Employers Should Prepare for A Final Overtime Rule

Under the new leadership of Acting Labor Secretary Patrick Pizzella, the Department of Labor (DOL) is expected to move quickly on the final overtime rule. Understanding that once 2020 arrives all focus will turn to the elections, Pizzella has spoken of his commitment to focusing on what the department can realistically achieve during the remainder of this term.

Earlier this year, the DOL published a proposed rule that would make nearly a million more workers eligible to receive overtime pay. According to a Labor Department official, the final overtime rule is anticipated sometime between Labor Day and Thanksgiving.

Under the current rule, employees subject to the Fair Labor Standards Act with a salary of less than $23,660 per year ($455 per week) are entitled to overtime if they work more than 40 hours per week. Employers should pay particular attention to the final overtime rule as the DOL had proposed raising the salary threshold to $35,308 per year ($679 per week).

The proposed rule is a compromise between the current $23,660 threshold and the $47,476 cutoff that was adopted by President Barack Obama’s administration in 2016 but which later was blocked.

Though there is still time before the proposed overtime rule is expected to go into effect, employers should review current policies.

U.S. DOL Announces SCA Fringe Rate Changes

The prevailing health & welfare fringe benefits issued under the McNamara-O’Hara Service Contract Act (SCA) awarded before July 5, 2019 with Option Years on or after July 5, 2019 will utilize the new fringe rate of $4.54 per hour.

Additional SCA Health & Welfare Fringe Benefit Rate Information

All service contracts that contain paid sick leave (EO 13706) will utilize the lower fringe rate of $4.22 SCA health & welfare benefit rate.

For more information: Click Here To Read The Full Memo

DOL Secretary Acosta Resigns; Pizzella To Serve As Acting Secretary

After much scrutiny for his handling of a plea deal for the New York financier Jeffrey E. Epstein, Labor Secretary Acosta is stepping down. With pressure from both pollical parties to resign, Acosta announced his resignation which will take effect in one week; leaving the current labor Deputy Secretary Patrick Pizzella as acting secretary until the President names a permanent replacement. 

Trouble arose for Acosta when Federal prosecutors recently unveiled new charges of sex trafficking and sex trafficking conspiracy against Epstein. Acosta was a U.S. prosecutor in Florida when Epstein received a plea deal to avoid significant jail time.

Considered by many as being more aggressively pro-business than Acosta, Pizzella is anticipated to move more quickly than his predecessor to reverse Obama-era regulations that trouble businesses. President Trump nominated Pizzella and was sworn into office by Acosta in April 2018, before which Pizzella served as a Member of the Federal Labor Relations Authority (FLRA), after being nominated by President Barack Obama and confirmed by the U.S. Senate to that post in 2013.

Pizzella has a long history of federal service holding positions at the Federal Housing Finance Board, Department of Education, Office of Personnel Management, Small Business Administration, and the General Services Administration.

Employer’s Fiduciary Responsibility Relating to Group Health Plans

The Employee Retirement and Income Security Act (ERISA) sets out specific employer responsibilities (fiduciary responsibilities) relating to the establishment and operation of a Group Health Plan. These fiduciary responsibilities include:

• Acting solely in the interests of the plan participants and their beneficiaries
• Carrying out duties prudently
• Following plan documents unless contradicted by ERISA
• Holding plan assets (if the plan has any) in trust
• Paying only reasonable plan expenses

Employers may want to hire a firm, such as a 3^rd Party Administrator, who is experienced in ERISA legislation and Plan operation, to help them comply with their responsibilities. The process of hiring an outside firm to help employers with their fiduciary responsibilities is not a process to be taken lightly. Employers must utilize diligence when hiring a firm to partner with regarding fiduciary oversight.

First off, the employer must ensure fees relating to the plan are reasonable. Next, the employer must verify that the partnering firm is capable of performing the services which it was engaged to perform and is knowledgeable in ERISA and other legislation which may impact Plan operation.

When choosing an outside firm, employers need to thoroughly document every step in the engagement process. Documenting the process helps ensure that it was fair, open, and honest. An employer’s diligence and documentation of the hiring process, including rationale for decision making, could be key if later challenged by individuals or entities such as the Department of Labor.

During the interview process, provide prospective firms with the same Scope of Work and ask them the same questions. This process should provide you with enough information to make an informed decision as to who would be the best firm for the employer to partner with.

Federal Government Exceeds 2018 SB Goals

The U.S. Small Business Administration (SBA) announced results from their Small Business Federal Procurement Scorecard. In fiscal year 2018, the federal government awarded 25.05 percent in federal prime contract dollars to small businesses, an increase from the year before.

The federal government has a small business target of awarding 23 percent of all prime contracts to small business, which each agency contributes. Agencies work with the SBA to set their prime and subcontracting goals from which their performance is measured. These goals include a mix of goals for small businesses owned by women, service-disabled veteran-owned small businesses, small disadvantaged businesses, and small businesses located in Historically Underutilized Business Zones (HUBZones).

In 2018 the scorecard showed that the prime contract dollar awards in all small business categories increased from the previous year. The federal government also surpassed its subcontract goals, awarding more than $79 billion in subcontracts to all small businesses.  

The highest scoring agencies, those who meet or exceed their 2018 goals were the Departments of Commerce, Education, Homeland Security, Housing and Urban Development, Labor, Interior, Treasury, and Small Business Administration. The National Science Foundation was the lowest scoring agency reaching only 85 percent of their small business goals.

SBA continuously seeks to collaborate with federal agencies to expand small business opportunities for small business contractors to compete and win federal contracts. The individual agency scorecards released by the SBA, as well as a detailed explanation of the methodology are available at https://www.sba.gov/document/support–small-business-procurement-scorecard-overview.

April 2019 Construction Spending

The U.S. Census Bureau announced construction spending for April 2019 was at a seasonally adjusted annual rate of $1,298 billion, which shows only a minor change from the estimate of $1,299 billion in March.

While private construction spending in April was $954 billion, 2 percent below the revised March estimate of $970 billion; public construction spending was $345 billion, 5 percent above last month’s revised estimate of $329 billion. Compared to April 2018, while private construction spending was down 6 percent, public construction spending was up 15 percent in April over last year.

The primary contributor to public construction spending growth was highway construction, which was $114 billion, 7 percent above the revised March estimate, and 21 percent above the same period last year.

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

The Hidden Costs Of Being Non-Compliant

Compliance remains an ongoing threat to a contractor’s business when working with federal and state governments. Each level of government has a fringe benefit requirement and many have very strict compliance and audit requirements. On September 13, 2018, the US Department of Labor announced that it found that a California-based contractor and five of its subcontractors had violated federal contract provisions of the McNamara-O’Hara Service Contract Act (SCA).

Its investigation determined that the contractor owed over $3.5 million to 1,416 workers for failing to pay federal prevailing wages and required health and welfare benefits to workers. In addition to that finding there was also a separate DOL investigation for SCA violations regarding a federal contract to move military cargo that was stored at the contractor’s warehouse site.

https://www.prnewswire.com/news-releases/justice-for-port-drivers-leading-logistics-company-at-ports-of-lalong-beach-with-long-track-record-of-breaking-labor-and-safety-laws-resulting-in-7-disruptive-labor-strikes-chooses-to-abandon-workers-rather-than-reach-agreement–300779963.html

What’s concerning is that experts in the space have suggested that as many as 50% of contractors to the federal government are out of compliance. if you are out of compliance as a contractor you are potentially subject to fi­nes and penalties, both civil and criminal, and if your subcontractors are out of compliance with the DOL requirements you are responsible.

At risk are not only fines, but the ability to bid and win new contracts. For this reason it is critical that companies contract with transparent third party administrators that emphasize compliance. They need to have the ability to track your company and its subcontractors fringe spend to a penny, providing a true fiduciary partner to your firm.

WDOL.gov is Moving June 14th

An alert has been issued by Wage Determinations OnLine (WDOL.gov) to advise contractors that on June 14th, 2019 WDOL.gov is moving to beta.SAM.gov, which will become the official source for wage determinations. This change is part of a collaborative effort to bring together multiple federal award systems into a single website.

Migration to the new website will provide federal contracting officers with a single location to obtain Service Contract Act (SCA) and Davis-Bacon Act (DBA) wage determinations (WDs) for each official contract action.  This website will be the authorized U.S. government site for people who make, receive, and manage federal awards.

It is important to note that existing WDOL.gov subscriptions will not migrate to beta.SAM.gov. For a smoother transition, contractors should take note of their current WDOL.gov subscription numbers so that they can re-subscribe on beta.SAM.gov.

The website will be open to the general public who will be able to search and view DBA, SCA, and Collective Bargaining Agreements (CBAs) wage determinations without a login account. Additionally, users who set up accounts will be able to save searches, follow Wage Determinations, and enter CBA wage determinations. Guidance in selecting wage determinations from this website is provided in the WDOL.gov User’s Guide. A training video has also been posted at https://beta.sam.gov/cm/videos/detail?id=142

Nevada Prevailing Wage Change Signed Into Law

Last week Governor Steve Sisolak of Nevada signed a bill to restore prevailing wage requirements to public construction projects.

Assembly Bill 136 restores the prevailing wage threshold for public projects to $100,000 from its current level of $250,000. Also, it restores the prevailing wage for workers on public school projects to 100% from the previous 90% of prevailing wage that those workers had been earning.

Those in favor of the prevailing wage changes say they will lead to higher wages for construction workers, and increased productivity and enhanced safety. Opponents of these prevailing wage changes claim they will increase cost and are harmful to state and local economies.

Eloy Jara, assistant business manager with the Laborers’ Union International, says that “the new law will help to establish the next generation of hardworking Nevadans and will also reward families who’ve been on the cusp of making more money but are falling short.” People across Nevada are expected to begin seeing their paychecks increase more often after July 1st.

The Retirement Challenges for Physical Workers

“How old do you want to be when you retire?” That’s a question posed by financial planners, friends, family, associates, retirement providers, and, most importantly, ourselves. For many of us, it’s a question that doesn’t have an easy answer. There are a lot of things to think about.  How much have we saved? How much debt are we in? Where do we want to retire? What type of retirement lifestyle do we want? How long will our retirement income last?

How often have you heard someone say, “I’ll never retire”? Many times people think they will retire at age X, when something unexpected happens to change that. It could be that there is a company organizational change that becomes untenable, a family member needs a caretaker, or you’ve been asked to take early retirement. It could also be that the type of work you do has physical requirements that, whether we want to admit it or not, become more difficult to maintain as we age.

The fact is, physical workers face challenges that non-physical workers do not. One of these is the reality that many of those workers will need to retire earlier than anticipated or even desired – and before they are financially ready to make this transition. This challenge was the focal point of a recent study conducted by the Aegon Center for Longevity and Retirement, and Transamerica Center for Retirement Studies. This survey, “The Unique Retirement Challenges Of Workers In Physically Demanding Jobs”, examines the issues physical workers around the world face when preparing for retirement. The study is a must read for those employers in the construction and contracting trades.

The survey found that physical workers are less likely to think that they are on target to meet their retirement income goals. They are not what is considered “habitual savers” and the majority have no backup retirement plan. Furthermore, 39% of retirees in the survey, including both physical and non-physical workers, retired earlier than anticipated. With the demands on their bodies, it would be reasonable for physical workers to do all they can to maintain good health – after all, their livelihoods depend on it. However, only 38% of the physical workers surveyed say they take their health seriously.

So what can be done? The study’s authors provide several recommendations for employers, workers themselves and policy makers to consider. Employers can offer retirement plans, with or without a match, and make it easier for physical workers to remain in the workforce longer by offering transitional plans such as a reduced work schedule or different positions within the company. They can also support healthy lifestyles and provide opportunities for physical workers to keep their skills up to date. Physical workers can take a greater interest in their health and well-being, explore ways to update their skillset, particularly in an ever-evolving labor market, and create a retirement strategy. Policy makers can encourage more financial literacy programs and skills training as well as promoting workplace retirement savings programs.

We’re all getting older! While planning for retirement may not be something we like to think about, physical workers also bear additional retirement risk simply due to the nature of their work. There are actionable solutions available to counteract this reality. By working together, employers and workers can mitigate these issues so that for physical workers, the question, “How old do you want to be when you retire?” is easier to answer.