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California AB 2143 Overview

The contents of this blog post have been transcribed from our YouTube video, “California’s New Solar Regulation and Requirements: AB2143”  

Renewable energy is taking the construction space by storm and keeping up with regulations can be a tough feat, but we’re here to help. We’ll be discussing changes made to California’s net energy metering program that came into effect January 1st, 2024 in this overview of Assembly Bill 2143, also known as AB 2143. 

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Net Energy Metering Explained

Net energy metering is a tool that allows customers with renewable energy  systems, namely solar panels, to gain credit for solar projects exceeding 15 kW of energy generated that is fed back into the grid. So, extra energy gathered from a renewable energy source can be sold for credit. 

Applicability and Requirements

AB2143 is applicable to contractors entering into a contract to perform work on a renewable electrical generation facility or associated battery storage.  

The requirements include:  

• Paying Prevailing Wages  

• Maintaining and Verifying Payroll Records 

• Submitting digital copies of payroll records biannually  

Paying Prevailing Wages

Prevailing wages are the minimum rate required to be paid out to workers in a specific occupation, also known as a classification. California prevailing wage rates are issued by the Department of Industrial Relations, also known as the DIR. Not only are there required base rates assigned to each occupation type, but there are also fringe amounts and provisions that can differ per classification. For an in-depth review on prevailing wage, you can visit this video on our YouTube channel.

Maintaining and Verifying Payroll Records

The second requirement is the requirement to Maintain and Verify Payroll records. Payroll records must be accurate and display the following: 

• Employee name 

• Address 

• Social security number 

• Work classification 

• Straight time and overtime hours worked each day and week

• Actual wages paid 

They must also be signed under penalty of perjury, which is a legal statement by the signer verifying that all information on the payroll record is true.  

These payroll records must also be available for inspection or furnished upon  request to the awarding body and Division of Labor Standards Enforcement, also known as the DLSE. 

Biannual Payroll Submissions

Finally, each contract must submit digital copies of certified payroll records biannually. The dates for submission are July 1st and December 31st of each year.  The commission team that monitors Net Energy Metering projects will be retaining these records as public record for five years. 

So, to summarize the key points, prevailing wages must be paid at minimum to employees on renewable energy projects, payroll records of these wages must be kept and available upon inspection or request, and records must be submitted biannually. 

Penalties

While the requirements can be vast, violation of the requirements can pose major issues. AB 2143 is enforced through the following means: 

A civil wage and penalty assessment can be issued. So, if a contractor is found to be in violation, interest will accrue on all due and unpaid wages and the violator will be publicly listed by The Labor Commissioner. Construction workers cannot be underpaid and administrative complaints or civil action can be pursued for violation of the bill. 

Additionally, willful violation can result in revoked eligibility for the energy facility to receive service pursuant to AB 2143 Section 769.2(d).  

Exemptions

Please note, this bill is not applicable to the following (as derived from AB 2143 Section 769.2(f)):  

“  

• A residential renewable electrical generation facility that is eligible to receive service pursuant to the standard contract or tariff developed pursuant to Section 2827.1 and has a maximum generating capacity of 15 kilowatts or less of electricity. 

• A residential renewable electrical generation facility that is eligible to receive service pursuant to the standard contract or tariff developed pursuant to Section 2827.1 and that is installed on a single-family home. 

• A project that is a public work, as defined in Section 1720 of the Labor Code, and that is subject to Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code. 

• A renewable electrical generation facility that serves only a modular home, a modular home community, or multiunit housing that has two or fewer stories. 

“  

Conclusion

With everything discussed in mind, it’s important to be aware of and comply with the requirements of AB2143. Our team works closely with contractors through dozens of project types to assist in remaining compliant. If you would like in-depth assistance, please feel free to get in touch. 

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New York Roadway Excavation Quality Assurance Act

The contents of this blog post have been transcribed from our YouTube video, “New York Roadway Excavation Quality Assurance Act Overview” 

A New York Labor Law published in August of 2023 has triggered prevailing wage requirements on certain roadway construction work by utility company contractors. Here’s an overview of what this act is and what requirements are posed for you. 

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Which Projects are Applicable?

The New York Roadway Excavation Quality Assurance Act came into effect on September 15th, 2023. The rules under this law are enforced on “all contracts for construction solicited on or after the effective date.” A contract is “solicited” when bidders on a project are requested to submit their offers. If there was no solicitation or contract, the act is enforced on work performed under a permit issued on or after the effective date. If a permit was required for the job but not obtained, the work would still be covered. 

The type of work covered under this law is defined as a “covered excavation project.” This includes “construction work issued to a contractor or subcontractor of a utility company by the state, a county, or a municipality.” The work covered isn’t exclusive to excavation, and the law generally covers “projects requiring a permit to excavate, open, or otherwise use a street to perform utility work are covered by this law.” This can include the opening, patching, and closing of the street as well. 

Covered types of utility work include “Electric, gas, water, steam, sewer, fuel, geothermal and telephone/telegraph.

Prevailing Wage Requirements

With the effective date and types of covered work in mind, the payment of prevailing wage rates would follow. The payment of prevailing wages is applicable to all contractors and subcontractors and would go to the laborers, workers, or mechanics performing work for the utility company, For an extensive overview of what prevailing wages are, you can visit this video on our YouTube channel. 

Contractors are recommended to contact the nearest Bureau of Public Work district office to gather which prevailing wage rates are applicable to the different types of utility work. 

Recordkeeping Requirements

Alongside the payment of prevailing wages, contractors are instructed to maintain records of payment. Per the Quality Assurance Act guidance, “Contractors and subcontractors to a utility are now always required to keep records of the payment of prevailing wages.” Commonly kept records for general prevailing wage documentation includes certified payroll reports, pay stubs/itemized wage statements, and fringe benefit documentation. The overarching best practice is to keep all documents that provide a full picture of the employees’ pay. 

Enforcement and Penalties

Regulations of The Quality Assurance Act and penalties for violation are further defined through the following Labor Laws: 

Labor Law 220, which defines the 8 hour workday, 

Labor Law 220(a), which requires contractors to maintain statements showing the amounts due for wages toward employees and the payment of prevailing wages. 

Labor Law 220(b), which defines withheld payments on laborers’ wages,

Labor Law 223, which defines the contractor’s responsibility if found non-compliant with the proper payment of wages 

Labor Law 224-b, which defines the stop-work order if a contractor is found to be non-compliant, 

And Labor Law 227, which penalizes contractors who have failed to pay prevailing wage rates. This can result in being guilty of a misdemeanor and, in certain cases, a fine of $500 – even imprisonment. 

Conclusion

The payment of prevailing wages under the New York Roadway Quality Assurance Act is important to maintain to keep your business above penalties and remain in compliance with the prevailing wage laws.

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Inflation Reduction Act Overview

The contents of this blog post have been partially transcribed from our YouTube video, “Inflation Reduction Act (IRA) Overview”.

The Inflation Reduction Act, or, the IRA is the biggest investment in clean energy in the United States. The goal is to fight climate change and increase economic opportunity. The tax incentives are available to all taxpayers, corporate and private entities that meet the criteria within each tax provision. For many of these provisions come the inclusion of prevailing wage and apprenticeship requirements.

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Inflation Reduction Act (IRA) and Tax Credits

On August 16th, 2022, the Inflation Reduction Act was signed into action, providing tax incentives for several tax credit provisions that involve clean energy projects. 

One specific example Is the Production Tax Credit. This provides taxpayers the possibility of acquiring $2.60 per kilowatt hour credit for electricity produced at qualified facilities. To gain this credit, taxpayers would have to satisfy the prevailing wage and apprenticeship requirements, otherwise that credit is reduced.

In the context of the IRA, a taxpayer is anyone attempting to receive the tax credit or incentive, and this includes contractors.

The Davis-Bacon Act and the Related Acts itself are not subject under the IRA, including enforcement regulations. However, there are similarities in how certain provisions are derived. 

  • The IRA follows the same prevailing wage requirement as it pertains to “Laborers & Mechanics” under DBA.
  • Apprentices are expected to have the same certification requirements under DBA. 
  • What’s considered the “Site of Work” and “Construction, Alteration, and Repair” are defined the same both under DBA and IRA.

Requirements to Obtain Tax Credits

The IRS 87 FR 73580 guidance outlines requirements for obtaining tax credits. The two main ones to be found for prevailing wage are (1) the payment of prevailing wage rates and (2) maintaining records. The applicable rates are to be found for laborers and mechanics as defined at 29 CFR 5.2(m), performing construction, alteration, or repair. 

Remember, there is no exception for independent contractors.

Maintaining Records

Section 16.001-1(a) of the Income Tax Regulations states taxpayers must keep records to establish the amount of claimed credits. This documentation should include the applicable wage determination provided by the DOL and documentation showing each worker, their classification, gross pay, hours worked, and proper prevailing wage rate of pay. This includes the appropriate fringe benefits. It’s important that these records are maintained to prove the requirements are being met.

If a taxpayer fails to pay prevailing wage rates, they can still be considered to have satisfied the requirements if they:

  1. Pay the laborers or mechanics the difference between the paid wages and the prevailing wage rates, plus interest of 3%; and
  2. Pay a $5,000 fine per laborer or mechanic who was underpaid, to the Secretary of Labor

This fine increases to three times the sum of (a) and $10,000 per violation if it was found to have been an intentional underpayment.

The IRA Proposed Rules

On August 29th, 2023, the IRS and the Treasury issued “proposed rules” that 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. If you’d like any further assistance, feel free to contact us.

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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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Prevailing Wage for California Temporary Staffing Agencies

Awarding Agencies

Misclassifying employees from Temporary Staffing Agencies is a frequent mistake in prevailing wage. It’s important to know how contractors utilizing these employees are subject to the prevailing wage requirements on applicable projects. 

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What is a Temp Agency?

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. 

What are the Prevailing Wage Requirements?

Prevailing wages are expected to be paid on certain project types. Public works projects most commonly enforce the payment of prevailing wages. Temp agencies may be called in by contractors to assist in performing work for these projects. The “primary employer” status designates which body, between the Temp agency and the hiring contractor, would be held under the prevailing wage requirements in this situation. 

When it comes to prevailing wage, 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 includes the temp 

employee on their payroll and can submit payroll for them, the temp agency does not need to be registered with the DIR. 

Temp Employees, Apprenticeship, and Violation Penalties

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.” 

Apprenticeship standards are enforced on public works projects and published under Labor Code 1777.5. Meeting these standards are included within a contractor’s duties on public works projects. If a contractor chooses to utilize employees from a temp agency in place of a valid request for apprentices, the contractor may be in violation. 

Some of the requirements regarding apprenticeship standards can include but are not limited to not employing apprentices if utilizing 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. 

1777.7(a)(1) notes that contractors who violate any of the apprenticeship standards found in §1777.5 “shall forfeit as a civil penalty” an amount not exceeding $100 “for each full calendar day of noncompliance.” 

Conclusion

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 projects.

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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