On November 3, 2023, the Illinois Department of Labor released proposed regulations for implementing the Paid Leave for All Workers Act (PLAWA).
This law mandates that private employers throughout the state provide their employees with earned paid leave, applicable for any purpose. While some Illinois municipalities already had similar requirements, this Act ensures uniform benefits statewide.
Broadly, the PLAWA covers most employers with employees who work in Illinois, and under this Act, employees are entitled to one hour of paid time off for every 40 hours they work in 12 months. Employers are not required to grant more than 40 hours of paid leave in that period, but employees can also take that leave for any reason.
Although the proposed rules are not yet finalized, they provide additional guidance for employers to consider when aligning their leave policies with the impending PLAWA, which will be effective on January 1, 2024.
Meanwhile, on November 9, 2023, Chicago passed an ordinance providing a comprehensive package encompassing paid leave to all employees who work at least two hours in two weeks while physically present within the City of Chicago.
As per the ordinance, employees can accumulate up to 40 hours of paid leave within 12 months. Additionally, employees can now use an additional 40 hours of paid leave for any reason, making the total allowable paid time off 80 hours per 12-month period. The Chicago ordinance is one of the nation’s most generous paid time off regulations.
The implementation of the Chicago ordinance is scheduled for December 31, 2023, requiring businesses in the city to modify their policies to align with this broader framework quickly.
Moreover, businesses with employees in Illinois, including those within and outside the City of Chicago, should take measures to ensure compliance with the provisions of the Illinois Paid Leave for All Workers Act, which is also to take effect at the beginning of the new year.
In October, the National Labor Relations Board (NLRB) issued a final rule revising the joint-employer standard under the National Labor Relations Act (Act). This new rule replaced the 2020 final rule established by the previous Board, effective April 27, 2020. The updated regulation introduces a fresh criterion for determining when two employers are joint employers of specific employees as defined by the Act.
Essentially, the 2023 rule states that, according to the Act, multiple entities can be considered joint employers of a group of employees if each entity has an employment relationship with those employees and if they collectively influence or determine one or more essential terms and conditions of employment.
The 2023 rule aligns more closely with established common-law agency principles. It assesses the alleged joint employers’ authority to control essential employment terms and conditions, regardless of whether such control is actively exercised and irrespective of whether the exercise of control is direct or indirect. This rule recognizes the relevance of reserved and indirect control, consistent with common-law principles.
In contrast, the 2020 rule made it easier for actual joint employers to avoid a finding of joint-employer status because it set a higher threshold of “substantial direct and immediate control” over essential employment terms of conditions, which lacks a foundation in common law.
However, the Board has recently prolonged the implementation date of its updated rule outlining the criteria for determining joint-employer status until February 26, 2024. This extension aims to allow for the resolution of legal challenges associated with the rule. Importantly, the revised standard will only be applicable to cases initiated after the rule takes effect.
The Biden-Harris Administration is launching the Better Contracting Initiative (BCI) as part of the Federal Government’s next enterprise approach phase. This initiative is geared toward transforming the purchasing landscape, ensuring better terms, improved pricing, and a deliberate focus on engaging small and disadvantaged businesses. The primary goal is to optimize government spending, especially in procuring common items like IT products and services.
One facet of this initiative is leveraging data sharing across federal agencies. By capitalizing on data, standardizing software licenses, improving contract requirement procedures, and instituting enhanced evaluations for high-risk contracts, as much as $10 billion in annual savings can be achieved.
The BCI focuses on reforming the entire procurement process. The goal is to mitigate risks on high-risk contracts and ensure agencies can negotiate favorable deals in challenging situations.
Overall, the BCI aligns with efforts to enhance diversity and innovation in federal procurement while modernizing workforce development opportunities to keep pace with the ever-evolving procurement landscape. This initiative strives to save billions annually and improve the efficiency and efficacy of federal contracts.
The U.S. Census Bureau announced construction spending for August 2023 was at a seasonally adjusted annual rate of $1,983 billion, 0.5% above the revised estimate of $1,974 billion in July. Compared to the same period last year, construction spending was up 7.4%. During the first eight months of this year, spending amounted to $1,85 billion, up 4.2% above that period in 2022.
While private construction spending in August was $1,553 billion, up 0.5% from the revised July estimate of $1,545 billion, public construction spending was $432 billion, 0.6% above the revised July estimate of $429 billion. Two contributors were educational construction at $91 billion, up 0.25 from July, and highway construction at $130 billion, up 0.4% from July. Additionally, public construction spending is up 14.1% from last year’s period.
More information may be found at:
The Internal Revenue Service (IRS) recently announced notable changes concerning retirement plans for the tax year 2024. These changes reflect ongoing efforts to adapt retirement-related regulations to evolving economic conditions and financial needs.
Changes include the contribution limit for 401(k), 403(b), and most 457 plans, along with the federal Thrift Savings Plan, which has been increased to $23,000, up from the previous limit of $22,500 in 2023. The annual contribution limit for Individual Retirement Accounts (IRA) has also been raised to $7,000 from $6,500. There is a catch-up rate for those 50 or older, who can now add an extra $1,000. For participants in 401(k), 403(b), and most 457 plans, as well as the federal Thrift Savings Plan, who are 50 and older, the catch-up contribution limit remains $7,500, allowing a total contribution of up to $30,500 starting in 2024.
Furthermore, income ranges have been adjusted to determine eligibility for deductible contributions to traditional IRAs, contributions to Roth IRAs, and claiming the Saver’s Credit. Phase-out ranges for traditional IRA deductions have been updated, including an increase for single taxpayers to $77,000 to $87,000.
The income phase-out range for Roth IRA contributions has also increased, with singles and heads of household now falling between $146,000 and $161,000. The Saver’s Credit income limit has been adjusted to $76,500 for married couples filing jointly.
Other changes introduced under the SECURE 2.0 Act include increasing the contribution limit for SIMPLE retirement accounts to $16,000 from $15,500. Additionally, adjustments have been made to the limitation on premiums for qualifying longevity annuity contracts, the deductible limit on charitable distributions, and the deductible limit for a one-time election to treat a distribution from an IRA made directly to a split-interest entity.
Details on these and other retirement-related cost-of-living adjustments for 2024 are in Notice 2023-75, available on IRS.gov.
In November 2021, President Joe Biden signed into law the Infrastructure Investment and Jobs Act (IIJA), allocating $550 billion for the revitalization of our nation’s infrastructure. These funds encompass a broad spectrum of projects, from road and bridge improvements to climate resilience measures, and many of them fall under the purview of the Davis-Bacon Act, ensuring prevailing wage jobs for workers. However, as of February 28, 2023, a significant portion of these funds remains unspent due to the intricacies of the preconstruction phase. This phase, while crucial, entails a multifaceted process involving project planning, design, risk assessment, and regulatory approvals.
Now, as these preconstruction efforts culminate, we stand on the cusp of a large implementation phase, with $185 billion projected to be spent at the state level in 2023. Simultaneously, the commercial construction sector is witnessing a slowdown, particularly in the office space segment. Click here to read valuable insights into the impending opportunities for prevailing wage contractors, emphasizing key considerations such as bidding on infrastructure projects, prevailing wage requirements, workforce development funding, opportunities for designated businesses, and compliance with environmental and labor standards.
The federal government faces a potential shutdown if Congress doesn’t agree on funding by the September 30, 2023 deadline. If no funding plan exists, the shutdown will commence at 12:01 a.m. on October 1, 2023. The shutdown duration is uncertain.
A shutdown is initiated by a deficiency in allocated funding, underscoring the government’s responsibility to adhere to Congress-approved expenditures. The presence of a divided government and ongoing Congressional disputes regarding spending levels increase the likelihood of a shutdown or a sequence of brief continuing resolutions.
While much of the information in the article was provided in a blog in 2019, the impact remains the same. While the news focuses on the implications for federal employees and services such as Social Security checks, airport screening, national parks and museums, and the ability of the IRS to conduct business, the impact on federal contractors is not insignificant.
A helpful resource to better understand federal contracting legal issues when there is a lapse in funding is the Congressional Research Service report titled, Government Procurement in Times of Fiscal Uncertainty, dated April 6, 2012 (R42469). A copy of this report can be viewed at https://fas.org/sgp/crs/misc/R42469.pdf Below is a summary of critical issues:
Please remember that each circumstance is different, so there is no single answer to many of the questions. It is important to note that past government shutdown experience has shown that some agencies are willing to work with contractors and consider equitable adjustments or other tools, such as overtime, to offset lost work. Contractors should document lost hours and the impact on deliverables should this option become available.
Additionally, some unintended contract events occurred due to previous shutdowns, including delays in invoice processing, the shutdown of E-Verify, and the limited functionality of the Civilian Board of Contract Appeals.
This is not a legal opinion of what contractors should do during a shutdown; instead, it’s an effort to direct you toward helpful information.
As the federal government’s fiscal year-end approaches on September 30, 2023, SCA (Service Contract Act) government contractors face the looming specter of a government shutdown. In the current political climate, it’s uncertain whether Congress will reach a budget agreement in time, increasing the risk of a government shutdown that could last for days or even weeks. Such an event would have a significant impact on government contractors, but there are steps you can take to prepare and minimize the potential fallout.
To appropriately plan for a government shutdown, establish open lines of communication with your contracting officers as early as possible. Regular communication will help you stay informed and better anticipate potential disruptions.
Analyze your existing contracts to understand their funding levels and become familiar with suspension of work, stop-work, and government delay-of-work clauses. Equipping yourself with this knowledge will be crucial in the event of a shutdown.
Prepare an internal action plan to mitigate financial damage and ensure the continuity of your operations and employee engagement. Planning ahead can help you navigate the uncertainties of a government shutdown effectively.
Why Is Preparation Crucial?
Government shutdowns have occurred before, with significant economic consequences. The shutdown in 2013 resulted in over $24 billion in economic losses, while the one in 2018-2019 cost the American economy at least $11 billion. Government contractors bore a substantial portion of these losses.
During a government shutdown, agencies are restricted by the Antideficiency Act from obligating funds, which means they cannot award new contracts, modify existing ones, or exercise contract options. Additionally, non-essential government personnel are furloughed, affecting contractors who rely on timely decisions and approvals to maintain project momentum.
Navigating the Shutdown:
During a shutdown, performance delays can be explicit or implicit. Contractors might receive a formal suspension of work or stop-work orders, which can last up to 90 days. Proper documentation of cost and schedule impacts during these periods is critical for equitable adjustment claims.
Even without explicit orders, government inaction can lead to unexpected monetary delays. Understanding clauses like the Government Delay of Work and Changes clauses can help contractors seek relief for additional costs and performance time required due to government inaction.
What Contractors Can Do to Minimize Impact –
Before the Shutdown:
Maintain regular communication with contracting officers to obtain approvals and create action plans.
Train personnel on suspension of work and stop-work orders and develop systems for immediate communication within your organization.
Develop contingency plans for re-assigning personnel and resources, preparing for furloughs, and negotiating contingency plans with supply chain partners.
During the Shutdown:
If directed to stop work, implement contingency plans and accurately track delays and costs.
If no formal stop-work order is issued but delays occur due to government inaction, discreetly track reasons for the delays and associated costs.
Document all relevant facts and time impacts to maximize potential recovery.
In summary, preparing for a potential government shutdown is essential for SCA government contractors. By taking proactive steps and developing a comprehensive plan, you can minimize the impact and navigate the uncertainties that may lie ahead.
Did you know that SIMPLE plans cannot be used effectively when work is performed on prevailing wage jobs? Employers with SIMPLE IRA or SIMPLE 401(k) plans are unable to take full advantage of the savings that can be realized from prevailing wage retirement contributions.
Unless changes are made by November 1st, employers will be stuck with their SIMPLE plan through the next year. Written notice of intent to discontinue a SIMPLE plan must be provided to employees at least 60 days prior to the beginning of the calendar year so keep that in mind when considering making a switch.
Here’s the Deal: Prevailing wage contributions made to a qualified retirement plan, e.g. Profit Sharing, 401(k), reduce payroll overhead and can be leveraged in other ways to save company owners money and allow them to contribute more to their own retirement accounts. Some contractors set up SIMPLE plans because there is no requirement for annual reporting and nondiscrimination testing but they quickly discover that a SIMPLE IRA plan is not a good fit for prevailing wage jobs. While they are relatively easy to set up, their lack of flexibility can cost you winning bids.
Top 4 reasons that SIMPLE plans don’t work for prevailing wage contractors:
Transitioning from a SIMPLE Plan to a 401(k) Plan
As noted, the deadline for employers to provide notification to employees that they intend to discontinue their SIMPLE plans is November 1st. Employers should also contact their current SIMPLE plan administrator to notify them that contributions will not be made to the plan next year.
What Type of Retirement Plan is Best?
For assistance in determining what type of plan will provide maximum benefits for you and your company, consult a qualified retirement plan provider with experience helping prevailing wage contractors. Here at The Contractors Plan, we are the leading experts in prevailing wage benefits.
For more information on prevailing wage benefit plans, please contact us at info@thecontractorsplan.com or 866-670-7442.
On August 23, 2023, the Department of Labor (DOL) published the final rule, “Updating the Davis-Bacon and Related Acts Regulation,” to update regulations for the Davis-Bacon Act and Related Acts (DBRA). The regulations intend to provide explicit guidance and more effective wage rate enforcement on federal projects.
To assist with implementation, the DOL will offer online compliance seminars in September to educate contracting agencies, contractors, unions, workers, and others about the recent updates to regulations concerning employment practices for federally funded contracts.
The final rule announcement follows a Notice of Proposed Rulemaking from March 18, 2022, which received input from the construction industry and labor stakeholders to inform the updates. These updates are the most comprehensive in decades. Some of the rule’s highlights include
The seminars, which require registration, aim to clarify these changes and promote compliance with federal prevailing wage requirements. The workshops will be held on September 13 and 14, 2023, covering various updates, including the definition of “prevailing wage,” periodic rate updates, adoption of state or local wage determinations, and enforcement changes.
The updated regulations are the first significant revision in almost 40 years. Fringe Benefit Group will continue to monitor these changes, seek clarifications from the DOL, and inform you about changes that need to be made. The final rule will be effective 60 days after publication in the Federal Register.