It’s been a strenuous year for leading construction industry groups and American government agencies. Three controversial new rules, that were supposed to have been in effect at this point, have ignited a heated battle, including some lawsuits. New overtime pay rules, a ‘blacklisting’ rule, and an injury illness record keeping and reporting rule have been successfully delayed by leading construction industry groups. Below is a summary of the recent developments:
Injury and Illness Record Keeping and Reporting
In May of 2016, OSHA announced a new rule hoping to gain valuable data regarding workplace incidents that was scheduled to into effect starting August 10, 2016. After the announcement, several construction industry groups spoke out about their apprehensions of the new rule and the effective date was pushed back to November 1, 2016 in July. The new rule would not only help OSHA gain data into workplace injuries, but it will also require construction companies to make their injury records public, much like restaurant health records are made public. Personal health data will still be kept private, but the injury numbers will be counted against employers.
As of October 24th, the effective date has again been delayed, this time until December 1, 2016, due to industry group efforts. The second delay also comes with several changes and clarifies to the rule, which the Associated General Contractors of America helped push. The biggest change the group had hoped for was regarding the restrictions of drug testing after an injury or illness was reported. OSHA wanted to restrict employer rights to drug screen, as they believed it could be used to discourage employees from reporting injury. With the changes, OSHA released a clarification on their drug testing rule, which includes three factors to determine if an employer’s drug testing of an injured employee was legitimate:
- whether the employer had a reasonable basis for concluding that drug use could have contributed to the injury or illness (and therefore the result of the drug test could provide insight into why the injury or illness occurred),
- whether other employees involved in the incident that caused the injury or illness were also tested or whether the employer only tested the employee who reported the injury or illness
- whether the employer has a heightened interest in determining if drug use could have contributed to the injury or illness due the hazardousness of the work being performed when the injury or illness occurred.
Fair Pay and Safe Workplaces Executive Order (“Blacklisting” Rule)
For all federal construction contracts totaling $500,000 or more, labor and materials included, the Fair Pay Act seeks to hold contractors accountable for following the 14 federal labor and employment laws and any equivalent State laws by forcing them to disclose any violations from the previous 3 years. Federal agencies will have the ability to disqualify contractors if they have violated any of 14 laws. The new rule is over 500 pages long and a real thrill of a read (you can read it in its entirety here), but the change is mostly in the enforcing of the previous laws, rather than adding any new laws. The rule was scheduled to be slowly rolled out in phases, giving prime contractors and subcontractors a chance to gather all the appropriate information and ease into the new rules. Previously, the rule was set to be effective on October 25, but, once again, industry groups have delayed the rule.
Associated Builders and Contractors, INC. (ABC) filed a legal challenge to the new rule on October 7 and also filed a motion for a temporary restraining order and preliminary injunction on October 12. On October 24th, a day before the new rule was set to go into effect, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction against the rule. The injunction has effectively prevented the rule from going into effect.
“Associated Builders and Contractors is pleased the court ruled that the Obama administration cannot order private businesses to publicly disclose mere accusations of labor law violations that have not been fully adjudicated,” said ABC Vice President of Regulatory, Labor & State Affairs Ben Brubeck in a press release. “By issuing this decision, the court has maintained the First Amendment rights of government contractors and protected them and taxpayers from the poorly crafted blacklisting rule.”
This isn’t the end of this battle, so we’ll keep you updated as new developments are made.
The Overtime Pay Rule
On May 18, 2016, the DOL issued a final rule that raises the minimum salary an employee has to make in order to not qualify for overtime pay from $23,660 to $47,476. That means that any salaried worker that makes under $47,476 annually must be paid overtime for any hours worked over 40 per week. The overtime exemptions have not been updated since 2004 and the lawmakers have not only brought the salary amounts up significantly to more accurately reflect current market conditions, but they have also included a provision that requires the salary threshold be updated every 3 years. The rule also increased the threshold for highly compensated employees (HCE) to receive overtime protection from $100,000 to $134,004. Currently, this rule is set to go into effect on December 1, 2016.
In late September, legislation was passed by the U.S. House of representatives that could potentially delay the start date of the new overtime rules, which ABC has applauded. Much like the “Blacklisting rule” above, ABC also filed a lawsuit against this overtime rule in the U.S. District Court for the Eastern District of Texas on September 20.
“Construction projects often last longer than three years and are meticulously planned in order to stay on time and budget,” said Kristen Swearingen, ABC Vice President of Legislative and Political Affairs, in a press release. “This rule will create uncertainty for contractors and their employees by forcing contractors to speculate about employees’ status years into the future when work on a project will actually be performed.”
With the continued delays and passing of legislation, it’s clear that several construction industry groups have some major influencing power. It remains to be seen whether or not the rules will simply be delayed or be overturned, but they’re not going down without a fight.
One of the toughest things to deal with on any project can be the relationships between owner and general contractor or the general contractor and subcontractor. In the worst case scenarios, tensions between those relationships can sometimes lead to one of those parties packing up their tools and walking off the job before it’s complete. But that action may make the situation a little hairier than you might expect, if you don’t do it the right way.