The U.S. Department of Labor published a Proposed Rule to Implement President Joe Biden’s Executive Order (EO) reinstating the Nondisplacement of Qualified Workers Under Service Contracts.
The EO and DOL proposed rule reinstates a policy that requires successor federal contractors, in certain circumstances, to offer a right of first refusal of employment to employees working under the predecessor contract.
The EO requires DOL to develop this regulation and the FAR Council to create a contract clause to apply to new solicitations. Since the EO was signed, “agencies are strongly encouraged” to include the new contract clause in solicitations before the FAR clause is final.
Employees working on predecessor contracts covered by the Service Contract Act, and meeting other requirements, who would be terminated as a result of the contract’s end, should be offered by the successor “a right of first refusal of employment under this contract in positions for which those employees are qualified.”
A copy of the Notice of Proposed Rulemaking can be found here: https://www.federalregister.gov/documents/2022/07/15/2022-14967/nondisplacement-of-qualified-workers-under-service-contracts
Gov. Whitmer defies the law to reimpose a rule favoring unions in big state construction projects.
The builders I work with are used to Michigan putting the thumb on the scale for labor unions. But we never expected Gov. Gretchen Whitmer to go so far as to disregard the law. She has unilaterally imposed a prevailing-wage mandate on the biggest state construction projects, even though the state Legislature officially ended this policy in 2018. The nonunion construction companies I represent are no longer able to compete for these contracts fairly and openly. And we aren’t the only losers. Ms. Whitmer is lawlessly sticking it to taxpayers, too.
Read the entire article here: https://www.wsj.com/articles/can-we-build-it-not-in-michigan-we-cant-union-prevailing-wage-mandate-construction-taxpayers-governor-whitmer-11658437152
On July 14th, 2022, the Department of Labor announced an Notice of Proposed Rulemaking (NPRM) to implement the executive orders of President Biden made late last year. The order requires that contractors and subcontractors working on covered federal service contracts (i.e., most SCA-covered contracts over $250,000) must, in good faith, offer service employees employed under the predecessor contract a right of first refusal of employment on the successor contract.
Possible positive impacts from the proposed rule include:
The Department of Labor encourages interested parties to submit comments on the NPRM by 11:59 p.m. ET on August 15, 2022.
You can view the full press release below:
Per 29 C.F.R. subsection 4.52, the prevailing wage health and welfare fringe benefit rates will be increased under the McNamara-O’Hara Service Contract Act effective June 23, 2022.
Any contracts awarded before January 1st 2017, will have a new fringe rate of $4.80 per hour.
Any contracts awarded after January 1st 2017 that have to comply with EO13706, will have a new fringe rate of $4.41 per hour.
You can view the entire Memorandum Number 239 by clicking here.
In response to the Department of Labor’s (Department’s) notice of proposed rulemaking (NPRM), updating the Davis-Bacon and Related Acts Regulations, Fringe Benefit Group worked with The Groom Law Group on comments promoting retirement savings and limiting the administrative burden on contractors.
In March, the Department issued the NPRM, representing the most comprehensive review of the Davis-Bacon Act regulations in 40 years. The Department encouraged interested parties to submit comments on this proposal by May 17, 2022.
The proposed updates were extensive and involved a broad range of changes. Our expertise allowed us to focus on the proposed rules that would have the greatest impact to our clients and their benefit plans. Based on our years of experience and countless conversations with contractors, we knew it was imperative to provide comments on two fundamental aspects: encouraging retirement benefits and addressing the advantage of simplifying administrative requirements.
Our comments emphasize that the Departments proposed updates can be enhanced for both covered workers and contractors. We underscore that covered workers should have access to the highest quality benefits, such as retirement savings. In addition, these benefits should be portable, so they do not risk losing access to them when moving from project to project. We also reiterate that covered contractors want to meet their DBRA requirements and use their fringe benefit programs to attract and retain superior workers.
These interests align with a regulatory scheme that appropriately protects workers’ interests but does not create excessive administrative requirements. Therefore, it is essential that requirements are consistent and streamlined, ultimately minimizing the potential of high administrative costs so as not to limit contractors’ ability to offer such benefits but rather to encourage them to provide the highest-quality benefits and workers’ access to them.
In direct support of congressional efforts to boost retirement savings, we encourage the Department to include a safe harbor provision to automatically qualify defined contribution pension plans (DCPPs) for the annualization exception when they meet the exception requirements. This change would help eliminate an unnecessary burden on contractors and administrators who would otherwise prepare submissions for all fringe benefit plans seeking an exception from an annualization requirement.
Having a safe harbor included in the DCPP would also help address time constraints and administrative complexity, which would help encourage small businesses or new entrants to pursue opportunities covered by the DBA or DBRA. And demographically, covered workers in these scenarios are the ones who could benefit the most by achieving improved financial security.
Alternatively, we proposed that the Department adopt a concept that has been used successfully in other contexts by federal agencies for many years and allow contractors to adopt “pre-approved” plans that have met the annualization requirements. This, again, benefits both covered workers and contractors by supporting the provision of worker benefits and affording timely and efficient administrative requirements for the contractors.
The proposed regulations also include a new provision that a contractor or subcontractor may not take Davis-Bacon credit for its administrative expenses incurred with the administration of fringe benefits. The Department has specially requested comments concerning “whether it should clarify this principle further concerning third-party administrative costs.”
In our response, we stressed that the Department should confirm that reasonable administrative expenses paid to a third party and directly related to the provision of fringe benefits should be creditable. Essentially, if the third party expense would not have been incurred “but for” the provision of fringe benefits, it should be creditable, encompassing administrative costs associated with providing fringe benefits to employees and the administration and delivery of benefits.
This recommendation is consistent with ERISA, the governing statute of employee benefit plans, allowing plan assets to “defray reasonable expenses of administrating the plan.” In other words, Congress and the Department have determined that benefit plan assets can be used to pay for plan administrative expenses. In addition, allowing employers to receive credit for reasonable expenses paid to third-party providers encourages them to utilize providers who can efficiently maximize the value to covered employees. Furthermore, any additional costs would disproportionately impact smaller businesses, which often struggle the most in absorbing added expenses.
We hope that the Department will incorporate our suggestions, making it easier to access retirement savings benefits and less burdensome for contractors to administer benefits and overall compliance.
On May 27, the Safer Federal Workforce Task Force (SFWTF) updated their guidance concerning its new vaccination certification form, intended to help protect the health and safety of all Federal employees against the spread of COVID-19. Submission of this signed verification form or proof of any required negative COVID-19 test may be required to enter a Federal facility.
This form aims to ensure compliance with safety protocols for all Federal employees and onsite contractor employees, visitors to Federal facilities, and other individuals interacting with the Federal workforce. The SFWTF is authorized to request the information on this form per Executive Order 13991, Protecting the Federal Workforce and Requiring Mask-Wearing (Jan. 20, 2021). However, the agency will not maintain any documentation, and therefore, it is essential to keep the form once completed while visiting a federal facility.
The guidance clarifies that the forms will be required whenever the COVID-19 Community Level in a county where a Federal facility is located is “MEDIUM” or “HIGH” as defined by CDC. Onsite contractor employees must attest to their vaccination status by being able to present a completed Certification of Vaccination form while in that Federal facility. If they fail to submit this signed form or cannot provide proof of any required negative COVID-19 test, entrance may be denied.
The guidance and form can be found at: https://www.saferfederalworkforce.gov/downloads/CertificationVaccinationPRAv7.pdf
Nat Peniston, vice president of The Contractors Plan, recently wrote an article which appears in Construction Executive. In this article, he discusses the number one challenge contractors face nationally, which is the inability to hire and retain an adequate number of skilled craft workers.
While businesses are having problems finding and retaining qualified employees in today’s post-COVID-19 economic recovery, the construction labor market has been tightening for years, and contractors are uniquely affected. According to ABC analysis, there is a shortage of over 500,000 skilled workers in the United States. There are various reasons for this labor shortage, but false perceptions of a career in construction are a primary cause. Many Gen Y and Z workers perceive construction as dangerous work, with poor income potential and limited career opportunities.
You can read the entire article here: https://www.constructionexec.com/article/is-it-time-to-update-your-recruiting-strategy
In support of National Construction Safety Week, the Department of Labor’s (DOL) Wage and Hour Division (WHD) announced new compliance assistance materials and a web page to help construction employees and employers understand Davis-Bacon Act worker protections for projects created by the Bipartisan Infrastructure Law.
Jessica Looman, Acting WHD Administrator, noted that “we depend on construction industry workers to help us realize the promise and benefits of the Bipartisan Infrastructure Law. Many work long hours in difficult conditions, and we owe it to them to ensure that their jobs are good and that employers pay them fair wages and benefits.”
The new compliance assistance materials include a toolkit in English and Spanish to help construction workers understand their rights and inform employers about their legal obligations.
Additionally, the WHD is inviting all Federal construction industry contractors, workers, and other stakeholders to an online forum on wage compliance and other relative issues, which will take place on May 17th and 18th from 9:00 am to 4:30 pm CDT. Attendance for The “Build Back Better in Compliance” forum is free, but registration is required ahead of time.
Register Here: https://www.eventbrite.com/e/fy-2022-dol-forum-build-back-better-in-compliance-tickets-299630241117
On March 11, 2022, the Department announced a notice of proposed rulemaking (NPRM), Updating the Davis-Bacon and Related Acts Regulations to better reflect the needs of workers in the construction industry, and planned federal construction investments. The proposed rulemaking by the department’s Wage and Hour Division represents the most comprehensive review of the Davis-Bacon Act regulations in 40 years.
Many of the proposed regulatory changes will improve the Department’s ability to administer and enforce DBRA labor standards more effectively and efficiently.
Proposed changes include:
There are 71 DBRA laws applicable to federal and federally assisted construction projects that require the payment of locally prevailing wage rates for 1.2 million U.S. construction workers. The requirements currently cover approximately $187 billion in federal spending on construction each year.
The DBRA requirements also protect workers under the unprecedented federal investments in infrastructure across the country. These projects involve clean energy, power and water infrastructure improvements, legacy pollution remediation, and renovation to the nation’s broadband and transportation infrastructures.
Learn More Here:
https://www.dol.gov/agencies/whd/government-contracts/construction/NPRM-davis-bacon
The U.S. Census Bureau announced construction spending for December 2021 was at a seasonally adjusted annual rate of $1,639 billion, 0.2% above the revised estimate of $1,636 billion in November. Compared to last year’s same period, construction spending in December was up 9%. The overall value of construction in 2021 was $1,589 billion, 8.2% above the total construction spending in 2020.
While private construction spending in December was $1,293 billion, 0.7% above the revised November estimate of $1,284 billion, public construction spending was $347 billion, 1.6% below the revised November estimate of $353 billion. However, the one strong contributor to public construction was highway construction at $103.5 billion, 0.1% above the revised November estimate of $103.4 billion.
Compared to the previous year, the value of public construction in 2020 was $346 billion, 4.2% below what was spent in 2020. Again, highway construction was the sole leader of growth with $99.7 billion, up 0.2 percent above the $99.5 billion in 2020.
More information may be found at: