Monday, August 31, 2015

Overtime Pay Lawsuit Hits Walsh Construction

Chicago based Walsh Construction is facing a federal class action overtime pay lawsuit in Connecticut, brought by non-craft project bookkeepers claiming Walsh improperly classified them as professional accountants, exempt from time and a half for hours worked past 40 per week. Most construction tradespeople belonging to unions have labor agreements requiring them to be paid time and a half –or more on Sundays and holidays – for overtime work, but non-union clerical and administrative staffers lack the overtime pay requirements of union contracts.

The class action lawsuit is part of a drive to use the existing Fair Labor Standards Act, and the Obama administration’s proposed new rules, to require construction contractors to pay overtime past 40 hours to everyone on a project site who earls less than $52,000.00 per year. Companies in the construction business should watch the outcome of this case closely, to determine what impact the result may have on their own payroll expenditures, and bottom lines.

Mayor Emanuel Reorganizes Chicago Infrastructure Trust

Frustrated with the sluggish pace of progress by his showpiece Chicago Infrastructure Trust in pushing forward funding and completion of public private partnership investment projects in the city, Mayor Rahm Emanuel has shaken up the board and staff of the entity he touted on its creation as “the breakout strategy for the city” during the present era of declining federal funding and disappearing state resources. Executive Director Stephen Beitler, venture capitalist, is being replaced by Chicago Law Department attorney Leslie Darling. Former Boeing executive James Bell and former Sara Lee executive Diana
Ferguson have resigned from the Trust’s board, and former 10th Ward Alderman John Pope lost his seat after being defeated in April’s election. Their departures are joined by former Chicago Inspector General David Hoffman, whose term expired at the end of 2014.

Thus far, the Trust has initiated work on only two projects – improving city owned building energy efficiency, and adding cell phone service in CTA subway tunnels. The energy efficiency upgrade project was slated to involve 104 city buildings at an investment of $115 million, but lack of investor participation cut back the scope to $13 million worth of work on only 62 buildings. The subway cell phone initiative for 4G wireless installation is expected to produce investment of $32 million.

Mayor Emanuel has expanded the Trust’s Board from five to seven members. New appointees include City Treasurer Kurt Summers, Ventas CEO Debra Cafaro, Northern Trust hedge fund officer Carl Lingenfeller, Ernst & Young Global investment head Kym Hubbard, Marquette & Associate Managing Partner Miguel Zarate, and 19th Ward Alderman Matt O’Shea. The sole holdover from the earlier board is Chicago Federation of Labor President Jorge Ramirez.

The new, expanded board will be looking at potential private investments in proposed projects such as express L service from the loop to O’Hare Field, upgrading 400,000 Chicago street lamps to energy efficient LED lighting, and improving energy efficiency of 114 swimming pools in Chicago’s parks and schools, a proposal approved by the outgoing board, but which tanked as the CPS bond rating has plummeted.

OSHA Proposes $1.7 Million Fine For Worker Asbestos Exposure

St. Louis area contractors Kehrer Brothers Construction and its affiliate D7 Roofing were investigated by OSHA for exposing Mexican H-2B visa temporary workers to asbestos hazards during renovation of a former school building in Okawville, Illinois. Kehrer was cited for 16 egregious violations, 9 willful violations, and 6 serious violations for failing to warn the workers of asbestos hazards, failing to provide proper training in asbestos remediation, and failing to provide proper protective equipment, and for threatening to fire workers who spoke with OSHA investigators.

According to Assistant Secretary of Labor for Occupational Safety and Health David Michaels, the workers were at the mercy of their employer, who helped them obtain temporary work visas, arranged their housing, and drove them back and forth to the project site: “They spoke no English … They were completely at his mercy,” Michaels said. Kehrer affiliate D7 was also cited for 1 serious and 2 willful violations in the investigation.

Overtime Pay Rules Changes

The Obama administration has proposed dramatic rules changes under the Fair Labor Standards Act for determining which employees must be paid time and a half for working more than 40 hours per week. Current rules exempt white collar salaried workers earning more than $35,000.00 per year from overtime requirements. The proposed new rule would require time and a half pay past 40 hours per week to white collar workers earning between $35,000.00 and $50,440.00 per year.

Businesses responding to the proposal say it will not result in higher earnings for current employees, rather it would cause hiring of part time workers without benefits to perform the extra hours of work, eliminating overtime for current staff. It remains to be seen what the final rule will look like after the comment period expires.

East Algonquin Road Corridor Development Study

The Village of Algonquin recently released the study report it commissioned from development consultants Gruen Gruen + Associates with recommendations for enhancing development in the area of the village along Algonquin Road east of the Fox river. The study report notes that business properties in the study area consist of 59% retail stores, 26% construction, industrial and automotive uses, and 15% medical and health related service businesses. According to the consultants, residential development in the study area has been hindered by perceived quality differences between Jacobs High School west of the Fox and Dundee-Crown High School east of the river, as well as village requirements that homes built in the area have brick on all four sides, increasing construction costs. Lower traffic and worker counts east of the Fox also contribute to restaurant vacancies and lack of grocery and food service businesses in the study area.

In order to arrest the declining business environment along Algonquin Road east of the Fox, the consultants recommend that Algonquin’s village government adopt a policy of discouraging dense residential and mixed use developments, as well as stand alone retail locations, and encourage housing development within the study area by eliminating costly fa├žade requirements. As for business development, the study recommends reducing regulatory costs and uncertainties by making medical clinics, physical therapy facilities and MRI centers as permitted uses, rather than requiring special use permit applications for every clinical use project.

The study praises completion of the Algonquin Road congestion relief project just west of the Fox, but remarks that more work is needed in order to further reduce traffic congestion in the downtown area at the river, so as to encourage folks living west of the bridge to travel across to the east side for shopping and entertainment.

New USEPA Clean Water Rules In Force In Illinois

Despite a ruling by North Dakota Federal Judge Ralph Erickson in Fargo barring enforcement of EPA’s new clean water rules in 13 states, the agency announced that it will enforce the new regulations in all 37 states which were not joined in that particular litigation, including in Illinois. Judge Erickson’s ruling bars enforcement of the new rules on permits required for activities affecting small tributary streams and other waters on private property within Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota and Wyoming. Different states have similar litigation proceeding elsewhere, with a court hearing scheduled in another case against the rules in New York on October 1.

The agency seems confident the new rules will ultimately be held enforceable everywhere, despite legislation pending in both houses of Congress to block the new rules. Meanwhile, construction contractors and property owners in Illinois who are proposing work on property with wetlands or small streams need to contact USEPA and apply for permits required under these new regulations, or face potential fines and penalties should EPA ultimately prevail in this protracted legal battle. Better safe than sorry.

Federal Surface Transportation Update

Congress may be creeping toward a long term solution to the Federal Highway Trust Fund revenue problem, at least for the next six years, according to my conversation with Sixth District Congressmn Peter Roskam (R. Ill.) a member of the House Ways and Means Committee, which is charged with responsibility for appropriating money to fill the gap between the nation's needs for road, bridge, waterway and transit construction and repair, and the declining revenues generated by the federal motor fuel taxes dedicated to keeping America moving. Congressman Roskam agrees that the 34 consecutive short term appropriation patches for the Trust Fund are a poor substitute for the traditional funding Congress used to provide six years at a time. Without the ability to predict federal shares of highway, bridge, waterway and transit funding over the long term, state and local governments are crippled in their planning for needed repair and construction projects which usually last more than a year from initial planning through completion.

Primarily because of the Congressionially enacted CAFE fuel economy standards, and also because folks tend to drive less when the economy is sluggish, taxes generated on gasoline and diesel fuel have declined dramatically in recent years, although the costs of highway, transit and waterway construction projects continue to increase. As a result, the gap between motor fuel tax revenue and the funds needed for surface transportation infrastructure construction and repair projects continues to grow each year. According to Representative Roskam, the majority of the Ways and Means Committee is looking toward legislation which would reduce the income tax rate on repatriated foreign earnings of U. S. corporations, and would dedicate the expected resulting tax revenues to the Highway Trust Fund.

However, it remains to be seen whether such an appropriation bill from the House would pass in the Senate, since such a six year funding measure would not address the need for additional Highway Trust Fund revenues in future six year appropriation periods.