Assessing prevailing wage benefits to workers, contractors, and the NYC economy

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The Worker Institute of the ILR School at Cornell University
August 3, 2023

The Labor and Employment Law Program, the Buffalo Co-Lab and the Worker Institute of the ILR School at Cornell University are hosting the launch of a report exploring the cost of prevailing wage to New York City workers and contractors.

On January 1, 2022 an expansion of the prevailing wage law in New York City came into force. The new law significantly increases the universe of construction projects subject to prevailing wage requirements. Given the recent change in legislation, researchers at the Buffalo Co-Lab and the Worker Institute will present on research that explored the cost savings of workers covered by prevailing wages versus workers who are not, in four areas of construction work: laborer, carpenter, lather, and cement finisher. On the face of it, there does not appear to be a difference between union and nonunion wages and benefits in a project covered by prevailing wage. But this changes when the percent of the cost of benefits for a union worker is compared to a nonunion worker. This is, in fact, a defining factor and here the analysis will help us better understand the nature of this relationship between cost of wages and benefits for union versus nonunion workers. Researchers will also present a newly created tool that the public can use to determine the cost of a union versus nonunion contractor for future projects.

A panel discussion will follow the presentation of research with distinguished members of government, labor unions and the real estate industry to explore together the role prevailing wage projects play in and how the building industry can better work to protect the health and safety of construction workers while building more cost-efficient projects in New York City. This session will explore the future of prevailing wage projects, the need for enforcement and responsible contractors as stewards in New York City.

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What’s good for workers is good for Wyoming’s economy

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Bob Abbott
August 3, 2023

For project developers and construction contractors across Wyoming, opportunity is knocking.

At the federal level, the bi-partisan Infrastructure and Jobs Act, Inflation Reduction Act and Chips and Science Act are unleashing billions of dollars to support Wyoming energy, infrastructure, and advanced manufacturing.

Indeed, these investments are a big reason why the U.S. Bureau of Labor Statistics is projecting that between now and 2030 about 60% of new jobs in our nation’s economy won’t require a college degree. Many of them, in the skilled construction sector, will build and maintain these federally funded projects.

In short, the opportunities ahead cry out for investments that promote quality jobs and expanded career pathways into the skilled trades.

Yet for generations, Americans have told our kids that college — and the enormous student debt load that comes with it — was the preferred pathway to a middle-class life. State legislatures and courts alike mounted decades of attacks on workers’ rights, labor standards and the institutions that have long replenished our supply of skilled trade workers.

Wyoming has not been immune to these efforts — or their effects.

It is one of roughly two dozen states that have passed laws to weaken collective bargaining institutions. These so-called “right to work” laws are consistently linked to inferior job quality, safety and workforce development outcomes.

This summer, a new state law that restricts the use of pre-hire labor agreements on publicly funded construction projects went into effect — even though research finds these types of agreements lead to better economic and workforce outcomes.

Today, Wyoming has the highest per-capita rate of workplace fatalities in the nation, even as it faces a historically tight labor market.

The fact is that partnerships between employers and labor should not be perceived as a threat to the generational energy and broadband investments coming to Wyoming. They might just be key to their success.

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Biden administration investment tracker

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Will Ragland
Ryan Koronowski
June 15, 2023

The passage of the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act—two of which received broad bipartisan support—unleashed an unprecedented level of public and private sector investments in America. These investments are rebuilding the country’s infrastructure, bolstering American manufacturing, and cementing U.S. leadership in critical new industries such as clean energy, electric vehicles, and much more. In total, these investments hold the promise of creating, supporting and reshoring millions of well-paying jobs.

This tool catalogs more than 35,000 of these investments that users can filter by category, state, congressional district, amount, and/or keyword. The tracker is a valuable and growing resource for anyone who wants to learn how these laws are being put to work in their counties, in their states, and across the country.

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Evidence of Worker Exploitation Stops Work at 110 Job Sites

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New Jersey Department of Labor & Workforce Development
FOR IMMEDIATE RELEASE
July 11, 2023

TRENTON – In the four years since Governor Murphy expanded the New Jersey Department of Labor and Workforce Development’s (NJDOL) powers in 2019 to halt work on job sites when there is strong evidence of worker exploitation, over 110 stop-work orders have been issued and more than $2.7 million in back wages owed to affected workers, liquidated damages, and penalties have been assessed.

In 2021, Governor Murphy further boosted these powers, permitting stop-work orders to be applied to all work sites of an employer found to be in violation of the law.

“Since the beginning of our Administration, we have been dedicated to respecting, defending, and upholding the rights of all New Jersey workers, who are the lifeblood of our economy,” said Governor Murphy. “These expanded powers have led to over a hundred stop-work orders in just the past few years, advancing our commitment to stronger and fairer worker protections.”

“Having the authority to shut down work as soon as wrongdoing is identified has exponentially strengthened the department’s effectiveness at enforcing our state’s wage and hour laws and protecting workers and law-abiding employers,” said Labor Commissioner Robert Asaro-Angelo. “We’ve made it clear: If we find you are cheating workers, we will halt your business operations, and in many cases, you will be told to leave the job by the general contractor or contracting authority.”

“A vast majority of New Jersey employers follow the law and do right by their workers, but NJDOL wants to ensure all businesses are following the law and treating workers fairly,” Asaro-Angelo added. “It’s not just about stopping the violations in progress. There is also an educational component to prevent these issues from happening in the first place.”

NJDOL’s Division of Wage and Hour and Contract Compliance has the authority to immediately halt work at any public or private worksite – both construction and non-construction – when an investigation finds evidence an employer has violated state wage, benefit or tax laws. Examples include: misclassifying employees as independent contractors; not having appropriate workers’ compensation insurance; failing to pay prevailing wage or overtime; or paying workers partially, late, or off the books.

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NABTU’s Sean McGarvey shares vision of boosting middle class with new jobs created by the Infrastructure Act

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Sheri Gassaway
July 10, 2023

North American Building Trades Unions (NABTU) President Sean McGarvey stopped in St. Louis last week to share how the organization is working with local and state building trades leaders, community groups and government officials to help boost the middle-class and create good-paying jobs after passage of the Infrastructure Investment and Jobs Act.

The event, hosted by the Missouri Works Initiative, Missouri AFL-CIO and St. Louis Building and Construction Trades Council, was a part of NABTU’s national multi-city road tour to demonstrate how union-trained workers are prepared to meet the moment. The event was held at the Sheet Metal Workers Local 36 union hall in St. Louis and included a tour of the union’s state-of-the-art training center.

“There’s over 250,000 people in our training programs and we can ramp that up to one million,” Garvey said. “With the investments made by the Biden-Harris Administration and members of Congress, we’re going to start filling those numbers up and growing these training programs through our apprentice-ready programs like BUD and creating pathways to the middle-class for everyone who wants an opportunity.”

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Denver wage theft unit sees rise in cases, especially in migrant community

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Karen Morfitt
July 8, 2023

Having worked in the construction industry for several years, Edgar Jauregui has met a lot of people and heard a lot of stories.

“They are willing to walk from their country all the way over here. You can tell they are going to do whatever it takes to change their lives,” he said.

As a representative for the Southwest Mountain States Regional Council of Carpenters, which represents about 55,000 workers, he’s also become an advocate for the immigrant community.

Recently, their concerns have centered largely around wage theft.

“They don’t get paid overtime after 40 hours and some other ones, they just don’t get paid at all. And they keep working because they have a promise that they are going to be paid for the next week,” Jauregui said.

Wage theft is the illegal practice of underpaying or not paying workers or providing benefits laid out in a contract or required by law.

In Denver complaints can be made both to the City Auditor’s Office and the Denver City Attorney’s office, where Brian Snow is an investigator.

“It’s definitely on the increase,” he told CBS News Colorado. “Our migrant population is disproportionately impacted by this,” he said.

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Attorney general Ellison forms task force on worker misclassification

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The Office of Minnesota Attorney General Keith Ellison
July 6, 2023

Minnesota Attorney General Keith Ellison announced today that he is forming a new Advisory Task Force on Worker Misclassification. He is soliciting applications to serve on the Task Force through the State of Minnesota Open Appointments process. Applications are being accepted now through August 2, 2023.

“Misclassifying workers hurts not only those who are misclassified and their families, it hurts all Minnesotans, including businesses who do the right thing by their employees by playing by the rules, and every Minnesota taxpayer who has to make up the slack for law breaking employers,” Attorney General Ellison said. “I’ve created this task force to gather the best thinking about the problem and make practical, workable recommendations to the Legislature, State agencies, other levels of government, industry, nonprofit organizations, and advocates about how we can put an end to the problem. It’s another way we can help create a more level playing field and a fairer economy, which helps all Minnesotans better afford their lives and live with dignity, safety, and respect.”

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New RI law will make wage theft a felony

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Sarah Guernelli
June 27, 2023

Rhode Island is cracking down on wage theft.

Gov. Dan McKee recently signed a new law that will change wage theft from a misdemeanor crime to a felony starting next year.

Rep. David Morales helped champion the change.

“No longer will an unethical employer who withholds wages from their workers be met with a slap of a wrist of just a misdemeanor,” Morales said.

Under the new law, employers that knowingly and willfully fail to pay an employee more than $1,500 in wages could face up to three years in prison and pay fines.

“If you commit wage theft you are going to be held accountable,” he said.

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Department of Labor to hold online seminars to educate current, prospective federal contractors on prevailing wage requirements

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Edwin Nieves
June 14, 2023

The U.S. Department of Labor announced today that its Wage and Hour Division will offer online seminars for contracting agencies, contractors, unions, workers and other stakeholders on the requirements for paying prevailing wages on federally funded construction and service contracts.

Part of the division’s effort to increase awareness and improve compliance, the seminars will include recorded training videos on a variety of Davis-Bacon Act and Service Contract Act topics that participants can view on-demand. The division will then offer live Q&A sessions to provide additional information.

Q&A sessions on compliance issues will be offered as follows:

Davis-Bacon Act: June 27 and Sept. 13.
Service Contract Act: June 28 and Sept. 14.

“Prevailing wage laws are key to ensuring that construction and service jobs are good jobs and that workers on federally funded projects across the country are paid fair wages and benefits,” said Principal Deputy Wage and Hour Administrator Jessica Looman. “Recent investments in our nation’s infrastructure offer us a great opportunity to educate employers so they can compete for new federal contract opportunities and put skilled employees to work in their communities.”

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Inflation Reduction Act: Federal Incentives for Public Entities for Clean Energy Improvements

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Bricker Graydon LLP
June 15, 2023

By now, you are likely aware that the federal government is making the largest investment in climate and energy improvements in American history, known as the Inflation Reduction Act (IRA). The IRA allocates funding to provide incentives that reduce renewable energy costs for an expanded number of organizations including public educational institutions, school districts, states, counties, and local municipalities. Previously, renewable energy incentives were only available to private tax-paying entities. The IRA, however, now allows public entities to have access to these incentives.

Specifically, the federal government has made $369 billion available over the next decade for new and existing programs with the goal of a 40% reduction in the nation’s carbon emissions by 2030. The Act expressly allows these incentives to be used for installing energy facilities like solar arrays and wind turbines, installing certain water and sewage facilities, converting fleets of gas-powered vehicles to electric and hybrid vehicles (for example fleets of police cars, ambulances, fire trucks, school buses, garbage trucks, snow plows), and electric and other alternative fuels vehicle charging stations.

Investment Tax Credits (ITC) and Production Tax Credits (PTC)

One of the most innovative aspects of the IRA involves its creation of a direct-payment mechanism that is available to public entities. This new ability to receive direct cash payments is available for many of the different credits and programs funded by the IRA. Two of the most valuable types of tax credits that are eligible for direct payments under the IRA are the Investment Tax Credit (ITC) and Production Tax Credit (PTC).

Both types of credits were expanded to assist with financing renewable energy projects with the hope of spawning a new era of clean energy projects where ownership is retained by public and other tax-exempt entities. Among other categories of assets, the PTC was extended to include wind and solar projects that begin construction before January 1, 2025, and the ITC was expanded to include wind, solar, and energy storage projects that begin construction before January 1, 2025. The ITC and the PTC expire in their current form on December 31, 2024, and will be replaced by even more expansive technology-neutral and zero-emissions clean energy investment and production tax credits.

An ITC can be claimed after a clean energy project is completed and placed into service. The amount of an ITC that a project might be eligible for is calculated based off the upfront costs of installing and placing the project into service. The base rate for the ITC is 6% of the costs of a project. If prevailing wage and apprenticeship requirements are met, the base rate is automatically increased 5x to 30% of the project’s costs. On November 30, 2022, the IRS published its initial guidance for meeting these prevailing wage and apprenticeship requirements.

While an ITC is a one-time credit based on the upfront costs of a project, a PTC provides a yearly credit that can be claimed over a 10-year period. The amount of credit that an energy project is eligible to claim depends on the amount of energy it produces and sells to unrelated entities each year. The base rate of the PTC varies each year due to inflation. In 2022, for instance, the PTC had a base rate equal to $0.005/kWh. Like the ITC, if prevailing wage and apprenticeship requirements were met, the base rate for 2022 was increased 5x to $0.026/kWh.

Historically, for public entities, income and other types of tax credits are useless. Thanks to the IRA, public entities are now able to receive direct payments in lieu of credits by filing a tax return for the tax year that a project was placed into service that requests a refund equal to the amount of a project’s eligible tax credit. The ability to receive direct payments is available for many of the different credits created by the IRA and is not limited to only ITCs and PTCs. Entities can only elect to receive these new direct payments at such time and in such manner as the Secretary of the Treasury provides.

Public entities should consult experienced public finance counsel to further explore these financing options.

Clean commercial vehicle credits

The IRA provides resources to facilitate the purchase of clean energy commercial vehicles that replace traditional combustion-engine vehicles. The IRA expanded commercial vehicle tax credits to encompass any clean energy commercial vehicle. Each purchase of an eligible clean energy vehicle can receive a credit that equates to the lesser of 30% of the purchase price (15% if a hybrid vehicle) or the difference between the clean energy vehicle’s purchase price and a comparable combustion-engine vehicle’s purchase price, known as the incremental cost. Vehicles weighing under 14,000 pounds are eligible for a credit of up to $7,500. Vehicles weighing more than 14,000 pounds are eligible for a credit of up to $40,000. As alluded to above, this credit is also able to be received as a direct payment by tax-exempt entities.

The IRA carved out an additional amount of funding for an Environmental Protection Agency (EPA) program, consisting of $1 billion in competitive grants and rebates, that is aimed at offsetting up to 100% of a public entity’s replacement cost for heavy-duty Class 6 and 7 commercial vehicles. The grants and rebates under this EPA program can even be used to reimburse the costs of any charging or other associated infrastructure that is necessary to replace those types of vehicles, including workforce development.

Alternative fuel charging station credits

The Alternative Fuel Vehicle Refueling Property Credit is a general tax credit for an entity that installs alternative fuel vehicle refueling and recharging stations, including direct current fast charging stations. The base value of credit is 6% of the cost of the charging station with a maximum credit capped at $100,000. Like the ITC, the value of this credit increases from 6% to 30% of the cost of a qualified alternative fuel vehicle refueling station, but is still subject to the cap of $100,000 per station, if the requirements for prevailing wages and apprenticeship are met. Please note that public entities cannot use this credit to offset expenses related to the permitting and inspection of project sites. There are strict geographic limitations on the ability to qualify for this charging station tax credit. The station must be installed in rural or low-income areas. This credit is able to be transferred by certain tax-paying entities for cash and is eligible to be received by tax-exempt entities as direct payments in lieu of non-refundable tax credits.

Davis-Bacon Act

The Davis-Bacon Act applies to IRA-funded or assisted contracts in excess of $2,000 for the construction, alteration or repair (including painting and decorating) of public buildings or public works. This Act triggers an obligation on the contractors and subcontractors to pay federal prevailing wage.

Apprenticeship requirements

Lastly, the IRA sets forth apprenticeship requirements that must be complied with for IRA-funded or assisted contracts. These requirements include at least one apprentice for each subcontractor with four employees or more, ratio requirements as set by the Department of Labor or a state agency and required percentage of apprenticeship work hours (12.5% for 2023, and 15% for 2024 and beyond) for projects. The IRA does, however, include a good-faith exception for projects that do not receive a response in five business days from qualified apprentices from a registered apprenticeship program or for when no apprentices are available.

In sum, IRA has provided public entities with a unique opportunity to reduce energy costs while also reducing the amount of their carbon emissions.

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