Data Privacy And Security Must Be Key Components In Selecting A Business Partner That Will Handle Your Most Sensitive Information.

Why You Need A Partner Who Is Service Organization Control (SOC) 2 Certified.

The Digital and Information Age requires your Benefit Administrator have the proper security resources and technologies to protect your data and keep your personal information secure. The Contractors Plan, provided by Fringe Benefit Group, is one of the few Third Party Administrators in our industry who has made the significant investments necessary to earn the esteemed Service Organization Control (SOC) 2 security certification. 

Plain And Simple, SOC 2 Credentials Matter.

The SOC 2 standard is a measure of trust and accountability in a business’s data handling practices. You, no doubt, have seen news articles about businesses who failed to properly manage and protect their customers’ data.  Data privacy and security must be key components in selecting a business partner that will handle your most sensitive information.

These are the four main areas that the SOC 2 certification covers:

1. Monitoring – A SOC 2-certified business is be able to fully monitor system access and usage, along with associated network matters such as user access privileges and has the best possible systems in place to monitor and guard against unauthorized access. This includes unauthorized access from human hackers or by software attacks.
2. Alerting – Businesses are constantly under attack from global threats. The SOC 2 requires robust alert systems to notify organizations when possible threats or attacks might be occurring.  Just a few areas that The Contractors Plan monitors 24 x 7 include unauthorized file transfers, account access, or changes to data.
3. Auditing – To be SOC 2-certified, organizations must have auditing systems capable of producing detailed logs of system access, changes, and alerts. The Contractors Plan maintains audit trails covering modification of system components, data changes, and the source of incoming connections.
4. Forensics – Quickly responding to threats, identifying their source, and understanding the scope of the attack are all critical in stopping attacks. Having best of class forensics systems in place enables the Contractors Plan to offer assurance that any attacks will be dealt with via best security practices, with an eye towards minimizing any harm done.

NY City Council Passes Prevailing Wage Bill For Building Service Workers

Recently the NY City Council passed a bill to extend the existing building service prevailing wage law to include new affordable housing. The bill requires that future affordable-housing developments and preservation projects with 120 units or more pay building-services workers a living wage. 

Based on the principle that if developers receive financial assistance to build affordable housing units, building service workers should also receive a prevailing wage that includes affordable housing benefits. The law would require future developments that get more than $1 million in aid from the city for construction or preserving rent-stabilized low-income units to pay the prevailing wage to building-service workers.

Building-service workers will now be guaranteed that as the city builds and preserves 300,000 affordable housing units in low-income communities, that the workers in those buildings would be able to afford similar housing. 

Opponents of the bill believe it will add billions to the cost of developing affordable housing, money that the City Council does not include.

NPRM for Fluctuating Workweek Method of Computing Overtime

Recently, U.S. the Department of Labor (DOL) announced a Notice of Proposed Rule Making (NPRM), which would allow employers subject to the Fair Labor Standards Act (FLSA) overtime requirement to offer incentive-based pay and other bonuses to employees whose hours vary from week-to-week. The NPRM seeks to provide clarity to ensure the salary and payments are compatible with the use of the fluctuating workweek method under the FLSA.

The FLSA requires time-and-one-half the regular rate of pay for any hours above 40 that an employee works in a week unless the employee is “exempt.” For some employees, however, there is the alternative “fluctuating workweek method” under the FLSA,  in which employers have another method of calculating overtime when employee work hours fluctuate.

The NPRM lays out the plan to revise the existing regulations implementing the FLSA fluctuating workweek regulation (29 CFR 778.114) to explain the circumstances under which employers may use an alternate method. Changes will include explicitly stating requirements, adding examples, improving readability, and changing the title of the regulation to reflect the purpose of the subsection better.

The public has 30 days to review the NPRM (RIN Number: 1235-AA31) and is encouraged to submit comments on the proposed rule.

OFCCP To Begin VEVRAA-Focused Reviews

The Office of Federal Contract Compliance Programs (OFCCP) released its initial scheduling list for reviews focused solely on compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). The VEVRAA-focused reviews are meant to ensure that federal contractors and subcontractors comply with their affirmative action and nondiscrimination obligations, assuring equal employment opportunities for veterans.

Under VEVRAA, employers doing business with the federal government are required to take affirmative action to recruit, hire, and promote categories of veterans covered by the law, including disabled veterans and recently separated veterans. Additionally, it is unlawful for federal contractors and subcontractors to discriminate against protected veterans when making employment decisions about hiring or firing, pay, benefits, job assignments, promotions, layoffs, training, and other employment-related activities.

The OFCCP is expected to conduct 500 reviews that will include a comprehensive review of employment practices and a contractor’s policies as they relate specifically to VEVRAA. Contractors can check-out the Corporate Scheduling Announcement List in the OFCCP’s FOIA Library, https://www.dol.gov/ofccp/foia/foialibrary/index.html, to find out if OFCCP has scheduled them for a VEVRAA-focused review.

Understanding The Service Contract Act of 1965

The Service Contract Act of 1965 (SCA) requires that government contractors pay most non-professional service employees designated minimum wage rates and fringe benefits. These regulations are complex and often poorly understood by federal contractors, government contracting officers and auditors, particularly with respect to the SCA’s fringe benefits requirements. This is especially challenging for smaller contractors who may not have the resources to address such complexities. As a result, federal service contractors often face government allegations of SCA non-compliance.

Potential penalties for SCA errors are severe, including default termination and debarment. Extensive fines are on record and the potential loss of contracting access are common. In addition, a contractor’s failure to correctly understand the Service Contract Act when preparing bid pricing may result in a reduction to anticipated profits on the resulting government contract.

The Contractors Plan has created administrative processes and compliance solutions to address these risks for over 30 years. In addition to our expertise, The Contractors Plan has been committed to helping employers identify and implement solutions that are Affordable Care Act compliant, eliminating additional compliance risks as result of federal health regulations.

We encourage you to review our solutions and utilize our Savings Calculator so you can thoroughly understand the options available to you. We are here to be an expert resource and partner with you in minimizing your administration efforts and compliance risks.

President Trump Revokes Executive Order 13495

Last week, President Trump revoked Executive Order (Order) 13495, the Nondisplacement of Qualified Workers, which applied to contracts under the Service Contract Act.

Previously Order 13495, had required that successor federal contractors, in certain circumstances, offer a right of first refusal of employment to employees working under the predecessor contract.

Agencies were instructed to implement the revocation immediately. It included instructions for all agencies and executive departments to rescind any orders, guidelines, rules, programs, or policies implementing or enforcing the previous Order. The Secretary of Labor, who was formerly responsible for ensuring compliance, was also instructed to terminate any investigations or compliance actions related to the last Order 13495.

https://www.whitehouse.gov/presidential-actions/executive-order-improving-federal-contractor-operations-revoking-executive-order-13495/

August 2019 Public Construction Spending Increased

The U.S. Census Bureau announced total construction spending for August 2019 was at a seasonally adjusted annual rate of $1,287.3 billion, a 1.2 percent increase over July. However, compared to the same period last year, there was a 1.8 percent decrease.

While private construction spending in August was $955 billion, it was nearly the same as the July estimate. But when compared to the previous year, private spending decreased 4 percent. However, public construction spending was $332.3 billion, which was relatively consistent compared to July, but 4.6 percent more than one year ago.

There were several contributors to the growth in public construction spending over the past year; these include highway and street construction, sewage and waste disposal, transportation, and public safety. More information may be found at:

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

Assembly Bill 5 Goes Into Effect On January 1, 2020

Assembly Bill 5, which strengthens California’s rules regarding the classification of workers and independent contractors, was signed into law by Governor Newsom on September 18, 2019 and goes into effect on January 1, 2020. AB 5 codifies the California Supreme Court decision Dynamex Operations West, Inc. v. Superior Court of Los Angeles.

The misclassification of employees has been a nationwide problem for years. The U.S. Department of Labor, as well as many states, have taken steps to limit inappropriate misclassification of workers as independent contractors. Workers misclassified as independent contractors are denied worker protections such as minimum wage and overtime. They may also be denied the employer portion of payroll taxes and benefits.

To curtail misclassification, the California legislature adopted AB 5 which codifies Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) which presumes a worker is an employee unless an employer satisfies a three-factor test.

To be considered an independent contractor, the test requires the employer to demonstrate the person:

1. Is free from the control and direction of the employer involving the performance of their work
2. Performs work that is outside the usual business of the employer, and
3. Is customarily engaged in an independent trade, occupation, or business

AB 5 has been opposed by companies that typically treat workers as independent contractors instead of employees, claiming that it would hurt people who make a living doing gig work in the new economy. The impact of AB 5 is not limited to gig workers, so any employer in California that classifies workers as independent contractors should review their classification procedures before January 1, 2020.

FBO.gov is Moving to SAM.gov

Federal Business Opportunities (FBO.gov) will start transitioning to SAM.gov on November 8th. Before being decommissioned, FBO.gov functionalities will transition into beta.SAM.gov the first quarter of FY 2020. The new beta.Sam.gov is expected to have the same federal business opportunity capabilities that exist today as well as many additional improvements.

The process of building the beta.SAM.gov and developing the improvements was a collaborative effort between users and stakeholders. Enhancements to the new beta.SAM.gov include the ability to search for an opportunity that provides more precise results, ability to manage alerts and set up notices more efficiently, offering a more user-friendly design and offering options such as viewing previous versions with one click.

Many of the features and functions used in FBO.gov will have new names once they migrate to beta.SAM.gov.

These include:

• Watchlist will become Follow
• Search Agent will become Saved Search
• Archived will become Inactive

For more information about the move to beta.SAM.gov, please visit the fact sheet at

https://www.gsa.gov/cdnstatic/FBO_Is_Transitioning_to_Beta_Factsheet_%281%29.pdfh

The SCA Contractors Recession Cheat Sheet

It is always a good idea to begin an analysis of projects that may be impacted by a recession or a downturn in the market.  If you are lucky enough to have been awarded an SCA contract, you already possess one of the most stable revenue streams.  It is more important than ever you retain SCA contract(s) and bring in new ones.

For better or worse, contracts are generally awarded based on price as long as operational and experiential criteria are met. It is important you utilize all means available to squeeze every bit of fat out of your bid. One way to help do this is to fully discharge the Health and Welfare obligation inside “bona fide” fringe benefit plans.  

Below are a few tips to help win new contracts and retain current SCA contracts.

• Do not pay the Health and Welfare obligation as an additional cash wage to employees.
  • If you pay the Health and Welfare obligation in cash, it likely could mean the difference in winning and losing new contracts and retaining current ones.
• You must pay and account for payroll taxes on Health and Welfare funds paid to an employee as an additional wage in your bids.
• You must also understand and account for the additional cost of Worker’s Compensation Insurance and potentially other types of insurance. When calculating insurance premiums, payroll can be a factor and by adding to payroll insurance premium may increase.
• The Affordable Care Act (ACA) is still the law of the land. Depending upon your employee headcount, you may have to offer employee benefits in order to comply with the ACA. Based on the affordability provisions found in the ACA, you will need to offer a substantial contribution toward benefits for each of your employees. If you have paid Health and Welfare on the paycheck there is no recourse but to offer this contribution from General Assets.

The best way to eliminate these extra costs is to account for Health and Welfare in your bids and in practical application through the compliant discharge into “bona fide” fringe benefits. This saves payroll taxes, reduces insurance costs, and reduces spend from General Assets.  This will be a meaningful amount and could very well be the difference in being awarded a contract, or not.