Enforcement of Employment Laws Priority for Many U.S. Government Agencies

A hot topic for discussion throughout 2009 has been the anticipated increase of new employment laws potentially introduced by the Obama administration.  While these new laws have not yet surfaced, the administration has focused heavily on the increased enforcement of existing employment laws by government agencies across the board, and employers are encouraged to prepare now or face tough penalties.

Leading the pack when it comes to the enforcement of employment laws is the U.S. Department of Labor (DOL).  Headed-up by the newly appointed Secretary of Labor, Hilda L. Solis, this agency has come out strong with its intent to enforce the many laws already under its belt that protect workers against unfair wage, discrimination and safety practices.  DOL is even eliminating the agency that stands between the Office of the Secretary and the sub-agencies, the Employment Standards Administration, in an attempt to more closely monitor their efforts.  In an announcement on September 2, Secretary Solis stated, "As secretary of labor, I am committed to the vigorous enforcement of our laws and will make use of the full weight of my authority to find and prosecute violators." The announcement was soon followed with the hiring of 250 new investigators in the agency's Wage & Hour Division (WHD) in order to monitor wage and hour violations including overtime, minimum wage and prevailing wage violations.  Of specific importance to the construction industry is the renewed enforcement of the Davis-Bacon Act, the prevailing wage law for federal construction contractors.  At a recent Prevailing Wage Conference, sponsored by WHD, officials guaranteed increased enforcement for prevailing wage issues as it relates to the Davis-Bacon Act, including the review of certified payroll records, overtime violations and apprenticeship practices, with a special focus on construction projects funded by the American Recovery and Reinvestment Act of 2009 (ARRA). WHD isn't the only DOL sub-agency focused on the enforcement of ARRA-funded projects.  OFCCP, the Office of Federal Contract Compliance Programs, which is responsible for ensuring that contractors doing business with the federal government do not discriminate and take affirmative action, recently announced in its Recovery Act Plan that since the majority of ARRA funding and grants will provide direct funding or federal assistance to construction projects, then "consequently, OFCCP will place a special emphasis on the construction industry" when it comes to enforcement.  Beginning in July 2009, OFCCP promised to begin compliance reviews for at least 360 construction contractors, including at least 10% of first-time federal contractors.  These reviews will be followed by quarterly compliance evaluations through September 30, 2010. Since she also oversees the Occupational Safety and Health Administration (OSHA), safety is also at the top of the Secretary's agenda.  During a speech at the National Labor College in April 2009, Secretary Solis stated, "OSHA will get back in the business of issuing standards that protect workers and strong enforcement of those standards."  In her pledge to "strengthen enforcement" in the wake of ARRA, 36 additional OSHA inspectors were hired with an extra 130 budgeted for 2010. Running neck-and-neck with DOL in employment law enforcement is the U.S. Department of Homeland Security (DHS).  In July 2008, DHS began fulfilling its promise of investigating employers who hire illegal workers by initiating two major steps: conducting audits of employers' I-9 forms; and preparing for increased monitoring of the E-Verify System.  The two sub-agencies responsible for these initiatives are the U.S. Citizenship and Immigration Services (USCIS) and Immigration & Customs Enforcement (ICE).  After determining that fewer than two percent of all worksite immigration enforcement arrests were employers, DHS issued new guidelines to ICE with instructions to immediately "focus its resources in the worksite enforcement program on the criminal prosecution of employers who knowingly hire illegal workers in order to target the root cause of illegal immigration." As a result, only half-way through 2009, ICE issued notices for I-9 audits to 652 businesses nationwide, compared to 503 notices issued in all of 2008. Complimenting the I-9 audits, USCIS announced its plans to use a new system to monitor the use of the voluntary E-Verify system, which is now mandated for use by certain Federal Contractors as of September 8, 2009.  The new Compliance Tracking and Management System (CTMS), which is intended to alert employers of potential issues and misuse of E-Verify in order to correct any deficiencies, will be used to identify such things as the fraudulent use of Alien numbers, wrongful employee terminations due to tentative non-confirmations, verification of applicants instead of employees, verification of only some employees and failure to use E-Verify consistently, to name a few.  Although USCIS does not have the authority to investigate and prosecute employers or workers based on its findings through CTMS, it may share the information it gathers with ICE as well as other law enforcement agencies in order to build a case against an employer. Last but not least, the Internal Revenue Service (IRS) is rumored to have increased its enforcement of independent contractor status claims.  Employers are not responsible for certain taxes paid on behalf of employees, such as social security and workers' compensation, when they hire independent contractors, enticing some employers to improperly classify employees this way.  The Small Business Council of America recently reported the introduction of the Taxpayer Responsibility, Accountability, and Consistency Act bill into Congress, which would make substantial changes to what is known as the Section 530 safe harbor, requiring employers to receive a "written determination or exam" from the IRS confirming that the independent contractor is indeed not an employee.  Upon receiving a negative determination, the IRS would be required to report to the U.S. Department of Labor that the individual or position was reclassified as an employee. Sharing information across agency lines is something new that the federal government is promising.  OFCCP officials will share evidence of discrimination and results of I-9 and E-Verify audits with ICE in order to build stronger cases for employer prosecutions.  WHD will share information with the IRS, singling out employers who evade employee taxes by misclassifying employees, and so on.   In addition to the sharing of information across agency lines, agency walls will also be breached in order to recover any fines and back wages due to employees.  For example, if a contractor owes $100,000 in back wages after a WHD investigation, WHD will be able to pull those funds from a Department of Defense contract that the contractor has been awarded.  There is also a renewed focus on debarment in lieu of fines and penalties for federal contractors, a process in which a contractor is precluded from bidding on or entering into contracts with the federal government.  Many agency representatives feel that debarment will pack more of a punch to violating employers and that many employers view fines and penalties as a mere cost of doing business. To help contractors maintain compliance, many agencies are hosting free seminars, conferences and webinars throughout the United States.  The Department of Labor is sponsoring hundreds of free events across the country, including Prevailing Wage Conferences, OFCCP Compliance Assistant Seminars for Construction Contractors and ARRA Compliance Assistance Seminars, which can be found on DOL's Events Web page.  In addition to the FAQ's for Federal Contractors posted on their Web site, DHS is offering free webinars on the E-Verify program. Many agencies have also revised or created new compliance assistance manuals to help contractors with old and new regulations.  For example, USCIS issued E-Verify Supplemental Guidance for Federal Contractors on September 8.  DOL has made available a Prevailing Wage Resource Book for contractors in addition to creating an OFCCP New Contractors' Guide and updated the OFCCP Technical Assistance Guide for Federal Construction Contractors.   Available AGC resources include the Davis-Bacon Manual on Labor Standards for Federal and Federally Assisted Construction, the Affirmative Action Manual for Construction and an immigration compliance live educational session, all of which are presented in a contractor-friendly form.   For easy access to these resources arranged by subject matter, take a moment to review AGC's Labor and HR Topical Resources page. Compliance assistance will also take a front seat at AGC's 2009 HR Professionals Conference with an employment law workshop, immigration law update and our first ever Department of Labor forum, with representatives from OFCCP, WHD, OSHA and the Employment Benefit Standards Administration (EBSA) .  The Conference will take place October 27-29, in Atlanta, Ga. Click here for conference details and registration.