Chapter Corner

Legislative Affairs

Policy Issues: 115th Congress

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

NLRB “Ambush Elections” Rule
On December 13, 2014 the National Labor Relations Board (NLRB) published its final rule to representation-case procedures -- commonly referred to as the "ambush elections" rule -- which will dramatically shorten the election window during union organizing campaigns from the median of 38 days to as few as 14 days. This proposed change to election procedures would leave employers almost no time to speak with their employees about the impact of unionization on their workplace and benefits, and cuts the time workers have to review all of the facts and make an informed decision about their representation. The rule would also force employers to turn over confidential information about employees to union organizers such as e-mail addresses and telephone numbers. Resolutions (H. J. Res. 29/S. J. Res. 8,) were passed by both the House and Senate in spring of 2015 and, if enacted, would nullify NLRB’s rule.  However, President Obama vetoed the measure and an override proved unsuccessful.  In addition, in June of 2015, the U.S. District Court for the Western District of Texas upheld the NLRB’s ambush election rule and the rule was ultimately upheld upon appeal. IEC opposes efforts to shorten the timeline for union elections and favors proposals to roll back the NLRB’s expedited election rule.

‘Persuader’ Rule
In March of 2016, the Department of Labor finalized a revision to the “persuader” rule, which changes federal disclosure rules to make it more difficult for employers to access legal counsel and legally communicate with employees about the pros and cons of a particular union or unionization generally. Currently, employers, consultants, and attorneys must disclose any arrangements to persuade employees about their decision on whether or not to unionize if the consultant or attorney directly communicates with employees. This is meant to ensure employees know the employer has hired the third party to communicate with them. If the attorney or consultant does not communicate directly with the employees, but instead, only advises the employer about how to legally communicate with employees, then no disclosure is required.

DOL’s rule narrows the scope of this “advice” exemption so that virtually all interaction between employers and labor lawyers or consultants will be subject to the disclosure requirements. In doing this, the Board will limit employer access to counsel, make it harder for employers to find competent counsel to represent them, and provide more opportunities for unions to catch unsuspecting employers mistakenly running afoul of complicated labor laws. The changes will also make it harder for employers to train supervisors on how to communicate with employees about labor issues without violating the law. All of these repercussions make it less likely employers will exercise their federally protected free speech rights to discuss the pros and cons of unionization with employees, which was the clear design of the change. In late June of 2016, the US District Court for the Northern District of Texas issued a preliminary injunction in the case of the National Federation of Independent Business, et. al. v. Perez, delaying the implementation of the persuader rule, which was set to go into effect on July 1, 2016.  In the fall of 2016, the same court issued a permanent injunction, thus stopping the rule completely from taking effect. IEC opposes DOL’s radical change to the “advice” exemption and supports the current rule, which only requires reporting requirements when a third party addresses employees directly.

Joint Employer Standard
At the end of August 2015 the National Labor Relations Board (NLRB) released its decision on a new interpretation of the “joint employer” standard in a case known as Browning-Ferris Industries of California, Inc.  The Board discarded its long-standing bright-line test whereby two companies would only be considered joint employers if they share or codetermine those matters governing the essential terms and conditions of employment.  In addition, the prior standard required control over the employees to be direct and immediate. The NLRB’s new standard deems a joint employer to exist even where one company only has the right to exert indirect or potential control over the terms and conditions of another company’s employees. Consequently, it’s likely that contractors could be held liable for various labor law violations of a completely separate contractor where they have no ownership stake, depending on their business relationship.  A contractor may also be exposed to another company’s collective bargaining obligations, and economic protest activity, including strikes, boycotts, and picketing. During the first half of the 114th Congress, the “Protecting Local Business Opportunity Act” (H.R.3459/S.2015), which would repeal the new joint employer interpretation and return the law to the standard that has been in place for decades, was introduced, but saw little movement. Policy riders to defund implementation of the standard were also introduced, but did not pass. Browning-Ferris is currently appealing the ruling. IEC opposes the new joint employer standard requiring only indirect and potential control of another company’s employees and supports reinstatement of the prior standard requiring direct and immediate control.

Overtime
Over the summer of 2015, the Department of Labor issued a final rule that would alter what “white collar” workers would be eligible to receive overtime, which means it would affect the management teams and other staff within an electrical contractor’s operations. The Fair Labor Standards Act (FLSA) currently entitles “blue collar” employees, such as electricians, overtime pay. DOL’s proposal would require those white collar employees making less than $917 per week or $47,476 annually be paid overtime. This is a significant increase over current law, which requires paying overtime to employees making less than $455 per week or $23,660 annually.  Furthermore, the rule includes automatic increases in the salary threshold every three years in perpetuity, regardless of economic conditions and without the input of stakeholders. Late in the 115th Congress, various pieces of legislation were introduced to delay or gradually implement the new overtime threshold. In November 2016, a Federal judge for the U.S. District Court for the Eastern District of Texas blocked the new rule, which was set to go into effect on December 1st.  The Obama administration filed and was granted an expedited appeal, that would still carry over into the Trump administration. IEC opposes DOL’s drastic increase to the “white collar” overtime threshold and its proposal to adjust it on an annual basis.

Secret Ballot
Legislation was introduced in the 113th Congress that would guarantee workers a vote on union representation with the protection of a secret ballot free from coercion. The “Secret Ballot Protection Act” (H.R. 2346) 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. Similar legislation was introduced in the first half of the 114th Congress in the form of the “Employee Rights Act” (H.R.3222/S.1874), which 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.” IEC supports proposals guaranteeing employees the right to a secret ballot in union organizing elections.

Blacklisting
In July of 2014, President Obama issued the Fair Pay and Safe Workplaces Executive Order 13673, which requires contractors to report violations on 14 different labor and employment laws and “state equivalent” laws taking place in the past three years for contracts exceeding $500,000. Once awarded the contract, a company would be required to update this information every six months for the life of the contract. Subcontractors, whose value of the contract exceeds $500,000, would be required to do the same, but through the prime contractor. Ultimately, federal contractors could be deemed “not responsible” by contracting officers and lose out on federal contracts without due process based on their reports. In October 2016, a court issued a preliminary injunction, blocking the rules implementing the order from going into effect. IEC opposes this overly bureaucratic, unfair and unworkable system to determine whether a company is deemed “responsible” and fit to work on a federal contract.

Paid Sick Leave
On September 29, 2016, the Department of Labor issued its final rule to implement Executive Order 13706, which requires covered federal contractors to provide employees with up to seven days (56 hours) of paid sick leave per year. The rule permits an employee to take paid leave to care for anyone with whom the employee has a “significant personal bond” that is like a family relationship, regardless of a biological or legal relationship. The proposed rule’s tracking and reporting requirements alone would place significant burdens on small electrical contractors, further deterring them from procuring federal contracts. IEC opposes DOL’s mandate to require federal contractors provide employees working on covered contracts 7 days of paid sick leave per year due to its overly broad nature and burdensome tracking requirements.

Salting
“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. 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 legislation to protect merit shop businesses and their employees from aggressive subversion by salting and permits employers to not hire salts.

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 legislation and any effort to ensure open competition on federal construction projects.

Davis-Bacon Act
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. The “Davis-Bacon Repeal Act” (H.R. 987/S. 1785) was introduced in the first half of the 114th Congress, which would repeal the prevailing wage requirements. IEC supports repeal of the Davis-Bacon Act and favors updating federal prevailing wage laws.

Responsibility in Federal Contracting Act
The 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. In the 114th Congress, “Responsibility in Federal Contracting Act” (H.R. 924) was introduced, which would transfer the responsibility of determining wage rates in federal construction projects to the Bureau of Labor Statistics (BLS), which uses a more accurate and scientific method of calculation. IEC favors having the Bureau of Labor Statistics, rather than the Department of Labor, determine wage rates in federal construction projects.

Jobs and Workforce Development 

Promoting Registered Apprenticeship
IEC strongly supports the expansion of registered apprenticeship opportunities to foster the knowledge, technical skills, and practical experience necessary to succeed in today’s electrical trade.  IEC supports efforts to help address the growing shortage of workers for highly skilled jobs in our nation’s construction sector.

PERKINS ACT Reauthorization
Carl D. Perkins Career and Technical Education Act, last renewed in 2006, governs the largest federal program for high schools and sends $1 billion out to the states to support career and technical programs. Other educational issues are being signaled as higher priorities, but Perkins is one of utmost priorities for IEC. The current silos of secondary and postsecondary education systems – and the funding streams that perpetuate their separation – are not preparing enough students to meet the demand for these middle- and high-skilled jobs. Career and technical education can provide students with opportunities for career awareness and preparation by providing them with the academic and technical skills needed to succeed in postsecondary education, training and employment.  Legislation in the 114th Congress was introduced and passed overwhelmingly in the House of Representatives.  However, the bill got hung up in the Senate, which ran out of time in 2016 and was unable to act on the bill.  IEC favors reauthorization of the Perkins Act.

Energy and Tax

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. IEC cautions both the House and Senate tax committees against focusing on budget-neutral, corporate-only approaches that would increase taxes on small businesses and individuals by an estimated $27 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.  Many of these extenders were renewed at the end of 2015, retroactively for 2015 and prospectively for 2016.  In addition, Congress extended bonus depreciation by allowing small businesses to depreciate 50 percent of the cost of property acquired and put in service during 2015, 2016 and 2017. It will drop to 40 percent in 2018 and 30 percent in 2019.  It also made permanent and increase, from $25,000 to $500,000, in the amount a small business can expense on certain equipment under Section 179 of the tax code.  IEC recommends that Congress consider indexing income thresholds so that inflation is not the cause of tax policy changes. IEC also favors codifying popular “extenders” such as 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. 

Death Tax
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. Legislation was introduced in the 114th Congress that would completely repeal the Death Tax in the form of the “Death Tax Repeal Act of 2015” (H.R. 1105).  IEC opposes the Death Tax and supports efforts towards its permanent repeal. 

Energy Policy
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.

Tenant Star
The "Energy Savings and Industrial Competitiveness Act" was introduced in the 113th Congress, which created a variety of voluntary measures (such as “Tenant Star”) to reduce energy consumption in the industrial and government sectors and will help electrical contractors as they work with manufacturers of electrical components and building owners to improve the energy efficiency of building systems. The bill also incentivized the production and use of energy efficient motors and transformers, which IEC members include in both retrofit projects and new construction jobs.  Both the House and Senate also introduced stand-alone “Tenant Star” bills (H.R. 2126/S. 1191) last Congress.  The House passed H.R. 2126 by an overwhelmingly bipartisan vote of 375-36, but the Senate failed to act.  In the 114th Congress, Tenant Star was added as an amendment to the Keystone XL Pipeline bill that was ultimately vetoed by President Obama. IEC supports the voluntary energy efficiency provisions proposed in the Tenant Star legislation.  

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). Eligibility is open to building owners, designers, and contractors to help offset some of the high costs of energy efficient components and systems incorporated in the construction of commercial and larger multifamily buildings. To qualify for the deduction, improvements must reduce total annual energy and power costs with respect to the interior lighting, systems, heating, cooling, ventilation and hot water systems by 50 percent at a rate of $1.80 per square foot, with less-efficient improvements still qualifying for deduction at a prorated amount. This deduction is important to many IEC members who incorporate energy efficiency into their projects. Section 179D expired on December 31, 2014 and was then renewed retroactively for 2015 and prospectively for 2016 as part of the end of the year omnibus bill.  The provision was not renewed at the end of 2016 and thus, expired for 2017.  IEC supports making 179D permanent and increasing the deduction from $1.80 to $3.00 per square foot. IEC also supports further extension of the deduction to apply to retrofit projects.

Federal Contracting
In the 113th Congress, a number of proposals were introduced to address longstanding obstacles to efficient and cost-saving procurement of construction services.  Among these are the “Design-Build Efficiency and Jobs Act” (H.R. 2750), the “Common Sense Construction Contracting Act of 2013” (H.R. 2751), and the “Security in Bonding Act” (H.R. 776). The H.R. 2750 limits both single-step design-build procurements and the second-step of two-step design-build to three to five teams to promote greater competition by more qualified competitors. The H.R. 2751 prohibits federal agencies from using reverse auctions that reduce competition and lower the quality of work. Lastly, the H.R. 776 limits surety bond fraud by requiring pledges of only legitimate, tangible, and verifiable assets. This bill was once again introduced in the 114th Congress in the House (H.R. 838).  Combined, these bills save valuable taxpayer dollars and ensure better competition for federal contracts.  IEC supports proposals to address longstanding obstacles to efficient and cost-saving procurement of construction services.

Healthcare

Healthcare Reform
IEC contractor members are proud of the competitive benefits and wages that they offer to their employees, and IEC has long supported commonsense reforms to our nation’s health care system with the hopes of driving down costs, increasing efficiencies, and lessening the stress that providing quality health insurance options places on both employers and employees.  IEC has been a vocal advocate to Congress for market-driven reforms that ensure affordability, provide greater choice to consumers, and make it easier for small business owners to offer their employees with quality health care options.  IEC is a supporter of Association Health Plans and medical liability reform.

Association Healthcare Plans
IEC vehemently opposed passage of the Patient Protection and Affordable Care Act (PPACA) in 2010. The myriad of mandates on both individuals and employers included in the enacted law continue to create uncertainty and impose costly burdens on IEC contractor members, their families, and their employees. Complete repeal of PPACA is highly unlikely; however, efforts to enact amendments to the law blunting its impact on small businesses are more viable.  IEC supports legislative efforts to alleviate the negative impacts of the PPCA through revision or repeal, and to delay or eliminate compliance with damaging new mandates.  

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. At the end of the first session of the 114th Congress, a provision was included in the omnibus bill delaying the implementation of the health insurance tax for a year.  In addition, "The Jobs and Premium Protection Act" (H.R. 928/S. 183) was introduced in both the House and Senate, which would repeal the annual fee on health insurance provider. As part of the year-end omnibus legislation, the HIT was delayed for 2016. IEC supports efforts to repeal the health insurance tax (HIT).

Immigration

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, in the 113th Congress, the Senate “Gang of Eight” immigration proposal, the “Border Security, Economic Opportunity, and Immigration Modernization Act” (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. The issue of immigration was not addressed during the 114thsession of Congress.  IEC opposes the maximum annual cap of 15,000 on visas available for construction sector jobs and 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.

Employee Verification
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.  In the 113th Congress, the “Border Security, Economic Opportunity, and Immigration Modernization Act” (S. 744) was introduced, which included such a standard and preempted state regulations on employment eligibility. Also introduced last Congress, the “Legal Workforce Act” (H.R. 1772) was a stand-alone E-verify bill that included a strong safe harbor provision, federal preemption language, and, importantly, a two year phase-in for small businesses with less than 20 employees.  IEC supports the standard for an employment verification system as outlined in S. 744.

Metal Theft

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” (S. 394) was introduced in the 113th Congress, which 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. A stand-alone bill was not introduced during the 114th Congress. IEC supports proposals that protect construction business from loss and critical infrastructure from damaging theft.