As merit shop contractors, there are certain legislative issues that directly impact the business of IEC members. Labor, energy, tax, jobs, and workforce development are all major political issues taking place at the national level that have the ability to greatly affect the electrical contracting industry.
Labor and Wages
Project Labor Agreements (PLAs)
PLAs on federal contracts require contractors to agree to collective bargaining and union hiring. PLAs increase costs by limiting competition for federally-funded projects. Executive Order 13502, signed by President Obama in early 2009, encourages federal agencies to use PLAs. IEC opposes the use of union-only PLAs and supports the “Government Neutrality in Contracting Act” (H.R. 436/S.109) and any effort to ensure open competition on federal construction projects.
The Davis-Bacon Act is a Depression-era law that requires the payment of the locally prevailing wage on all federally-funded construction projects. Due to inefficiencies and inaccuracies with the program, the federal prevailing rates are often the local union rates and not the prevailing market wage rates. Davis-Bacon increases costs on federal construction projects by requiring the use of a system that is inefficient and inaccurate, and limits competition due to its significant paperwork and reporting requirements. IEC supports H.R. 2013, the Davis-Bacon Repeal Act, and will also continue to push for updating federal prevailing wage laws.
Responsibility in Federal Contracting Act
The U.S. Department of Labor currently relies on the Wage and Hour Division to determine federal wage rates as they apply to contractors and subcontractors performing on federally assisted contracts of $2,000 or more. The Responsibility in Federal Contracting Act would transfer the responsibility of determining wage rates in federal construction projects to the Bureau of Labor Statistics, which uses a more accurate and scientific method of calculation. IEC supports H.R. 448, the “Responsibility in Federal Contracting Act.”
NLRB Recess Appointments
In January of 2013, a panel of the D.C. Circuit Court of Appeals unanimously ruled in Noel Canning v. NLRB that the President exceeded his constitutional authority by appointing three people to the board while the Senate was not in session. The National Labor Relations Board (NLRB) still continues to issue decisions and is planning to petition this ruling.
The Preventing Greater Uncertainty in Labor-Management Relations Act would prohibit the NLRB from taking actions which require a quorum until this controversy is resolved by Senate confirmation of the appointees, a Supreme Court ruling, or the expiration of the terms of the three recess appointees with the adjournment of the 113th Congress. It also would prohibit the Board from enforcing any action taken after January 2012 that required a quorum. IEC supports H.R. 1120/S.850, the “Preventing Greater Uncertainty in Labor-Management Relations Act,” and the upholding of the D.C. Court’s decision in Noel Canning.
The “Secret Ballot Protection Act” would guarantee workers a vote on union representation with the protection of a secret ballot free from coercion. The bill guards against “card check” provisions included in the failed Employee Free Choice Act (EFCA) that would have denied workers a secret ballot in union elections and imposed mandatory card check certification. The “Union Coercion Prevention Act” (H.R. 1815) would amend the National Labor Relations Act (NLRA) to mandate a secret ballot election for all union-held elections, and redefine the term “majority” to mean “the majority of all the employees in the unit, and not the majority of employees voting in the election.” The bill also blocks an NLRB rule on expedited “quick snap” elections, which was overturned by a U.S. District Court decision in 2012 and is being appealed by the NLRB. IEC strongly supports both H.R. 2346 and H.R. 1815 and any effort to guarantee employees the right to a secret ballot.
“Salting” is a technique whereby undercover union applicants known as “salts” attempt to apply for job openings with merit shop contractors, with the stated goal of attempting to organize the contractor’s employees to join the union. Salts may also want nothing more than to harass a contractor by creating a situation that forces the contractor into making personnel decisions that violate federal labor law and lead to lawsuits and fines for the contractor.
The “Truth in Employment Act” (H.R. 1746) would amend the NLRA to allow employers to refuse to hire salts. Under current law, an employer cannot discriminate against a salt simply because of an alleged conflict of interest or due to “potential” violation of company policies even when the applicant’s intent is to damage the potential employer’s company. IEC supports H.R. 1746 as an important measure to protect merit shop businesses and their employees from aggressive subversion by salting.
Energy and Tax Issues
Comprehensive Tax Reform
IEC strongly supports comprehensive reform of the U.S. tax code that addresses not only proposals affecting C-corporations, but more importantly focuses on lowering marginal tax rates and easing reporting burdens on individual taxpayers and “pass-through” businesses such as S-corporations, partnerships, LLCs, or sole proprietorships. As new legislation begins to take form in the House and Senate, IEC cautions against focusing on budget-neutral, corporate-only approaches that would increase taxes on small businesses and individuals by an estimated $27 billion per year. A 2011 Ernst & Young study further notes that the construction industry would be among the hardest hit sectors by this approach, with roughly four out of five businesses absorbing a 9 percent tax hike amounting to $2.3 billion per year. As the construction sector struggles to recover from the 2008 recession, the offsets of a corporate-only approach would be devastating for IEC’s members.
IEC further encourages legislators to take into account the impact of proposed tax reform measures on the ability of businesses in the construction sector to grow and hire new staff. Navigating the myriad of complex current tax laws is often confusing for the small business owner. Any approach to reform should therefore focus on two key fundamentals: simplicity and permanency. Further, employers must rely on Congress to annually renew popular “tax extenders” that benefit both individuals and small businesses. IEC recommends that Congress consider indexing income thresholds so that inflation is not the cause of tax policy changes and codifying popular “extenders” such as Section 179 expensing, bonus depreciation, and the domestic production activities deduction that many in the construction industry – including many IEC members – rely on. IEC also encourages the adoption of tax policies that incentivize innovative, smart, energy-efficient, resilient development, fueling the building and renovation of commercial and residential buildings and creating jobs in the construction sector.
The federal Estate Tax, commonly referred to as the Death Tax, is a tax on the estate of a deceased person and is a major hurdle in passing down family owned small businesses to future generations. As part of a larger tax package signed into law in December 2010, the death tax was re-instituted for 2011 and 2012 at a top rate of 35% and an exclusion amount of $5 million. IEC opposes this double taxation and will continue to support efforts to permanently repeal the Death Tax (H.R. 147, H.R. 177).
Health Insurance Tax
Under the Patient Protection and Affordable Care Act (PPACA), the cost of small business health insurance premiums is slated to increase as a result of a provision instituting a new sales tax known on health insurance companies that will generate $87 billion in assessments between 2014 and 2019 alone. This tax will be almost entirely passed on to consumers in the fully insured marketplace, where nearly all small businesses and the self-employed purchase their coverage. This new tax on small business owners will raise insurance costs for already struggling employers in the construction sector. IEC supports H.R. 763/S.603, bipartisan legislation to repeal the health insurance tax (HIT).
It is critical over the next decade that investments be made in our energy infrastructure and in delivery of alternative and renewable energy sources to meet the ever growing demand for energy. IEC supports expanding incentives for renewable energy including emphasis on solar and wind technologies, and supports reducing the recovery period for investment in electricity transmission lines and smart grid devices from 20 years to 10 years.
Commercial Building Tax Deduction
The Energy Policy Act of 2005 set a precedent by containing a market transformation incentive in the form of a tax deduction for owner investments in commercial building energy efficiency (179D). The deduction is equal to energy-efficient commercial building property expenditures made by the taxpayer, subject to a cap. The deduction is limited to an amount equal to $1.80 per square foot of the property for which such expenditures are made. IEC supports extending the deduction beyond 2013, and increasing the deduction from $1.80 to $3.00 per square foot. IEC also supports extending tax deduction beyond 2013 and including specific lighting technologies and for other technologies that improve building energy performance.
Jobs and Workforce Development
Green Jobs Act
The Green Jobs Act was enacted as part of the Energy Bill signed into law in December 2007. The Green Jobs Act established grants for training programs targeted at creating an efficient energy and renewable energy skilled workforce. However, the Green Jobs Act limits eligibility to entities who are partnered with a labor organization. IEC supports efforts to open up Green Jobs Act funding to all approved training programs.
Workforce Investment Act Reform
Reauthorization of the Workforce Investment Act, which provides funding and assistance that are integral to the education and training of the next generation of highly skilled electrical and systems contractors, is long overdue. According to the U.S. Bureau of Labor Statistics (BLS), electricians will have a 23 percent growth rate between 2010 and 2020, which is higher than the national average job growth rate. Even so, our industry is still experiencing a shortage of qualified workers.
H.R. 803, the “Supporting Knowledge and Investing in Lifelong Skills (SKILLS) Act,” streamlines and consolidates the array of funding streams for workforce development into one Workforce Investment Fund, through which states can more efficiently provide support services for employers, workers, and job seekers. The bill also requires that two-thirds of both state and local Workforce Investment Board members are employers and removes statutory language barring merit shop contractors from accessing green jobs training grants.
In the Senate, S. 1356, the “Workforce Investment Act of 2013” reauthorizes the Workforce Investment Act and establishes a new Industry or Sector Partnership Grant program administered by the DOL. The grants allow recipients to establish or expand industry or sector partnerships that lead collaborative planning, resource alignment, and training efforts across multiple firms for current and potential workers within the targeted industry cluster. IEC supports WIA reauthorization and continued investment in workforce training and development.
Visa Program Expansion
IEC supports bipartisan immigration reform, and believes that incorporating a sensible and needs-based approach to expanding foreign worker visa programs to addresses shortages in human capital for domestic businesses will bolster U.S. economic recovery. However, the Senate “Gang of Eight” immigration proposal, S. 744, fails to adequately meet the construction industry’s workforce needs. IEC is greatly concerned with an arbitrary cap on construction workers eligible for newly-created “W visas” for lesser-skilled, non-agricultural workers. Out of an annual maximum of 200,000 “W visas”, a stringent 15,000 per year limit for the broad range of trades encompassed by the construction industry – electricians, masons, roofers, painters, and the like – is simply unworkable and threatens to create labor shortages. While the unemployment rate for construction has remained high as the sector strives to recover, the U.S. Bureau of Labor Statistics (BLS) estimates that construction laborer and helper jobs will grow at a rate of 25 percent over the next 10 years. If the Senate’s proposed cap were to be enacted, construction employers could easily go from not having enough work to not having enough workers.
While an IEC member or a trade with which they are partnered on a construction project may not need to source foreign labor now, S. 744’s stringent cap will obstruct the industry’s ability to fill essential jobs in the future. Labor shortages created by the cap on construction visas will only translate into project delays and higher costs for production, which would inevitably be passed on to small business contractors and ultimately to consumers. IEC opposes the maximum annual cap of 15,000 on visas available for construction sector jobs under S. 744. believes that, rather than be subjected to an arbitrary and unsustainable limit, construction should receive the same treatment as other “W visa”-eligible industries that benefit from visa availability that fluctuates to meet the needs of the labor market.
IEC members place significant emphasis on ensuring the employees they hire are properly vetted to legally work in the U.S. IEC further believes that any proposed mandatory employment verification system should include a “knowing” intent standard for liability for employers as well as contractors that employ subcontractors on projects. IEC supports the federal requirements for E-verify in S.744 that incorporate such a standard and preempt state regulations on employment eligibility. IEC also supports H.R. 1772, the “Legal Workforce Act,” a stand-alone E-verify bill. This legislation includes a strong safe harbor provision, federal preemption language, and, importantly, a two year phase-in for small businesses with less than 20 employees.
Metal theft has been on a steady rise in the United States, increasing by 36% since 2010. Copper wiring used by the electrical industry is one of the more commonly stolen items – ninety six percent of all claims filed for metal theft since 2010 have been for copper materials. Many IEC members have been the victims of metal theft, either at their business location or at the site of a construction project. Most states have enacted laws specifically addressing metal theft, but it is important that federal law and the federal government complement the efforts of state and local authorities. The Metal Theft Prevention Act establishes federal criminal provision for the stealing of metal from critical infrastructure. It further requires recyclers to keep basic records of purchases and prohibits cash payments over $100 for resold metal. Importantly the bill does not preempt applicable state or local laws. IEC supports H.R. 876/S. 394 to protect construction business from loss and critical infrastructure from damaging theft.