Register Now – 20th Annual NAFC Conference, August 19-22, 2018 – San Diego, CA

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May 2018

It’s our 2oth Anniversary! Save the date and join NAFC at our next Annual Conference in sunny San Diego, CA. The Conference will be held at the Hilton San Diego Bayfront Hotel, in downtown San Diego. This year’s Conference will be jointly sponsored by the Center for Contract Compliance and will have a national as well as a California specific focus. The NAFC National Conference is attended by participants from across the nation, including representatives from labor organizations, responsible contractors, fair contracting compliance organizations as well as researchers, academics, attorneys and officials from federal, state and local governments.

Stay tuned for further information.

(Visit NAFC’s Conference Page)

(Download Joint Conference Registration Form)

California Supreme Court Adopts Broad New Misclassification Test

Posted by National Alliance for Fair Contracting on

By Ashton Riley © Fisher Phillips
May 2, 2018

In a groundbreaking decision, the California Supreme Court adopted a new legal standard that will make it much more difficult for businesses to classify workers as independent contractors, drastically changing the legal landscape across the state.

The decision will directly affect the trucking and transportation industry because the workers involved in the case were delivery drivers, but it also has the potential to affect nearly every other industry-including the emerging gig economy.

Specifically, the court adopted a new standard for determining whether a company “employs” or is the “employer” for purposes of the California Wage Orders.

Under the new “ABC” test, a worker is considered an employee under the wage orders unless the hiring entity establishes all three of these prongs:

  • The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.
  • The worker performs work that is outside the usual course of the hiring entity’s business.
  • The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

This decision not only expands the definition of “employee” under the California Wage Orders, it also imposes an affirmative burden on companies to prove that independent contractors are being properly classified.

As a result of today’s decision, all California businesses with independent contractors will need to conduct a thorough evaluation of such workers to determine whether they are properly classified.

The case is Dynamex Operations West, Inc. v. Superior Court, Cal., No. S222732 (April 30, 2018).

(Read More)

California attorney general seeks to combat state’s growing underground economy

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by Mark Iandolo
Apr. 9, 2018, 10:44am

SACRAMENTO, Calif. (Legal Newsline) – California Attorney General Xavier Becerra announced April 2 that he is working with Sen. Cathleen Galgani on legislation to permanently establish the Tax Recovery and Criminal Enforcement (TRaCE) Task Force within the California Department of Justice.

“Here in California, home to the world’s sixth-largest economy, every worker who powers this engine deserves rights at work, every upstanding business owner deserves a fair market, and every taxpayer deserves to see their hard-earned money used to fund vital services,” Becerra said in a statement. “If you work hard and play by the rules, you should be able to get ahead. This legislation would provide the resources needed to enforce the law and protect the pocketbook of every hard working Californian.”

Senate Bill 1272 would expand TRaCE to all the state’s metropolitan regions- Sacramento, Los Angeles, San Diego, the Bay Area and Fresno. The bill seeks to combat California’s growing underground economy.

“The underground economy results in significant uncollected revenues that are desperately needed to fund basic government services,” said Galgiani in a statement. “The TRaCE Task Force, operating as a pilot program, has recovered millions of dollars in lost tax revenue for the state. I’d like to thank the agents for their rigorous work investigating and prosecuting the most egregious felony-level underground economic crimes in the state.”

(Read More)

San Jose, Calif., Weighs Boost for Construction Project Workers

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By Joyce E. Cutler
March 27, 2018

Private construction projects in San Jose, Calif., that receive $3 million or more in tax breaks or other public financial support would have to pay prevailing wages and hire local workers under a proposal the city council is expected to consider next week.

“There are three basic challenges we’re trying to grapple with. One is a severe shortage of affordable housing and of housing supply generally; substantial shortage of construction labor, which are driving up construction costs; and third, a growing gap between those who are benefiting from the great prosperity here in the Bay Area and those who are gasping for air with the rising tide,” Liccardo said.

Local Standards

The proposal would require that employers on the projects pay a wage-and-benefits package that’s at least equivalent to the state-determined levels for the work and geographic area. At least 30 percent of the workers on a qualifying project within the city would have to live within 50 miles of the job site. A quarter of apprentice hours would have to go to disadvantaged workers. Projects would have monitoring and compliance provisions.

The requirements would cover projects that receive at least $3 million in public subsidies, including money, land, or other direct financial assistance or a substantial reduction in fees or taxes.

“The end goal is to provide good quality jobs to local workers. And whether we do that by way of initiative or reaching a compromise by the more conventional channels is not so important to us,” Ben Field, South Bay Labor Council executive officer, told Bloomberg Law.

Union-Backed Initiative

The agreement was reached after negotiations with the South Bay Labor Council, Working Partnerships USA, the Santa Clara-San Benito Counties Building Trades, and the Mechanical, Electrical, Plumbing, and Sprinkler Fitters (MEPS) unions, Liccardo said in a memo to the council.

“One of the best ways to ensure that good quality jobs go to local workers is to provide a prevailing wage,” Field said March 23. “One of the basic problems that we’re seeing here is middle class jobs are disappearing. A large part of the reason is the construction workforce is not being paid adequately.” Would-be construction workers aren’t going into trades or crafts where the wages are depressed.

(Read More)

San Jose ballot measure would force real estate developers to hire local

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By MARISA KENDALL
PUBLISHED: February 6, 2018 at 6:00 am | UPDATED: February 6, 2018 at 6:07 am

SAN JOSE – As Silicon Valley’s housing market booms, benefiting homeowners, landlords and developers, some activists say one group isn’t reaping its fair share of the profits: the local construction workers building these expensive homes.

A new ballot measure for San Jose seeks to change that. If approved by voters in November, the “Build Better San Jose” initiative would require developers of large, private projects to hire more local workers, and pay them better.

“Workers are not paid enough to be able to afford to live in the area,” said Louise Auerhahn, director of economic and workforce policy for public policy group Working Partnerships USA, which helped draft the measure.

Responsible Development San Jose, a coalition that supports local construction workers, is set to send the initiative to city officials Tuesday, the first step to putting it before voters in November. Once it is approved by the city, it will need 21,200 signatures to make it to the ballot.

If passed by voters, the measure would require developers in San Jose to pay workers the “prevailing wage” – a payment standard set by the California Department of Industrial Relations that varies depending on a worker’s location and specific type of work.

As of last year, the prevailing wage for construction workers classified as “laborers” in Northern California ranged from about $20 to $33 per hour. Developers also would have to put forth a “best faith effort” to hire locally for at least 30 percent of a project’s hours, hiring workers who live in San Jose or within 50 miles of the city’s limits. And developers would be required to help train new local workers by using one hour of apprentice labor for every five hours worked by an experienced worker.

(Read More)

Prevailing wage crucial for construction workers

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BY SAMANTHA DRAPER
POSTED 02.20.2018

It is sadly ironic that portions of the construction industry have been fighting for years to reduce wages on these important but dangerous jobs are now claiming they face a skilled labor shortage.

Just last year, California’s housing industry spent millions of dollars lobbying against minimum labor standards in any part of the residential construction sector. Even though research shows that construction labor represents a paltry 15% of total housing construction costs, they tried making the mathematically absurd claim that paying their workers enough to pay the rent -even in exchange for less red tape on certain projects – would somehow make California’s housing affordability crisis worse.

Some California contractors talking about labor shortages were trying to convince California municipalities to become “charter cities” so they could circumvent prevailing wage rules.

But they haven’t been the only ones.

Since 2015, five U.S. states have repealed their prevailing wage laws – laws that establish minimum wages for different skilled crafts on publicly funded projects and promote privately financed training programs that are designed to prevent skilled labor shortages. Other states are considering following suit, even though labor represents just over 20% of the total cost of public works projects – a historically small and declining share in what constitutes fully one-third of all output in America’s fourth-largest economic sector.

(Read More)

California DA: Contractors failed to pay $200K in prevailing wages, state taxes

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Kim Slowey
Feb. 26, 2018

Dive Brief:

  • The Orange County (California) District Attorney’s Office has charged a group of contractors that performed work on the Pacific Amphitheater at the Orange County Fair and Event Center in Costa Mesa between 2013 and 2015 with underpaying workers and failure to pay state taxes, an amount totaling $200,000, according to the Los Angeles Times.
  • Prosecutors allege that the owners of AWI Builders, Zhirayr “Robert” Mekikyan and his wife, Anna Mekikyan of Pico Rivera, California, did not pay workers the prevailing wage rate established for the $10 million project, which was a new lobby and entrance area for the amphitheater, and created fraudulent records to conceal the supposed fraud. The DA’s office also claims that AWI did not report the correct amount of wages to the California Employment Development Department to avoid paying its fair share of state payroll taxes.
  • Also named in the suit is another one of the Mekikyans’ companies, Construction Contractors Corp., and a family member’s business, TOSC, Inc. Prosecutors allege that those companies also submitted forged apprenticeship certificates. An attorney for the Mekikyans said the charges against his clients are false.

Dive Insight:

Prevailing wage fraud is a problem nationwide, and local authorities have their hands full trying to root it out.

The Manhattan District Attorney’s office has categorized this underpayment of workers as wage theft and, in December, charged area construction companies, as well as their owners, with stealing nearly $3 million in wages from more than 400 construction workers. Manhattan DA Cyrus R. Vance Jr. said the companies stole employee pay through checks returned for insufficient funds, hourly rates lower than the prevailing wage, not paying overtime or not paying workers at all. The amounts not paid per construction company ranged from $13,000 to $700,000.

(Read More)

Ninth Circuit Considers Challenge to Prevailing Wage Law

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BIANCA BRUNO
February 5, 2018

(CN) – The Ninth Circuit Monday considered arguments by nonunionized construction groups challenging a California wage law they claim prevents the open-shop industry from exercising its free speech rights.

The Associated Builders and Contractors of California Cooperation Committee and Interpipe Contracting appealed the dismissal of their case brought against Attorney General Xavier Becerra, Labor Commissioner Julie Su and Department of Industrial Relations director Christine Baker, which challenged the constitutionality of an amendment to the state wage law that went into effect in 2017.

Senate Bill 954 only allows employers who make payments to an “industry advancement fund” as required by a collective bargaining agreement to receive a prevailing wage credit through a state subsidy.

(Read More)

(Order in ABC vs. Becerra)

Prevailing Wage, Local Workers Sought for Affordable Housing Projects

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Posted by Debbie L. Sklar
March 14, 2018

Builders who receive city money for affordable housing and public works projects would be required to hire skilled, local workers and pay them a prevailing wage under a proposal advanced by a City Council committee Wednesday.

Councilwoman Georgette Gomez’s “HireSD” program would aim to lift people out of poverty by requiring developers in certain projects to hire workers who have completed apprenticeships or other training because those workers are paid a higher wage. The resulting demand for skilled workers would create an incentive for economically disadvantaged people to complete that training as a “pipeline to middle-class jobs,” the councilwoman’s Chief of Staff Dominika Bukalova said.

The plan would also require developers of certain projects to hire local people and pay a prevailing wage, a minimum wage currently paid in certain public works projects.

The rules would apply to projects that receive money from the city’s affordable housing fund and a business subsidy program. Part of the proposal is an expansion of a 2013 prevailing wage ordinance that applies to public works projects.

(Read More)

New CA law requires contractors to assume subs’ unpaid wages

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AUTHOR – Kim Slowey
PUBLISHED – Dec. 1, 2017

Dive Brief:

  • California contractors acting as direct contractors on private construction projects will be financially responsible for any wages, fringe benefits and union contributions left unpaid by subcontractors and their sub-tiers, per a new law signed by Gov. Jerry Brown, JD Supra reported. The law encompasses all private contracts entered into starting Jan. 1.
  • Direct contractors will not have to pay any penalties or liquidated damages that arise from a subcontractors neglecting to pay their employees, but the law will require direct contractors to monitor closely their subcontractors’ payrolls.
  • The law allows for direct contractors to withhold payment from any subcontractor that does not provide the required payroll records. To protect against having to assume any subcontractors’ or their sub-tiers’ unpaid costs, direct contractors should add indemnity language to their subcontracts.

(Read More)