WHD Provides Additional Contractor Guidance Concerning COVID-19

The U.S. Department of Labor, Wage and Hour Division (WHD) released additional guidance concerning the use of paid sick leave on certain federal contracts under the Emergency Paid Sick Leave Act or expanded family and medical leave under the Families First Coronavirus Relief Act (FFCRA). The guidance offers compliance support to businesses with federal service contracts covered by the Service Contract Act and federal construction contracts covered by the Davis-Bacon Act.

The guidance, laid out in a Question and Answer format, helps clarify contractor obligations. The guidance is available at www.dol.gov/agencies/whd/pandemic/sca-questions. Additionally, the WHD offers information on everyday matters businesses and workers face when responding to COVID-19 and its effects on wages and hours at www.dol.gov/agencies/whd/pandemic.

May 2020 Public Construction Spending Increases

The U.S. Census Bureau announced construction spending for May 2020 was at a seasonally adjusted annual rate of $ 1,356 billion, 2.1% below the revised estimate in April. Compared to 2019, May 2020 total spending is up 0.3%. Also, during the first five months of 2020, construction spending amounted to $ 543 billion, 5.7% above the $ 514 billion for the same period in 2019.

While private construction spending in May was $ 1,001 billion, 3.3% below the revised April estimate of $ 1,035 billion, public construction spending was $ 355 billion, 1.2% above last month’s revised estimates of $351 billion.

Compared to May 2019, public construction spending was up 4.9%. The most significant contributor on a percentage basis to the increase during that past 12 months, is construction spending for public safety, which was $14 million, 44.2% above the $10 million for the same period in 2019. Also contributing to public spending growth in May from the previous month is Highway construction, which was at a seasonally adjusted annual rate of $107 billion up 2.8% from the revised April estimate of $104 billion.

More information may be found at: https://www.census.gov/construction/c30/pdf/release.pdf

WHD Announces Job Openings to Assist with Federal Requirements

The U.S. Department of Labor, Wage and Hour Division (WHD) announced that they would be hiring 55 additional investigators and eight technicians to support their efforts to ensure that employers meet their federal compliance requirements. These recruits will join 92 investigators recently hired or awaiting placement and 28 technicians that WHD hired at the beginning of 2020.

Last year, WHD conducted a record-setting 3,700 public events to educate employers and workers about their workplace responsibilities and rights. Also, the division collected a record-setting $322 million in wages owed to employees.

WHD Administrator Cheryl Stanton noted that “in addition to enforcing long-standing protections, they now are enforcing the paid sick leave and expanded family and medical leave protections in the Families First Coronavirus Response Act.”

Those hired as investigators are responsible for conducting investigations to establish employers’ compliance with pertinent federal labor laws, while the technicians will provide front-line support for these efforts. Technicians also handle the receipt and evaluation of incoming complaints and ensure compliance information for employees, employers, and other stakeholders.

OSHA Issues Guidance for Reopening Non-Essential Businesses

The Occupational Safety and Health Administration (OSHA) issued recent guidance to help employers and workers in safely returning to work and reopening businesses regarded by local authorities as “non-essential businesses” during the evolving coronavirus pandemic. Employers are encouraged to use this guidance to develop policies and procedures to ensure their employees’ safety and health.

The guidance supplements previous information released from the U.S. Department of Labor, U.S. Department of Health and Human Services’ and the White House and focuses on general principles for updating restrictions initially put in place to slow the spread of the coronavirus.

OSHA points out that while state and local governments lift shelter-in-place or stay-at-home orders, Non-essential businesses should reopen and continue to follow to public health requirements and recommendations from the Centers for Disease Control and Prevention and other federal agencies.

The guidance notes that through each phase of the reopening process, employers should continue to develop policies and procedures for social distancing, basic hygiene, identification and isolation of sick employees, and employee training. Additionally, employers are encouraged to consider ways to use workplace flexibilities, such as remote work and alternative business operations, to provide goods and services to customers.

OSHA recommends that employers continually monitor federal, state, and local government guidelines for updated information about ongoing community transmission and mitigation measures, as well as for emerging guidance on disinfection and other best practices for employee protection.

For guidance, details visit https://www.osha.gov/Publications/OSHA4045.pdf

Virginia Adopts New Prevailing Wage Requirement

Virginia’s General Assembly passed, and Governor Ralph Northam signed legislation that would require prevailing wages on public works projects procured by state agencies.

The new prevailing wage requirement applies to contractors and subcontractors on all state public works contracts with a value greater than $250,000. The wages and benefits required by the new law will be based on the prevailing wage and benefits set by the U.S. Department of Labor under the federal Davis-Bacon Act. In addition to a new prevailing wage requirement, other labor laws to protect against worker misclassification, workplace discrimination, and wage theft were adopted.

The new law will take effect on May 1, 2021. Virginia’s Department of Labor and Industry will be developing rules and regulations to implement this new requirement.

2020 Retirement Regulation Update

2019 was a year of major developments in the US retirement industry. The signing of the SECURE Act at the end of December and state sponsored retirement programs such as CalSavers in California enacted significant changes to qualified retirement plans, as well as how individuals can save for retirement. Below, we will focus on the provisions in those pieces of legislation that most affect you as adopters of The Contractors Plan. Please note, we are awaiting additional guidance on some of the provisions before they can be applied.

SECURE Act

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019 as part of the Further Consolidated Appropriations Act. Most of the provisions in the act are effective in 2020 and require amendments to your plan. The act is over 300 pages in length, so we’ll try to narrow it down to the areas that we feel are the most important and impactful.

• Notices have been eliminated for safe harbor nonelective plans. If you are using a nonelective contribution to satisfy the ADP safe harbor, you are no longer required to send safe harbor notices to your employees. However, if you have a safe harbor match provision, annual notices are still required.
• Mid-Year adoption of safe harbor status. You may now amend your plan to adopt a safe harbor feature using a 3% nonelective contribution anytime up to 30 days before your plan’s year end. Alternatively, if you do not elect to adopt the safe harbor feature for your plan until 30 days before your plan year end, you may still adopt the safe harbor feature with a 4% nonelective contribution.
• Adopting a qualified plan after the end of the year. You may now adopt a qualified retirement plan up until your corporate tax return is due, including extensions. However, if you want to have a deferral option in your plan, it must be adopted prior to year-end.
• Required Minimum Distribution (RMD) age. The age which participants are required to take a required minimum distribution from a qualified retirement plan or IRA has been raised from 70 ½ to 72.This will be effective for distributions required after 2019 for those employees turning 70 ½ after 12/31/2019. If their birthday is after 7/1/1949, they are not required take an RMD until 4/1/2022 – April of the year after you turn 72.
• Small plan tax credit. If you are eligible to set up a SIMPLE plan, generally <100 employees, you could receive a tax credit when establishing a qualified plan such as a Profit Sharing or 401(k) plan. You could receive a credit for the startup and annual fees that total $500 – $5,000 for the first three years of the plan. See your tax accountant to determine if you are eligible for this credit.
• Withdrawals after a birth or adoption. This optional amendment allows for up to $5,000 to be withdrawn without the standard 10% penalty up to 1 year following a birth or finalized adoption. There is also a provision to repay the distribution, though additional guidance from the IRS is required relative to the details of this repayment option.
• Form 5500 late filing penalty increase. The penalty for filing a late Form 5500 has been increased from $25/day with a $15,000 maximum to $250/day, with a $150,000 maximum. Note the DOL penalty for a late Form 5500 filing has remained the same at $1,100/day with no maximum penalty. Message? File your Form 5500 on time!
• In-service distribution age for Money Purchase Pension Plans. If you have a Money Purchase Pension Plan, you have the option to amend your plan to allow for in-service distributions at age 59 ½ instead of age 62.

State Sponsored Mandatory Retirement Plans

Several states have passed legislation which encourages or mandates small businesses to either have an employer sponsored retirement plan or enroll their employees in a state run program. Many of these programs are still being developed. However, the common theme is that an employer can be exempt from the state sponsored programs if they offer a qualified retirement plan. The Contractors Plan meets these criteria.

CalSavers (CA), Illinois Secure Choice (IL), and OregonSaves (OR) have all enacted mandatory employee savings plans that employers must utilize unless they offer a qualified employer sponsored retirement plan.

Programs in Connecticut, Maryland, and New Jersey are still working on the specifics of their mandates and may be ready later in 2020 or 2021. Massachusetts’ program is for non-profit entities only. Vermont’s Green Mountain Secure Retirement Plan will be a MEP (multiple employer plan) and Washington state offers the Retirement Workplace of which participation is voluntary.

If you have questions about whether your state has passed or is thinking of passing similar legislation, please refer to your state’s treasury website.

Administration Proposes Trillion Dollar Infrastructure Budget

Earlier this week, the Fiscal Year 2021 proposed budget submitted to Congress by the White House requests $1 trillion over 10-years in Direct Federal Investments to support the rebuilding and modernizing of the nation’s infrastructure. The proposal includes two major components that combined would focus on roads, bridges, improvements to existing rail and bus systems, and providing high-speed internet to rural areas.

The principal component is a request for $810 billion to support a 10-year reauthorization of surface transportation programs. Within this amount is $602 billion for highway infrastructure, $155 billion for transit infrastructure, $20 billion for traffic and motor carrier safety, $17 billion for rail infrastructure, $16 billion for Transportation Infrastructure Finance and Innovation Act (TIFIA) loans and Better Utilizing Investments to Leverage Development (BUILD) grants, and about $1 billion for pipeline and hazardous materials safety.

The second component requests $190 billion for a wide range of infrastructure sectors that include broadband and water. More specifically it proposes $60 Billion for a new Building Infrastructure Great grants program, $50 billion for a new Moving America’s Freight Safely and Efficiently program, $35 billion for a Bridge Rebuilding program,  $25 billion for a new Revitalizing Rural America program, and $20 billion for a Transit State of Good Repair Sprint program.

The budget request also includes $6.5 billion for a Public Lands Infrastructure Fund to address the deferred maintenance backlog in national parks, forests, wildlife refuges, and other public lands, along with the Bureau of Indian Education schools.

Similar to the recently proposed House Democratic infrastructure plan, the Administration’s request would also require approval by the House, Senate, and White House. However, it serves as another indicator of the importance of addressing infrastructure.

December 2019 and Full-Year Construction Spending

The U.S. Census Bureau announced construction spending for December 2019 was at a seasonally adjusted annual rate of $1,328 billion, 0.2 percent below the estimate of $1,330 billion in November. Compared to the same period last year, construction spending in December was up 5.0 percent. The overall value of construction in 2019 was $1,303 billion, not seasonally adjusted which is 0.3 percent below the $1,307 billion in 2018.

While private construction spending in December was $ 991 billion, 0.1 percent below the revised November estimate of $ 992 billion; public construction spending was $ 336 billion, 0.4 percent below last month’s estimate of $ 338 billion. One of the main contributors to public spending was Highway construction which was $99 billion, up 3.1 percent from November’s $97 billion. Also, Highway construction in December 2019 was up 14.1 percent from the same period in 2018.

Compared to the previous year, the value of public construction in 2019 was $329 billion, up 7.1 percent from $307 billion in 2018. Educational construction in 2019 was $79 billion, up 3.4 percent from $76 billion and highway construction was $99 billion, up 8.8 percent from $91 billion in 2018.

More information may be found at:

https://www.census.gov/construction/c30/pdf/release.pdf

House Democratic Infrastructure Proposal

Late January, House Democrats released their proposal for a $760 billion five-year infrastructure plan to rebuild roads, bridges, transit systems, railways, airports, ports, inland waterways, wastewater and drinking water systems, brownfields, and broadband. The Democratic proposal addresses the nation’s aging infrastructure and commits to long-term sustainable funding, improving the economy, enhancing public safety, and addressing environmental concerns.

Some key features include:

• Transit and Highway spending of $434 billion
• Rail transportation spending of $55 billion
• Airport spending of $30 billion
• Harbor Maintenance Trust Fund spending of $19.7 billion
• Water Resource spending of $10 billion
• Clean Water spending of $50.5 billion
• Brownfield Restoration and Reinvestment spending of $2.7 billion
• Clean Drinking Water and Clean Energy spending of $59.7 billion
• Broadband and Communication spending of $98 billion

The proposal also applies the Davis-Bacon Act and other worker protections. The House Democratic infrastructure proposal would require approval by both the House and Senate and the President’s signature. However, it does serve as a starting point for negotiations which could lead to something eventually getting adopted. This is a link to the proposal; https://transportation.house.gov/imo/media/doc/Moving%20Forward%20Framework.pdf

WHD To Host 2020 Prevailing Wage Seminars

The U.S. Department of Labor’s Wage and Hour Division (WHD) released the dates of their upcoming prevailing wage seminars for 2020. These three-day compliance training workshops are designed for regional stakeholders such as private contractors, unions, state agencies, federal agencies, and workers.

WHD 2020 seminars will be held in the following locations:

• Guam, March, 2020
• Hawaii, March, 2020
• Salt Lake City, UT, May, 2020
• Detroit, MI, June, 2020
• Charleston, SC, July, 2020
• Philadelphia, PA, August, 2020

During the seminars conference participants, will cover the following topics: The Davis-Bacon Act and McNamara O’Hara Service Contract Act; Executive Order 13658 “Establishing a Minimum Wage for Contractors”; the process of obtaining wage determinations and adding classifications; the process for appealing wage rates, coverage, and compliance determinations; and compliance assistance and enforcement processes.

For more information go to: https://www.dol.gov/agencies/whd/government-contracts/construction/seminars