on to contractors who can then undercut legitimate competitors.

Shapiro said that in 2019, 163 construction employers misclassified 1,347 employees in Pennsylvania – and those were just the ones the state knows about. Those workers represented $27.2 million in underreported wages that could have been taxed for things like roads or schools, Shapiro said.

But he added that the Pennsylvania Department of Labor and Industry collected only $531,000 in administrative penalties from those companies, which he deemed “the cost of doing business” for unscrupulous employers.

…

Shapiro said the partnership with the district attorney’s office is key to that approach because Act 72 allows for the attorney general only to bring misdemeanor and summary charges against offenders. The district attorney’s office, on the other hand, might be able to pursue felony charges for things like wage theft or labor trafficking.

(Read More)

U.S. DEPARTMENT OF LABOR ISSUES INDUSTRY-RECOGNIZED APPRENTICESHIP PROGRAM FINAL

Posted by National Alliance for Fair Contracting on

Agency: Employment and Training Administration
Date: March 10, 2020
Release Number: 20-386-NAT

WASHINGTON, DC -The U.S. Department of Labor today published a final rule that will help expand apprenticeships in the United States by establishing a system for advancing the development of high-quality, Industry-Recognized Apprenticeship Programs (IRAPs).

IRAPs are high-quality apprenticeship programs, recognized as such by a third-party entity under standards established by the department in the new rule. Through these programs, individuals will be able to obtain workplace-relevant training and progressively advancing skills that result in an industry-recognized credential, all while getting paid for their work. An IRAP is developed or operated by entities such as trade and industry groups, corporations, non-profit organizations, educational institutions, unions, and joint labor-management organizations.

“Apprenticeships are widely recognized to be a highly effective job-training approach for American workers and for employers seeking the skilled workforce needed in today’s changing workplace,” Secretary of Labor Eugene Scalia said. “This new rule offers employers, community colleges, and others a flexible, innovative way to quickly expand apprenticeship in telecommunications, health care, cybersecurity, and other sectors where apprenticeships currently are not widely available.”

Third-party entities interested in evaluating and recognizing high-quality IRAPs consistent with the department’s standards should follow the process outlined in the final rule to become Standards Recognition Entities (SREs).

As described in the final rule, many different types of entities may become recognized SREs, including trade groups, companies, educational institutions, state and local governments, non-profits, unions, joint labor-management organizations, and certification and accreditation bodies for a profession or industry. The rule also outlines the responsibilities and requirements for SREs, as well as the department’s standards that programs must meet to obtain and maintain IRAP status and sets forth how the administrator will oversee SREs.

Once recognized by the department, SREs will work with employers and other entities to establish, recognize, and monitor high-quality IRAPs that provide apprentices with industry-recognized credentials.

IRAPs will serve as a complement to the successful registered apprenticeship program that has been in place for over 80 years. The industry-led, market-driven SRE approach outlined in the final rule will give employers and other stakeholders additional flexibility necessary to expand the apprenticeship model into new industries and to address the diverse workforce needs of different industries and occupations. The rule prohibits SREs from recognizing IRAPs in the construction sector, which has the greatest existing utilization of registered apprenticeship programs.

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ATTORNEYS GENERAL SUE OVER DOL JOINT-EMPLOYER RULE

Posted by National Alliance for Fair Contracting on

February 27, 2020

Attorneys general from 17 states and the District of Columbia filed a lawsuit to stop the US Department of Labor’s new joint-employer rule. The suit was announced Wednesday.

“The new rule, which would result in lower wages and additional wage theft targeting lower- and middle-income workers, demonstrates that the Trump Administration does not care about the hardworking individuals that help this country run,” New York Attorney General Letitia James said in a statement.

The Department of Labor announced the final rule last month, and it’s set to take effect March 16. It includes a four-factor test for determining joint-employer status where an employee performs work for one employer and that work benefits another. It’s separate from a joint-employer final rule discussed this week by the National Labor Relations Board.

In the lawsuit announced yesterday, the attorneys general argued companies have increasingly outsourced employment of workers and that third-party employers are less stable and subject to less scrutiny. As a result, they are more likely to violate wage and hour laws, according to the attorneys general.

“Here in New Jersey, we have a strong stake in protecting the rights of workers and guaranteeing them redress for wage-and-hour violations. That is why it’s important for us to be part of today’s lawsuit,” New Jersey Attorney General Gurbir Grewal said.
The joint-employer standard determines when more than one employer is responsible under the Fair Labor Standards Act because both exert sufficient influence over a worker’s employment.

“Under the new administration rule, corporations can only be categorized as ‘joint employers’ – and therefore only be held liable for the actions of their subcontractors, franchisees or third-party managers – if it can be shown they have ‘direct control’ over the other companies’ policies,” according to the New Jersey Attorney General’s Office.

(See Article)

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AG Frosh Joins Suit to Safeguard Key Protections for Workers in the Fair Labor Standards Act (MD)

Posted by National Alliance for Fair Contracting on

Unlawful Department of Labor Rule Will Increase Wage Theft for Workers

February 27, 2020
News Release, Office of the Maryland Attorney General

BALTIMORE, MD (February 26, 2020) – Maryland Attorney General Brian E. Frosh today joined a coalition of 18 attorneys general in filing a lawsuit to stop the Trump Administration from eliminating key labor protections for workers.

The lawsuit challenges a United States Department of Labor (USDOL) rule that seeks to unlawfully narrow the joint employment standard under the Fair Labor Standards Act (FLSA). The FLSA is the federal law establishing a baseline of critical workplace protections, such as minimum wage and overtime, for workers across the country. The joint employment standard determines when more than one employer is responsible under FLSA because both exert sufficient influence over a worker’s employment.

This change would undermine critical workplace protections for the country’s low-and middle-income workers and could lead to increased wage theft and other labor law violations.

Over the past few decades, businesses have increasingly outsourced and subcontracted many of their core responsibilities to intermediary entities, instead of hiring workers directly. Because these entities tend to be less stable, less well-funded, and subject to less scrutiny, they are more likely to violate wage and hour laws.

In the suit, the coalition argues that USDOL’s new rule provides an incentive for businesses to offload employment responsibilities to smaller companies, which, under the new rule, will shield them from federal liability for wage and hour obligations under the FLSA. The attorneys general argue implementing the new rule will result in lower wages and increased wage theft for workers, especially for workers in low-wage jobs. Further, the new rule will make it more difficult to collect unpaid back wages for workers.

“The rule change is unfair to working men and women around the country. It will allow businesses to outsource labor and skirt important worker protections,” said Attorney General Frosh. “The proposed rule is inconsistent with the Fair Labor Standards Act and undermines Maryland law as well.”

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Labor Department apprenticeship rule exempts construction programs

Posted by National Alliance for Fair Contracting on

AUTHOR: Jenn Goodman
PUBLISHED: March 11, 2020

Dive Brief:

  • A Department of Labor rule issued yesterday that will help expand apprenticeships in the U.S. leaves out programs that seek to train apprentices to perform construction work. Those groups instead can continue to participate in a separate Registered Apprenticeship Program
  • The rule establishes a system for advancing the development of Industry-Recognized Apprenticeship Programs (IRAPs), a centerpiece of President Donald Trump’s workplace policy agenda. It will take effect May 11.
  • The idea of exempting the construction industry from IRAPs has drawn fire from major contractor groups like the Associated General Contractors of America (AGC) and Associated Builders and Contractors (ABC). On the other hand, building trade unions like North America’s Building Trades Unions (NABTU) have praised the plan.

Dive Insight:

IRAPS are recognized by a third-party entity under standards established by the department in the new rule. Through these programs, individuals will be able to obtain workplace-relevant training and progressively advancing skills that result in an industry-recognized credential while getting paid for their work.

An IRAP is developed or operated by entities such as trade and industry groups, corporations, nonprofit organizations, educational institutions, unions and joint labor-management organizations. They are seen as a way to help alleviate the labor shortage in new industry sectors and occupations that don’t traditionally have apprenticeships.

“Apprenticeships are widely recognized to be a highly effective job-training approach for American workers and for employers seeking the skilled workforce needed in today’s changing workplace,” Secretary of Labor Eugene Scalia said in a statement. “This new rule offers employers, community colleges, and others a flexible, innovative way to quickly expand apprenticeship in telecommunications, health care, cybersecurity, and other sectors where apprenticeships currently are not widely available.” …

In the end, the department concluded that registered apprenticeship programs are more widespread in the construction sector than in other sectors and therefore don’t need to be included in the plan. The decision could spur at least one legal challenge according to Bloomberg Law, and includes a clause to limit a potential lawsuit from the construction industry. …

… NABTU President Sean McGarvey said the union is pleased with the outcome and that the industry’s current apprenticeship programs won’t be “watered down” by having to participate in IRAPs.

“Given the widespread and effective nature of our privately financed and jointly managed registered programs for the construction industry, the final rule recognizes our rightful place as the standard bearer in the workforce development space,” he said.

(Read More)

Bill aims at cracking down on companies committing wage theft (HI)

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Representative Chris Lee says his bill would subject employers who willingly withhold money from their employees’ paychecks to criminal charges.

Thursday, February 27th 2020

Have you ever felt like you’ve been underpaid? A new bill could help prevent that from happening to you.
A bill moving through the capitol looks to crack down on companies that commit wage theft.

Representative Chris Lee says his bill would subject employers who willingly withhold money from their employees’ paychecks to criminal charges. Violators could face up to five years in prison and up to $10,000 in fines.

“In cases around the country we’ve seen employers intentionally dock wages from their employees, underpay their employees, pocket the money themselves, and in those cases they can be charged with a felony — which could be thousands of dollars, years in prison, because that is the same as someone going to a store nearby and robbing them of the same amount of money. So this protects workers from exploitation,” Lee said.

Under current law, the penalties for employers convicted of wage fraud ranges from a fine of $50 to up to a year in prison.

(See Article)

Employers Misclassifying Workers as Independent Contractors: A Six-Pack of Employee Misclassification Laws

Posted by National Alliance for Fair Contracting on

The National Law Review
Friday, January 24, 2020

… Gov. Murphy signed 6 new laws that address the misclassification issue and provide for significant liabilities for those employers found to have misclassified workers. …

A 5838 – Stop Orders

Under this law, the New Jersey Department of Labor (“DOL”) is now empowered to issue stop-work orders against any employer who is found to be a violation of “any State, wage, benefit and tax law.” This would include failure to pay wages required by law and misclassification of a worker as an independent contractor. The stop-work order would require the cessation of all business operations at the place where the violation exists. …

A 5839 – Additional Penalties

… New penalties are now available against employers who misclassify workers. The new law provides an administrative “misclassification penalty” of up to $250 for each misclassified employee for first violations, and up to $1,000 per employee for each subsequent violation. In addition, a penalty will be paid to the misclassified worker of “not more than 5 percent of the worker’s gross earnings over the past twelve months from the employer who failed to properly classify them.”

A 5840 – Joint Liability

… Gov. Murphy amended the Wage Theft Act so that there is also joint and several liability when the state employment tax laws are violated. So, if you use contract employees and your contractor improperly classifies its workers as independent contractors, you could be liable for all the fines, penalties, and damages resulting from this misclassification.

A 5843 – Notice Posting

This law requires employers to post in the workplace a notice of the prohibition against misclassifying workers, the benefits and protections available to employees and the remedies available under all of the new laws. The DOL is tasked with developing and issuing a form of notice for employers. The law also … provides a private cause of action for employees who are retaliated against. Finally, any employer who violates any part of this law shall be guilty of a disorderly person’s offense and pay fines between $100 and $1,000. …

S 4226 – DOL Website Posting

This law permits the DOL to post on its website the name of any person who is found to be in violation of any state wage, benefit, or tax law, and who has had a final order issued against them by the DOL Commissioner. …

S 4228 – Tax Data Sharing

This law permits the State Division of Taxation to share with the DOL the following information (which was previously deemed confidential): tax information statements, reports, audit files, returns, or reports of any investigation for the purpose of labor market research or assisting in investigations pursuant to any state wage, benefit or tax law.

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STUDY: Should Prevailing Wages Prevail? Reexamining the Effect of Prevailing Wage Laws on Affordable Housing Construction Costs

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Matt Hinkel, Michigan State University, Dale Belman, Ph.D., Michigan State University (ICERES, Institute for Construction Economic Research)

A current policy debate surrounding state prevailing wage laws is centered on whether they are costly to state governments and taxpayers. The authors contribute to this debate by extending and utilizing data from a 2017 prevailing wage study to replicate and investigate a controversial paper often cited in this debate. The authors examine the relationship between California’s prevailing wage law and the costs of building affordable housing, and they do so by going beyond the 2017 study’s estimates and estimating a carefully-constructed two-stage model. The authors find no causal effect of prevailing wages on affordable housing construction costs, contradicting previous literature. Further, in a supplemental analysis, the authors examine and highlight key methodological deficiencies present in a prior study. This timely research is designed to contribute to the current prevailing wage debate, which has important implications for researchers, practitioners, and legislators.

(PDF Copy of Full Study)

(Visit the ICERES Website)

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IL: Attorney General Raoul Convenes First Meeting Of Worker Protection Task Force

Posted by National Alliance for Fair Contracting on

1/23/20

Chicago, IL (WorkersCompensation.com) – Attorney General Kwame Raoul today convened the first meeting of a task force that will facilitate collaboration between the Attorney General’s office, county prosecutors and state agencies in order to better protect workers’ rights and law-abiding businesses in Illinois.

The Worker Protection Unit Task Force was created under Senate Bill (SB) 161, which was initiated by Attorney General Raoul and signed into law by Gov. JB Pritzker. The new law became effective on Jan. 1, 2020. The task force will bring together the state’s leading regulatory agencies that impact workers, law enforcement and worker protection advocates in order to better combat wage payment violations and unfair labor practices. …

… The new law established a Worker Protection Unit Task Force to facilitate information sharing and collaboration between the Attorney General’s office, local prosecutors, the Illinois Department of Labor, the Illinois Department of Human Rights, the Illinois Department of Employment Security and the Workers’ Compensation Commission. …

In addition to establishing the Worker Protection Unit Task Force, Senate Bill 161 codified the Worker Protection Unit within the Attorney General’s office to enforce violations of worker protection laws. The law also gives the Attorney General clear legal authority to investigate and bring enforcement actions against employers that commit wage theft and other workplace rights violations.

(Read More)

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City officials: Getting tax breaks on your project? Pay prevailing wage (MO)

Posted by National Alliance for Fair Contracting on

February 07, 2020

ST. LOUIS (KMOX) — St. Louis Mayor Lyda Krewson has signed an ordinance guaranteeing a prevailing wage for workers on all projects in that receive City of St. Louis incentives.

Krewson says the idea is to avoid developers who get tax breaks and then try to hire workers on the cheap.

“We want to make sure if the city is investing in a project, that the workers are treated fairly and the contractors are treated fairly,” Krewson told KMOX. …

“This is very important to our construction workers on city tax incentivized projects — they’ll be getting a fair wage and benefits on any of these projects,” said Alderwoman Sarah Martin, who sponsored the ordinance.

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