Transportation Spending Approved By Senate Committee

On April 21, the Senate Appropriations Committee approved the FY2017 Transportation and Housing and Urban Development (HUD) Appropriations Bill. The $56.5 billion bill was approved 30-0 and prioritizes funding for transportation projects and programs to encourage economic growth as well as for core housing programs.

The bill represents an $827 million decrease from FY2016 enacted levels and is $2.9 billion below the President’s budget request. With significant budget constraints, the bill targets funding for critical programs, while making choices to reduce spending in lower-priority areas.

The US Department of Transportation has been allotted $16.9 billion in discretionary appropriations. This is $1.7 billion below the FY2016 enacted level and $2.5 billion below the President’s request. Within this amount, funding is prioritized on programs to make transportation systems safe, efficient, and reliable. The bill ignores the budget request to shift certain programs from discretionary to mandatory spending. In addition, the bill provides $44 billion; the exact amount authorized by the Highway Trust Fund, to be spent on the Federal-aid Highways Program, consistent with the recently-enacted surface transportation authorization bill, or FAST Act. The bill also continues to allow state departments of transportation to repurpose old, unused earmarks for more important infrastructure projects.

Now the bill goes before the full Senate, where it is recommended for consideration.

WHD Requests FY17 Budget Increase to Support Enforcement Efforts

The FY 2017 budget request for the US Department of Labor Wage and Hour Division (WHD) includes a significant increase over the previous year. The increase comes mostly from a boost in the enforcement and investigative staff.

The additional resources are intended to improve the WHD’s efficiency and effectiveness in detecting and deterring violations, focus enforcement and compliance assistance resources on priority industries, and ensure that workers are receiving a fair day’s pay. The proposed budget investments would significantly increase the number of investigative staff, improve case management capabilities, back wage collection and payments, and data analytics that would allow WHD to reach more workplaces.

WHD explains that it has adopted a strategic enforcement approach to achieving compliance, seeking to use its resources to secure maximum impact. WHD intends to prioritize efforts in industries where problems are the greatest, where workers are least likely to exercise their rights, and where WHD can have an impact on compliance. Overall WHD seeks to expand its impact through investigations in priority industries, strategic engagement of stakeholders, and strategic use of media and communications.

Some of the specific program increases include:

• $29,419,000 and 300 FTEs for additional enforcement and training staff and support
• $5,800,000 for a new, integrated case management system to replace the current outdated system, which impedes WHD’s ability to conduct strategic enforcement
• $3,000,000 and 12 FTEs to build data analytic capabilities for strategic enforcement and the creation of data tools and products to allow WHD to take a data-driven informed approach

Keep in mind that this is WHD’s budget request and still has to be approved by Congress. More details can be found at http://www.dol.gov/sites/default/files/documents/general/budget/CBJ-2017-V2-09.pdf.

Construction Spending Strong in Public Sector

Recently the U.S. Census Bureau of the Department of Commerce announced the monthly estimates for construction spending in January 2016.

During that time, overall construction spending was estimated at a seasonally adjusted annual rate of $1,140.8 billion, 1.5 percent above the revised December 2015 estimate. The January 2016 figure is 10.4 percent above the January 2015 estimate of $1,033.3 billion. Though private nonresidential spending was up, the more significant jump, at least as a percentage, came from public construction spending.

Public construction spending had considerable growth over the past year, with overall spending up 13 percent from January 2015. Highway construction, along with commercial spending, is the primary driver of growth with increases of 34% and 56% respectively compared to the previous period a year ago.

From December 2015 to January 2016, public spending on construction was at $309.4 billion, 4.5 percent above the revised December estimate. A large driver of this growth came from highway construction which was $110.4 billion, 14.7 percent above the revised December estimate of $96.2 billion. Other strong sectors include conservation and development which was up 10.5 percent, and commercial which was also up 6.5 percent.

With regard to private spending, nonresidential was at $831.4 billion, just 0.5 percent above the revised December estimate of $827.3 billion. Residential construction was $433.2 billion in January, nearly the same as the revised December estimate of $433.1 billion. Nonresidential construction was $398.2 billion in January, just slightly above the revised December estimate.

The next data report for construction spending for February 2016 will be released April 1, 2016.

Executive Order Requires Sick Leave for Employees of Federal Contractors

The US Department of Labor Wage and Hour Division published a Notice of Proposed Rulemaking (NPRM) on February 25, 2016 to implement President Obama’s Executive Order (EO) requiring federal contract employees to earn one hour of paid sick leave for every 30 hours worked. Comments on the NPRM are due by March 28, 2016.

This new sick leave requirement will apply to new contracts, or replacements for expiring contracts, in which a solicitation was issued on or after January 1, 2017. Additionally, this requirement will apply to contracts awarded outside of the solicitation process on or after January 1, 2017. It is anticipated that this new benefit will result in 828,000 federal contractor employees having access to paid sick leave.

The sick leave requirement will apply to Federal contracts covered by the Davis-Bacon Act (DBA); Service Contract Act (SCA); concessions contracts, even those exempt under SCA; and contracts in connection to Federal property or land and related to offering services. The sick leave requirement specifically does not apply to contracts subject to the Davis-Bacon Related Acts because while those contracts are Federally-funded, they are not awarded by Federal agencies.

There are certain contracts that are specifically not covered such as grants, contracts and agreements with or grants to Indian Tribes; or construction contracts not subject to DBA or service contracts not subject to SCA. Additionally, the requirement does not apply to manufacturing or supply contracts covered by the Walsh-Healey Public Contracts Act.

However, when the sick leave requirement applies it applies to all employees whose wages are governed by the SCA, DBA, or FLSA – even those who qualify for an exemption from the FLSA minimum wage and overtime requirements.

Sick leave will accrue at the rate of one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract. Contractors may limit the number of sick leave hours that can be accrued to 56 hours and these hours may be carried over from one year to the next. Contractors also have the option of making 56 hours of sick leave available at the beginning of the year instead of accruing it at the rate of one hour for every 30 hours worked. Contractors will not be required to pay employees the cash equivalent of any unused paid sick leave when the employee leaves its job.

The term “hours worked” is being used broadly to include all time an employee is or should be paid to include time working, or in paid time off status such as sick leave or any other paid time off provided by the contractor.

Sick leave can be used by the employee for their own illness or other health needs, to care for a family member who is ill or needs health care, or as a result of domestic violence, sexual assault or stalking.

If contractors already have a sick leave policy in place it can serve to satisfy this requirement as long as it provides the same benefits and rights as those required by the EO.

A final rule is expected no later than September 30, 2016. A copy of the NPRM can be viewed at http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28710

WHD Provides Guidance on Joint Employment

On January 20th, the Wage and Hour Division (WHD) of the US Department of Labor issued the Administrator’s Interpretation concerning joint employment under the Fair Labor Standards Act (FLSA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Under these laws, it is possible for a worker to be jointly employed by two or more employers who are both responsible, simultaneously, for compliance. Employers conducting commercial work should keep this guidance in mind to ensure joint employment compliance.

The press release accompanying the Interpretation discussed how companies should take more responsibility for their contracted workforce, pointing out that the country’s workforce continues to change as companies concentrate on core competencies while subcontracting out everything else. It is becoming more and more common for employees to have more than one employer. Additionally, the WHD says they have stepped up enforcement as they continue to see problems across all industries.

The Interpretation identifies common scenarios in which two or more employers jointly employ an employee and are thus jointly liable for compliance. In one particular scenario a laborer is employed by a Drywall Company which is an independent subcontractor on a project. Though the Drywall Company was hired by the General Contractor, the Drywall Company hired the laborer and is responsible for paying them. Yet, the laborer receives the necessary equipment and materials from the General Contractor who also provides workers’ compensation insurance, and is responsible for the health and safety of the laborer.

In this scenario both employers jointly reserve the right to remove the laborer from the project, control the laborer’s schedule, provide assignments on site, and supervise the laborer. This example is indicative of joint employment by a General Contractor.

Generally, once it is determined that a joint employment relationship exists the joint employers are both responsible for compliance with the FLSA and the MSPA. With regard to the FLSA, employers must ensure that the employee receives payment of at least the federal minimum wage for all hours worked and overtime pay at not less than one and one-half times the regular rate of pay for hours worked over 40 in a workweek. Furthermore, joint employers must combine all of the hours worked by the employee in a workweek to determine if the employee worked more than 40 hours and is due overtime pay.

Under MSPA, each of the joint employers must ensure that the employee receives all employment-related rights granted by MSPA, such as accurate and timely disclosure of the terms and conditions of employment, written payroll records, and payment of wages when due.

It may also be worth noting that this Interpretation is similar to the manner in which Davis-Bacon and Service Contract Act contracts are handled; where the prime contractor is responsible for the compliance of the subcontractor. At the very least this should serve as a reminder for companies, regardless of whether they do just commercial, just government, or a combination of both, to review their compliance procedures.

The WHD Joint Employment Interpretation may be found at: http://www.dol.gov/whd/flsa/Joint_Employment_AI.htm

Enforcement Update from the DOL

This January the US Department of Labor (DOL) Wage and Hour Division (WHD) released statistics on aggregate enforcement data for their 2015 fiscal year, which ended September 30. This is part of an effort to make information more transparent, accountable, and responsive.

Here’s a summary of some of the enforcement trends reflected in the data.

• In FY2015 the WHD collected $247 million in back wages, which is up 3%, or $6 million, from FY2014.
• While fewer employees  received back wages in FY2015, the amount they were owed, $1,027 per employee in 2015, was more than in the prior year of $890.
• Although there were fewer complaints than in any previously tracked year, it appeared to take longer to resolve them – 125 days, up from 116 days in 2014.

Within the construction industries, the number of cases with violations was down from the previous year. However, the number of those involving payment of back wages increased by almost 7%. In addition, there was a significant increase in the number of civil monetary penalties, which grew to 799,221 from 473,566 the prior year.

Overall, the data seems to suggest that WHD is spending more time on fewer and larger cases such as those with civil monetary penalties.

In 2016, the WHD has stated that they want to continue any momentum towards building a stronger and more effective enforcement program, growing staff and support efforts.

Full Year Appropriations Reached

Last week, just before adjourning for the holidays, the House Appropriations Committee released the 2016 Omnibus Appropriations bill which includes full Appropriations legislation and funding for the 12 annual Appropriations bills through the end of the fiscal year, September 30, 2016. After passing both the House and Senate, the President promptly signed the bill which provides discretionary funding for the federal government for the current fiscal year avoiding the threat of a government shutdown.

The bill is consistent with the increased domestic discretionary funding provided by the Bipartisan Budget Act of 2015 that was passed November 2, 2015.

Bill highlights include:

• A total of $1.149 trillion base
• Up to $680 billion in tax breaks
• $73.7 billion  Global War on Terror (GWOT)/Overseas Contingency Operations (OCO) funding for the operations of the federal government to combat the threat of ISIL and other enemies around the world
• Provides $548 billion for defense and $518 billion for non-defense base

Moreover, the bill covers a wide range of important policy items such as increasing transparency and accountability at federal agencies, and halting administrative overreach that hinders economic growth. Appropriations Chairman Hal Rogers noted that “this bill will provide a stop to wasteful and unnecessary spending and reining in regulatory overreach that hinders growth and job creation. It will help move the country in the right fiscal direction as we embark on a new year.”

FAR Issues Final Rule

Last week, the Federal Acquisition Regulation (FAR) which is administered by the Department of Defense (DoD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) issued the final rule to implement Executive Order (E.O.) 13658, Establishing a Minimum Wage for Contractors. The final rule has significant implications for employers who have workers that will perform work under covered federal contracts or subcontracts.

The final rule implements E.O. 13658 by increasing the federal minimum wage for contract workers which was increased to $10.10 an hour in 2015 and for which will increase to $10.15 per hour starting January 1, 2016 due to changes to the Consumer Price Index.

The final rule identifies important terms used in the E.O., explaining the contractors’ obligations including a thorough description of the types of covered contracts such as those covered by the Davis-Bacon Act and the Service Contract Act as well as concession contracts or any contract in connection with a Federal contract.

In addition, the rule requires that contractors provide notice to anyone, including their employees, who enter into a lower-tier contract. Notices need to specify that, as a condition of payment, the wages paid for work covered under the contract must comply with the minimum hourly wage rates.

Employers should be watchful about checking whether their contracts will be subject to the terms of the final rule which will apply to new contracts with the federal government as well as with replacements for expiring contracts that result from solicitations issued on or after Jan. 1 and to contracts that are awarded outside the solicitation process on or after Jan. 1.

Highway Bill Signed into Law

Just as federal infrastructure funding was about to run out, President Obama signed into law a 5-year, $305 billion Highway Bill which Congress approved with strong bipartisan support.  After years of short-term efforts, this bill features the first transportation funding since 2005 to last longer than two years.

The bill, also known as the “Fixing America’s Surface Transportation (FAST) Act,” is intended to improve surface transportation infrastructure, reform and refocus programs on addressing national priorities, maintain a strong commitment to safety and promote innovation. In addition, the bill is to give state and local governments greater certainty about transportation funding so they can plan crucial projects.

Though it received strong support, Congress struggled with funding the bill for the 5-year duration. For now funding is set to come from a combination of gas tax revenue and a package of $70 billion in offsets from other areas of the federal budget. However, a future Congress and president will need to determine how to permanently fund the bill’s priorities.

DOL Announces Minimum Wage Increase for Work on Federal Contracts

On September 16th the US Department of Labor Wage and Hour Division (WHD) announced that beginning January 1, 2016 the minimum wage for performing work on Federal contracts covered by Executive Order 13658 will increase to $10.15. President Obama signed the Order establishing minimum wage for contractors back in February of 2014, which raised the hourly minimum wage paid to workers performing work on covered Federal contracts to $10.10 beginning January 1, 2015. The final regulations implementing the contractor minimum wage calls for annual adjustments. View the announcement here.