A string of administrative actions, judicial decisions and legislative initiatives, from verifying proper pay structures to ensuring workers are documented, could have an impact on construction industry employers. It's critical to be aware of and respond to these important developments, each of which could ultimately impact your business.
Federal Minimum Wage Increase
On July 24, 2007, the federal minimum wage increased from $5.15 to $5.85 per hour. This is the first of three scheduled increases: on July 24, 2008, the minimum wage will increase again to $6.55 /hour, and on July 24, 2009 to $7.25/ hour.
The law provides certain exceptions which may benefit construction-industry employers. For example, companies can pay new employees under 20 years of age a reduced "training wage" during their first 90 days of employment.
Importantly, at least 25 states have minimum wage rates higher than the federal minimum. Where federal and state laws have different minimum wage rates, the higher rate must be paid to covered employees.
It is also important to note that these wage rates apply to employees covered by collective bargaining agreements. Therefore, if an agreement calls for wages below the federal or state minimums, an employer will need to adjust those wage rates in order to comply with the new minimum wage rates.
ON THE HORIZON
Social Security "No-Match" Regulation On Hold
Implementation of a new Department of Homeland Security (DHS) regulation regarding an employer's obligations upon receiving a Social Security Administration (SSA) "no match" letter is on hold as a result of a recent court ruling. But this doesn't mean companies are off the hook in terms of ensuring employees are properly documented.
On October 10, 2007 a federal judge in California granted a preliminary injunction which prohibits DHS from implementing its new "no match" program. By way of background, SSA sends companies no-match letters after discovering that a social security number (SSN) does not match the information provided by the employer. DHS had planned to implement a regulation whereby an employer who receives a no-match letter can be deemed to have "constructive knowledge" that it is employing an illegal alien (and thus subject to civil or criminal penalties), unless that company follows specific "safe harbor" provisions.
To take advantage of these provisions, the regulation provides that upon receiving a no-match letter, the employer must check its records to determine whether the discrepancy was caused by a clerical error, take steps to correct the error, and verify that the corrected name and SSN now match SSA's records. Or, if the company determines that the no-match is not a result of an error in the employer's records, it must request that the employee confirm the accuracy of their name and SSN. Employees could also provide different documentation to verify their employment eligibility.
However, if after 93 days the no-match discrepancy has not been resolved and the employee has failed to offer sufficient alternative documentation, the regulation says that the employer could either terminate the employee or face the risk that DHS will find it in violation of immigration laws, because it had constructive knowledge the employee was not authorized to work.
The judge who halted implementation of the regulation intends to hold hearings in the next few weeks to make a final determination over whether the no-match regulation can go into effect. In addition to monitoring the situation, construction companies employing high numbers of immigrant workers should review their policies and procedures involving SS no-match letters, and consistently follow the safe harbor procedures outlined in the regulation.
Potential Expansion of Discrimination Claims