Passing new legislation in the construction industry happens all the time. Whether it be the recently popular P3 legislation, adjustments to a state’s Little Miller Act, or even new regulations on drones, new laws affect the construction industry in a multitude of ways. Specifically, just by reading the title it’s obvious that fair pay and job site safety are the main features of the order. Actually, Levelset’s own Nate Budde just recently wrote an article on workplace safety and construction payment noting how the practices differ.
The Fair Pay and Safe Workplace Order issued by President Obama will go into effect later this month which will have a widespread impact on industry members. The order certainly caught the attention of federal contractors. Most notably, The Associated General Contractors of America (AGC) and the Associated Builders and Contractors (ABC) strongly oppose the order. At least for now, the order will go into effect shortly, so contractors and subs should take note of these important dates.
For more information, here’s the Fair Pay and Safe Workplaces Order in full, and here’s further guidance from the Federal Register.
Fair Pay and Safe Workplaces Order Goes Into Effect October 25, 2016
The goal of the order is simple: to promote safe and effective workplaces by rewarding contractors and subcontractors with an exemplary record. The order will do so by placing greater hiring restrictions on contractors bidding for federal projects. The underlying theory is that by excluding contractors with a checkered history regarding labor laws, the government will boost efficiency and quality on federal construction projects.
While this sounds all well and good, contractors have not been very responsive to the impending regulations. According to the AGC, the new regulations are inconsistent and allow for arbitrary decisions. As far back as two years ago, the ABC has chided the order, claiming it affects federal contractors, especially those smaller businesses, in a negative way. The regulations are about to enter the rollout phase, and preassessment started earlier this month.
Preassessment (Began September 12, 2016)
The voluntary preassessment phase of the rollout began just over two weeks ago. At this point, up until October 25, a contractor or subcontractor can request an assessment from the Department of Labor. This assessment will determine if the contractor has any past violations and the degree of severity of such a violation. The advantage of taking part in preassessment is that by successfully clearing the assessment, a contractor will have a verified record of labor law compliance going into the next phase of the rollout.
Contractor Disclosure (October 25, 2016 – April 24, 2017)
The first phase of the rollout is the contractor disclosure phase. Beginning in late October, contractors bidding on federal projects will have to abide by the disclosure requirements of the order on projects of $50M or more. Following April 24, 2017, these requirements will apply to all federal contractors bidding for projects exceeding $500K.
Paycheck Transparency Provision Takes Effect (January 1, 2017)
The Paycheck Transparency Provision takes effect on the first of the year. This provision calls for a detailed record of payment information for employees when a project exceeds $500K. The record should include hours worked, including overtime, rate of pay, gross pay, and any deductions made.
Subcontractor Disclosure (Begins October 25, 2017)
Beginning in October of next year, subcontractors on federal contracts will also fall under the Fair Pay and Safe Workplaces Order. Until then, subcontractors should treat this time as an extended preassessment period. Subs are encouraged to voluntarily request an assessment from the Department of Labor before subcontractor disclosure becomes mandatory.
Public Disclosure Period
The public disclosure period was harder to put a date on, but it goes into effect on October 15, 2016. According to the order, contractors must publicly disclose labor law violations. However, in the interest of fairness, disclosures will only include labor law violations occurring after October 15, 2015. This creates more of a cut-off provision concerning violations prior to October 15, 2015. With this cut-off, contractors will not be penalized again for any violations occurring prior to the implementation of the Fair Pay and Safe Workplaces Order.
Takeaway
The Fair Pay and Safe Workplaces Order has not been welcomed in the construction industry, at least not by the Associated General Contractors of America and the Associated Builders and Contractors. However, the goal of the act, which includes transparency in construction payment, is something that the industry desperately needs. No matter how a contractor or sub feels about the act, if they want to work on federal projects, these are important dates.
For other updates on new laws, check out the new legislation materials on the blog.
