The D.C. Download, June 2023

June 30 2023

Government

Biden Administration’s Spring Regulatory Agenda

The Biden Administration recently released its Spring 2023 Regulatory Agenda.  The Agenda outlines the Administration’s Federal regulatory priorities and provides updates on pending and anticipated regulatory rulemakings. The Agenda includes updates on several rulemakings of importance to TAUC members:

• Finalize Rule Updating and Modernizing Davis-Bacon Prevailing Wage Requirements – The DOL is expected to finalize its prevailing wage rulemaking in June 2023. The rule is designed to address the substantial erosion to the DBA’s regulatory framework that has occurred over the past 40 years, which has undermined the Act’s intent of providing wage protections for workers and a level playing field for contractors.

The NPRM proposes to:

• Creating efficiencies in the prevailing wage update system to ensure wage rates reflect actual wages paid to workers on Federal construction projects.
• Restore the original definition of “prevailing wage” used from 1935 to 1983 to ensure prevailing wages reflect actual wages paid to workers in the local community. This would restore what is known as the “Three-Step Rule” for calculating wage rates, which will more accurately reflect the actual wage rate for each job classification that most frequently appears in a county.
• Periodically updating prevailing wage rates to address out-of-date wage determinations.
• Provide broader authority to adopt state or local wage determinations when certain criteria are met.
• Issuing supplemental rates for key job classifications when no survey data exists.
• Updating the regulatory language to better reflect modern construction practices.
• Strengthen and clarify debarment standard debarment and anti-retaliation provisions to promote consistent enforcement of prevailing wage standards.

TAUC and the Construction Employers of America (CEA) submitted comments in support of the proposed rule.

• Employee Classification Under the FLSA – DOL is expected to finalize it rulemaking to replace the Trump-era rule that made it easier for employers to misclassify workers as independent contractors in August 2023. The NPRM would propose a new standard for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). Under the FLSA, employers are required to provide benefits such as minimum wage and overtime to employees, but not to independent contractors.

While we will have to wait to see the final rule, the framework in the proposed rule was more consistent with longstanding judicial precedent on which employers have relied to classify workers as employees or independent contractors under the FLSA. The goal of the proposed rule is to provide guidance on worker classification to combat employee misclassification, which is rampant in the construction industry and provides employers who misclassify an unfair advantage over law-abiding businesses.

Among other things, the proposed rule would:

• Rescind the 2021 Independent Contractor Rule, which TAUC opposed.
• Align the department’s approach with courts’ FLSA interpretation and the economic reality test.
• Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor, as opposed to the two-factor test focused only on control and profit in the 2021 rule.
• Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
• Revert to the longstanding interpretation of the economic reality factors, which considers the extent to which the work being performed is integral to the employer’s business. These factors include — 
• the workers economic dependence on the employer,
• investment by the worker and the employer, and
• the nature and degree of employer control and opportunity for profit or loss.

• National Apprenticeship System – In August, DOL is expected to issue a Notice of Proposed Rulemaking (NPRM) on National Apprenticeship System Enhancements. The last time the National Apprenticeship System was updated was 2008. The Administration stated objective in advancing the NPRM is to update the National Apprenticeship System so that it expands and strengthens registered apprenticeships, worker protections, equity, and the pre-apprenticeship pipeline.

House Committee Defeats Attempt to Limit Use of PLAs on Aviation Projects

During its consideration of the reauthorization of Federal Aviation Administration (FAA) programs, the Transportation and Infrastructure Committee defeated an amendment to prohibit the use of PLAs on FAA funded projects. The amendment, offered by Representative Scott Perry (R-PA), was defeated by a vote of 22-42.  Several republicans voted with all democratic committee members on the vote.

Perry also offered an amendment proposing to raise the threshold on projects required to pay workers prevailing wage from $2,000 to $150,000. That amendment was defeated on a voice vote. 

We anticipate seeing similar attempts to limit the application of David Bacon and use of PLAs as amendments offered to annual appropriations bills later this summer. 

NLRB Expands Definition of Employee

The National Labor Relations Board (NLRB) issued a ruling that revised the standard it applies to determine whether a worker is an employee who has the protections of the National Labor Relations Act (NRLA), or an independent contractor who is not protected by the NLRA. The 3-1 decision overturned a Trump-era ruling, which had made it easier for companies to define their workers as independent contractors. The new ruling returns an Obama-era test, which, among other factors, elevates how much a worker depends on a single company for their income. The ruling also relegates a Trump-era test, which had elevated how much independent contractors could leverage their business acumen to generate more income. 

New Protections for Pregnant Workers to Take Effect

The Fiscal Year 2023 Omnibus Appropriations bill included more than $1.7 trillion dollars in spending, but it also included enhanced protections for pregnant workers, which are scheduled to go into effect at the end of June 2023. The Pregnant Workers Fairness Act (PWFA) requires businesses with more than 15 employees to provide “reasonable accommodations” for workers who are managing pregnancy, childbirth, or related medical issues. However, the Equal Employment Opportunity Commission (EEOC), which is tasked with enforcing the law, still has not released regulations on how it will apply PWFA.

Project Delivery and Permit Reform

The agreement reached between President Biden and House Republicans to suspend the Federal debt ceiling included reforms to the National Environmental Policy Act (NEPA) to speed federal environmental reviews and permitting requirements for infrastructure projects. The provisions would set time limits on Federal environmental reviews, allow developers to deal with a single federal agency, and reduce duplicative forms and reviews. Specifically, it would set a one-year deadline for finalizing environmental assessments and a two-year maximum for environmental impact statements for construction projects.

It also expands Fast-41, an existing federal program that allows stakeholders to expedite federal permitting for infrastructure projects by helping to improve project coordination, transparency, and predictability.

Inflation Reduction Act Implementation and Guidance

• Guidance Released on Domestic Manufacturing Credits– The Internal Revenue Service (IRS) and the Department of Treasury (Treasury) released new guidance outlining how to developers can receive domestic manufacturing bonuses from the Inflation Reduction Act (IRA). The bonus will apply to clean energy projects that meet domestic manufacturing and sourcing requirements. To qualify for the 10-percent bonus, projects must meet domestic content requirements and the project must product less than 1 megawatt of energy; construction must have started before January 29, 2023; and the project must meet the IRA’s prevailing wage and apprenticeship requirements.

The bonus applies to facilities created using domestically produced iron, steel, and other manufactured products. To receive the bonus, steel and iron manufacturing processes must occur domestically.

• IRS Releases Additional Guidance on IRA Clean Energy Investments – The IRS released additional guidance on green energy investments in the IRA. The guidance supplements guidance the IRS released in April 2023 for the clean energy Investment Tax Credit (ITC) and Production Tax Credit (PTC). The additional guidance provides updates on eligibility for bonuses based on new local unemployment rate data and other clarifications. The new unemployment rate data reflects data from 2022.

The tax credits are available to developers who locate projects in areas that had historically relied on fossil fuels for jobs and tax revenue. To qualify for the credit, at least 0.17 percent direct employment, or at least 25 percent local tax revenues, must be related to the extraction, processing, storage, or production of fossil fuels. Areas must also face above average rates of unemployment. The tax credit is also available for eligible projects being developed on brownfield sites. 

• IRS Releases New Guidance for Investments in Coal and Low-Income Communities — The IRS, U.S. Department of Energy (DOE), and U.S. Department of Treasury (Treasury) released new guidance on the application process for the Qualifying Advanced Energy Project Credit program. Originally created through the American Recovery and Reinvestment Act of 2009, the IRA provided $10 billion in new funding for the program. There are some restrictions on how the new funding can be spent, including $4 billion must be reserved for projects in communities with closed coal mines and $4 billion must be used for projects in designated coal communities. The guidance released covers new information on the application process and technical guidance.

Treasury and IRS released an NPRM for the Low-Income Communities Bonus program. The program provides a boost to the Investment Tax Credit for solar and wind projects located in low-income communities. The NPRM includes recommendations on how to expedite the application process and create transparency in the application process. Final guidance on this program is expected later this year.

Supreme Court on Collision Course with NLRB

In 2017, Glacier Northwest, Inc. was working towards a new collective bargaining agreement with its truck drivers when the truck drivers decided to call a strike. During the strike, the truckers left concrete in their trucks, eventually ruining it. Glacier Northwest sued the trucker’s union for damages in a case that eventually made its way to the Washington Supreme Court. The Washington Supreme Court dismissed the concrete company’s lawsuit for damages. Last year, the National Labor Relations Board (NLRB) ruled that the original lawsuit was an unlawful retaliatory tactic, a decision which caused some controversy. Historically, the NLRB does not regulate how groups use the legal system to settle disputes.

However, in an 8-1 decision, the United States Supreme Court ruled against the Washington Supreme Court, arguing the Washington Supreme Court was incorrect in dismissing the concrete company’s lawsuit. The Supreme Court decision indicates the concrete company’s lawsuit can and should move forward.

GAO Releases Report on Non-Compete Agreements

Working with the Federal Trade Commission (FTC) and Department of Justice, the Government Accountability Office (GAO) released a study on non-compete agreements. The study found that approximately 18% of workers are subject to noncompete agreements (NCAs) and that 38% of workers had been subject to an NCA at least one point in their career. NCAs are normally associated with senior level positions, and the study backed this up, finding that more than 98% of respondents that use NCAs require them for executives and salaried managers. However, among respondents that use NCAs, 69% and 72% of companies require them for part-time and hourly workers respectively.

The study concluded that few workers who sign NCAs were able to negotiate the terms of the agreement. It also concluded that NCAs restrict job mobility and potentially reduce wages and the rate of new firm creation.

The FTC is working on a proposed rulemaking that would ban non-compete employment agreements.