Category: News Line

On May 14, the Coalition for Workforce Innovation, ABC, ABC Southeast Texas Chapter and the Financial Services Institute filed an amended complaint challenging the U.S. Department of Labor’s unlawful withdrawal of the independent contractor rule. The Department’s hasty and unjustified action violates the Administrative Procedure Act, compounding a violation that began when the department improperly delayed the effective date of the rule in March.

“The Independent Contractor Rule is an important and necessary action by the previous administration that brought much needed clarity and guidance to the proper classification of contractors under the Fair Labor Standards Act,” said Ben Brubeck, Associated Builders and Contractors vice president of regulatory, labor and state affairs, in a joint statement released by the coalition. “For too long, businesses and contractors who want to remain independent have been subjected to burdensome lawsuits and inconsistent court rulings under the FLSA. The department’s improper delay and withdrawal of the rule walks us backwards and does nothing to address the very real problems confronting millions of contractors who have made the choice to remain independent.”

On May 5, the U.S. Department of Labor announced the withdrawal—effective May 6—of the Trump-era independent contractor final rule. ABC strongly supported the Trump DOL final rule, which would have clarified the department’s interpretation of independent contractor status under the Fair Labor Standards Act and promoted certainty for employers, independent contractors and employees.

“While we certainly saw this coming, it is still disappointing to see the Department of Labor chose to rescind the independent contractor final rule, which would have provided much needed clarity for the independent contracting community, employers and employees,” said Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck in a statement. “The withdrawal will harm small businesses and the entire construction industry. This move is not only in apparent violation of the Administrative Procedure Act, but also brings independent contractors—an essential lifeline to the construction industry—back to the inadequate standards previously in place, which could damage the U.S. economy and deprive many independent workers of opportunities to succeed.”

“ABC has already filed a federal court complaint challenging the Department of Labor’s unlawful delay of the rule’s effective date beyond March 8. We intend to amend our complaint to contest the department’s claimed authority to withdraw the rule, which compounds the department’s violation of APA requirements.”

According to the DOL press release, the agency is withdrawing the Trump DOL final rule for several reasons, including:

• The independent contractor rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent.
• The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
• The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Background and ABC Actions:

On Feb. 5, the WHD proposed to delay the effective date of the final independent contractor rule from March 8 to May 7. On Feb. 22, ABC filed a request for extension of time to file comments on the delay proposal and further protested the department’s restriction on the nature of comments that could be filed.  The department denied the extension request on Feb. 24.

On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.

On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule’s effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.

On March 26, ABC, ABC Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserts that the steps taken by DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act.  ABC’s general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge.

On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.

ABC will continue to monitor this important issue and provide any updates in Newsline.

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Anyone who questions whether or not the inflation story is real should look at current material prices.

Key construction inputs such as softwood lumber, iron, steel and diesel fuel have experienced sharp price increases over the course of the COVID-19 pandemic. Softwood lumber leads the pack with prices that have increased a whopping 80% over the past year. This increase is largely due to a surge in residential construction. Iron and steel prices have also increased by more than 20% over the past year.

The injection of massive levels of monetary and fiscal stimulus into the global economy, along with occasional supply chain issues, have produced a nearly 8% rise in construction input prices over the past year. This rapid rise in input prices continues to suppress economic growth in many parts of the world. As vaccinations become more pervasive around the world, additional stimulus is injected into various economies, and the global economy reopens in earnest, the pace of price increases could further accelerate.

It’s Economics 101: As demand increases, scarcity builds and low prices disappear. Eventually, suppliers respond by investing more aggressively in capacity given the pursuit of higher sales amid higher prices, which eventually results in the pendulum swinging back toward lower prices.

But this time the circumstances are slightly different. Because coronavirus vaccine distribution is accelerating, the expectation is that worldwide demand for steel, aluminum, oil and other productive inputs will surge later in 2021. The result could be substantial upward pressure on construction input prices. Some of these dynamics became apparent during the second half of last year but will likely become even more obvious as the global economy recovers in earnest.

On March 12, ABC joined a coalition of construction, housing and real estate organizations in a letter to the commerce secretary to address the price increases of lumber in the U.S. over the past year. Due to a range of issues including decreased production, supply chain woes, tariffs, and wildfires in the U.S., the construction industry has seen significant increases in lumber prices since last spring, threatening jobs and leading to higher project costs. ABC will continue to work with government officials to develop solutions to these significant price increases to protect construction jobs and support critical projects.

ABC has also continuously advocated for the removal of unnecessary and costly steel and aluminum tariffs to help address the historic shortages of readily available and globally-priced steel and aluminum products for the construction industry.

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On May 4, ABC sent a letter to the U.S. Senate Finance Committee Chair Ron Wyden (D-Ore.) raising concerns about provisions in the Clean Energy for America Act that would expand new government-registered apprenticeship program requirements and Davis-Bacon prevailing wage regulations onto the construction of projects receiving clean energy tax incentives. ABC is troubled by provisions in the legislation that will needlessly increase construction costs and reduce competition from qualified companies and their skilled employees who participate in the construction of the clean energy marketplace.

As currently drafted, this legislation will create a shortage of skilled labor and contractors able to deliver a rapid, market-driven and cost-effective transition away from fossil fuel energy to clean energy. In addition, these changes will create added costs that will be passed on to ratepayers, manufacturers and consumers, and decrease America’s energy cost advantage attractive to manufacturers and businesses in the global marketplace.

Introduced by Senate Democrats, the legislation overhauls “the system of tax breaks dealing with clean energy, providing new or sweetened incentives for using solar, wind and other non-carbon sources to generate and transmit electricity, as well as expanding incentives to promote energy efficiency, in areas such as commercial buildings,” according to Engineering News-Record.

The increased costs resulting from the legislation’s proposed government-registered apprenticeship program requirements and prevailing wage regulations for the construction of projects receiving clean energy tax incentives may make program tax credits unusable—depending on the type of clean energy construction project and geographic market—and hinder the ability of clean energy producers to be competitive against fossil fuel producers, which ultimately undermines critical policies addressing climate change.

Government-registered Apprenticeship Requirements

Section 601 in Title VI of the Clean Energy for America Act requires all contractors and subcontractors contracted to build clean energy projects that are receiving applicable tax credits and have four or more construction workers on a jobsite to “ensure that not less than 15% of the total labor hours of such work” is performed by participants in government-registered apprenticeship programs.

ABC and its 69 chapters support government-registered apprenticeship programs—offering more than 300 U.S. Department of Labor and state government-registered apprenticeship programs in 20 different construction occupations across America—as part of its all-of-the-above workforce development strategy to tackle the industry’s skilled workforce shortage, estimated at 430,000 workers in 2021 alone. 

However, participants and graduates of federal and state registered apprenticeship programs in the construction industry constitute only a small fraction of the industry’s workforce and data demonstrates the government-registered apprenticeship system is not meeting the industry’s demand for skilled labor. According to data from the U.S. DOL, in fiscal year 2020, the construction industry’s federal government-registered apprenticeship system produced 20,749 graduates of its four-to-five-year apprenticeship programs. In addition, construction industry apprenticeship programs registered with state governments produced an estimated 15,000 to 20,000 graduates in FY 2020. At current rates of completion, it would take more than 10 years for all government-registered construction industry apprenticeship program completers to fill the estimated 430,000 vacant construction jobs in 2021 alone.

According to the letter:

“Needlessly excluding all contractors who do not participate in government-registered apprenticeship programs from building clean energy projects subject to clean energy tax incentives is problematic. It will create a shortage of contractors and skilled labor to complete these projects, undermine established and preferred industry workforce development pipelines not affiliated with government-registered apprenticeship programs, displace contracts and jobs for businesses and workers already building the clean energy economy, give an unfair competitive advantage to unionized contractors and labor, increase clean energy construction costs and ultimately threaten America’s rapid and cost-effective transition to clean energy.”

Prevailing Wage Requirements

The Clean Energy for America Act expands ABC-opposed Davis-Bacon prevailing wage requirements to “eight clean energy tax credit programs, which will reduce competition from contractors already building the clean energy economy, increase construction costs and render some of these tax credit programs unusable,” according to the letter.

“Until the Davis-Bacon Act can be modernized and regulators address the red tape burdens and increased costs resulting from this anti-competitive and costly regulatory scheme, it would be wise to keep prevailing wage regulations in their current form off of clean energy tax credits projects. Doing so would create the conditions for all qualified contractors and their skilled workforce to compete to build the clean energy economy and give taxpayers additional value for investments in clean energy and public works projects as Congress works to enact critical clean energy infrastructure modernization and America faces a $2.6 trillion infrastructure gap by 2029.”

Outlook on Wyden Bill and Infrastructure Proposals

Sen. Wyden’s Clean Energy for America Act was introduced on April 21 and received a full committee hearing on April 27. The U.S. House Ways and Means Committee is working on similar legislation overhauling the tax code for clean energy marketplace.

Sen. Wyden’s bill comes on the heels of the Biden administration’s March 31 release of the American Jobs Plan, an outline of $2.25 trillion worth of government spending that includes investments in infrastructure and clean energy.

According to a White House fact sheet, “President Biden is proposing a ten-year extension and phase down of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage. These credits will be paired with strong labor standards to ensure the jobs created are good-quality jobs with a free and fair choice to join a union and bargain collectively.”

ABC has raised concerns about the AJP’s tax hikes on small businesses and language calling on Congress to pass the ABC-opposed Protecting the Right to Organize Act and tie controversial government-mandated project labor agreements onto federal investments in infrastructure via forthcoming legislation.

In an April 28 op-ed published in The Hill, titled America can build back better through fair and open competition, ABC pushed back on controversial provisions in the AJP that would harm the merit shop contracting community:

“At a time when our economy is showing signs of recovery, the Biden administration and Congress should support policies that help bring our economic engine roaring back to life. Fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities and jobs for all qualified local small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster.”

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On May 5, the U.S. Department of Labor announced the withdrawal—effective May 6—of the Trump-era independent contractor final rule. While expected, this action is extremely disappointing. ABC strongly supported the Trump DOL final rule, which would have clarified the department’s interpretation of independent contractor status under the Fair Labor Standards Act and promoted certainty for employers, independent contractors and employees.

“While we certainly saw this coming, it is still disappointing to see the Department of Labor chose to rescind the independent contractor final rule, which would have provided much needed clarity for the independent contracting community, employers and employees,” said Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck in a statement. “The withdrawal will harm small businesses and the entire construction industry. This move is not only in apparent violation of the Administrative Procedure Act, but also brings independent contractors—an essential lifeline to the construction industry—back to the inadequate standards previously in place, which could damage the U.S. economy and deprive many independent workers of opportunities to succeed.

“ABC has already filed a federal court complaint challenging the Department of Labor’s unlawful delay of the rule’s effective date beyond March 8. We intend to amend our complaint to contest the department’s claimed authority to withdraw the rule, which compounds the department’s violation of APA requirements.”

According to the DOL press release, the agency is withdrawing the Trump DOL final rule for several reasons, including:

• The independent contractor rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent.
• The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
• The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

Background and ABC Actions:

On Feb. 5, the WHD proposed to delay the effective date of the final independent contractor rule from March 8 to May 7. On Feb. 22, ABC filed a request for extension of time to file comments on the delay proposal and further protested the department’s restriction on the nature of comments that could be filed.  The department denied the extension request on Feb. 24.

On Feb. 24, ABC submitted comments arguing that the WHD’s hasty and unsupported attempt to delay the effective date of the independent contractor final rule was arbitrary, capricious and in violation of the Administrative Procedure Act. ABC therefore urged the WHD to maintain the final rule’s effective date of March 8.

On March 4, the WHD issued a final rule that delays the Trump DOL’s independent contractor final rule’s effective date from March 8 to May 7, 2021. Soon after, on March 12, DOL issued a proposal to withdraw the independent contractor final rule.

On March 26, ABC, ABC Southeast Texas Chapter and the Coalition for Workforce Innovation filed suit against DOL for delaying the effective date of the independent contractor final rule and proposing to withdraw it. The filed complaint asserts that the steps taken by DOL to negate the independent contractor final rule are in violation of the Administrative Procurement Act.  ABC’s general counsel, Littler Mendelson P.C., is representing the plaintiffs in the legal challenge.

On April 12, ABC submitted comments in opposition to the DOL’s proposal to withdraw the independent contractor final rule. ABC argued that the final delay rule was unlawfully promulgated and because the department’s subsequent proposal to withdraw the independent contractor final rule relied on the unlawfully promulgated rule for the assertion that the independent contractor final rule had not already gone into effect, the subsequent proposal itself must be ordered withdrawn.

ABC will continue to monitor this important issue and provide any updates in Newsline.

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On May 5, ABC and a coalition of 16 industry and employer groups sent a letter to President Joe Biden raising concerns about the administration’s direct expansion and support of legislative policies encouraging or requiring controversial government-mandated project labor agreements on federal and federally assisted construction projects.

The Biden administration’s March 31 release of the American Jobs Plan, an outline of $2.25 trillion worth of government spending, includes investments in infrastructure and clean energy. ABC has raised concerns about the AJP’s tax hikes on small businesses and language calling on Congress to pass the ABC-opposed Protecting the Right to Organize Act and tie controversial government-mandated PLAs to federal investments in infrastructure via forthcoming legislation addressing infrastructure.

“Simply put, the Biden administration cannot meet its infrastructure, affordable housing and clean energy agenda without strong participation from the construction industry directly harmed by anti-competitive and costly government-mandated PLA policies,” said the coalition letter.

“Ensuring fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities for all qualified small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster,” said the letter.

In an April 28 op-ed published in The Hill, titled America can build back better through fair and open competition, ABC pushed back on controversial provisions in the AJP that would harm the merit shop contracting community:

“At a time when our economy is showing signs of recovery, the Biden administration and Congress should support policies that help bring our economic engine roaring back to life. Fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities and jobs for all qualified local small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in the op-ed.

ABC and the coalition are monitoring Biden administration executive actions, federal agency policies and legislation introduced in the 117^th Congress that might promote government-mandated PLAs and exclude quality contractors and 87% of the construction industry from competing to win contracts to build construction projects funded and authorized in forthcoming spending and infrastructure legislation.

ABC and the coalition also supports the Fair and Open Competition Act (S. 403/H.R. 1284), reintroduced in the 117^th Congress by Sen. Todd Young (R-Ind.) and Rep. Ted Budd (R-N.C.), which would restrict government-mandated PLAs on federal and federally assisted construction projects.

In a Feb. 24 ABC press release, ABC applauded the introduction of the bill that would encourage more qualified construction companies to compete for federal and federally funded construction projects, providing value for hardworking taxpayers while benefiting the construction industry.

After the bill was introduced, an ABC-led coalition of 17 construction industry and business associations sent a letter to Congress in support of the bill, urging them to immediately pass this legislation.

ABC encourages ABC chapters, members and industry stakeholders to participate in a grassroots campaign urging their U.S. House and Senate lawmakers to sign on as a co-sponsor of FOCA in the 117^th Congress.

ABC members can learn more about ABC’s historical efforts opposing government-mandated PLAs, ABC’s current campaign and the coalition’s campaign in support of fair and open competition benefiting taxpayers and the local construction industry.

The full text of the letter appears below. 

May 5, 2021

The Honorable Joseph R. Biden Jr.

The White House

1600 Pennsylvania Avenue

Washington, DC  20500

Dear President Biden:

The diverse coalition of the undersigned construction and business associations share concerns about the Biden administration’s promotion of policies^[1] and legislation^[2] encouraging the use of controversial, government-mandated project labor agreements for the construction of federal and federally assisted infrastructure and clean energy projects.

We applaud the Biden administration addressing the state of America’s infrastructure via the American Jobs Plan outline and ongoing bipartisan discussions with Congress. We are in strong agreement that our roads, bridges, schools and water, energy and transportation systems are in urgent need of public and private investment in order to accelerate America’s strong economic comeback and keep our country competitive in a global economy.

However, government-mandated PLAs have the potential to needlessly increase costs for taxpayers, unfairly limit competition by some of America’s best contractors and ultimately exclude almost nine out of 10 of the construction industry’s workforce from middle class jobs and benefits, resulting from government investment in infrastructure, affordable housing and clean energy projects.

A PLA is a jobsite-specific collective bargaining agreement unique to the construction industry that typically requires companies to agree to recognize unions as the representatives of their employees on that job, use the union hiring hall to obtain most or all construction labor, exclusively hire apprentices from union programs, follow union work rules and pay into union benefit and multi-employer pension plans that nonunion employees will be unlikely to access. This forces employers to pay “double benefits” into their existing plans and union plans and places such firms at a significant competitive disadvantage. In addition, PLAs typically force construction workers to pay union dues and/or join a union if they want to work on a PLA project and receive benefits earned while working on the job.

When mandated by government agencies and lawmakers, PLAs can supersede and interfere with existing collective bargaining agreements contractors have already negotiated with various unions. In addition, PLA mandates unfairly discourage competition from quality nonunion contractors and their employees, who comprise 87.3% of the private U.S. construction industry workforce, according to the most recent U.S. Bureau of Labor Statistics data.^[3]

The federal government’s existing PLA policy, Executive Order 13502, signed Feb. 6, 2009, encourages federal agencies, on a case-by-case basis, to require PLAs on federal construction projects exceeding $25 million in total value and permits states and localities to mandate PLAs on federally assisted projects in order to “promote the economy and efficiency in federal procurement.”^[4]

However, subsequent government-mandated PLAs on federal and federally assisted projects have resulted in reduced competition, increased costs, delays, poor local hiring outcomes and litigation. In addition, multiple studies of hundreds of taxpayer-funded school construction projects found that PLA mandates increase the cost of construction by 12% to 20% compared to similar non-PLA projects already subjected to state prevailing wage regulations.^[5]

In short, hardworking taxpayers are getting less and paying more when PLAs are encouraged or mandated by the government on federal and federally assisted construction projects.

Government-mandated PLAs are especially problematic considering two key data points; 1) industry reports estimate the U.S. infrastructure spending deficit will total $2.6 trillion by 2029 and more than $5.6 trillion by 2039;^[6] and 2), the U.S. construction industry faces an 8.6% unemployment rate^[7] due to the recession caused by the COVID-19 pandemic.

Simply put, the Biden administration cannot meet its infrastructure, affordable housing and clean energy agenda without strong participation from the construction industry directly harmed by anti-competitive and costly government-mandated PLA policies.

For these reasons, our coalition formally requests a meeting with administration officials in charge of infrastructure, affordable housing and green energy policies to discuss inclusive policy solutions that expand the benefits of rebuilding America’s infrastructure to the entire construction industry. Ensuring fair and open competition on taxpayer-funded construction projects will ultimately result in savings to taxpayers, more opportunities for all qualified small businesses, minorities and women in the construction industry, and the construction of more quality infrastructure projects so America can Build Back Better and faster.

Sincerely,

American Fire Sprinkler Association

American Pipeline Contractors Association

Associated Builders and Contractors

Business Coalition for Fair Competition

Construction Industry Round Table

Electronic Security Association

Independent Electrical Contractors

National Association of Home Builders

National Black Chamber of Commerce

National Federation of Independent Business

National Ready Mixed Concrete Association

National Roofing Contractors Association

National Utility Contractors Association

Plastics Pipe Institute

Power and Communication Contractors Association

Small Business and Entrepreneurship Council

cc:         U.S. Department of Transportation Secretary Pete Buttigieg
              U.S. Department of Energy Secretary Jennifer Granholm

              U.S. Department of Housing and Urban Development Secretary Marcia Fudge

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Thanks to a $1 million grant that just passed the Tennessee General Assembly, ABC’s Greater Tennessee Chapter will operate educational programs to provide advanced craft skills in HVAC, masonry, electrical, and carpentry in a new 15,000-square-foot facility with classroom and lab space. The grant would enable ABC to serve an additional 250 students a year in its four-year adult program. 

“The demand for persons with trade skills training and certifications in Tennessee is high, with an anticipated need of more than 150,000 workers through December 2022,” said Clay Crownover, president and CEO of ABC’s Greater Tennessee Chapter. “We are thrilled that Gov. Bill Lee recognizes the importance of career and technical education in construction and is helping us create new opportunities for students and employees as we invest in building America.”

To help workers develop trade skills and grow the regional workforce, Knox County is using its own grant money to develop a new Career and Technical Education Training Academy for ABC’s Greater Tennessee Chapter.

Additionally, Knox County and ABC plan to develop a partnership with Knox County Schools to offer dual enrollment courses to area high school students without current access to CTE. Only approximately half of Knox County high schools offer trades programming.
Knox County and its partners hope to open the academy in 2021.

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In an unfortunate but expected turn of events, Gov. Phil Murphy has signed into law New Jersey’s most recent anti-merit shop project labor agreement-favoring legislation, S-3414/A-5378, which requires government-mandated project labor agreements to apply to all public construction contracts over $5 million in the state. ABC and the African American Chamber of Commerce of New Jersey spoke out in opposition to the legislation.

This new PLA mandate expands the already-existing policy that applied PLAs to only public vertical construction contracts over $5 million. The bill received overwhelming support in the legislature, passing the Senate 31-4 and the Assembly 60-10-3, and follows almost two decades of attempts by Senate President Stephen Sweeney to push through the expansion of PLA mandates through a variety of legislation. This includes most recently a 2020 effort, S1370/A2607, that Governor Murphy surprisingly vetoed in August.

Notably, this bill goes beyond simply mandating the use of PLAs by including language aimed at benefitting “minority group members, members of disadvantaged communities and women.” However, the inclusion of that language was a political calculation thought to be the key to finally passing the expansion, intended to mislead voters and dampen opposition from minority business groups, which historically stand in staunch opposition to PLAs due to the discriminatory impact they have on largely nonunion minority-owned businesses.

The bill requires any project labor agreement for projects to which this new policy is applicable to contain “all measures and programs to be undertaken to attain the goals…regarding minority group members, members of disadvantaged communities and women, which may include measures giving them priority in referral and placement from the hiring halls of signatory unions, programs to provide on-the-job or off-the-job outreach and training and programs to provide incentives for, or otherwise facilitate, their hiring and employment.”

Unfortunately, this language is only meant to perpetuate the falsehood that PLAs help, not hurt, minority communities and women, and lawmakers were certain this would secure support from those groups. However, that calculation proved incorrect. The African American Chamber of Commerce of New Jersey has repeatedly spoken out against the bill throughout the legislative effort, first in a joint statement with Associated Builders and Contractors of New Jersey in March. In the statement, AACCNJ President and CEO John E. Harmon Sr. decried the then-proposed PLA expansion and pointed out yet again the dangers PLAs pose to these minority communities, which union bosses and their political allies continue to attempt to use while simultaneously disenfranchising them.

Both ABC New Jersey and AACCNJ advocated extensively for Gov. Murphy to veto this policy once again and offered several quality alternative proposals to help minority communities and disadvantaged populations, encourage competition and protect New Jersey taxpayers. Those efforts and ideas fell on deaf ears, as the false promises and campaign dollars of organized labor drowned out common sense and actual voices of those minority communities.

Upon passage, both groups expressed their disappointment. Now following Gov. Murphy’s signature, they have once again come out in fervent opposition to the expansion.

“This ill-conceived PLA legislation directs public project funding to politically-connected union firms at the expense of the more than 80% of New Jersey construction workers who have chosen not to join a union,” said Harmon. “Furthermore, 98% of minority-owned construction-related businesses are nonunion and will realize no benefits from this law. In fact, many have told me that it could double their costs by forcing them to contribute to pension funds, health care projects and union dues of which their workers are not beneficiaries. Moreover, this decision is devastating because there was ample room for compromise and it demonstrates an unwillingness to take a small step that could have had a transformational impact on Black-, Hispanic-, women-, veteran-owned and small businesses in our state. It appears that the fact that Blacks receive only 1% of public contracts is inconsequential to the administration; notwithstanding the 94% percent of their vote to elect this administration. The irony is, the more things change, the more they remain the same in New Jersey. This would have been the perfect time for this administration to demonstrate their support for the national call for equity.”

“This legislation is an example of how government can hurt the people it purports to help, give unfair advantages to favored special interests, and squeeze the middle class,” said Samantha DeAlmeida, president of Associated Builders and Contractors of New Jersey. “Frankly, the governor’s support for this legislation at this time is confusing, considering he conditionally vetoed it in August of last year. The only change to the bill is the newly added diversity language that was nothing but a guise to shepherd this legislation across the finish line. Alternative ideas that would have actually protected and benefited minorities were offered by both [Associated Builders and Contractors of New Jersey] and [the African American Chamber of Commerce of New Jersey] in hopes of finding a fair compromise, but to no avail. Hardworking taxpayers in New Jersey deserve more efficient and effective policies that will encourage all qualified contractors and their skilled workforce to compete for the opportunity to build long-lasting, quality projects at the best price. Respectfully, this law does just the opposite.”

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On April 27, President Joe Biden issued an executive order increasing the minimum wage for federal contractors, which would require federal contractors to pay a $15 minimum wage to workers working on or in connection with a federal government contract.

Beginning Jan. 30, 2022, the EO requires all agencies to incorporate a $15 minimum wage in new contract solicitations and to implement the minimum wage into new contracts by March 30, 2022. Agencies must also implement the higher wage into existing contracts when the parties exercise their option to extend such contracts, which generally occurs annually. The minimum wage will continue to be indexed for inflation. 

The EO directs the U.S. Department of Labor’s Wage and Hour Division and the Federal Acquisition and Regulatory Council to issue regulations to implement the EO’s provisions by Nov. 24, 2021. 

In response to President Biden’s EO, Ben Brubeck, ABC vice president of regulatory, labor and state affairs, stated: 

“ABC has long held that the market should determine wages in the construction industry, where well-paying merit shop construction jobs sustain the careers of 87.3% of the workforce. In general, ABC’s government contractor members pay wage rates substantially higher than $15 per hour under the requirements of the Davis-Bacon Act and, to a lesser extent, the Service Contract Act. The primary concern with this executive action is not the wage rate itself, but rather the unlawful and unprecedented power grab by the executive branch to set a new minimum wage in direct contravention of the DBA and SCA.” 

In Feb. 2014, the Obama-Biden administration’s Executive Order 13658 required federal contractors to pay employees working on federal contracts $10.10 per hour, subsequently indexed to inflation. Currently, the minimum wage for workers performing work on covered federal contracts is $10.95 per hour.

Additional information about this EO can be found in this analysis from ABC general counsel Littler Mendelson.  

ABC will continue to provide updates on this important issue in Newsline. 
 

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From supporting the Protecting the Right to Organize Act to rolling back Trump-era regulatory actions, the Biden administration got off to a fast start delivering on its election-year promises to unions. ABC has mobilized to protect merit shop construction and provide members with status and updates on key policy actions.

Ahead of President Joe Biden’s first congressional address, Associated Builders and Contractors issued the following statement from Michael Bellaman, its president and CEO, on key merit shop construction industry priorities that should be considered by the administration.

“As President Biden prepares to address a joint session of Congress, Associated Builders and Contractors recommends that he embrace bipartisan ideas to help our economy recover from the COVID-19 pandemic and rebuild America with the best possible construction firms and workers at the best possible price for hardworking taxpayers. Doing so will keep America’s economy competitive, help small businesses recover as they create fulfilling careers in construction, and maximize efficient investments in clean energy and resilient infrastructure for the 21^st century.

“Congress and the Biden administration must promote fair and open competition on any taxpayer-funded infrastructure plan so that all of America’s experienced contractors and talented construction workers are welcome to rebuild their communities. Unfortunately, controversial language in the Biden administration’s American Jobs Plan calls on Congress to tie federal investment in infrastructure to costly government-mandated project labor agreements. These PLA schemes exclude the 87.3% of our workforce that chooses to work in a nonunion, merit shop environment with an employer of their choice from participating in the nation’s economic recovery and rebuilding their communities. Eliminating artificial barriers to competition for small businesses and allowing all workers to freely choose whether to affiliate with unions are important cornerstones of fair and cost-effective infrastructure projects. Worker choice allows each individual who has different desires to pursue their career dreams in their unique way. Having this choice is what America is all about.

“Despite exclusion from competing fairly in building infrastructure, nonunion merit shop construction companies will be taxed through current and anticipated tax increases from the Biden administration.. For example, the infrastructure plan’s tax increases on small businesses would take 15 years to cover the plan’s price tag, which would negatively affect job-creating construction firms that are still recovering from the effects of the COVID-19 pandemic.

“We also encourage President Biden to preserve worker privacy rights, the independent contractor economy and right-to-work laws approved by taxpayers in 27 states, which are all threatened by the Protecting the Right to Organize Act. President Biden urged Congress to pass the PRO Act as part of the American Jobs Plan. 

“ABC is ready to work collaboratively with the administration and Congress to reform our broken immigration system, expand apprenticeship opportunities to meet current and future workforce demand, create opportunities for all to pursue a long-term career in construction and drive America’s economic prosperity. We also applaud the administration for a rapid and successful COVID-19 vaccine rollout, a critical step in getting America back on the path to recovery from the devastating toll of the disease. ABC will continue to offer productive solutions to Congress and the Biden administration to improve our nation’s ability to compete in a global economy and give every worker a chance to achieve the American dream.”

Get the latest on project labor agreement mandates, right-to-work laws, the independent contractor rule and more in ABC’s comprehensive analysis.

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