Wisconsin Approves Changes to Prevailing Wage Law

On July 8th, Wisconsin legislation amended the state’s prevailing wage law so that it no longer applies to local projects. The newly amended law removed several existing requirements and changed the manner in which the prevailing wage is calculated and who has oversight.

As a result of the approved changes, the prevailing wage law will now apply only to state projects and will no longer pertain to county, municipal, or school projects. Local governments are prohibited from enacting or administering their own prevailing wage laws or similar ordinances.

The repeal also specifies that the formula for calculating the prevailing wage will come from the U.S. Department of Labor (USDOL) and will not be determined by the State’s Department of Workforce Development as it has been previously. State projects will now use prevailing wage rate data determined by the USDOL under the federal Davis-Bacon Act.

Provisions of the legislation also establish that the Department of Administration (DOA) will now have full oversight and rule-making authority to enforce and administer the law with the exception of  state highway projects, which are administered by the Department of Transportation (DOT).

The provisions take effect  January 1, 2017, and will be applied to any request for bids issued on or after that date.

DOL Issues Additional Independent Contractor Guidance

The US Department of Labor (USDOL) Wage and Hour Division recently issued Administrator’s Interpretation No. 2015-1 which provides additional guidance regarding independent contractors under the Fair Labor Standards Act. The Department of Labor has been working for years with the IRS and state agencies to curtail misclassification of employees as independent contractors.

Despite these efforts to educate employers on correctly classifying workers as employees or independent contractors, the USDOL states, “Misclassification of employees as independent contractors is found in an increasing number of workplaces in the United States.” Therefore the Administrator believes additional guidance “may be helpful to the regulated community in classifying workers and ultimately in curtailing misclassification.”

The USDOL believes that the Fair Labor Standards Act definition of employ, “to suffer or permit to work”, as well as the “economic test” is broader in scope than the often-used “common law control” test, so the Department issued Interpretation No. 2015-1 to provide additional guidance.

The Interpretation includes additional insights regarding the “suffer or permit” standard as well multiple other factors to consider. A copy of the Interpretation can be obtained here: http://www.dol.gov/whd/workers/Misclassification/AI-2015_1.htm.

Fair Pay

Recently, in an effort to implement President Obama’s Executive Order (EO) 13673, “Fair Pay and Safe Workplaces,” the Federal Acquisition Regulatory Council issued a proposed regulation and the U.S. Department of Labor issued proposed guidance. This requirement, when implemented, will require covered federal contractors to disclose labor violations, contracting agencies to assess these violations, and the DOL to provide assistance.

 An employer’s record of violations may now be taken into account when contemplating whether to award future contracts, cancel existing contracts, and to potentially demand remedial action to address a pattern of violations.

Furthermore, the proposed guidance and regulations will require contractors to notify workers of their classification as an employee or independent contractor, exempt or non-exempt status under the FLSA, and provide thorough information and disclosures about workers’ pay. Employers with a government contract that exceeds $1 million will be barred from requiring employees to enter into mandatory pre-dispute arbitration agreements for disputes arising out of torts related to sexual harassment or assault, or the Title VII of the Civil Rights Act.

Supporters of the Fair Pay EO say it is intended to improve government contractor compliance with workplace labor requirements administered by the DOL as well as equivalent state laws.

Critics believe the proposed rules will deny federal contractors due process and permit or encourage discrimination in federal contracting based on arbitrary criteria, pre-adjudicated and/or false accusations, or a contractor’s labor affiliation.

A copy of the documents can be found at http://www.dol.gov/asp/fairpay/2015-12562.pdf and http://www.dol.gov/asp/fairpay/2015-12560.pdf.

DOL Proposes New Overtime Rules

On June 30^th, the US Department of Labor (DOL) released a Notice of Proposed Rulemaking (NPRM) focused on updating overtime salary and compensation levels. The NPRM extends overtime protections and overtime pay to most salaried workers earning less than the new threshold of $50,440.

The NPRM implements President Obama’s Memorandum that was issued over a year ago to increase overtime pay. The Memorandum directed the DOL to update the regulations defining which white collar workers are eligible to receive pay for hours worked over 40 in a workweek.

In response, the NPRM raises the salary threshold that businesses will use to determine whether employees are exempt from being paid overtime, simplifies the identification of nonexempt employees, and creates a process to automatically update compensation thresholds.

Under the Fair Labor Standards Act (FLSA), if a worker earned less than the current salary threshold of $23,660 per year, they are automatically qualified for overtime pay if they work more than 40 hours a week. This previously set threshold is below poverty level for a family of four and has been eroded by inflation, leaving a large percentage of workers “exempt” from earning overtime pay.

The Notice of Proposed Rulemaking (NPRM) was published on July 6, 2015 in the Federal Register (80 FR 38515) and interested parties are invited to submit comments on the proposed rule at www.regulations.gov on or before September 4, 2015.

Proposed Changes for Wisconsin’s Prevailing Wage Law

Wisconsin State Assembly Speaker Robin Vos, along with other Assembly members, has called upon the Wisconsin Senate to implement changes which would cut back the state’s prevailing wage.

An ongoing debate has been occurring between those pushing for full repeal of the prevailing wage law and those more focused on preserving the law. These differing positions may provide a compromise.

Proposed changes include cutting eligible projects by 60 percent, setting new minimum salaries for construction workers, and exempting projects that cost less than $450,000 from the law. Furthermore, projects worth less than $1 million would be exempt if at least half the funding comes from private donations.

Reform supporters believe these changes are a step in the right direction, as they would result in half of public construction projects becoming exempt from the law. Supporters also feel the changes would allow more businesses to participate in the projects since the state will require less paperwork from contractors. In addition, a reduction in administrative costs which were previously passed on to taxpayers is expected as administrative work is decreased.

Opponents, however, see these changes as another attempt to save money by lowering wages. They want to preserve the law to fight the risk of lowering the quality of workers, emphasizing that cheapest is not always a better value. The proposed change calls for a study in four years to determine whether the reforms were successful in lowering costs.

Fair Pay Executive Order Proposed Guidance and Rule Published

The US Department of Labor (USDOL) issued guidance and the Federal Acquisition Regulatory (FAR) Council recently published a proposed rule to implement President Obama’s Executive Order on Fair Pay and Safe Workplaces.

The Executive Order requires prospective and existing Federal contractors to disclose whether they have had certain labor law violations and contracting officers, in consultation with newly created labor compliance advisors, to consider the violation, as well as mitigating circumstances, in determining whether to award or extend a contract.

The Executive Order requires for contracts with a value greater than $500,000.

1. Contractors to disclose whether they have had any violations of any one of 14 different Federal labor laws, executive orders, or equivalent state labor laws during the preceding three years
2. Contracting agencies to evaluate these disclosures in determining whether the contractor has a satisfactory record of integrity and business ethics and qualified to receive a Federal contract, and
3. The USDOL to provide assistance to contractors to help them come into compliance.

Comments on these documents are being requested, due no later than July 27, 2015. For more information please see the USDOL press release, which includes links to the USDOL guidance and FAR Council proposed rule.

Preavailing Wage Workers Must be Reimbursed for Work-related Lodging Away from Home

The US Department of Labor’s Administrative Review Board (ARB) recently released a decision regarding Weeks Marine’s payment of employee lodging costs when working away from home. The ARB remanded the case to the Administrative Law Judge for further consideration but in doing so it made clear that when employees are working away from home they must be reimbursed their actual lodging costs.

Weeks Marine was awarded a contract for maintenance, dredging, and beach replenishment of Fire Island Inlet in New York. The contract was covered by the Davis-Bacon Act and employees working on the contract would be lodging away from home. Employees received a $35 per diem subsistence allowance but this did not cover the cost of lodging.

The ARB explained that lodging at Fire Island was primarily for the benefit and convenience of the employer and employees were entitled to their actual costs.

While this decision is not inconsistent with the Field Operations Handbook (FOH) which addresses lodging and transportation costs at 15f19, “Where an employer sends employees who are regularly employed in their home community away from home …… (costs are) properly reimbursable by the employer and incurred for its benefit.”

The ARB did not rely on the FOH and stated, “The Field Handbook merely provides ‘guidance’ to which the ARB and WAB have looked for ‘interpretive assistance’.” While DOL’s intent has been known, the Weeks Marine decision now makes a contractor’s responsibility clear when employees must travel from their homes.

While this is not a legal opinion, it should serve as a reminder to contractors as to their obligations when employees must travel.

A copy of the decision can found at http://www.oalj.dol.gov/PUBLIC/ARB/DECISIONS/ARB_DECISIONS/DBA/12_093.DBAP.PDF

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Wisconsin’s New Right-to-Work Law

On March 9th Wisconsin Governor Scott Walker signed a right-to-work bill making Wisconsin the 25th state in the nation to adopt such a policy. Essentially, the right-to-work law bars businesses and unions from obtaining agreements that require all workers, not just union members, to pay union dues.

Upon signing the bill, Governor Walker explained that Wisconsin “wants people to have the freedom to work, no matter where they work or what they do, and to give employers another compelling reason to consider expanding or moving their business to Wisconsin.”

While state and federal law already allows workers not to join unions; the new law takes it further by making it a crime to require payment of union fees by non-members as a condition of employment.

Supporters say the law will give employees the freedom to decide for themselves whether or not to join or financially support a union. Opponents, however, believe it will weaken unions and lead to fewer employee rights.

Several labor groups sued to nullify the new right-to-work law, asserting that it forces them to represent non-union workers within unionized workplaces at no cost. However a judge quickly ruled that the labor groups failed to prove they would be permanently harmed by the new law and the law stands.

President’s 2016 Budget Proposes Significant Infrastructure Spending

On February 2, President Obama released his proposed budget for 2016 which details a six-year, $478 billion infrastructure plan that would provide a 33 percent increase in funding for public works projects. The plan seeks to upgrade the country’s thousands of crumbling and aging roads, bridges and ports financed in part by a new tax rate on overseas earnings by American companies.

The infrastructure plan proposes efforts to modernize as well as repair existing roads and bridges and modernize our infrastructure with new investments in highways and freight networks as well as bus, subway, rapid transit, light rail, and passenger rail systems in cities, fast-growing metropolitan areas, small towns and rural communities across the country.

Though Democrats and Republicans both appear to be in agreement on the need to improve our country’s infrastructure, the Republican-controlled Congress may object to how President Obama proposes to pay for this effort.

Roughly $240 billion of the funding needed for this plan would supposedly come from current taxes on gasoline and other revenue sources. The additional $238 billion however is expected to come from a transition tax. A transition tax would mean American companies would have to pay a US tax on the $2 trillion they already have overseas.