Treasury, IRS Release Guidance on Wage and Apprenticeship Requirements, Commenced Construction Standard

Posted by National Alliance for Fair Contracting on

JD Supra | December 5, 2022

On Nov. 29, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) published Notice 2022-61, Prevailing Wage and Apprenticeship Initial Guidance under Section 45(b)(6)(B)(ii) and Other Substantially Similar Provisions (Notice). The Notice provides initial guidance on the prevailing wage and apprenticeship requirements taxpayers must satisfy to qualify for increased energy credits or deduction amounts enacted in the Inflation Reduction Act (IRA) (P.L. 117-169).

The prevailing wage and apprenticeship requirements apply to the following tax incentives:

  • Advanced Energy Project Credit (§ 48C)
  • Alternative Fuel Refueling Property Credit (§ 30C)
  • Credit for Carbon Oxide Sequestration (§ 45Q)
  • Clean Fuel Production Credit (§ 45Z)
  • Credit for Production of Clean Hydrogen (§ 45V)
  • Renewable Energy Production Tax Credit (§ 45, § 45Y)
  • Renewable Energy Investment Tax Credit (§ 48, § 48E)
  • Energy Efficient Commercial Buildings Deduction (§ 179D)

The prevailing wage requirements also apply to the following tax incentives:

  • New Energy Efficient Home Credit (§ 45L)
  • Zero-Emission Nuclear Power Production Credit (§ 45U)

Under the statute, prevailing wage and apprenticeship requirements apply to qualifying facilities that begin construction 60 days or more after the Treasury and IRS publish guidance. This Notice starts the clock on the statutory 60-day period, meaning the requirements will be in effect for facilities that begin construction on or after Jan. 29, 2023. For facilities the construction of which begins prior to that date, the increased credit amount applies without regard to these labor requirements.

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Prevailing Wage and the Inflation Reduction Act

Posted by National Alliance for Fair Contracting on

November 29, 2022 – USDOL

On August 16, 2022, President Biden signed Public Law 117-369, 136 Stat. 1818, also known as the Inflation Reduction Act of 2022, into law. The Inflation Reduction Act is by far our nation’s largest investment in clean energy to date. By pairing climate investment with the creation of good-paying jobs, the Inflation Reduction Act’s unparalleled investments to fight the climate crisis will help improve job quality in clean energy industries and incentivize the expansion of workforce training pathways into these jobs.

Critical to providing good paying jobs, the Inflation Reduction Act offers enhanced tax benefits for a range of clean energy projects when taxpayers pay Davis-Bacon Act prevailing wages and utilize registered apprentices, in accordance with the Inflation Reduction Act.

Learn More

On November 30, 2022, the U.S. Department of Treasury and the Internal Revenue Service will publish guidance on the Inflation Reduction Act’s prevailing wage and apprenticeship requirements. The publication of this guidance means that in order to receive increased incentives, taxpayers must meet the prevailing wage and apprenticeship requirements for facilities where construction begins on or after January 29, 2023.

The U.S. Department of Labor invites you to register for one of two educational webinars on the labor standards provisions contained in the Inflation Reduction Act and Treasury Guidance. The webinars are being offered at the following times:

Register Now: Wednesday, Dec. 14 from 1–2:30 p.m. EST
Register Now: Thursday, Dec. 15 from 1–2:30 p.m. EST

If you require an accommodation or language interpretation to attend this listening session, please email whd-events@dol.gov at least five (5) business days prior to the event so we can make arrangements.

Please direct any questions to WHD-Events@dol.gov.

IRS Requests Comments on Various Aspects of Energy Tax Credits

Posted by National Alliance for Fair Contracting on

JD Supra | Oct. 6, 2022

On October 5, 2022, the U.S. Internal Revenue Service (IRS) issued six notices requesting comments on various aspects of extensions and enhancements of energy tax benefits in the Inflation Reduction Act. Here is list of, and links to, the notices.

  • Notice 2022-46 requests comments on credits for clean vehicles.
  • Notice 2022-47 requests comments on energy security tax credits for manufacturing.
  • Notice 2022-48 requests comments on incentive provisions for improving the energy efficiency of residential and commercial buildings.
  • Notice 2022-49 requests for comments on certain energy generation incentives.
  • Notice 2022-50 requests comments on elective payment of applicable credits and transfer of certain credits.
  • Notice 2022-51 requests comments on prevailing wage, apprenticeship, domestic content, and energy communities requirements.
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Illinois accuses Bridgeview construction company of stealing wages from union carpenters

Posted by National Alliance for Fair Contracting on

Chicago Sun Times – By Mitch Dudek Sept 2, 2022

Drive Construction allegedly funneled payments to carpenters through sham subcontractors to pay less than what the state’s overtime and prevailing wage laws require

A Bridgeview-based construction company is accused of wage theft and using an elaborate scheme to underpay dozens of union carpenters, according to a lawsuit filed by Illinois Attorney General Kwame Raoul’s office.

Between 2015 and 2020, Drive Construction Inc. obtained contracts for public works projects in the Chicago area, such as schools and public housing apartments, worth nearly $40 million, according to the lawsuit. The contracts required Drive to pay its carpenters, who are represented by the Mid-America Carpenters Regional Council, Illinois-mandated prevailing wages.

But Drive funneled payments to carpenters through sham subcontractors to pay the carpenters less than what the state’s overtime and prevailing wage laws require and to dodge the cost of other legally required benefits and protections, according to the lawsuit filed Thursday in Cook County Circuit Court.

“Drive passed money through two layers of sham subcontractors before using its construction foremen to distribute those payments to workers on Drive’s projects as a flat, per-week payment,” the suit alleges. “This multitiered funneling of wage payments enabled Drive to make it look like the workers were not Drive’s employees — when, in fact and by law, they were.”

Payments were typically made in cash or by money order to avoid traceability and did not reflect the overtime and prevailing wage rates that they should have, according to the suit.

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US Department of Labor Spotlights Employer Readiness, New Resources, Rights of Workers During Disaster Preparedness Month

Posted by National Alliance for Fair Contracting on

Agency: Wage and Hour Division
Date: September 6, 2022
Release Number: 22-1745-BOS

Wage and Hour Division hosts preparedness webinar Sept. 8, 2022

BOSTON – With menacing weather and severe storms a danger in late summer and fall, the U.S. Department of Labor urges workers and employers who clear debris, repair homes or perform other types of disaster recovery to use its Wage and Hour Division’s online resources, including a new Natural Disaster Compliance Assistance Toolkit, to ensure they are familiar with federal laws governing wages, hours of work and pay practices.

Even when disaster strikes, worker protections apply. Employers must ensure they can maintain accurate records and pay wages as due. Workers are particularly vulnerable during times of crisis and the failure to comply with federal labor laws harms them and their families.

“The U.S. Department of Labor works tirelessly to ensure that workers who respond in times of crisis, to help communities recover from devastating storms, are paid all of their legally earned wages and benefits,” explained Wage and Hour Regional Administrator Mark Watson in Philadelphia. “Additionally, we stand ready to equip employers with the information and guidance they need to prevent violations, which are often costly.”

From October 2017 to June 2022, the department’s Wage and Hour Division conducted more than 900 investigations related to recovery from natural disasters. Those cases yielded more than $62 million in wages recovered for more than 45,000 workers. During that same time, the division hosted more than 1,200 outreach events for disaster recovery employers, employees and stakeholders, totaling more than 75,000 participants.

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AG Healey Secures Nearly $3 Million in Penalties and Back Wages Within the Construction Industry in Fiscal Year 2022

Posted by National Alliance for Fair Contracting on

FOR IMMEDIATE RELEASE: 8/22/2022
Office of Attorney General Maura Healey
The Attorney General’s Fair Labor Division

AG’s Fair Labor Division Cited 100 Construction Companies for Violating State Labor Laws, Securing Restitution for More Than 850 Workers

BOSTON — As part of an ongoing initiative to combat wage theft in the construction industry, Attorney General Maura Healey announced today that her office issued 216 citations against 100 construction companies for violating the state’s wage and hour and prevailing wage laws over fiscal year 2022. As a result of these enforcement actions, more than 853 workers will receive more than $1.7 million in back pay and the companies will pay over $1.1 million in fines.

“Our Fair Labor Division works hard to advocate for construction workers across Massachusetts who are often vulnerable to wage theft and other forms of exploitation on the job,” said AG Healey. “Through continued enforcement, outreach, and education, we are committed to ensuring a fair working environment in the construction industry and a level playing field for responsible employers.”

The violations in these cases, handled by the AG’s Fair Labor Division, include the failure to pay wages in a timely manner, to pay overtime, and to furnish records for inspection, as well as retaliation. For work performed on public construction projects, violations include failure to pay the prevailing wage, to submit true and accurate certified payroll records, and to register and pay apprentices appropriately.

Some of the 2022 enforcement actions include citations against the following construction companies:

  • Rochester Bituminous Products, Inc., and its owners, President, Thomas Russo, Manager, Albert Todesca, and Treasurer, Michael P. Todesca, were issued 25 citations totaling more than $1.2 million in restitution and penalties for prevailing wage violations and failing to submit certified payroll records. The violations occurred on various public projects, including projects for the City of Boston, Town of Mattapoisett, Boston Water & Sewer Commission, as well as Abington, Bridgewater, Canton, Plymouth, Sharon, and Weymouth.
  • Superior Carpentry, Inc., and its President, Fernando Barroso, and Vice President, Felipe Drumond, were issued five citations for over $540,000 in restitution and penalties for failure to pay prevailing wages and for submittal of false payroll records to awarding authorities on public projects at the Middleborough and Westport police stations.
  • Railworks Track Systems, Inc., will pay more than $220,000 in restitution and penalties for failing to pay the proper overtime rate to workers, failing to properly account for different hourly rates of pay earned by employees during the same work week, and failing to submit true and accurate payroll records for work performed on public works projects in Hyannis, Falmouth. Framingham, Great Barrington, Lee, Lenox, Pittsfield, Sheffield, and Stockbridge.
  • Gonza Construction Inc. was issued five citations totaling $143,000 in restitution and penalties for prevailing wage, record-keeping, earned sick time, and paystub violations on a public project in Stoughton.

(Read More)

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Offshore Wind and the US Inflation Reduction Act

Posted by National Alliance for Fair Contracting on

Mayer Brown | 8/19/22
Authors – Amanda L. Rosenberg, Lauren A. Bachtel and Daniel T. Kiely

The Inflation Reduction Act of 2022 (IRA), which was signed into law by President Joe Biden on August 16, 2022, has the potential to shape offshore wind development for the foreseeable future. Among other things, the IRA modifies the investment tax credit requirements for offshore wind projects, ties offshore wind leasing to offshore oil and gas leasing while also opening new areas for potential offshore wind development, and appropriates additional funds for the planning and development of interregional electricity transmission and transmission of electricity generated by offshore wind.

Tax Credits

There are now more onerous requirements for offshore wind projects to qualify for investment tax credits (ITCs) at the full rate but a renewed opportunity to claim production tax credits (PTCs).

Previously, offshore wind projects under construction by the end of 2025 qualified for a 30% ITC but were ineligible for PTCs at the full rate unless they were under construction by the end of 2016. Wind projects under construction between 2017 and 2021 qualified for PTCs at a reduced rate. Most offshore wind projects are expected to claim the ITC given the high capital costs of constructing such projects.

Now, offshore wind projects under construction by the end of 2024 are eligible for a reduced base credit (6% ITC or 0.3 cent PTCs, adjusted for inflation) that is subject to increase if certain criteria are met. In order to be eligible for the full ITC or PTCs, offshore wind projects must meet certain prevailing wage and apprenticeship requirements or else be under construction no later than 60 days after the Treasury secretary issues guidance on the prevailing wage and apprenticeship requirements.

Prevailing wage requirement: A taxpayer, as well as its contractors and subcontractors, must pay prevailing wages to laborers and mechanics in the construction of the facility and, during the first five (in the case of ITC projects) or 10 (in the case of PTC projects) years of operation after the facility is placed in service, the alteration and repair of the facility. Prevailing wages are determined by the secretary of Labor. Taxpayers have the ability to correct a shortfall in wages by paying to the laborer or mechanic the difference between the prevailing wage amount and what the laborer or mechanic was actually paid plus interest and a penalty to Treasury. The amount owed to the laborer or mechanic for a shortfall is multiplied by three and the penalty is higher, if there was “intentional disregard” of the prevailing wage requirement.

Apprenticeship requirement: A certain percentage of the total labor hours for the construction, alteration or repair work with respect to the facility (including work by contractors or subcontractors) must be performed by qualified apprentices. The percentage is 10% for projects under construction before 2023, 12.5% for projects under construction in 2023, and 15% for projects under construction after 2023. A “qualified apprentice” is an apprentice employed by the taxpayer or its contractors or subcontractors and who participates in certain registered apprenticeship programs. Additionally, any taxpayer, contractor or subcontractor who employs four or more individuals to perform construction, alteration or repair work with respect to the facility must employ at least one qualified apprentice. There is an exception to the apprenticeship requirement if (i) the taxpayer requested qualified apprentices from a program and either the request was denied or there was no response from the apprenticeship program within five days or (ii) the taxpayer otherwise pays a penalty to Treasury for failing to meet the labor hours and minimum participation requirements. The penalty is multiplied by 10 if the taxpayer intentionally disregarded the apprenticeship requirement.

Practical considerations: For wind projects, the determination of whether the prevailing wage requirement and apprenticeship requirements are satisfied is made on a “qualified facility” basis. The IRS generally considers each turbine, pad and tower a separate facility. It is unclear how the requirements will apply to the balance of the wind project. Another consideration is whether the start of construction rules that have been used for qualification purposes over the last nine years, including the “single project” rule, will apply for purposes of determining whether a project was under construction in time to avoid having to meet the prevailing wage and apprenticeship requirements. Recordkeeping will be critical in deals claiming the full tax credit rates. Investors are likely to ask sponsors to make representations that the prevailing wage and apprenticeship requirements are met, if applicable. Beginning of construction analysis will be important for projects looking to avoid having to meet the requirements. Sponsors will need to coordinate with contractors to ensure the requirements are met and may attempt to push these risks on to contractors. It is worth noting that the start of construction deadline for claiming an ITC for an offshore wind project was pulled forward by one year, but projects under construction in 2025 or later may be eligible for a technology-neutral ITC or PTCs as discussed below.

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FACT SHEET: The Inflation Reduction Act Supports Workers and Families

Posted by National Alliance for Fair Contracting on

The White House Briefing Room
8-19-22

By signing the Inflation Reduction Act, President Biden is delivering on his promise to build an economy that works for working families. President Biden is the most pro-worker, pro-union President in history, and the Inflation Reduction Act builds on that legacy. President Biden and Congressional Democrats beat back special interests to pass this historic law that lowers costs for families, creates good-paying jobs for workers, and grows the economy from the bottom up and the middle out.

The Inflation Reduction Act lowers prescription drug costs, health care costs, and energy costs. It’s the most aggressive action on tackling the climate crisis in American history, which will lift up American workers and create good-paying, union jobs across the country. It’ll lower the deficit and ask the ultra-wealthy and corporations to pay their fair share. And no one making under $400,000 per year will pay a penny more in taxes.

CREATE CLEAN ENERGY JOBS

The Inflation Reduction Act creates good-paying union jobs that will help reduce emissions across every sector of our economy. As President Biden promised when running for president, the law includes some of the strongest labor protections and incentives ever attached to clean energy tax credit programs. It will:

  • Incentivize prevailing wages. The expanded tax credits for energy efficient commercial buildings, new energy efficient homes, and electric vehicle (EV) charging infrastructure will include bonus credits for businesses that pay prevailing wages and hire registered apprentices, ensuring local wages are not undercut by low-road contractors.
  • Stop companies from ripping off workers. It will penalize companies that promise to pay prevailing wages but don’t follow through, and workers who are owed prevailing wages will receive the difference, plus interest.
  • Make it in America. For the first time ever, the Inflation Reduction Act establishes Make it in America provisions for the use of American-made equipment for clean energy production. The law provides expanded clean energy tax credits for wind, solar, nuclear, clean hydrogen, clean fuels, and carbon capture, including bonus credits for businesses that pay workers a prevailing wage and use registered apprenticeship programs.

…

REVITALIZE AMERICAN MANFACUTURING

President Biden made a promise to re-energize American manufacturing, and he kept his promise. The President already has the strongest record of growing manufacturing jobs in modern history, and this law invests in American workers and industry. The Inflation Reduction Act will:

  • Build American clean energy supply chains, by incentivizing domestic production in clean energy technologies like solar, wind, carbon capture, and clean hydrogen.
  • Support American workers with targeted tax incentives aimed at manufacturing U.S.-sourced products such as batteries, solar, and offshore wind components, and technologies for carbon capture systems.
  • Strengthen America’s manufacturing base. The Inflation Reduction promotes domestic sourcing and American jobs. For example, clean energy tax credits are increased if the amount of American steel used in wind projects meets the domestic content threshold, and bonus credits apply to employers who use of prevailing wages and apprenticeships, ensuring that federal tax policy supports good-paying, high-skilled jobs.
  • Create good-paying union jobs in energy communities. Clean energy tax credits will be increased by 10% if the clean energy projects are established in communities that have previously relied upon the extraction, processing, transport, or storage of coal, oil, or natural gas as a significant source of employment, creating jobs and economic development in the communities that have powered America for generations.

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New York Construction Wage Theft Law: Prime Contractors Responsible for Subcontractor’s Failures

Posted by National Alliance for Fair Contracting on

Friday,  July 1,  2022

The scope for liability related to employee wage claims has changed dramatically for contractors and subcontractors operating in New York under a new law that shifts wage payment obligations to prime contractors.

New York Governor Kathy Hochul signed into law NY State Senate Bill S2766C, which is intended to reduce wage theft claims and amend wage theft prevention and enforcement in the construction industry within the state, on January 25, 2022, and the new law is effective retroactively to January 4, 2022.

The Legislature proposed this amendment to existing wage theft law to increase the likelihood that allegedly exploited workers in the construction industry will be able to secure payment and collect unpaid wages and benefits for work already performed by shifting the ultimate payment obligation to prime contractors.

Prior to the new law, a worker could only bring a private lawsuit for alleged unpaid wages (including overtime and fringe benefits) against their direct employer. The New York State Assembly asserted that this was a major issue in the construction industry and that subcontractors hid assets, changed their corporate identities, or took part in other alleged unscrupulous practices to avoid liability and make themselves judgment-proof from a potential wage theft action.

The New Standards
There are two sections to the new law. Section one pertains to construction industry wage theft and is codified under NY CLS Labor § 198-e. Pursuant to this new section, a construction contractor, as defined within, would assume liability for any unpaid wages, benefits, damages, and attorney’s fees related to a civil or administrative action by a wage claimant or the Department of Labor against a lower tier subcontractor.

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Prevailing Wage Law Added in Anne Arundel County, Maryland

Posted by National Alliance for Fair Contracting on

July 1, 2022

Prevailing Wage Law

Beginning with contracts executed on July 1, 2022, the Prevailing Wage and Local Hiring Law applies and is patterned after the Federal Davis-Bacon and State of Maryland’s prevailing wage laws. See Anne Arundel County Bill 72-21. It requires the prevailing wage be paid to workers on County-financed construction contracts as required by Anne Arundel County’s Laws; and also adds local hiring requirements as applicable. The prevailing wage rate is the rate paid for comparable work in the private sector within the County. The County’s Wage Determinations are subject to the State of Maryland Wage Determination rates for Anne Arundel County for Highway Construction and/or Building Construction. Job classifications not listed, Vendors will be required to request a rate determination with the Request for Additional Wage Rates from the Maryland Division of Labor and Industry. In the event of a conflict between the County prevailing wage and local hiring statutes, the statute shall control.

It is the responsibility of each contractor and bidder submitting a quote or solicitation to Anne Arundel County to read, certify and attest to the County that they have read and agree to be bound by the prevailing wage and local hiring requirements of the County, including these guidelines, and agree to be bound to them. An affidavit must be provided attesting to the same in such form and substance as required by the County upon demand as an incorporated requirement to any contract or agreement.

In the event the state or federal prevailing wage law applies, the requirements of Maryland state law or federal law shall apply, provided however that local hiring requirements may still also concurrently apply. If the state prevailing wage applies, additional requirements as set forth in COMAR and state statute will be applicable including, but not limited to, notices to independent contractor and withholding of last payments for contracts until a certification and attestation is received by the County evidencing that all employees and contractors have been paid in accordance with state prevailing wage requirements.

(See Article)