Category: News Line

On Dec. 13, ABC submitted comments opposing the U.S. Department of Labor’s independent contractor proposed rule, which eliminates the ABC-supported 2021 final rule’s emphasis on two “core” factors—a worker’s control over their work and their opportunity for profit or loss, both of which are paramount in making an independent contractor determination. Instead, the department’s approach is to restore a “totality-of-the circumstances” analysis of the “economic reality test.”

The new proposal creates an ambiguous and difficult-to-interpret standard under which employers will be forced to guess which factors will be more important in the determination and how to analyze the facts of their contractual relationships under multiple factors. This confusion will lead to more litigation, as employers and workers alike will not understand who qualifies as independent contractors.

ABC’s comments also state, “It is unfortunate that the DOL will not let the January 2021 final rule stay in effect long enough to work. It does not create a new standard; instead, the January 2021 final rule clarifies and simplifies the longstanding economic reality test based on an exhaustive analysis of cases applying that test around the country, which the DOL properly found put the greatest weight on the right of control and economic opportunity, along with other traditional factors.”

In conclusion, ABC urges the DOL to withdraw the new proposed rule and retain the current 2021 final rule.

Background

On Oct. 11, the DOL announced a new proposal to rescind and replace a commonsense, ABC-supported 2021 final rule on independent contractors. The proposed rule would unnecessarily complicate the test for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act, which would cause confusion, increased litigation and additional administrative burdens for contractors.

ABC issued the following statement in response to the DOL’s announcement:

“ABC is deeply disappointed that the Biden DOL is moving forward with a proposed rule that will disrupt legitimate independent contractors, which are an essential component of the construction industry,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Independent contractors provide specialized skills, entrepreneurial opportunities and stability during fluctuations of work common to construction. Rescinding the commonsense 2021 final rule will increase the confusion and litigation chaos that has bedeviled the regulated community for years. Any effort by DOL to undermine the use of independent contractors in the rulemaking will likely be challenged by ABC and other stakeholders.”

On Oct. 19, ABC urged the DOL to extend the Nov. 28 comment period deadline by 60 days, stating, “ABC represents a large number of contractors and subcontractors who will be significantly impacted by this new proposed rule. Due to the complexity of the issues included in the 58-page proposal, the current 45-day comment period does not allow sufficient time for ABC to fully analyze the rulemaking as well as effectively communicate the broad scope of issues with its members before providing comments.”

On Oct. 25, the DOL announced an extension of the comment deadline on the proposed rule from Nov. 28 to Dec. 13.

On Nov. 9, ABC participated in the U.S. Small Business Administration’s Office of Advocacy virtual roundtable on the proposed rule. 

ABC encouraged members to help push back against the DOL’s harmful proposal by submitting to the DOL a pre-generated comment opposing the proposed rule, which was sent out by ABC’s Action app.

ABC is one of the co-plaintiffs that successfully sued the Biden administration’s DOL for attempting to delay and rescind the commonsense 2021 independent contractor final rule. Under the March 2022 decision issued by the U.S. District Court for the Eastern District of Texas, the 2021 final rule went into effect as scheduled on March 8, 2021, and is still in effect.

To learn more about the DOL’s new proposed rule, see ABC general counsel Littler Mendelson’s analysis.

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On Dec. 7, ABC submitted comments to the National Labor Relations Board urging the board to withdraw the new proposed joint employer rule and retain the current 2020 NLRB final rule, which provides clear criteria for companies to apply when determining status. In the comments, ABC argued that the new proposed rule will cause great confusion and uncertainty among construction contractors, specifically small business owners. More than 11,000 comments were submitted to the docket.

ABC explains in the comments that the board’s radical proposal dramatically expands the joint-employer standard beyond the limits of the common law. “The board’s new proposal greatly expands joint-employer liability by restoring—and then exceeding—the Browning-Ferris Industries standard, which deems two entities joint employers based on the mere existence of reserved joint control, indirect control or control that was limited and routine,” ABC stated.

Further, the comments state, “The proposed rule goes even further than the BFI case by making clear that indirect or reserved control standing alone may be sufficient to prove joint-employer status. As NLRB members Marvin E. Kaplan and John F. Ring explained in their dissent, the proposed rule ‘would not merely return the Board to the Browning-Ferris Industries standard but would implement a standard considerably more extreme than BFI.’”

ABC’s comments also made the following arguments:

• The proposal will disrupt long-established operational methods by which construction service providers work together to build America;
• The proposed rule, if implemented, would violate the Administrative Procedure Act;
• The proposed rule will harm the collective bargaining process in the construction industry;
• The proposed rule violates the “major case” doctrine and constitutionally required separation of powers;
• The proposed rule will harm small businesses in the construction industry; and
• The absence of clear guidance in the proposed rule will cause great confusion and uncertainty for construction contractors.

ABC also joined the comments submitted by the ABC-led Coalition for a Democratic Workplace.

Background on the new proposed NLRB rule:

On Sept. 6, 2022, the NLRB announced a new joint employer proposal, which would rescind and replace the ABC-supported 2020 final rule on Joint Employer Status Under the National Labor Relations Act.

ABC issued the following statement on the new proposed rule on Sept. 6:

“It is unfortunate that the Biden NLRB took an ax to the ABC-supported 2020 NLRB joint employer final rule, which provides clear criteria for companies to apply when determining status,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Today we see that the partisan NLRB proposes to greatly expand joint-employer liability under the NLRA, which will cause confusion and impose unnecessary barriers to and burdens on contractor and subcontractor relationships throughout the construction industry. As a result, contractors may be vulnerable to increased liability, making them less likely to hire subcontractors, most of which are small businesses.”

ABC was a vocal opponent of the expanded definition of joint employer that was created by the NLRB’s 2015 Browning-Ferris Industries decision, and has supported legal and legislative efforts to restore the standard that was in place for more than 30 years.

On Sept. 29, ABC joined the Coalition for a Democratic Workplace and several other organizations in urging the NLRB to extend the comment period to Jan. 6, stating, “Given the expansive nature of the proposed standard and the complexity of issues relating the standard’s impact on employers and other entities in different industries, employers and other parties will require more time to engage in a meaningful evaluation of the proposed standard and to formulate comments that will benefit the Board when giving further consideration to the proposed rule and during any development of a final rule.”

On Oct. 14, the NLRB announced it was extending the comment deadline from Nov. 7 to Dec. 7 in order to allow sufficient time for parties to file initial comments.

On Oct. 20, ABC participated in the U.S. Small Business Administration’s Office of Advocacy virtual roundtable on the proposed rule. ABC expressed disappointment that the NLRB is once again revising its standard for determining joint-employer status, which will cause great confusion among construction contractors, specifically small business owners.

The ABC-led Coalition for a Democratic Workplace created a grassroots toolkit to tell the NLRB to abandon its radical joint employer proposed rule. The toolkit provided an explanation of the rulemaking and a ready-to-send letter to the NLRB explaining why the new joint employer standard would be disastrous.

In 2019, ABC submitted comments in support of the Trump-era NLRB’s proposed rule, as did the ABC-led CDW.

To learn more about the new NLRB proposal, read ABC general counsel Littler’s analysis, NLRB Proposes New Joint-Employer Standard That Would Dramatically Expand Scope of ‘Joint Employment’ Under the National Labor Relations Act.

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On Oct. 11, the U.S. Department of Labor announced a new proposal to rescind and replace a commonsense, ABC-supported 2021 final rule on independent contractors. The proposed rule would unnecessarily complicate the test for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act, which would cause confusion, increased litigation and additional administrative burdens for contractors.

Help ABC push back against this harmful proposal by submitting to the DOL a pre-generated comment opposing the proposed rule by the Dec. 13 deadline!

Background

ABC issued the following statement in response to the DOL’s announcement on Oct. 11:

“ABC is deeply disappointed that the Biden DOL is moving forward with a proposed rule that will disrupt legitimate independent contractors, which are an essential component of the construction industry,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Independent contractors provide specialized skills, entrepreneurial opportunities and stability during fluctuations of work common to construction. Rescinding the commonsense 2021 final rule will increase the confusion and litigation chaos that has bedeviled the regulated community for years. Any effort by DOL to undermine the use of independent contractors in the rulemaking will likely be challenged by ABC and other stakeholders.”

ABC is one of the co-plaintiffs that successfully sued the Biden administration’s DOL for attempting to delay and rescind the commonsense 2021 independent contractor final rule. Under the March 2022 decision issued by the U.S. District Court for the Eastern District of Texas, the 2021 final rule went into effect as scheduled on March 8, 2021, and is still in effect.

To learn more about the DOL’s new proposed rule, see ABC general counsel Littler Mendelson’s analysis.

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On Nov. 30, the U.S. Treasury Department and Internal Revenue Service released guidance regarding tax credits for private clean energy projects funded by the Inflation Reduction Act conditioned on compliance with prevailing wage and government-registered apprenticeship requirements. Treasury and the IRS also released FAQs to provide additional information on the prevailing wage and apprenticeship requirements.

The IRA, opposed by ABC, was signed into law on Aug. 16, 2022, and provides over $270 billion in tax credits for the construction of solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations and other clean energy projects.

Developers/taxpayers can receive a bonus tax credit 500% greater than a baseline tax credit of 6%, but this is conditioned on requirements that project contractors pay Davis-Bacon prevailing wages and utilize apprentices enrolled in government-registered apprenticeship programs. This new policy is an unprecedented expansion of Davis-Bacon and registered apprenticeship requirements/enticements onto private construction projects via the federal tax code.

This fall, ABC conducted a member survey and submitted comments on Nov. 7 to Treasury regarding implementation of these tax credits, outlining concerns with the IRA’s unprecedented expansion of prevailing wage and apprenticeship requirements and the lack of clear guidance through a formal notice and comment rulemaking.

ABC issued a Nov. 29 statement on the guidance’s release, which was picked up by Engineering News-Record and other media outlets, stating in part:

“Developers, taxpayers, contractors and subcontractors need clear and specific guidance on how these new provisions will be implemented so developers can decide whether the tax credits are worth the significant risks and penalties, and large and small business contractors and subcontractors can decide whether to bid on and perform such work,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “Today, this administration did not provide that clear guidance, which is likely to prevent stakeholders from taking full advantage of the tax credits and slow down clean energy infrastructure development.”

The prevailing wage and apprenticeship provisions outlined in the guidance will now apply to projects that begin construction on or after Jan. 30, 2023––60 days after the guidance’s publication in the Federal Register. Treasury indicated it “plans to issue additional proposed regulations with respect to these requirements in the coming months.” This may provide additional information and clarity but could also create additional risk and uncertainty for developers looking to break ground and claim full tax credits in 2023 who may be fearful of additional regulatory changes and guidance that might undermine compliance efforts and the full value of tax credits.

Government-Registered Apprenticeship Provisions

In order to access full tax credits, developers of qualifying projects are required to use apprentices from government-registered apprenticeship programs for at least 15% of the total labor hours of the project in 2024, which phases in at 12.5% for construction work in 2023 and increases to 15% in 2024 and thereafter. Each contractor and subcontractor employing four or more individuals on a qualifying project must employ one or more apprentices from a government-registered apprenticeship program.

ABC supports government-registered apprenticeship programs as one key component of the industry’s all-of-the-above workforce development strategy and offers more than 300 four-to-five-year GRAPs in more than 20 trades across the country. Yet the majority of contractors engaged in private construction activity upskill their workforce through community workforce development programs and/or proprietary skill-based programs that are not part of the government’s registered apprenticeship system and accompanying red tape. Likewise, ABC has expressed concerns about the capacity of government-registered apprenticeship programs to meet industry demand in many markets.

Of note, taxpayers who have made a good faith effort to hire qualified apprentices with respect to the construction of a project are deemed to satisfy the requirement and are eligible for the bonus rate, assuming they have also met the prevailing wage requirement when required. A good faith effort is defined as requesting apprentices and receiving a denial or not receiving a response within five business days, as stated in the guidance:

“Under the Good Faith Effort Exception, the taxpayer will be considered to have made a good faith effort in requesting qualified apprentices if the taxpayer requests qualified apprentices from a registered apprenticeship program in accordance with usual and customary business practices for registered apprenticeship programs in a particular industry.”

Davis-Bacon Provisions

Developers seeking the full bonus credit must require contractors and subcontractors to pay laborers and mechanics employed for the construction and alteration or repair of a qualifying project an hourly prevailing wage rate set by the U.S. Department of Labor via the Davis-Bacon Act. The guidance does not provide clarity on whether Treasury/IRS or the DOL will be enforcing compliance and the additional regulatory red tape and practices that typically accompany regulations related to the DBA, though this may be clarified in future regulations and guidance documents.

The guidance does clarify that contractors will be required to reach out to the DOL for a wage determination if one is not already available:

“To rely on the procedures to request a wage determination or wage rate, and to rely on the wage determination or rate provided in response to the request, the taxpayer must contact the Department of Labor, Wage and Hour Division via email at [email protected] and provide the Wage and Hour Division with the type of facility, facility location, proposed labor classifications, proposed prevailing wage rates, job descriptions and duties, and any rationale for the proposed classifications. The taxpayer may use these procedures to request a wage determination, or wage rates for the unlisted classifications, applicable to the construction, alteration, or repair of the facility. After review, the Department of Labor, Wage and Hour Division will notify the taxpayer as to the labor classifications and wage rates to be used for the type of work in question in the area in which the facility is located.”

Of note, the DOL is currently engaged in a total rewrite of its regulations governing enforcement of the DBA independent of the IRA, adding to the uncertainty over compliance issues.

Next Steps

ABC members with experience complying with the prevailing wage and apprenticeship regulations may find new opportunities in the clean energy market as a result of this law. However, firms, in particular small businesses, with no experience in prevailing wage and apprenticeship regulations will likely avoid this work or incur additional compliance costs that may make them less competitive. ABC chapters should consider providing additional webinars, forums and educational content around prevailing wage compliance for membership to prepare for these changes. Likewise, ABC chapters and members with government-registered apprenticeship programs should prepare for new opportunities as a result of enactment of the IRA.

Of note, developers/taxpayers failing to comply with both of these requirements face significant and varying penalties that may undermine the value of the tax credits and/or discourage competition from contractors and subcontractors concerned about the regulatory certainty of these new policies.

For more information on this guidance, please attend ABC’s upcoming webinar on Monday, Dec. 12 at 3 p.m. ET, “Insights on New Treasury Guidance for Apprenticeship and Davis-Bacon Mandates on Private Clean Energy Projects.” To receive the registration link, please contact Michael Altman at [email protected].

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On Nov. 14, the Federal Acquisition Regulatory Council issued a proposed rule to amend the Federal Acquisition Regulation to require certain federal contractors to disclose their greenhouse gas emissions and set GHG emission reduction targets.

Under the proposed rule, federal contractors who qualify as significant contractors, (those receiving between $7.5 million and $50 million in federal contracting obligations in the prior fiscal year) would be required to inventory their annual GHG emissions and disclose this information to the federal government.

Major contractors (receiving over $50 million in contracting obligations) would also be required to make publicly available CDP climate disclosures and set targets for reducing GHG emissions.

Contractors that fail to comply with these requirements would be deemed nonresponsible and ineligible for federal awards.

Comments on the proposed rule are due by Jan. 13, 2023, and may be submitted via regulations.gov. Please reach out to Michael Altman at [email protected] with any questions or comments on the potential impact of this proposal.

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The U.S. Department of Transportation recently announced the expiration on Nov. 10 of a general waiver to Buy America requirements imposed by the Infrastructure Investment and Jobs Act. With this expiration, the IIJA’s expanded Buy America requirements are now in effect for most federally funded infrastructure projects. The DOT proposed two narrower waivers that will exempt a limited number of projects from these requirements.

The first proposed waiver would waive these requirements for contracts entered into prior to the general waiver’s expiration, specifically:

• Any contract entered into before Nov. 10, 2022
• Any contract entered into before Mar. 10, 2023, if the contract results from a solicitation published prior to May 14, 2022

The second proposed waiver would waive these requirements for small grants, de minimis costs and minor components.

ABC submitted comments in support of the waivers, stating that, while ABC supports strategies to expand domestic jobs and manufacturing to avoid global supply chain disruptions and capture economic benefits within America, Buy America requirements must be balanced with safeguards against increased costs and delays of infrastructure projects funded by taxpayers.

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On Nov. 22, the ABC-led Coalition for a Democratic Workplace requested that the National Labor Relations Board issue a 30-day extension to the comment period for the board’s new notice of proposed rulemaking addressing election-blocking charges, voluntary recognition and construction industry bargaining relationships. On Nov. 29, the NLRB announced it is extending the comment deadline from Jan. 3 to Feb. 2, 2023. ABC will be filing comments opposing the proposed rule.

CDW asked the NLRB to provide the extension to ensure the regulated community has an opportunity to weigh in on the potential impact the proposed changes could have on business operations, the workforce and the economy generally. Businesses—and especially smaller entities—can now focus their resources and valuable time on the holiday season, with time to provide meaningful comments to the NLRB.

The NLRB proposed rule would address election-blocking charges, voluntary recognition and construction industry bargaining relationships. The proposal rescinds the ABC-supported 2020 NLRB final rule, which was intended to “better protect employees’ statutory right of free choice on questions concerning representation.” 

According to the NLRB, the proposed rule has three parts, each rescinding specific parts of the 2020 rule, including:

• Bringing back the “blocking charge” policy, which halts union representation or decertification elections if the union alleges the employer committed unfair labor practices until those charges are resolved;
• Eliminating the 45-day window that allows workers to challenge union representation via a secret ballot election if the employer voluntarily recognizes the union based on signed authorization cards; and
• Rescinding amendments that required unions in the construction industry to maintain proof of majority support if they want an exclusive collective bargaining relationship that is resistant to challenge.

Continue to monitor Newsline for further updates.

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With essentially all House races called, Republicans are on pace to hold the House majority by approximately the same margin that Democrats enjoyed in the 117th Congress—around five seats. On the heels of Democrat John Fetterman’s defeat of Dr. Mehmet Oz, Republican, to flip retiring Republican Sen. Pat Toomey’s seat in Pennsylvania, Democrats will return to the Senate majority.

Several ABC staff and members also won office in November’s election. Those include U.S. Sen.-elect Markwayne Mullin, R-Okla.; U.S. Rep. Lloyd Smucker, R-Pa., U.S. Rep. Carol Miller, R-W.Va., Gov. Bill Lee, R-Tenn.; Andy Whitt, Alabama House District 6; James Lomax, Alabama House District 20; Mike Kirkland, Alabama House District 23; Chuck Goodrich, Indiana House District 19; Cindy O’Laughlin, Missouri Senate District 18; Brad Von Gillern, Nebraska District 4; Thad Claggett, Ohio House District 68; Beth Lear, Ohio House District 61; and Suzanne Schmidt, Washington House District 04.

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ABC joined with more than 400 organizations in a letter calling on Congress to intervene in an ongoing labor standoff that threatens a stoppage of rail service. The letter asks members of Congress, absent a preferred voluntary agreement, to use their authority in the Railway Labor Act and take immediate steps to prevent a national rail strike.

This effort comes one week after the largest U.S. rail union, the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers, voted down the national tentative agreement reached in September, raising the likelihood of a year-end strike and subsequent shutdown—which the Association of American Railroads estimated would idle more than 7,000 trains daily and cost the economy more than $2 billion a day.

The “status quo” period during which the union will reengage with the National Carriers Conference Committee, as well as the presidential advisory board, will end on Dec. 9. However, many businesses will see the impact of a national rail strike well before Dec. 9—through service disruptions and other effects potentially as early as Dec. 5, as detailed by the Association of American Railroads’ hour-by-hour breakdown of railroad suspension of operations.

Before the national tentative agreement was reached in September, ABC released a statement urging Congress to take immediate action to bring about a resolution to this extremely dangerous threat to our economy. On Oct. 28, ABC joined with 322 organizations in signing a letter to the White House and key administration officials urging them to continue to work with the railroad unions and railroads to ensure that the tentative agreement is ratified by the parties and to avoid a rail shutdown that would have a significant impact on the U.S. economy and lead to further inflationary pressure.

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The U.S. Department of Transportation recently announced the expiration on Nov. 10 of a general waiver to Buy America requirements imposed by the Infrastructure Investment and Jobs Act. With this expiration, the IIJA’s expanded Buy America requirements are now in effect for most federally funded infrastructure projects. The DOT proposed two narrower waivers that will exempt a limited number of projects from these requirements.

The $1.2 trillion IIJA, signed into law in November 2021, expanded and made significant changes to Buy America requirements for federally funded infrastructure projects. The IIJA requires Buy America preferences and broadens the preferences to include nonferrous metals, such as copper used in electric wiring; plastic- and polymer-based products; glass, including optical fiber; and certain other construction materials, such as lumber and drywall. These preferences are now in effect for DOT-funded projects with the expiration of the general waiver.

However, projects that fall under the two new waivers will be exempt from enforcement of these expanded preferences. The first proposed waiver would waive these requirements for contracts entered into prior to the general waiver’s expiration, specifically:

• Any contract entered into before Nov. 10, 2022
• Any contract entered into before March 10, 2023, if the contract results from a solicitation published prior to May 14, 2022

The second proposed waiver would waive these requirements in the following circumstances:

• The total value of the noncompliant products is no more than the lesser of $1,000,000 or 5% of total allowable costs under the federal financial assistance award
• The size of the federal financial assistance award is below $500,000
• The nondomestically produced miscellaneous minor components comprise no more than 5% of the total material cost of an otherwise domestically produced iron or steel product

Comments on the proposed waivers are due by Nov. 20 and can be submitted via regulations.gov. ABC will be submitting comments in support of the waivers. While ABC supports strategies to expand domestic jobs and manufacturing to avoid global supply chain disruptions and capture economic benefits within America, Buy America requirements must be balanced with safeguards against increased costs and delays of infrastructure projects funded by taxpayers.

Please reach out to Michael Altman at [email protected] with any questions or comments on the proposed waivers and Buy America requirements.

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