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| 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. |
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Message from Executive Director
Robb Kahl
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The building trades have operated regional councils for decades. Each council has members consisting of affiliated local unions that represent skilled trade workers in its region. The regional councils have varied functions, including, facilitating communication between the trades, workforce development, pre-job meetings, jobsite safety, community outreach, philanthropy, and much more.
On March 28, 2018, leaders of Wisconsin's building trade unions met and formed the Wisconsin Building Trades Council (WBTC). The trade union members of WBTC are the Boilermakers, Bricklayers & Allied Craftworkers, Carpenters, Electrical Workers, Elevator Constructors, Insulators & Allied Workers, Iron Workers, Laborers, Operating Engineers, Operative Plasterers & Cement Masons, Painters & Allied Trades, Roofers, Sheet Metal Workers, Teamsters, and United Association. Collectively, they represent nearly 50,000 skilled workers in Wisconsin.
WBTC is a statewide organization, which means that the building trades now have a vehicle to speak with one, unified voice on issues affecting the entire industry. WBTC's first significant act was to donate $100,000 to the WRTP Big Step program to help it open an office in Racine. WRTP's Big Step program helps under-employed, under-served, and under-represented individuals succeed in well-paying careers while exceeding industry's workforce needs. WRTP is an important partner in the recruitment and training of the large construction workforce needed for the Foxconn development.
This week, WBTC hosted a Founding Convention in Appleton. Representatives from the trade unions and all of the regional councils meet to discuss and shape the future of WBTC. While many decisions must still be made, several key issues were resolved. Each trade union member appoints a member to the Executive Board, thereby ensuring that every trade has a say in how WBTC is operated and managed. WBTC will not duplicate the work of, or supplant, the regional councils. The regional building trade council presidents will sit on WBTC's Executive Board as non-voting members so that there is input, communication and cooperation with the regional councils. WBTC will request a state charter from the national organization.
Construction Business Group congratulates WBTC and its trade union members on a successful Founding Convention. It was an historic event, and WBTC will no doubt strengthen the construction industry in Wisconsin.
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Building Wisconsin Together
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Wisconsin Operating Engineer pre-apprenticeship highlighted at IUOE training center
Terry McGowan and Laura Cataldo joined AGC of America contractors and association leadership for a tour of the new IUOE training center in Crosby, TX. Workforce development is a priority for the national association that represents many of the largest union contractors in the country. General President James Callahan invited the AGC group to visit the new training center to witness the state-of-the-art facility that is now available to members.
IUOE has provided tremendous support to Local 139's development of the online pre-apprenticeship program and the intent is to reach agreement with K12 that allows for utilization of the curriculum in other states. Many of the attendees represented very large multi-state contractors, were impressed with our innovative approach to recruiting
a future workforce, and are eager for the program to expand into their locals.
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Industry News and Updates
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Electric Utility Customers to Receive TCJA Credit
There are 15 Investor-Owned Utilities (IOUs) operating in Wisconsin. They are all organized as Chapter C corporations and the federal Tax Cuts and Jobs Act (TCJA) reduced their corporate tax rate from a maximum of 35% to a flat 21% rate for tax years beginning after 2017.
Taxes paid by Wisconsin IOUs are considered when the Wisconsin Public Service Commission (PSC) sets electric utility rates. Earlier this year, the PSC directed Wisconsin IOUs to provide information on how they propose to account for this tax reduction. Last Thursday, the PSC issued its final order on this matter. Of note:
- The PSC determined Wisconsin IOUs will over-collect from utility customers an estimated $190 million to $198 million annually because the rates customers are currently paying are based on the revenue requirement at the higher federal tax rate.
- The PSC directed them to return $140.7 million annually through a bill credit consisting of a one-time lump sum payment for the income statement component that has already been collected from customers, and, thereafter, a monthly on-going bill credit.
(Read more)
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United States Supreme Court Sides with Brick-and-Mortar Businesses in Internet Sales Tax Case
Before the Internet became a tool for commerce, the United States Supreme Court established the legal framework for the collection and payment of state sales taxes for online purchases.
In National Bellas Hess, Inc. v. Department of Revenue of Illinois (1967) and Quill Corporation v. North Dakota (1992), the Court held that a State may not require a business to collect its sales tax if the business lacks a physical presence in the State. Instead, a State must rely on its residents to pay the use tax owed on their purchases from out-of-state sellers.
Now that annual e-commerce retail sales exceed $450 billion, the merits of the so-called "Physical Presence Rule" are debatable. Online retailers can sell their products without having to charge, collect or remit state sales taxes. Their community-based competitors do not have that option. State governments also lose out because shoppers rarely pay the applicable use tax for the products they buy online.
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State of Emergency Declared in Northwestern Wisconsin
On June 18th, Governor Walker declared a State of Emergency in Ashland, Bayfield, Burnett, Douglas, and Iron counties in response to widespread flooding within this area.
State agencies have been directed to assist in the response and recovery efforts. Members of the Wisconsin National Guard have been called to active duty to assist civil authorities for purposes of assisting in response and recovery efforts as well as providing security and other essential services.
Residents and businesses that sustained damage from the storms and flooding should contact 2-1-1 to file a report. Information gathered will be passed on to county officials, as they work to assess damage done in their areas.
The Wisconsin Department of Natural Resources has issued guidance for checking wells and septic systems and removing storm related debris and the Wisconsin Office of Commissioner of Insurance has issued guidance on storm-related property and casualty insurance coverage.
Additional information on the state and local government response to the flooding can be found here.
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NEW STUDY: Responsible Bidder Ordinances Promote Quality, Control Costs, and Provide Best Value for Taxpayers
Date: May 22, 2018
Author: Jill Manzo
Responsible bidder ordinances (RBOs), which establish local construction standards on municipally funded public works, raise wages and reduce employee turnover according to a new study by the Midwest Economic Policy Institute(MEPI). As of May 2018, 40 Indiana counties, townships, cities, towns, school districts, and hospital districts have passed RBOs.
Nearly all governments award construction contracts to the lowest bidder, which can put pressure on contractors to cut corners on quality, wages, and safety. RBOs guarantee that contractors and subcontractors building public projects have proven track records of performance and legal compliance, adhere to local quality standards, and participate in USDOL-approved apprenticeship training programs.
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Stealing From Workers Is a Crime. Why Don't More Prosecutors See It That Way?
It's time for prosecutors to shift their focus to protecting the millions of workers who are victimized by their bosses each year.
By Terri Gerstein
5/24/2018
Last week, Manhattan District Attorney Cyrus R. Vance Jr. announced the indictment of a construction company, its principals, and others for theft of over $1.7 million, as well as for insurance fraud. Here's the interesting part: The alleged theft in this case involved stealing from workers by illegally reducing their paychecks. Among other things, Parkside Construction and its managers allegedly altered time records in order to shave workers' hours and thereby pay less money in wages than what was owed. Historically, that kind of malfeasance would get you a lawsuit, not get you arrested.
But things are changing, although not fast enough. This case exemplifies the leadership role increasingly played by a handful of prosecutors in pursuing predatory employers. Far more state and local prosecutors should take on this work; it is the right thing to do on the merits, and is especially needed now, as the federal government is abdicating its role of protecting our country's workers.
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New Maryland Law Makes General Contractors Liable for Paying Their Subcontractors' Employees (MD)
May 25, 2018
JD Supra
At the tail-end of the 2018 legislative session, the Maryland General Assembly passed Senate Bill 853, making construction general contractors jointly and severally liable for the failure of their subcontractors to pay their employees in compliance with Maryland's wage and hour laws. This new law will become effective October 1, 2018. California recently passed a similar measure, AB 1701, which is applicable to construction contracts entered into in that state on or after January 1, 2018.
This controversial new Maryland law contains both a multiplier and an attorneys' fees provision, dramatically increasing its impact. Under existing law, an employer that fails to pay an employee in accordance with Maryland's wage and hour laws may be liable to the employee for up to three times the wages owed, plus reasonable attorneys' fees and other costs. Until now, this liability has largely been confined to the direct employer-employee relationship. SB 853 expands the reach of Maryland's wage and hour law, making a general contractor on a construction services project jointly and severally liable for a subcontractor's failure to properly pay its employees. The term "construction services" is broadly defined to include "building, reconstructing, improving, enlarging, painting, altering, and repairing" in connection with real property. Notably, the liability imposed by this new law is not limited to first-tier subcontractors; rather, it expressly applies "regardless of whether the subcontractor is in a direct contractual relationship with the general contractor." So, a general contractor is now liable for every wage and hour law violation occurring on a construction project, including those committed by subcontractors far down the construction chain. The time frame for this liability is also expansive. A claimant may make a claim against both the general contractor and the non-paying party as soon as two weeks after a violation occurs, and as late as three years after the occurrence.
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Construction Business Group | 608-240-4170 | www.cbgwi.com
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