Category: News Line

On June 3, the U.S. Department of Labor stated that it plans to engage in rulemaking on determining employee or independent contractor status under the Fair Labor Standards Act. 

As part of the rulemaking process, the agency will hold a public forum on June 24 from 2:30 to 4:30 p.m. ET to hear input from employers. ABC will be participating in the forum. Learn more about the forum and register.

Once a proposed rule is published in the Federal Register, there will be a notice and comment period allowing the public to review the proposal and provide formal written comments.  

Background:

In January 2021, the DOL under President Trump issued an independent contractor final rule under the Fair Labor Standards Act, which ABC strongly supported. Soon after, the DOL under President Biden issued a proposed rule to withdraw the final rule and ABC submitted comments opposing it. On March 26, ABC, the ABC Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against the DOL. In May, the DOL rescinded the final rule.

On March 15, 2022, the U.S. District Court for the Eastern District of Texas dealt a blow to the Biden administration’s efforts to delay and rescind the Trump administration’s 2021 independent contractor final rule in that case. Under a decision applauded by ABC, the ABC-supported rule went into effect as scheduled on March 8, 2021, and remains in effect today.

Desired Outcome:

ABC will be commenting on and closely monitoring the DOL’s latest rulemaking to ensure compliance with the district court’s order, which remains in effect. Independent contractors are an essential lifeline to the construction industry, and any effort by the DOL to undermine that status will likely be challenged by the coalition of which ABC is a part.

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On May 11, ABC, as a steering committee member of the Partnership to Protect Workplace Opportunity, as well as 92 other organizations, sent a letter to Secretary of Labor Marty Walsh urging him to abandon or at least postpone issuing the U.S. Department of Labor’s announced proposed rulemaking altering overtime regulations under the Fair Labor Standards Act. Read PPWO’s press release on the letter.

In the letter, PPWO states, “Due to significant concerns with supply chain disruptions, workforce shortages, inflationary pressures, and the shifting dynamics of the American workforce following the COVID-19 pandemic, any rule change now would be ill-advised. Importantly, DOL last updated the overtime regulations only three years ago, which strongly suggests there is no need for urgency in issuing more changes.”

Over the last two months, the employer community, including ABC, has participated in DOL listening sessions warning that “the economy today cannot support changes to the white-collar exemptions under the FLSA.”

In 2016, the Obama-era DOL issued a final overtime rule that would have doubled the minimum salary level for exemption from $23,660 to $47,476 per year. ABC, along with several other business groups, sued the DOL in federal court and succeeded in blocking the rule from taking effect.

In 2019, the Trump administration issued a new overtime proposal to formally rescind the 2016 rule and readjusted the salary threshold to $35,568 per year.

ABC will continue to include updates on the DOL-announced overtime proposal in Newsline.

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On May 17, ABC, as a steering committee member of the Construction Industry Safety Coalition, submitted comments to the U.S. Department of Labor’s Occupational Safety and Health Administration voicing compliance and cost concerns on the proposed rule on Powered Industrial Trucks Design Standard Update. While CISC members are not manufacturers of powered industrial trucks, certain types of PITs are frequently used on construction worksites and, thus, CISC members are interested in this proposal.

While the coalition commends OSHA’s efforts to keep its regulations up to date, the comments raise certain limited concerns regarding the approach taken by OSHA in this proposed rule. As addressed in the comment letter, “CISC is concerned with OSHA’s decision to delegate its rulemaking authority to a third-party committee’s standards by reference. Although OSHA has done this in the past, there are issues that arise when delegating rulemaking authority which should be considered before the Agency proceeds. Incorporating a third-party committee’s standards by reference perpetuates existing barriers to access. For small employers in particular, the requirements of the incorporated standards are not separately stated in the proposed rule and otherwise are not readily accessible.”

Further, the comments point out that “OSHA’s proposed alternative methods of compliance will create confusion and impose unintended and unpredicted compliance costs on construction employers.”

Finally, CISC is concerned that “OSHA has failed to account for costs that the construction industry will undoubtedly face if the proposed rule is adopted.”

Continue to monitor Newsline for updates on the OSHA proposal.

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ABC highlighted its achievements in recruiting diverse audiences to careers in construction nationwide and outlined goals championing inclusion, diversity and equity in a letter to the U.S. Equal Employment Opportunity Commission for a May 17 hearing on race, sex and national origin discrimination in construction.

The EEOC hearing comes amid historic levels of funding for federal infrastructure through passage of the $1.2 trillion Infrastructure Investment and Jobs Act in 2021. ABC estimates that the construction industry needs to hire an additional 650,000 workers in 2022 alone.

The EEOC heard historical, statistical and experiential evidence of race- and sex-based harassment and discrimination that has limited opportunities for Black, Asian, Hispanic, Native American and women workers in construction, while exploring promising practices to prevent and address systemic discrimination.

ABC highlighted its main avenues of diversity outreach, which it launched more than two decades ago: the Inclusion, Diversity and Equity Committee, which was established in 1999 as a key component of ABC’s value proposition to develop people, win work and deliver work safely, ethically and profitably for the betterment of the communities in which they work; its annual IDE Summit; its Diversity Resource Groups; and the National IDE Excellence Awards. The latter three provide education and support and recognize success in achieving a diverse construction workforce.

In its letter to the EEOC, ABC outlined its achievements in increasing IDE:

• ABC established a $100,000 matching grant fund to assist chapters in their efforts to develop long-lasting chapter inclusion, diversity and equity programs that support the strategic initiatives of both the chapter and ABC National.
• Construction Inclusion Week harnesses the collective power of the construction industry to build awareness regarding the need to improve diversity, equity and inclusion in the industry.
• In January 2022, ABC joined the Surety & Fidelity Association of America and the National Association of Surety Bond Producers in launching the Contractor Bonding Education & Mentoring Program, which supports the development of new and emerging minority and disadvantaged contractors.
• ABC chapters have many programs to attract women and minority job-seekers to careers in construction, such as ABC Illinois’ Community Builders, ABC Greater Baltimore’s Project JumpStart, ABC Alabama’s PowerUp: It’s a Mother-Daughter Thing partnership and ABC Keystone’s All ‘Bout Construction (ABC) Girls Camp.
• ABC promotes veteran-, women- and minority-owned companies via its Top Performers lists and FindContractors.com, where members can find and do business with ABC member companies holding special designations.

ABC also submitted statistical evidence that diversity is expanding at member companies: Women in management/supervisory roles increased to 19% in 2021 from 17% in 2020, and women in craft/trade roles increased from 14% to 15% year over year, according to the 2022 ABC Workforce Development Survey. The survey also revealed that more than half of respondents employ reentering citizens; and Hispanics and Latinos made up over 20% of trade course attendees last year.

Citing the survey, ABC explained how its members are working hard to recruit, educate and upskill the nation’s future construction workforce through its network of more than 800 apprenticeship, craft, safety and management education programs—including more than 300 government-registered apprenticeship programs—across 20 different occupations. ABC contractor members invested $1.6 billion on workforce education in 2021, providing craft, leadership and safety education to more than 1.3 million course attendees to advance their careers in commercial and industrial construction.

To increase the pool of available workforce, ABC continues to identify, create and develop entry points into the industry. ABC chapters have 291 entry-point programs in place around the country that welcome individuals from all walks of life to begin a career in construction: reentering citizens; students in K-12 schools, community colleges and universities; active military and veterans; second-career seekers, faith-based organizations; charities; workforce boards; and more.

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The Infrastructure Investment and Jobs Act delivers $550 billion of funding to improve our nation’s infrastructure, and the construction industry stands ready to deliver on the law’s promised revitalization of America’s roads, schools, bridges, utilities, and transportation systems.

Unfortunately, this investment could not happen at a worse time for taxpayers. The construction industry currently faces supply chain disruptions, unprecedented materials cost inflation, declining investment in structures and a skilled labor shortage of 650,000 people in 2022. To make matters worse, the Biden administration proposed controversial new regulations in March that will needlessly increase construction costs and discourage small businesses from bidding on taxpayer-funded projects.

A Department of Labor proposed rule released on March 18 purports to “update and modernize” existing Davis-Bacon Act regulations requiring contractors performing work on most federal and federally assisted projects to pay construction workers a government-determined hourly wage and benefit rate reflecting local “prevailing” rates of compensation.

Since its passage in 1931, construction trade unions­­­­ and their allies in the federal government­­­ have fiercely defended the DBA—and expanded its reach to federally assisted construction projects procured by state and local government via 71 Related Acts. That’s despite complaints by government watchdogs, taxpayers and small-business advocates that DBA regulations and prevailing wage requirements needlessly raise taxpayer-funded construction costs, stifle job creation, undermine productivity, unfairly steer contracts to unionized firms and discourage competition from small businesses.

At the heart of the DBA policy debate are two key arguments. The first is that the DOL has failed to provide clarity to contractors about the various bureaucratic interpretations of DBA regulations. This exposes contractors to added compliance costs, fines, and litigation and ultimately undermines government programs seeking to award more contracts to small, minority, and disadvantaged businesses.

The second is the perception that lawmakers and regulators—collaborating with the construction trade-union lobby—have rigged the government’s regulatory and enforcement bureaucracy to ensure that, as much as possible, the DOL requires that contractors pay inflated, nonmarket union rates to construction workers. Since less than 13 percent of the construction industry is unionized, it is improbable for union rates to be adopted as “prevailing” as much as they actually are.

Likewise, for decades, the Government Accountability Office and the DOL Office of Inspector General have called for reforms to the DOL’s flawed wage determination process, yet the DOL has done little to improve it.

Together, these two regulatory deficiencies help unionized contractors win more government contracts. This is a key reason why the DBA is supported by Secretary of Labor Marty Walsh­, who was previously head of the Boston Building Trades Council, and President Biden, who has said, “I intend to be the most pro-union president leading the most pro-union administration in American history.”

So, it’s no surprise that the DOL’s proposal turned out to be more pork for unions rather than meaningful reforms. It rescinds modest reforms enacted by the Reagan administration in the early 1980s, overturns decades of legal decisions unfavorable to unions, expands the scope of the DBA to new types of construction-related activity and new industries such as manufacturing, trucking, and surveying, and fails to fix the DOL’s broken and convoluted wage determination process, which a new study released by the Beacon Hill Institute found increases the price tag of DBA construction projects by at least 7.2% and costs taxpayers an extra $21 billion a year. 

In total, there are more than 50 significant changes to DBA regulations in the proposed rule’s 432 pages of text, which the DOL claims will take just 90 minutes “of a human resources staff member’s time” to review and implement, at a cost of $79 in its first year for each of the 192,000 contractors it estimates will be affected by this rule. The regulations will likely cost regulated businesses hundreds of millions of dollars to implement, and the DOL does not account for additional costs to taxpayers as a result of the adoption of inflated nonmarket rates and reduced competition from small businesses.

The DOL has given just 60 days for taxpayers and industry stakeholders to provide thoughtful and comprehensive comments on these sweeping changes that apply to an estimated $217 billion in federal and federally assisted construction spending per year and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers. 

Meaningful Davis-Bacon Act regulatory reform will foster robust competition from all members of the construction industry on federally funded contracts and deliver communities the high-quality infrastructure they deserve while providing the best possible value for taxpayers.

Ben Brubeck is vice president of regulatory, labor and state affairs for Associated Builders and Contractors.

The op-ed was published by National Review on May 17.

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ABC recently surveyed contractor members regarding Davis-Bacon Act prevailing wage regulations, and the results clearly demonstrate that ABC members oppose Davis-Bacon Act regulations and have serious concerns about the sweeping changes recently proposed by the U.S. Department of Labor.

The 1931 Davis-Bacon Act and 71 related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. The DOL estimates the DBA collectively applies to an estimated $217 billion in federal and federally assisted construction spending per year­—which is about two thirds of all public works spending in 2021—and provides government-determined wage rates for an estimated 1.2 million U.S. construction workers.

On March 18, the DOL issued an ABC-opposed proposed rule that would undo Reagan-era reforms, expand coverage of prevailing wage requirements onto new projects and industries and ensure that union wage rates prevail more often, as highlighted in this Littler analysis.

ABC surveyed its members to gauge their opinions on this rulemaking and assist in drafting informed comments.

Highlights from the survey include:

ABC members continue to oppose current DBA regulations and strongly support repeal or reform.

• 74% of surveyed members support full repeal of the Davis-Bacon Act, and 83% support significant reforms.
• Approximately 80% somewhat or strongly disagree with statements that Davis-Bacon regulations result in better quality projects, cost savings for taxpayers, increased safety or other benefits that unions and DBA advocates claim.

ABC members clearly indicated that the DBA increases administrative burdens and costs, artificially inflates wages and discourages competition.

• Less than 10% of survey participants somewhat or strongly disagree with the statement that DBA results in fewer construction projects and less construction job creation overall.
• 94% somewhat or strongly agree that the DBA increases the overall cost of construction.
• 94% somewhat or strongly agree that DBA regulations result in more administrative burdens and costs than non-DBA projects.
• 88% somewhat or strongly agree that DBA inflates market wages and fringe benefits above market rates.
• More than 75% somewhat or strongly agree with statements that DBA regulations discourage competition from small businesses and small business contractors overall, respectively.

ABC members believe the existing wage determination process is flawed.

• Just 3.5% somewhat or strongly disagree with the statement that the DBA wage determination process should be replaced with a modern survey process.
• 74% somewhat or strongly disagree with the statement that DBA results in wage and benefit rates that reflect local area standards.

The vast majority of members do not participate in wage surveys, indicating the failure of the WHD to engage the full contractor community and obtain accurate wage data.

• 77% stated they do not participate, including 73% of small businesses.
• 58% indicate the reason as lack of awareness of surveys.

ABC members oppose the proposed rule because it will exacerbate existing problems with DBA regulations.

• 87% of members said the proposed rule will increase time spent on compliance.
• 58% said the proposed “30% rule” will decrease accuracy of wage determinations.
• 70% think cross-consideration of urban rural wage data will decrease accuracy of wage determinations.

“This data, as well as findings from previous ABC member surveys, is extremely valuable as ABC pushes back on the Biden administration’s proposed radical changes to Davis-Bacon Act regulations and files its extensive comments before the May 17 comment deadline,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck.  “Now is the time for individual ABC members and affected stakeholders to submit comments opposing this costly and burdensome proposal.”

ABC members can provide comments on the DOL’s rule through two options:

For additional resources and information on the rulemaking, please visit abc.org/DavisBacon.

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ABC recently surveyed contractor members regarding Davis-Bacon and Related Acts prevailing wage regulations, and the results clearly demonstrate that ABC members oppose Davis-Bacon regulations and have serious concerns about the changes recently proposed by the U.S. Department of Labor.

The 1931 Davis-Bacon Act and 71 related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. The DBA collectively applies to an estimated $217 billion in federal and federally assisted construction spending per year and provides government-determined wage rates for an estimated 1.2 million U.S. construction workers.

On March 18, the DOL issued an ABC-opposed proposed rule that would undo Reagan-era reforms, expand coverage of prevailing wage requirements and ensure that union wage rates prevail more often. ABC surveyed its members to gauge their opinions on this rulemaking and assist in drafting informed comments.

Highlights from the survey include:

ABC members continue to oppose current DBA regulations and strongly support repeal or reform.

• 74% of surveyed members support full repeal of the Davis-Bacon Act, and 83% support significant reforms.
• Approximately 80% somewhat or strongly disagree with statements that Davis-Bacon regulations result in better quality projects, cost savings for taxpayers, increased safety or other benefits that unions and DBA advocates claim.

ABC members clearly indicated that the DBA increases administrative burdens and costs, artificially inflates wages and discourages competition.

• Less than 10% of survey participants somewhat or strongly disagree with the statement that DBA results in fewer construction projects and less construction job creation overall.
• 94% somewhat or strongly agree that the DBA increases the overall cost of construction.
• 94% somewhat or strongly agree that DBA regulations result in more administrative burdens and costs than non-DBA projects.
• 88% somewhat or strongly agree that DBA inflates market wages and fringe benefits above market rates.
• More than 75% somewhat or strongly agree with statements that DBA regulations discourage competition from small businesses and small business contractors overall, respectively.

ABC members believe the existing wage determination process is flawed.

• Just 3.5% somewhat or strongly disagree with the statement that the DBA wage determination process should be replaced with a modern survey process.
• 74% somewhat or strongly disagree with the statement that DBA results in wage and benefit rates that reflect local area standards.

The vast majority of members do not participate in wage surveys, indicating the failure of the WHD to engage the full contractor community and obtain accurate wage data.

• 77% stated they do not participate, including 73% of small businesses.
• 58% indicate the reason as lack of awareness of surveys.

ABC members oppose the proposed rule because it will exacerbate existing problems with DBA regulations.

• 87% of members said the proposed rule will increase time spent on compliance.
• 58% said the new “30% rule” will decrease accuracy of wage determinations.
• 70% think cross-consideration of urban rural wage data will decrease accuracy of wage determinations.

This data will be extremely valuable as ABC pushes back on the proposed changes to the Davis-Bacon Act and files extensive comments before the May 17 deadline. Members can get involved by submitting ABC’s pre-generated comments on the rulemaking or by drafting their own comments and submitting them via regulations.gov at docket number WHD-2022-0001.

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