PRO Act

PRO Act

The Richard L. Trumka Protecting the Right to Organize Act (H.R. 20/ S. 567) includes provisions that would:

  • strip away workers’ free choice in union elections as well as their privacy rights;
  • codify into law the NLRB’s controversial Browning-Ferris Industries joint-employer standard that has threatened our country’s small and local businesses and would decimate the traditional contractor to subcontractor relationship in construction;
  • curb opportunities for people to work independently through gig economy platforms or more traditional independent contractor roles;
  • eliminate Right-to-Work protections for workers across the country, including in the twenty-seven states that have passed Right-to-Work laws;
  • interfere with attorney-client confidentiality and make it harder for businesses, particularly small businesses, to secure legal advice on complex labor law matters;
  • prohibit arbitration agreements in employment contracts;
  • infringe on the due process rights of employers; and
  • strip away “secondary boycott” protections that prevent unions from using their anti-trust exemptions and immunity from certain state laws to target businesses for anti-competitive purposes other than organizing.

Analysis by the American Action Forum proved the PRO Act’s economic cost would be disastrous for the economy. The provision limiting independent contractors’ rights would affect 8.5% of GDP and put up to $12.1 billion of additional annual cost pressure on employers, and the joint employer provision would cost up to $33.3 billion in lost annual output for the franchise business sector alone.

Immigration

Immigration

Systemic labor shortages rank at the top of companies’ lists of most significant problems and are already contributing to rising costs in construction. Despite efforts to recruit and train American workers, the construction sector faces a very real growth and affordability crisis if work is increasingly delayed or even cancelled due to a lack of domestic labor. True immigration reform must include a mechanism for construction industry employers to get the temporary foreign workers they need when American workers are unavailable. Our industry must be able to access a program where we can hire legal, foreign-born workers in order to supplement the U.S. construction workforce when the economy needs them.

Establishing a new, market-driven visa program for foreign workers will further help to address the workforce shortage and allow the construction industry to continue to grow and prosper. ABC supports the Essential Workers for Economic Advancement Act (H.R. 3734) introduced by Rep. Lloyd Smucker, R-Pa. This legislation would create a new visa program, eventually capped at 85,000 positions annually, to help address the workforce needs of the construction industry by providing critical access to temporary workers. There is also a need to establish a fair, efficient and workable national employment verification system that provides confirmation of the work authorization status of prospective employees but that also ensures liability protections for employers who comply in good faith. Enacting an improved, mandated E-Verify system with necessary protections for employers acting in good faith to ensure a legal workforce, and a federal preemption of state and local E-Verify laws should be enacted along with accompanying key immigration reforms that disincentive illegal immigration and secure the border.

Congress also must address the presence of the undocumented population in a respectful, common-sense manner that aids the workforce needs of industry sectors like construction. Opportunities to create an earned path toward legal permanent status or citizenship for undocumented workers who meet certain requirements, particularly those “Dreamers” or DACA recipients who were brought here as children and have voluntarily come out of the shadows to pursue an education, establish careers, and serve our country in uniform, should be pursued.

Concerning DACA and Temporary Protected Status designations, the sudden exodus of legally authorized workers from the construction sector will only exacerbate existing labor shortages and lead to project delays at a cost to taxpayers and consumers. Congress should work with the administration to provide certainty for DACA and TPS recipients and opportunities for those who are productive members of the workforce to remain in the United States, and ensure these hardworking individuals continue to participate in the American workforce at a time when they are most needed.

Inflation Reduction Act

Inflation Reduction Act

The Inflation Reduction Act was signed into law on Aug. 16, 2022, and provides over $270 billion in tax credits for the construction of solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations and other clean energy projects.

A new policy in Subtitle D-Energy Security of the IRA grants developers/taxpayers a bonus tax credit 500% greater than a baseline tax credit of 6%. However, this is conditioned on requirements that project contractors meet prevailing wage and apprenticeship requirements outlined in the legislation and IRS guidance. Developers/taxpayers must ensure that contractors pay all construction workers prevailing wages and benefits set by the U.S. Department of Labor via the Davis-Bacon Act. Developers must also ensure that contractors utilize apprentices enrolled in government-registered apprenticeship programs for certain percentages of all construction hours worked on a project (12.5% of all work hours in 2023 and 15% of all work hours in 2024 and thereafter).

All contractors with four or more employees on a jobsite must utilize at least one registered apprentice and comply with applicable apprenticeship ratios thereafter. The developer/taxpayer faces considerable penalties if prevailing wage and registered apprenticeship requirements are not met. This new policy is an unprecedented expansion of prevailing wage and government-registered apprenticeship requirements/enticements onto private construction projects via the federal tax code.

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Fair and Open Competition

Fair and Open Competition

Hardworking taxpayers deserve efficient and effective policies that will encourage all qualified contractors to compete to build long-lasting, quality projects at the best price. Government-mandated project labor agreements discourage quality contractors and the more than 88% of U.S. construction workers who choose to not join a union from bidding and working on projects in their own communities.

President Biden’s Feb. 4, 2022, Executive Order 14063 and Dec. 18, 2023, final rule, which requires anti-competitive and inflationary PLAs on federal construction contracts of $35 million or more, undermine efficiency in federal contracting, increase construction costs by 12% to 20%, and create project delivery delays and discriminate against nonunion contractors and workers.

Legislation should be enacted that would restore fairness and neutrality in government contracting by prohibiting federal agencies from requiring or prohibiting contractors to execute. The Fair and Open Competition Act (H.R.1209/S.537) introduced in the 118th  Congress by Rep. James Comer, R-KY., and Sen. Todd Young R-Ind, prohibits government-mandated PLAs on federal and federally assisted projects and helps taxpayers get the best possible product at the best possible price.

To date, 25 states have taken action ensuring government neutrality in contracting by prohibiting government-mandated PLAs on projects funded by taxpayers.

Tax Policy

Tax Policy

With many of the beneficial tax policies under the 2017 Tax Cuts and Jobs Act set to expire at the end of 2025, it is imperative that the House and Senate work to preserve critical tax initiatives and ensure certainty for thousands of small businesses throughout the construction industry in the United States.

Most importantly for many of the industry’s small, pass-through businesses, is the need to ensure a competitive tax rate. The 20 percent deduction under section 199A of the TCJA for pass-through entities helps level the playing field and provides parity for small businesses. If the 199A deduction is allowed to expire in 2026, the 94 percent of construction firms currently organized as pass-through businesses could see a significant increase in their tax liability. While C-Corps will maintain their rate, which was made permanent by the TCJA, if Congress fails to extend or make permanent the 20 percent deduction, it will make it extremely more difficult for these businesses to compete with larger firms, invest in their businesses, and hire workers.

Family-owned businesses are also a significant and long-standing presence in the construction industry, and support for a tax code to assist the ability to pass the ownership of these businesses to the next generation will be important to the future of the construction industry. The current doubling of estate tax exemption, which is $12.92 million in 2023, is currently set to expire after 2025. Slashing this benefit in half would make it more difficult for these businesses to transfer ownership to family members without incurring significant tax liabilities, leading to more family-owned construction businesses being sold to outside investors or being forced to close altogether.

Finally, the top tax rate is also set to revert to pre-2018 levels after 2025, increasing the top tax rate for individuals from 37% percent to 39.6%. The top rate coupled with the 20 percent deduction for pass through business has been a key tool for many small businesses to remain competitive with larger corporations and the elimination of either could prove dangerous for these businesses. A higher individual rate could also make it more difficult for construction firms to invest in their businesses and attract and retain talent, which could be particularly problematic in a tight labor market where construction companies are already struggling to find skilled workers and a workforce shortage of more than half a million workers.

Over the past six years, the TCJA has eased burdens on the construction industry, increased investment in thousands of small and family-owned businesses and put more money in the pockets of millions of hardworking Americans. Unfortunately, some in Congress still feel the need to repeal these beneficial provisions or propose significant tax increases that would impact ABC members and their businesses and ensure that investment in new small businesses plummets, family-owned businesses suffer, and small business owners have less money to put back into growing their businesses and paying their employees.

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Federal Contracting

Federal Contracting

One of the most abusive federal contracting policies affecting the construction industry is the expanded enforcement of “prevailing wage” requirements under the Davis-Bacon Act.

The federal Davis-Bacon and Related Acts govern wage requirements for contractors and subcontractors performing federally funded or assisted contracts in excess of $2,000. Administered through an unscientific and fundamentally flawed survey process by the U.S. Department of Labor (DOL), these so-called “prevailing” wages hinder economic growth, increase the federal deficit, and impose enormous burdens. Davis-Bacon stifles contractor productivity by raising project costs, and imposes rigid craft work rules that ignore skill differences.

Congress should carry out full repeal of the Davis-Bacon Act, and state and local legislative bodies should also repeal their prevailing wage laws that mandate wage and benefit rates that do not reflect the current construction market. In the absence of full repeal, legislative and regulatory efforts designed to mitigate the Act’s negative effects should be supported, and any expansion of Davis-Bacon into areas of public and private projects in which it has not been previously mandated should be opposed.

On Aug. 8, 2023 the U.S. Department of Labor released a final rule, updating Davis-Bacon and Related Act Regulations, which makes drastic revisions to the Davis-Bacon Act and Related Acts regulations that apply to federal and federally assisted construction projects funded by taxpayers.

The DOL’s final rule mostly disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation.

Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established by the Reagan administration, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.

Key changes in the final rule include:

  • Lowering the definition of “prevailing wage” to a wage paid to at least 30% of workers in a locality, down from 50%
  • Allowing the DOL to adopt state or local prevailing wage rates as DBA wage rates
  • Making DBA requirements effective by “operation of law,” meaning even if a federal agency fails to include DBA clauses in a contract, contractors are still required to pay prevailing wages
  • Adds new anti-retaliation provisions to DBA contracts

The final rule was published on Aug. 23, 2023, and will take effect on Oct. 23, 2023. Therefore, contracts entered into after this date will be impacted, and the DOL will be implementing the final rule’s changes to the wage determination process to WDs completed after the effective date.

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