How to Survive the Final Flurry of Federal Rules From the Obama Administration

Written by  Stephen E. Sandherr, CEO of AGC of America

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As every construction contractor knows, complying with laws and regulations is part of the cost of doing business. Unfortunately, that cost is rising at a precipitous rate for contractors in the waning days of the Obama Administration. No matter what the sector in the industry your company works—public or private, horizontal or vertical construction—you’re feeling the regulatory squeeze.

Failure to comply with the rules could lead to civil fines, suspension or debarment, and even criminal penalties. As such, it is essential that your construction business— whatever the cost—take proper measures to ensure that you are following the rules. The first step to compliance is knowing what’s out there.

A host of new regulations have recently taken effect or will soon be in effect. There are several regulations that all construction contractors face stemming from the U.S. Department of Labor (USDOL) and its various sub-agencies. For example, on December 1, 2016, the anti-retaliation provisions in U.S. Occupational Safety and Health Administration’s (OSHA) new injury and illness reporting rule takes effect. OSHA has highlighted its intention to enforce policies that could restrict contractors’ mandatory post-incident alcohol and drug testing as well as safety incentive programs. Also taking effect of December 1 is the Wage and Hour Division’s (WHD) new overtime regulation. The rule raises the minimum salary level that full-time white-collar employees must earn to be exempt from overtime pay from $455 per week ($23,660 for a fullyear employee) to $913 per week ($47,476 for a full-year employee). So, if you have such employees making less than $913 per week ($47,476 per year), they may be entitled to overtime pay under this rule.

If your company performs work on prime or subcontractors directly for a federal agency—like the Army Corps—you have even more to worry about. For example, parts of the “Fair Pay and Safe Workplaces” (Blacklisting) Executive Order, took effect on October 25 and continues to unfurl throughout 2017. Under that executive order, direct-federal contractors—not federally-assisted contractors with state department of transportation contracts—must report violations of 14 federal labor laws before contract award and again every six months after contract award. If a contractor is not deemed “responsible” by the contracting officer based on its labor law record, it may either (1) sign a labor compliance agreement with a labor enforcement agency, like USDOL; or (2) be recommended for suspension or debarment proceedings. There is no limit on the terms of a labor compliance agreement that an enforcement agency could “negotiate” with the contractor.

But wait, direct-federal contractors, there’s more. The Paid Sick Leave Executive Order generally goes into effect for new contractors with federal agencies on January 1, 2017. This executive order requires contractors with direct federal contracts and their subcontractors to provide employees working on or in connection with such contracts up to seven days (56 hours) of paid leave annually for sickness and other purposes. As a result, if your company does not specifically provide for paid sick leave, it will have to under this executive order at least for employees working on or in conjunction with direct-federal contracts. This can become an administrative nightmare if your company holds directfederal as well as state construction contracts, for instance. By no means are the new regulations discussed above all exhaustive. However, these are the highlights—or lowlights?—for now. Please keep in mind, nonetheless, that AGC of America continues to press for regulatory relief before the federal agencies as well as in Congress and federal court. The association has taken its case to USDOL, meeting with the head of OSHA and the White House, meeting with the Office of Management and Budget, as well as leaders of the various procurement agencies themselves in meetings and valuable regulatory comments based on feedback from AGC members like you. The association is also successfully pressing for legislation that could blunt the impact of some of these regulations if signed into law. Lastly, AGC continues file strategically sound and well-reasoned legal action as the association is currently litigating the validity of the Blacklisting Executive Order, the success of which could topple other federal regulatory actions. No matter what, remember, AGC is on your side and actively representing your concerns on these issues in Washington, DC.

In the meantime, as these AGC efforts to blunt or repeal various regulations endure, your company must be prepared to comply with them. As such, AGC has held and will continue to supply its members with educational opportunities through webinars, conferences, and various fact sheets and newsletters.

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