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TAUC Legislative & Regulatory Update, October 2019
Impeachment fever has overtaken Washington, D.C., threatening to crowd out many items on the legislative agenda. Congress passed a Continuing Resolution to keep the Federal Government operating through November 21st while the House and Senate work on reaching agreement on Fiscal Year 2020 spending bills. It remains to be seen what other agenda items will be considered when and if the House begins impeachment proceedings.
While we await Senate action on Multiemployer Pension reforms and next steps by the U.S. Department of Labor (DOL) on its proposed apprenticeship and training rule, here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Senate Confirms Department of Labor Secretary
The Senate voted 53-44 to confirm Eugene Scalia as Secretary of Labor to replace former DOL Secretary Acosta. Scalia is a partner at the Washington law firm Gibson Dunn & Crutcher. He is the son of former Supreme Court Justice Anton Scalia and served as solicitor of the Labor Department from 2002 to 2003 after his appointment by then-President George W. Bush.
The House Education and Labor Committee's Subcommittee on Workforce Protections held a hearing on the impact of employee misclassification on workers, businesses and the economy.
TAUC joined the Construction Employers of America (CEA) in a letter to the Subcommittee expressing the concern of union contractors with misclassification, which increasingly forces union contractors to compete against companies that deliberately misclassify workers as independent contractors to gain an unfair competitive advantage by disregarding wage and hour laws, workers' compensation laws, unemployment insurance regulations, and other basic responsibilities of being an employer. Estimates show that employers can save as much as 30 percent on payroll and related taxes by misclassifying workers, which costs the federal government approximately $3.7 billion in lost tax revenue.
The hearing also focused on legislation expected to be introduced soon to reduce misclassification – the "Payroll Fraud Prevention Act." This legislation would require employers to accurately classify their workers and to provide all workers they hire with a written notice of their classification. It would also establish civil penalties for violations and extend a private right of action to misclassified employees to recover lost wages and help improve the detection of misclassification by directing the Wage and Hour Division to conduct audits of industries with frequent incidents of misclassification.
The legislative activity in the House follow's the passage of legislation in California to tighten the rules for classifying a worker as an independent contractor rather than an employee.
DOL Overtime Pay Rule
The DOL finalized the rule governing federal overtime earning thresholds under the Fair Labor Standards Act (FLSA). The final rule supdates the overtime pay threshold for "standard salary level" from the current level of $455 per week ($23,660 annually) to $679 per week ($35,308 annually) for full-year employees. The threshold was last increased in 2004. The rule also raises the total annual compensation level for "highly compensated employees" exemption from $100,000 to $107,432 per year.
In 2014, the Obama administration proposed to double the overtime threshold to include workers earning up to $913 per week ($47,476 annually) and indexed future changes to the cost of living. A Federal court ruled in 2016 that DOL had exceeded its rulemaking authority and blocked its implementation. The court held the appeal in abeyance until further DOL could undertake further rulemaking regarding a revised salary threshold.
The final rule will be effective on January 1, 2020.