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The Roadway Excavation Quality Assurance Act

On August 16, 2023, New York Governor Hochul introduced the Roadway Excavation Quality Assurance Act, which then took effect on September 15, 2023. This act significantly impacts workers in the construction and utility industry, changing Labor Law §220 and adding a new section, Labor Law §224f. It specifically targets situations where private utility companies hire contractors or subcontractors to perform work that involves excavation or opening of public streets. The Roadway Excavation Quality Assurance Act aims to guarantee that workers engaged in these projects receive prevailing wages. This act can affect your projects in several different ways, including:

  1. Under the new law, contractors who obtain permits for street-related utility work are now obligated to pay the prevailing wage to all workers involved in the project. This applies to tasks such as opening or closing roads, sidewalks, curb cuts, and more.
  2. The legislation also establishes more stringent record-keeping requirements. Contractors and subcontractors working for utilities are now mandated to maintain records of prevailing wage payments at all times, regardless of whether local laws or ordinances necessitate it.
  3. All permits issued after the effective date of the law must include a copy of the Roadway Quality Assurance Act. This ensures that contractors and workers are aware of the prevailing wage requirement.
  4. Government entities granting permits for covered excavation projects are subject to specific requirements. Permits cannot be issued until there is a contractual agreement in place confirming the payment of prevailing wages. This agreement must also be filed with the relevant department of jurisdiction.
  5. Contractors and subcontractors in the utility sector must submit certified payrolls to the department of jurisdiction in accordance with Article 8 of the New York State Labor Law.

In conclusion, The Roadway Quality Assurance Act seeks to ensure fair compensation for workers engaged in excavation and construction projects on public streets. By mandating prevailing wages and outlining clear provisions, the Act promotes fair and competitive wages for those in the construction and utility industry.  

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Inflation Reduction Act Guidance

On August 29th, 2023, the IRS and the Treasury issued “proposed rules” which would update the PWA (prevailing wage and apprenticeship) requirements under the Inflation Reduction Act. The document provides clarification on many issues that arose after the original guidance was published in November of 2022. Some of the highlights include: 

  • A denial of a request for a qualified apprentice would not automatically qualify the taxpayer for the Good Faith Effort Exception. There would be a requirement to resubmit a request for apprentices every 120 days, in the event of a valid denial by the apprenticeship program. 
  • A new general wage determination is required to be used when a contract is changed to include additional, substantial construction, alteration, or repair work not within the scope of work of the original contract, or to require work to be performed for an additional time period not originally obligated. 
  • Apprentices not in a Registered Apprenticeship Program, or not supervised at the correct ratio, must be paid at the full prevailing wage rate for the classification and cannot have those hours counted towards the Apprentice Labor Hour Requirement. 

Many major topics are addressed, including cure and penalty provisions for failure to meet the requirements. Any taxpayer wishing to claim the increased tax credits should ensure that they are familiar with these proposed regulations. Alliant is here to help answer any questions, help clients stay informed, and to ensure full compliance with all of the IRA PWA requirements. 

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Prevailing Wage in Ohio

In the heart of the Buckeye State, Chapter 4115 of the Ohio Revised code sets the prevailing wage for the state of Ohio. The Ohio Department of Commerce enforces provisions that set the minimum wage and hour requirements for laborers and mechanics working on public works projects in Ohio. These statutes apply to all partially and fully publicly funded projects over the following threshold values:

  • New Building Construction: $250,000.00
  • Building Construction (reconstruction, repair, renovation, etc.): $75,000.00
  • New road or bridge construction: $96,901.00
  • Road or Bridge construction (reconstruction, repair, renovation, etc.): $28,789.00

These thresholds are adjusted every two years and cannot decrease or increase by more than 3% at a time. The law aims to ensure that workers are paid fairly for their work on public projects and to prevent contractors from underbidding one another by paying their workers less than the prevailing wage. It is important to note that Ohio state is committed to protecting the rights of workers shown through Ohio revised Code Section 4115.071, which stipulates that the public authority contracting for a public works project must appoint one of their employees as a “prevailing wage coordinator” for the life of the project to protect the rights of workers and ensuring that they are compensated fairly for their work on public projects.

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Fringe Benefits Overview

technical documentation

Fringe Benefits are an important factor of prevailing wage and can include a variety of benefits in addition to normal wages. According to the IRS, they are considered a form of compensation for services rendered. These benefits can include health or pension plans, among others. In the context of prevailing wage, fringe benefits are significant for two reasons:

  1. What counts as a Fringe Benefit: It is essential to determine what can be categorized as a fringe benefit. The amount must be paid to a 3rd party on behalf of and to benefit the employee. Examples of bona fide fringe benefit plans include health or pension plans.
  2. Factoring into Prevailing Wage: Fringe benefit payments may be taken into account when calculating prevailing wage rates for employees. Employers need to calculate the hourly cost of providing these benefits to the employees. This amount can be added to regular wages when determining the total compensation offered to employees to meet the prevailing wage requirements.

On August 23, 2023, the Department published in the Federal Register the final rule, “Updating the Davis-Bacon and Related Acts Regulations.”  The final rule updates regulations issued under the Davis-Bacon and Related Acts. The final rule is effective on October 23, 2023.

The final rule adds new paragraph (c) to § 5.25 to codify the principle of annualization that is used to calculate the amount of Davis-Bacon credit that a contractor may receive for contributions to a bona fide fringe benefit plan (or the reasonably anticipated costs of an unfunded benefit plan) when the contractor’s workers work on both DBRA-covered and private (non-DBRA) work. Contractors, plans, and other interested parties may request an exception from the annualization requirement by submitting a request to WHD, but such exceptions may be granted only if the benefit provided by the plan is not continuous in nature and does not compensate both DBRA-covered and non-DBRA work.

Generally, Fringe Benefits encompass employer contributions relayed to employees, firmly entrusted to a trustee or an external party as part of a genuine fringe benefit fund plan or program. This plan should be reasonably anticipated and represent a binding financial commitment for the employees’ benefit. It’s important to note that employer contributions mandated by federal, state, or local regulations do not fall under the category of fringe benefits.

Fringe benefits can be confusing, but taking these factors into account will help you remain compliant and avoid penalties! 

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Prevailing Wage in Hawaii

Prevailing Wage Hawaii

Surf, sand, and prevailing wage in the Land of Aloha!? Chapter 104 of the Hawaii Revised Statutes (HRS) established and details Prevailing Wage mandates in Hawaii. The code sets the minimum wage and hour requirements for laborers and mechanics working on public works projects in Hawaii. It requires contractors and subcontractors to pay their workers no less than the prevailing wage rate for similar work in the same locality. The law aims to ensure that workers are paid fairly for their work on public projects and to prevent contractors from underbidding one another by paying their workers less than the prevailing wage. It is important to note that Chapter 104 applies to all public works projects over $2,000 involving a Governmental Contracting Agency, regardless of funding source. By enforcing this law, Hawaii is committed to protecting the rights of workers and ensuring that they are compensated fairly for their work on public projects.

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Inflation Reduction Act Renewable Energy Projects

With heightened concern regarding the United States’ staggering carbon emissions, the Inflation Reduction Act (IRA) is pushing to reduce the country’s carbon emission output by roughly 40% by 2030. To reach this ambitious climate investment, the IRS has issued a plan to promote development in regions that are or have previously been dependent on the fossil fuel industry, whether through extraction, processing, or steady usage. These areas are known as energy communities.

To entice developers to initiate and construct projects in energy communities, the IRS and the Department of Treasury have issued guidance on how to obtain investment tax credits and production tax credits for renewable energy-specific projects, outlined in Notice 2023-38.

The available tax credits include a 2% energy community bonus, which increases the base investment tax credit (ITC) amount or the production tax credit (PTC) rate. Additionally, if a project satisfies prevailing wage and apprenticeship requirements, a 10% energy community bonus is provided instead.

Notice 2023-38 provides extensive insight into the components that make up energy communities, requirements developers must satisfy to receive bonuses, and applicable project components that will be accepted by the IRS.
 

For further information, please refer to the following links:
1. https://www.jdsupra.com/legalnews/what-is-an-energy-community-irs-6672439/
2. https://www.foley.com/en/insights/publications/2023/05/treasury-irs-guidance-content-bonus-credit-energy.

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Temporary Staffing Agencies in California

Awarding Agencies

A short look back to the mid 1900’s shows a shift in companies’ search for temporary labor. A temporary staffing agency or most popularly known as a temp agency is a recruiting firm that acts as an intermediary between candidates looking for work and companies needing short-term employees or indefinite temporary positions. Temp agency employees work for what is referred to as a “host employer” (or an employer who has general supervisory authority over the worksite) but are on the payroll of a “primary employer.” The primary employer can be either: A temp agency that hires workers and sends them to work for a host employer, or a professional employer organization (PEO) that puts a host employer’s employees on the PEO’s payroll as its own employees.

When it comes to prevailing wage, project registration requirements mandate that temporary staffing agencies must register with the DIR if the temp agency submits their own payroll as the primary employer (See CCR Title 8, § 16410). However, if the hiring contractor can submit payroll for the temp employee, the temp agency need not be DIR registered. Additionally, as referenced on the DIR’s FAQ website, “Apprenticeship requirements are the responsibility of the contractor. If a Contractor relies on the temp agency and there are problems, it is the Contractor who will be responsible for any resulting penalties.” Some of these issues can include but are not limited to not employing apprentices if it is an apprenticeable craft, late and/or DAS 140 forms not being sent for apprenticeable crafts, and/or failure to make training payments for all hours worked. Although, temp agency employees can be beneficial when it comes to saving time on training and hiring. Employers must be aware and do their due diligence to ensure they are meeting the prevailing wage requirements when they are choosing to work with temp agencies to avoid costly penalties on California State Funded Public Works project.

For more information visit: https://www.dir.ca.gov/oprl/FAQ_PrevailingWage.html

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Misclassification

Employers are obligated by state law to classify their employees properly and pay them accordingly. While employers can misclassify employees unintentionally, misclassification is illegal and can have stiff legal ramifications. It is important to understand that workers who are misclassified are deprived of essential mandated benefits such as workers compensation if injured on the job and/or unemployment benefits.
 
One of the most prevalent instances where misclassification occurs is when employers classify their employees as independent contractors to avoid paying state minimum wage, overtime rates and payroll taxes. Investigation under these circumstances has increased; therefore, it is best practice for employers to know the difference and maintain proper records to avoid misclassification.
 
Some criteria of an Independent Contractor:

  • Run their own business
  • Paid upon completion of project
  • Provides own materials, tools and equipment
  • Work with multiple clients
  • Temporary relationship until project is completed
  • Decides when and how they will perform the work
  • Decides what work they will do

For  More Guidance on how to determine who is an employee or independent contractor under the Fair Labor Standards Act (FLSA) click here

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Women In Construction

Since 2016, the number of women in construction has been steadily increasing and has now reached an all-time high. The industry has had a continued high demand for workers and within the past few years, employers and labor groups have been removing obstacles in order to broaden the selection of workers in the trades.

Although these obstacles have been lowered significantly, experts have explained that women are typically harder to recruit due to less experience and often require more flexible hours for childcare considerations. To combat this, experts say companies should set goals for diversity hiring and focus on inclusion and safety. Many women don’t see construction as a career option so it’s important to show them that women already have a place on the jobsite. Recently, U.S. Secretary of Commerce Gina Raimondo revealed the Million Women in Construction Initiative. This initiative has a goal of doubling the number of women in construction, from 1 million to 2 million, in the next 10 years. With more efforts being put into place, we hope to see the continuing rise of women in the trades.

If you would like further information please click here: Percentage of women in construction higher than ever