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
In Ledbetter v. Goodyear Tire & Rubber Co., Inc., 127 S. Ct. 2162 (May 29, 2007), the United States Supreme Court held that Title VII's statute of limitations for filing a discrimination charge with the Equal Employment Opportunity Commission begins to run when a discriminatory pay decision is made and communicated to the employee; it does not restart each time a subsequent paycheck is issued. The decision essentially prevents employees from claiming discrimination in their pay due to decisions made years before.
However, in response to the ruling, the U.S. House passed the "Ledbetter Fair Pay Act of 2007," seeking to overturn the Ledbetter decision and allowing employees to file discrimination claims years after a compensation decision was made. In addition, this legislation not only covers wages, but also vacation benefits, pensions and all other forms of employee compensation, in addition to broadening employees' rights to file compensation discrimination claims under other anti-discrimination laws as well.
While it is likely the original Ledbetter ruling will stand at least for the remainder of this Congress (due to threats of a Presidential veto if the Senate bill passes), this is, nevertheless, an important reminder for construction industry employers to, among other things: put in place neutral performance evaluation systems, train employees conducting performance evaluations, and communicate with employees about the basis for all compensation decisions. Taking such proactive steps will avoid employee discontent over pay differences and minimize the likelihood of pay discrimination claims.
Pro-Union Bills In Congress
Two bills are pending in Congress which, if they become law, could have a significant impact on construction-industry employers.
First, the U.S. House of Representatives has passed the Employee Free Choice Act, which proposes sweeping changes to the National Labor Relations Act's (NLRA) long-standing rules on union organizing campaigns and collective bargaining. The bill would: (1) require employers to recognize and bargain with unions based only on a "card check," rather than a supervised secret ballot election; (2) dramatically alter the collective bargaining process by requiring that a third-party arbitrator be given the power to impose contract terms upon an employer where the employer and union fail to reach agreement on an initial contract; and (3) substantially increase penalties imposed on employers for labor law violations during union campaigns.
Second, in 2006 the National Labor Relations Board (NLRB) issued a series of decisions clarifying who is a supervisor under the National Labor Relations Act (NLRA). The designation of "supervisor" is important because they are generally excluded from NLRA protection. A bill pending in Congress, the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers (RESPECT) Act, would overturn the NLRB's decisions and narrow the statutory definition of "supervisor." This and other changes to the NLRA proposed in the bill would promote unionization and reduce the number of excluded supervisors.
Taken together, should these bills become law they will make it easier for unions to organize workers at non-union construction companies and increase the number of workers entitled to unionize. They would also strengthen the hand of unions in initial collective bargaining negotiations. Industry employers should consider how these bills could impact their businesses, and notify their Congressional representatives of their position on them.
In conclusion, construction company leaders need to keep abreast of this evolving legal landscape impacting the employer-employee relationship. Taking steps to ensure your company is in compliance with applicable laws and regulations will minimize the potential for employment-related lawsuits. Familiarity with the potential effects of proposed legislation will also help you adapt to the ever-changing legal environment and ensure the long-term health of your business.
George A. Voegele, Jr., a member of the labor & employment practice group at Cozen O'Connor (one of the 100 largest law firms in the United States), has represented the construction industry in diverse matters, ranging from defending wage/hour and discrimination claims to handling administrative proceedings to conducting labor arbitrations and union prevention campaigns. Voegele can be reached at firstname.lastname@example.org