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.

WHD to Host 2019 Prevailing Wage Seminars

The Wage and Hour Division (WHD) has released the dates of their upcoming prevailing wage seminars for 2019. These seminars will be held as three-day compliance training workshops designed for regional stakeholders such as private contractors, unions, state agencies, federal agencies, and workers.

WHD 2019 seminars will be held in the following locations:

•    Austin, TX, on June 18th – 20th

•    Anchorage, AK, on June 25th – 27th

•    Sacramento, CA, on July 23rd – 25th

•    Washington, DC, on August 13th – 15th

•    Indianapolis, IN, on August 27th – 29th

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; Executive Order 13495 “Nondisplacement of Qualified Workers”; the process for appealing wage rates, coverage, and compliance determinations; and compliance assistance and enforcement processes.

For more information or to register go to: https://www.dol.gov/whd/govcontracts/SeminarsInfo.htm

Stanton Confirmed as New Administrator of WHD

The Department of Labor has announced that Cheryl Marie Stanton has been confirmed by Congress and officially sworn-in by Secretary of Labor, Alexander Acosta, as the new Administrator of Department’s Wage and Hour Division (WHD). Stanton has been awaiting confirmation by the Senate since being initially nominated in September 2017.

Before coming to Washington DC, Stanton served in public service as the Executive Director of the South Carolina Department of Employment and Workforce. Under her leadership, the jobless rate in South Carolina was at its lowest point in almost 50 years. During this time, Stanton also oversaw the workforce system that helped place over 500,000 South Carolinians in jobs as well as leading two major information technology modernization projects that improved customer service and increased efficiencies for employees. Also, Stanton partnered with her colleague at the Department of Corrections to create the Second Chance job re-entry program for ex-offenders, receiving national accolades.

As the new administrator, Stanton will bring her breadth of experience to the Division, leading efforts in the enforcement of the federal minimum wage, overtime pay, recordkeeping, child labor requirements of the Fair Labor Standards Act, the Family and Medical Leave Act, and consumer credit protections. Additionally, overseeing prevailing wage requirements of the Davis Bacon Act and the Service Contract Act and other statutes applicable to Federal contracts for construction and the provision of goods and services.

Optimism For Infrastructure Legislation

There was a recent meeting between the Administration and key Democratic lawmakers which concluded in an agreement to seek a $2 trillion legislative infrastructure package to improve and repair the nation’s roads, bridges, waterways, and broadband networks.

In the meeting, President Trump, House Speaker Nancy Pelosi, and Senate Minority Leader Charles Schumer each agreed on the importance of investing in this country’s future and rebuilding America’s infrastructure. Pelosi and Schumer told reporters after the meeting that “we’re very excited about the conversation we had with the president”; calling it a “good and constructive start.” Likewise, the White House also appeared optimistic about the discussion with Trump stating “an excellent and productive meeting” with the Democrats.

The Democratic leaders further noted that the two sides found common ground on some of the priorities that an infrastructure plan should address. Following the meeting, Democrats sent Trump a letter which outlined government funding, environmental considerations and Buy American provisions as three key priorities.

To date, both parties have submitted separate funding proposals to achieve the infrastructure goals. Nevertheless, the funding source continues to be unclear even with bipartisan agreement on the $2 trillion investment amount.  Future discussions are planned.

February 2019 Construction Spending

The U.S. Census Bureau announced construction spending for February 2019 was at a seasonally adjusted annual rate of $1,320 billion, 1.0 percent above the revised estimate of $1,307 billion in January. Compared to the same period last year, February was up 1.1 percent. For the first two months of the year, construction spending was $182 billion, up 1.4 percent for the same period last year.

While private construction spending in February was $994 billion, 0.2 percent above the revised January estimate of $993 billion; public construction spending was $326 billion, 3.6 percent above last month’s revised estimates of $314 billion. Compared to the same period last year, public construction was up 11.5 percent.

There were several contributors to public construction spending growth in February. The main contributor was Highway construction which was $111 billion, up 9.5 percent from revised January estimates of $101 billion. Compared to the same period last year, Highway construction is up 22.8 percent.

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

USDOL Announces Proposed Overtime Update

The U.S. Department of Labor announced a Notice of Proposed Rulemaking (NPRM) would be published to increase the weekly wage threshold to determine who is eligible for overtime pay under the Fair Labor Standards Act.

Employees earning less than the current threshold of $455 per week, which was established in 2004, must be paid overtime if they work more than 40 hours per week. The newly proposed threshold is $679 per week. The U.S. Department of Labor established this threshold based on comments from the public following a Request for Information in 2017, as well as six in-person listening sessions.

To be exempt from the new overtime proposal an employee must be paid a fixed salary, paid a weekly amount of at least $679, and primarily perform executive, administrative, or professional duties.

The public will have sixty days in which to provide comments once the NPRM is published in the Federal Register.

More information can be found at https://www.dol.gov/whd/overtime2019/.

2018 Construction Spending Update

The U.S. Census Bureau announced construction spending for 2018 was at a seasonally adjusted annual rate of $1,292.7 billion based on spending in December. The value of construction during 2018 increased by 4.1 percent compared to the same period in 2017.

While private construction spending was $991.2 billion based on spending in December, public construction spending was $301.5 billion. In 2018, both Private and Public construction spending were up with Private up 3.4 percent and Public construction, almost double that, increasing 6.6% from spending in 2017.

There were several contributors to public construction spending growth in 2018:

• Transportation construction was $34.9 billion, which was up 15 percent above the 2017 figures
• Educational construction was $73.6 billion, up 3.8 percent
• Highway construction was $94.6 billion, 4.2 percent above 2017

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