·      Job targeting programs are unknowingly funded by taxpayers. The dollars union members contribute to fund job targeting are not legally deductible on their individual tax returns. However, the study found the amount of monies being paid for job targeting plus the degree to which unions masked their payments to contractors strongly suggest that some – if not a significant portion – of these wage payments are improperly being deducted as union dues, thereby reducing the amount of income taxes that should have been paid.

 FLSA UPDATE: On January 15, 2009, the U.S. Department of Labor (DOL) issued a Wage and Hour Opinion Letter which found that a construction contractor’s “job rate” method of payment did not satisfy the overtime pay requirements of the FLSA.  The contractor submits labor bids for projects, most of which calculate that employees will work approximately 55 hours per week.  For employees who actually work fewer than 32 hours in a week to complete a project, the contractor credits the employee with 32 hours of work and the employee is paid an amount equal to 88% of the contractor’s labor bid.  For an employee who works more than 55 hours per week, the contractor pays based upon their actual hours worked.  To calculate overtime, the contractor divides the employee’s regular compensation by the total number of hours worked and then adds a premium payment of one-half the regular rate of pay for each overtime hour worked.  DOL found that both of these methods of payment were acceptable.  However, for employees working between 32 and 55 hours per week, the contractor ran into a problem.  For those employees, the contractor credited the employee with 55 hours of work regardless of the number of hours actually worked, and the employee would be credited with 88% of the labor bid as regular compensation.  For overtime, the contractor calculated a regular rate of pay by dividing the regular compensation by 55 hours.  The company would then pay an additional premium pay of half-time for each overtime hour worked.  For an employee working 45 hours per week, the resulting calculation worked out to $1,000 per week.  However, DOL found this method of calculation to be improper because DOL calculated the guaranteed $880 for regular compensation and a promised $120 for overtime hours as resulting in a regular rate of pay of $22.22 ($1,000 of total compensation divided by 45 hours worked).  The employee would then be entitled to half pay ($11.11) for each of the overtime hours worked, making the overtime pay $55.55 which was not taken into account by the contractor’s method of payment.  Nebraska contractors may use a “job rate” method of pay under 29 CFR §778.112, but this opinion letter reminds contractors that the method of calculation set forth in that regulation must be followed or the contractor will be in violation of the FLSA.                     By Bill Harding, Chapter Attorney

 ABC AND MEMBERS OF CONGRESS TAKE DOL TO TASK OVER UNION FINANCIAL DISCLOSURE RULE:ABC April 7 submitted comments to the U.S. Department of Labor’s (DOL) Office of Labor-Management Standards (OLMS) voicing strong opposition to efforts to delay, and potentially rescind, a final rule issued by the Bush Administration imposing additional financial reporting requirements on unions.  The final rule was published Jan. 21, 2009 and was scheduled to take effect Feb. 20, 2009.  In January, White House Chief of Staff Rahm Emanuel issued a memorandum to all federal departments and agencies delaying implementation of many recently finalized regulations that were slated to go into effect early this year, including the LM-2 rule.  In response, on Feb. 20, DOL announced it was delaying implementation of the rule until April 21 in order to verify that the final rule complied with the standards outlined in the memorandum. At the same time, DOL took the unusual step of reopening the rulemaking to solicit additional public comments. Subsequently, DOL announced a further delay of the final rule until Oct. 19 in order to solicit a second round of post-final rule comments.

 It was this additional delay that generated the ire of ABC as well as Rep. John Kline (R-Minn.) ranking member of the Subcommittee on Health, Employment, Labor and Pensions, and Rep. Howard P. (Buck) McKeon (R-Calif.) ranking member of the House Education and Labor Committee, who jointly submitted a letter to DOL voicing support for the final rule and displeasure with DOL’s delay in the rule’s implementation.  The LM-2 rule was published in an effort by the previous administration to better implement the reporting requirements of the Labor Management Reporting and Disclosure Act (LMRDA).  Congress saw the need to enact the LMRDA because of rampant corruption and undemocratic practices in several major unions.  One provision of the law requires that unions submit financial disclosure forms annually to DOL.

 In its comments, ABC submitted that “A close inspection of the final rule and of each of the [White House’s] standards make it quite clear that the final rule more than meets each of those standards and that there is simply no reason to further delay the Feb. 20, 2009 effective date previously announced, or to delay the need for unions to comply with the final rule’s reporting requirements.  “No matter how OLMS may try to justify its action, any further extension of the rule is tantamount to OLMS’ admission that its approach to this rulemaking has now become ‘we’ll continue to solicit comments from organized labor until we get a record that we like,’” ABC stated.

 To further convince DOL to implement the rule and require unions to immediately begin complying, ABC reminded DOL of its enforcement statistics documenting that since 2001 DOL obtained more than 900 convictions for union financial improprieties and recovered more than $91.5 million in restitution.  ABC also provided DOL with a list of the many instances of union corruption reported for the first two months of 2009 by National Legal and Policy Center.  In its concluding remarks ABC stated, “any decision to delay or rescind the rule will likewise have serious repercussions, not only to the credibility of OLMS, the Department of Labor, and to the Obama administration, but also to the President’s stated goals of promoting financial and governmental transparency, accountability and oversight.”

 ABC OPPOSES FISCAL YEAR 2010 BUDGET: ABC sent a key vote letter to the Senate and House of Representatives expressing opposition to the Fiscal Year 2010 Budget Resolution.  The proposed budget would increase taxes on small businesses and individuals, and would negatively impact economic growth and job creation.  ABC also is concerned with the budget’s cap-and-trade emissions tax, which could drastically increase fuel and building materials costs.

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Do you have questions on SALTING and bannering cases?  The following is a seminar that

will answer your questions.

Labor & Employment Laws Seminar

Law and Regulation Updates

Thursday, April 16, 2009

1:00 – 4:30 p.m.

Quarry Oaks – Ashland, NE