The White House announced an agreement with a bipartisan group of Republican and Democratic Senators on a Bipartisan Infrastructure Framework. The deal calls for $1.2 trillion in total spending and nearly $600 billion in new spending.
According to the White House fact sheet, the Plan makes “investments in clean transportation infrastructure, clean water infrastructure, universal broadband infrastructure, clean power infrastructure, remediation of legacy pollution, and resilience to the changing climate.” Supporters cite the Framework’s benefits, job creation, and improved U.S. competitiveness.
Specifically, the Bipartisan Infrastructure Framework will
The Bipartisan Infrastructure Framework will result in one of the most significant investments in U.S. infrastructure and competitiveness in history. Critics have pointed at the cost, but the Framework also addresses potential funding methods such as unemployment insurance program integrity, the redirection of unused unemployment relief funds, reinstatement Superfund fees for chemicals, 5G spectrum auction proceeds, and others.
A great deal of work still needs to be done by the White House and Members of Congress that support the Framework before it can be approved.
President Biden released the federal government’s budget request for fiscal year 2022. The budget requests $5.7 trillion in spending in FY22, which is about $1.5 trillion less than FY21. During the past several years, covid relief increased federal spending.
Biden’s budget addresses several administration priorities such as the infrastructure, families, and a commitment to reinvest “in crucial public services, benefits, and protections.”
One of the agencies that will play a leading role in implementing the administration’s priorities is the U.S. Department of Labor. Labor’s budget request for FY22 is $14.2 billion, a $900 million increase over FY21. The U.S. Department of Labor is responsible for several initiatives such as enhancing economic pathways for workers and improving worker protections and equity.
One of the Labor bureaus of interest is the Wage and Hour Division (WHD), which enforces workforce protections such as the Davis-Bacon Act and Service Contract Act. The budget request calls for $327.5 million in FY22, a $32.5 million increase compared to FY21. The majority of the increase would add 175 FTE to restore enforcement staff.
The administration’s budget request is just a proposal and would require Congressional approval. However, the request signals the administration’s policy priorities.
Earlier this month, the Wage and Hour Division (WHD) announced the withdrawal of the Independent Contractor rule effective May 6, 2021. The announcement noted that the current final rule published on January 7, 2021, had significantly undermined safeguards against unfair pay practices. Therefore the withdrawal was essential to protect workers’ rights to the minimum wage and overtime compensation protections of the Fair Labor Standards Act (FLSA).
In February, as the new Biden administration transitioned in, the WHD published a proposal to delay the Independent Contractor Rule’s effective date to allow for time to consider potential issues associated with the rule established by the Trump administration. The WHD followed this in March with a notice of proposed rulemaking (NPRM) to withdraw the Independent Contractor Rule explaining that the rule was inconsistent with the FLSA’s text and purpose and would have a confusing effect on workers and businesses alike due to its departure from judicial precedent.
The WHD sought comments on its NPRM to withdraw the Independent Contractor Rule, providing a comment period that expired on April 12, 2021, for which they received more than 1,000 responses. The commenters expressed opposition to the Independent Contractor Rule predominantly because the rule would have facilitated the exploitation of workers reclassified or misclassified as independent contractors due to the rule.
After considering the comments submitted in response to the NPRM, the WHD finalized the withdrawal of the Independent Contractor Rule. They anticipate that the withdrawal of the independent contractor rule will avoid a decline in workers’ access to employer-provided fringe benefits such as health insurance and retirement plans and avoid a reduction in other benefits such as workers’ compensation coverage and unemployment insurance.
President Biden issued an Executive Order (Order) requiring federal contractors to pay a $15 minimum wage by January 30, 2022, to employees working on covered federal contracts. The Order aims to promote economy and efficiency in Federal procurement by increasing the hourly minimum wage paid by the parties that contract with the Federal Government.
This Order builds on former President Obama’s 2014 Executive Order 13658, requiring federal contractors to pay employees working on federal contracts $10.10 per hour, subsequently indexed to inflation. Currently, workers performing work on covered federal contracts are entitled to a minimum wage of $10.95 per hour, and the tipped minimum wage is $7.65 per hour.
By January 30, 2022, all agencies must implement the $15.00 minimum wage into new contract solicitations, and by March 30, 2022, all new contracts must reflect the minimum wage. Additionally, agencies need to implement the new higher wage into existing contracts when parties exercise their option to extend.
The change applies to a wide range of federal workers from cleaning and maintenance, nurses, cafeteria, and other food service workers and tipped workers previously left out. The federal contractor minimum wage applies to contracts covered by the Davis-Bacon Act, the Service Contract Act, and others. Furthermore, the Order extends the required $15 minimum wage to federal contract workers with disabilities.
The U.S. Department of Labor Wage and Hour Division and the Federal Acquisition and Regulatory Council will initiate the rulemaking to implement and enforce this Order. After 2022, the minimum wage will also be subject to annual inflation increases set forth by the Secretary of Labor.
The fact sheet detailing the executive actions can be reviewed at https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/27/fact-sheet-biden-harris-administration-issues-an-executive-order-to-raise-the-minimum-wage-to-15-for-federal-contractors/
AUSTIN, Texas — May 4, 2021 — Fringe Benefit Group, an industry leader in the design, implementation and administration of benefits for hourly and part-time workers, today announced it has established a partnership with eMars to simplify compliance reporting for government contractors using Fringe Benefit Group’s prevailing wage benefit plan, The Contractors Plan.
Fringe Benefit Group is known for its full-service suite of tools and services that greatly reduce the burden of plan enrollment and administration for employers. eMars’ Compliant Client is an easy and efficient way to audit payroll contributions from any payroll. Contractors must certify each week’s payroll and eMars’ verification process uses a Web browser to provide real-time validation of prevailing wage payroll compliance prior to certification and release of funds. Compliant Client ensures that contractors and their subcontractors have the correct prevailing wage base and fringe benefit amounts for the job classification of the jurisdiction where the work is being performed.
According to Brian Robertson, Executive Vice President of Fringe Benefit Group, “Mutual clients of The Contractors Plan and eMars will have a tool to avoid non-compliant contributions and ensure their employees receive bona fide fringe benefits that are accurate.”
The Contractors Plan has nearly four decades of experience providing bona fide fringe benefits to construction contractors who compete under prevailing wage regulations such as the Davis-Bacon Act and state prevailing wage laws. Many non-union contractors pay workers comp and general liability insurance premiums as well as payroll taxes (e.g. FICA) by combining required fringe amounts with base wages and funding the total on the employee’s paycheck. These fringe contributions on the paycheck can create unnecessary payroll burden costs of tens of thousands of dollars per year. The Contractors Plan allows employers to offer bona fide benefits, including a wide variety of health and retirement plan options, to their workforce with minimal administrative burden.
The Biden administration has released a $2 trillion proposal to rebuild infrastructure and reshape the economy. President Biden’s plan will take eight years to accomplish and is intended to fix transportation infrastructure, create jobs, and improve Americans’ quality of life.
A large portion of the President’s plan invests in transportation infrastructure, including repairing roads and bridges, modernizing public transit, creating reliable passenger and freight rail service, improving ports, waterways, and airports. Also, a key focus within the plan is revitalizing digital and power infrastructure.
The plan emphasizes the need to become more resilient by safeguarding critical infrastructure and services, defending vulnerable communities, and maximizing land and water resources’ resilience to protect communities and the environment. To help accomplish Biden’s plan, the Administration will expedite federal decisions prioritizing stakeholder engagement and maximizing equity, health, and environmental benefits.
The plan’s cost will be paid for by raising corporate taxes, particularly from multinationals businesses that earn overseas profits. President Biden explained those increases are meant to encourage companies to produce and invest more in the United States. The Administration noted that the tax increases would offset spending in 15 years, eventually reducing the budget deficit.
The plan will need to be passed by Congress, where it could face opposition for its tax increases and impact on the national debt.
President Biden recently met with Transportation Secretary Pete Buttigieg and a bipartisan group of Members of Congress from the House Transportation and Infrastructure Committee to discuss the vital need to invest in modern and sustainable American infrastructure. This meeting was the Administration’s second in the past month to discuss infrastructure plans with Members of Congress and stakeholders. It is part of an ongoing focus to strengthen and enhance the Country’s roads, bridges, waterways, schools, housing, and more.
According to the White House, the participants “discussed their shared commitment to working across the aisle to build modern and sustainable infrastructure in rural, suburban, and urban areas across the country that create good-paying, union jobs and support the economic recovery.”
The participants also agreed that there is a need to ensure that all infrastructure is modernized to withstand any impacts of climate change while also creating skilled-trade jobs across construction, manufacturing, and engineering sectors to better position America in the 21st century.
However, while the goal of modernizing American’s Infrastructure is bipartisan, how to fund an infrastructure plan is not. The Administration has not decided whether to push infrastructure as a stand-alone bill or as part of a broader package. Either way, Biden’s infrastructure plan will likely face disagreements among party lines.
Earlier this month, the Wage and Hour Division (WHD) announced they would delay the final rule entitled “Independent Contractor Status under the Fair Labor Standards Act” to allow WHD additional opportunity for review.
The final rule was published on January 7, 2021. It had revised the interpretation of independent contractor status under the FLSA to help guide companies struggling with FLSA compliance and how to define an employee vs. an independent contractor. This rule was to take effect on March 8, 2021. However, as expected, the incoming Biden administration challenged this final rule instituting the President’s “Regulatory Freeze Pending Review,” an action that proposes to delay the rule until May 7, 2021.
The WHD also announced it had withdrawn two opinion letters about policies under the Fair Labor Standards Act (FLSA), FLSA2019-6 and FLSA 2019-10, both of which address essential aspects of the final rule.
The FLSA2019-6 opinion letter addressed the same issue under consideration by the WHD; independent contractor status under the FLSA. Therefore, the WHD is removing this opinion letter consistent with its proposed delay of the final rule. The FLSA2019-10 opinion letter has also been withdrawn. Several Courts have declined using this letter noting it was inconsistent with WHD’s regulations and because the letter did not adequately explain WHD’s change in position. Instead, these courts continued to follow WHD’s longstanding prior position.
These withdrawals are official rulings of the WHD, and these letters may not be relied upon as a statement of agency policy as of the dates of withdrawal.
The Executive Order “Combating Race and Sex Stereotyping,” which addressed training for the military, federal employees, grant recipients, and federal contractors, was rescinded by President Biden on January 20, 2021. This issue has been addressed in earlier blog posts.
The diversity training Executive Order’s rescinsion was included in a broader Executive Order on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.” The new Executive Order’s goal is to advance equity across the Federal Government through multiple initiatives.
The original order on diversity training that affected government contractors was signed on September 22, 2020. It applied to contracts entered into starting November 21, 2020. On December 22, 2020, a federal court issued a preliminary injunction prohibiting the Office of Federal Contract Compliance Program from implementing the rule.
Despite the on-again, off-again nature of this rule, agency actions to terminate or restrict contracts resulting from the original order will likely cease as a result of the new order.
Shortly after taking office, President Biden initiated a series of executive actions to provide economic relief in response to the COVID-19 pandemic. Most of the steps address the financial crisis by providing nutritional assistance, improving economic assistance delivery, more significant support for veterans, addressing workplace safety, and improving inter-agency benefit coordination.
While most COVID relief actions have a broad impact, one, in particular, is designed to assist federal government contractor employees. President Biden directed “his administration to start the work that would allow him to issue an Executive Order within the first 100 days that requires federal contractors to pay a $15 minimum wage and provides emergency paid leave to workers.”
Since a federal contractor minimum wage already exists, set at $10.95 per hour starting January 1, 2021 and administered by the U.S. Department of Labor Wage and Hour Division, the new direction will likely result in an amendment of that policy and a phase-in of the higher rate. The fact sheet describing the executive actions can be reviewed here.