Federal Trade Commission Issues NPRM To Ban Noncompete Clauses

The Federal Trade Commission (FTC) has issued a notice of proposed rulemaking (NPRM) that bans employers from imposing noncompete clauses on their workers. The NPRM is based on preliminary studies that find noncompetes create an unfair method of competition, therefore, violating Section 5 of the Federal Trade Commission Act.

Noncompete agreements are widespread and can block the creation of new businesses and suppress wages. The NPRM would prohibit new and existing noncompete clauses to address these issues.

The NPRM would apply to independent contractors and anyone who works for an employer, whether paid or not. The FTC estimates that the NPRM could help increase wages by nearly $300 billion annually and expand career opportunities for about 30 million American workers.

The public is invited to submit comments regarding the NPRM by March 10, 2023. After this, the FTC will issue a final rule that will include changes based on the comments received and any further analysis of this issue.

White House Issues Memo Strengthening Support for Federal Contract Labor Practices

The White House has issued memorandum M-23-08 requiring all federal agencies to formally designate a labor advisor whose role will ensure government contracts comply with federal employment laws. This comes in response to the White House Task Force on Worker Organizing and Empowerment (Task Force) report recommending strengthening federal contractor employment and labor practices.

The memorandum guides agencies on the Task Force’s recommendation to designate labor advisors in all federal agencies and to provide more coordination and training among agency labor advisors. These labor advisors would help to improve implementation and uniform compliance with contract labor law requirements for Federal contracts.
The objective is for labor advisers to help agencies prevent employment violations that can result in costly lawsuits, back pay, and erosion of trust in the federal procurement system. Labor advisors will have many roles, including helping promote federal workforce understanding of longstanding labor laws such as the Service Contract Act (SCA), Davis-Bacon Act (DCA), and the Fair Labor Standards Act (FLSA).

The Department of Labor and the Office of Federal Procurement Policy within the Office of Management and Budget (OMB) will establish and jointly manage the agency labor advisers, known as the Contract Labor Advisor Group (CLAG). The CLAG is expected to focus training on non-displacement and project labor agreements to support their implementation.
At this time, the OMB and DOL are asking Agencies to designate at least one career employee as a labor adviser by Feb. 15.

NY State Has New Registration System Enforcing Labor Laws

The State of New York has recently signed legislation establishing a new registration system for all contractors and subcontractors engaged in public work and covered private projects to enforce existing labor laws better. As a result, any contractors planning to bid on covered projects should know they must register with the NY Department of Labor (NYDOL) beforehand.

This new law creates a registration system that allows the NYDOL to vet the contractor to see if they had any previous labor law violations, including prevailing wage, and ensure that only responsible contractors are approved to bid on New York covered projects. The intent is to ensure transparency, reduce fraud, and ensure taxpayers’ money goes only to contractors who treat their employees well.

Under this new law, a contractor must register with the NYDOL by providing a series of disclosures about their businesses every two years. This legislation is now in effect. Details may be found at https://www.nysenate.gov/legislation/bills/2021/S5994.

November 2022 Construction Spending

The U.S. Census Bureau announced construction spending for November 2022 was at a seasonally adjusted annual rate of $1,807 billion, 0.2% above the revised estimate of $1,803 billion in October. Compared to the same period last year, construction spending was up 8.5%. During the first eleven months of 2022, spending amounted to $1,658 billion, up 10.5% above the same period in 2021.

While private construction spending in November was $1,426 billion, 0.3% above the revised October estimate of $1,422 billion, public construction spending was $381 billion, just 0.5% below the revised October estimate of $382 billion, with education construction as the primary contributor at $81.3, which is just 0.1% above the previous month. However, compared to last year’s period, public construction spending is up 10% from $345 last November.

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

Treasury & IRS Issues Guidance on Wage and Apprenticeship Requirements for Enhanced Tax Benefits

The Treasury Department (Treasury) and Internal Revenue Service (IRS) have released Notice 2022-61 which provides taxpayers with information on how to satisfy the prevailing wage and apprenticeship requirements for enhanced tax benefits under the Inflation Reduction Act (IRA).

When created, the IRA devised several new standards and revised tax incentives to promote clean energy projects. Among the incentives, Congress required that taxpayers meet prevailing wage and apprenticeship standards in constructing a project to foster job growth in the energy section. This Notice helps establish the initial guidance needed for implementing the IRA.

The Notice guides how taxpayers, such as contractors, builders, developers, and owners of clean energy facilities, receive the deduction amounts or increased tax credits by satisfying the wage and apprenticeship requirements. The guidance includes examples of what constitutes a prevailing wage and the determination of qualified apprenticeships.

This Notice also serves as the published guidance establishing the 60 days described in those provisions of the Code concerning prevailing wage and apprenticeship requirements. This Notice affects construction or installation, which begins on or after January 30, 2023.

This is a link to the Notice; https://www.govinfo.gov/content/pkg/FR-2022-11-30/pdf/2022-26108.pdf  The Treasury and the IRS anticipate issuing other guidance and proposed regulations concerning the prevailing wage and apprenticeship requirements.

Notice of Minimum Wage Rate Change for Federal Contracts in January 2023

The U.S. Department of Labor, Wage and Hour Division (WHD) announced a minimum wage increase for workers performing work on or in connection with federal contracts covered by Executive Order (E.O.) 14026, Increasing the Minimum Wage for Federal Contractors. This rate change is effective January 1, 2023, increasing the minimum wage for covered employees to $16.20 per hour.

President Biden issued E.O. 14026, which raised the hourly minimum wage to $15.00 per hour, beginning on January 30, 2022, with annual adjustments planned for inflation after that in amounts determined by the Secretary of Labor.

Currently, workers working on covered federal contracts are paid a minimum wage of $15.00 per hour. By January 30, 2023, all agencies must implement the $16.20 minimum wage into all new contract solicitations. Additionally, agencies must implement the new higher rate into existing contracts when parties exercise their option to extend.

DOL Issues NPRM Revising Guidance Determining Worker Classification Under FLSA

The U.S. Department of Labor, Wage and Hour Division (WHD) published a Notice of Proposed Rule Making (NPRM) revising their guidance and addressing the distinction between an independent contractor and an employee under the Fair Labor Standards Act (FLSA). The proposed guidance seeks to improve the determination process for classifying workers to avoid employee misclassification.

The NPRM rescinds the prior rule, issued in January 2021, and replaces it with an analysis for determining employee or independent contractor status that is more consistent with judicial precedent and the FLSA’s purpose. The proposed changes mean no longer using “core factors” in determining worker classification but instead returning to conducting a “totality-of-the-circumstances” analysis in which the economic reality factors are each given full consideration and not assigned predetermined weight.

A worker’s classification as an employee or an independent contractor makes a considerable difference regarding their rights under the FSLA. Therefore, the WHD believes the new rule would protect worker rights and provide consistency for regulated entities.

Parties interested in submitting comments to this NPRM should do so by the December 13^th deadline. More details regarding this NPRM as well as details for submitting comments can be found at Federalregister.gov and https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking.

Treasury Seeks Input on Credit Enhancements Under the IRA When Meeting Prevailing Wage and Apprenticeship Requirements

The U.S. Treasury and the Internal Revenue Service have issued Notice 2022-51 seeking taxpayer comments regarding specific provisions of the Internal Revenue Code, as amended or added by the Inflation Reduction Act of 2022 (IRA). The Notice marks a critical first step in the formal process of implementing this legislation.

Notice 2022-51 requests comments on how taxpayers may qualify for increased credit or deduction amounts if prevailing wage and apprenticeship requirements are satisfied, bonus credit amounts if specific domestic content requirements are met, or increased credit for investment in energy communities.

Comments received in response to this Notice will help to inform the development of guidance implementing the provisions of the IRA. Therefore, those interested in providing feedback should follow the instructions in the Notices and reply as soon as possible, ideally by November 4, 2022. This is a link to the Notice; https://www.irs.gov/pub/irs-drop/n-22-51.pdf.

Read The Latest Edition Of The Contractors Plan Retirement Newsletter.

The purpose of this quarterly newsletter is to provide a deeper dive into retirement topics, helping you better prepare for upcoming and important events. We will also cover happenings in the retirement industry that may potentially have an impact on your plan. We hope you find this information both informative and useful.

Click Here To Read The Fall 2022 Retirement Newsletter.

Overview of SBA Annual Agency Procurement Scorecards

The Small Business Administration (SBA) Office of Policy, Planning and Liaison recently published its annual procurement scorecard assessing how well federal agencies did in reaching their 2021 Small Business (SB) contracting goals. The SBA works with 24 agencies annually to establish their prime and subcontracting goals, and their scorecard grades are based on the agreed-upon goals.

The annual scorecard is an assessment tool to measure how well federal agencies reach their small business and socio-economic prime contracting and subcontracting.

Overall, in 2021, agencies reached their prime contracting goals for small businesses, small disadvantaged businesses, and service-disabled veteran-owned small businesses. However, agencies did not meet goals in small businesses located in Historically Underutilized Business Zones (HUBZones) nor with small woman-owned businesses.

Agency scorecard grades consist of their achievements in four areas, and each area is graded by percentage, with 50% from Prime Contracting. Letter grades are then given to reflect what percent of their goals were met or exceeded. The agencies with the highest scoring letter grade (+A) include Commerce, DHS, DOL, EPA, GSA, Interior, NCR, NSF, OPM, SBA, and State. The lowest scoring agencies include HHS and Treasury; both scored a letter grade of “B.” HUD can in with the lowest grade of a “C,” but that is improved from the “D” they earned the previous year.

The Agency Scorecard can be found at Scorecard Landing (sba.gov).