Skilled Construction Trades and Respected Contractors
Building Wisconsin Together ®
Welcome to Construction Business Group's Industry Updates.  This monthly e-newsletter will help us communicate the important initiatives that we have underway and relevant updates on issues that impact Wisconsin's construction industry.  
Message from Executive Director  Robb Kahl

Construction Business Group will be hosting our 3rd Annual Winter Conference at the Kalahari Resort in Wisconsin Dells on Wednesday, February 6 and Thursday, February 7, 2019.  If you haven't registered yet, there is still time.
We have an amazing line up of speakers and topics.  On Wednesday, DWD Secretary Caleb Frostman will open the conference on his outlook for the Department.  Also on Wednesday, Attorney General Josh Kaul will speak about his direction for the Attorney General's office, and he will participate in a panel discussion with other notable guests on combatting payroll fraud in the construction industry.  On Thursday, Governor Tony Evers will speak about his vision for Wisconsin, and WisDOT Secretary Craig Thompson will speak on the transportation funding outlook.
Additional session topics include: an in-depth look at a payroll fraud case from Minnesota that resulted in the criminal indictment of a contractor; recruitment and retention of the next generation of workers; and alternative financing and incentive models for infrastructure projects.  The speakers are high-quality professionals from all over the Midwest.
Attendees of the conference include building trade professionals, contractor association staff, contractor executives, utility representatives and government officials.  The CBG conference provides multiple socializing opportunities, including dinner on Wednesday night and breakfast on Thursday morning.
Click here for a copy of the final agenda.  RSVP to Patty Barlow at 608-240-4178 or at  Book your hotel room now by calling 1-877-525-2427.  There are still rooms available.

Industry News and Updates
From the News Stand
Field Set in State Supreme Court Race

On April 2, Wisconsin voters will elect a new Justice to a ten-year term on the Wisconsin Supreme Court. The candidates are Brian Hagedorn and Lisa Neubauer. Both are appellate court judges on the Wisconsin Court of Appeals, District II.
The winner of this non-partisan race will replace Supreme Court Justice Shirley Abrahamson who opted not to seek re-election.  

State Lawmakers Seek Out Common Ground

Fulfilling campaign promises is always a top priority for state lawmakers. That is a challenging task in a divided government. Some of these promises will be difficult to keep because the priorities of the Democrat Governor and the Republican-controlled Legislature are not in sync.
With that said, there are many important public policy issues that have strong bipartisan support. Recently, Assembly Republican legislators sent a letter to Governor Evers in which they identified eleven issues that fall into the category of shared policy priorities. This list includes: 
  • Reducing Wisconsin's tax burden; 
  • Enhancing high speed Internet access in rural Wisconsin; 
  • Addressing the debt level in Wisconsin's Transportation Fund; and
  • Attracting and retaining qualified employees
Governor Evers met privately with legislative Republicans to discuss these issues in greater detail.

New Prevailing Wage Papers: Effect of Prevailing Wage Repeals on Construction Income and Benefits and a second one on Effects of  Enactments on Injuries and Disabilities

January 22, 2019
Economists from the University of Utah have published two papers over the last year on the relationship of prevailing wage laws first to income and benefits and second to injuries and disabilities. Both are published in Public Works Management & Policy, a peer reviewed academic journal. See below for abstracts and links to the papers. 
While considerable research has examined the effects of prevailing wage law repeals on construction wages, little has been done on the repeals effect on benefits. ... we find that depending on sample and model specification, statewide annual average construction blue-collar income fell by 1.9% to 4.2%. Statewide annual average legally required benefits (social security, workers injury-compensation insurance, and unemployment insurance contributions) for blue- and white-collar construction employees combined fell from 3.8% to 10.1%. Statewide annual average voluntary benefits (primarily health insurance, pension contributions, and apprenticeship training) for blue- and white-collar construction employees combined fell from 11.2% to 16.0%. 
State prevailing wage law repeals have been shown to lower wages and benefits- including benefits providing safety training and associated with worker retention in construction. ... we find that repealing state prevailing wage laws increase construction injury rates across various types of injuries from 11.6% to 13.1% as the seriousness of injuries increases. Disabilities increase by 7.5% to 8.2% depending on the model specification. 

Gov. Pritzker Strengthens Working Families with Actions for Higher Wages and Protections on First Full Day in Office (IL)

Standing with Working Families, Gov. Pritzker Takes Critical First Steps, Including Women's Pay Equity, Prosecuting Wage Theft, Using Project Labor Agreements, Requiring Prevailing Wage and Promoting Diversity in State Contracts and Moving Employees to Appropriate Steps
Tuesday, January 15, 2019 - Office of the Governor
Springfield, Ill. - Standing with working families on his first full day in office, Governor JB Pritzker took important first steps to raise Illinoisans' wages by signing a robust initial package of legislation and executive orders designed to raise and protect their wages. 
"This administration is putting Springfield back on the side of working families and these measures are a critical first step in the work that will define my administration, especially as we move toward raising the minimum wage to $15 an hour," said Governor JB Pritzker. "On the first day of a new administration, we're enshrining our state's values to create real and lasting opportunity for the middle class. 
"For hardworking people across Illinois, know that your state government has your back. Whether it's pay equity for women, prosecuting employers who engage in wage theft, instituting prevailing wage requirements, using project labor agreements, restoring state employees' steps, or promoting diversity in state contracts, these steps are the first of many to take bold action to support working families. This work is far from done, and I look forward to continuing to work with the General Assembly to advance core priorities so working families across Illinois can thrive." 

DC Suit of Florida Company is a Primer on Misclassification (DC)

by Jim Kollaer | January 18, 2019
The recent lawsuit filed by the District of Colombia attorney general against Florida Company Power Design, Inc., labor brokers JVA Services, LLC and DDK Electric Inc., that alleges 535 workers were misclassified as Independent Contractors, or 1099 workers, provides a primer on the way that some construction companies create vehicles to avoid taxes, the payment of overtime, the provision of worker's compensation, or medical benefits. The lawsuit demands a jury trial where the defendants will have the chance to defend themselves, but the charges detailed give a full picture of how to set up and execute a plan to use independent contractors to act as subcontractors on specific projects for a specific company.
Generally, the process that the attorney general alleges representatives of Power Design used to set up the labor brokers in business and then use those labor brokers to provide manpower for their projects, specifically in the DC area, is being repeated across the country every day. This happens specifically in the construction industry, but it also is being used in various iterations by companies in a broad range of other industries and services as well.
Court: General contractor can be cited for subcontractor violations (LA)

By Kim Slowey
Dec. 19, 2018
Dive Brief:
  • A U.S. Appeals Court judge for the 5th Circuit in New Orleans has ruled that OSHA can cite general contractors - even if their employees are not affected - for subcontractor safety violations. The ruling came after Labor Secretary Alexander Acosta requested that the 5th Circuit review an OSHA administrative court decision that said a general contractor could only be cited for safety threats to its own employees.
  • In 2017, a Denver Occupational Safety and Health (OSH) Commission administrative judge ruled that Hensel Phelps could not be cited by the agency for safety hazards created by one of its subcontractors on a project in Austin, Texas. However, the 5th Circuit said more recent rulings have rendered the case law on which the administrative judge based his decision "obsolete" and said that Hensel Phelps could be held responsible for safety on the multi-employer site as a "controlling employer."
  • According to court documents, Hensel Phelps hired subcontractor Haynes-Eaglin-Waters (HEW) for a library construction project, and HEW, in turn, hired CVI Development as a sub-subcontractor to perform demolition, excavation and other work. Hensel Phelps and HEW project staff allegedly directed CVI to work in an unsafe excavation area. An OSHA inspector cited both Hensel Phelps and CVI for safety violations. The OSH Commission will now review the matter again, taking the 5th Circuit's decision into consideration.
Dive Insight: 
While workers might have once been expected simply to accept the risks of working on a dangerous construction site as part of their job, contractors, as well as state and local authorities, have made safety a priority. And authorities have become more willing to pursue criminal charges against contractors when their disregard results in injury or death. 

Report: Construction Contractors Cheating Workers, Taxpayers (PA)

By John Nichols
JANUARY 7, 2019
January 14, 2019
HARRISBURG, Pa. - Unscrupulous contractors in southeast Pennsylvania routinely are violating labor laws and victimizing customers, including state and local government, according to a new report. 

The report from the Keystone Research Center found many contractors in the regional Philadelphia construction industry are in a race to the bottom. 

Stephen Herzenberg, author of the report, calls that "destructive competition" - cutting costs by misclassifying workers as independent contractors, cheating them out of overtime pay, investing little in worker skills and in some cases operating unsafely.

"When construction contractors and subcontractors compete by violating the law, wage theft, threatening workers' health and safety, in the end nobody else wins," he states.

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