As we approach the midway point of 2016, the Department of Labor and OSHA have proposed several new changes to the construction industry in hopes of curving injury rates and increasing the fairness of wages. Despite the best attempts by the government, several trade associations are fighting to overturn these new regulations, noting the dramatic costs associated with implementation and maintaining the changes. With new stipulations regarding silica, overtime rules, and reporting measures, several studies show that these changes will cost contractors and the construction industry millions to fully comply.
Although the debate continues and studies offer a variety of conclusions, these rules and regulations have been authorized and approved. Below are four of the most critical changes to the industry to keep an eye on.
A few months ago The Integrated Group wrote on OSHA’s silica rule, outlining the new requirements. While there are some minor changes with the new silica rule, there are also some major shifts in safety practices, many of which require new systems and equipment. OSHA currently estimates implementation will cost the construction industry approximately $500 million. The Construction Industry Safety Coalition, however, estimates the cost at almost $5 billion per year due to direct costs of implementation, productivity loss, medical surveillance requirements, and the new recordkeeping procedures.
The Associated General Contractors of America and the Associated Builders and Contractors have filed a legal challenge to block the implementation of the rule in response to the cost projections. Regardless of the ultimate implementation costs for the industry, the silica rule will change how many companies approach their daily work and safety programs.
Overtime Wage Rule
The Department of Labor raised the exempt threshold for salaried workers a few months ago, dramatically changing the monetary definition of a salaried employee. The new overtime wage rule raises the threshold from $23,660 to $47,476 per year, nearly doubling the annual pay rate. Any salaried worker making less than the new threshold must be paid overtime wage rates if they work more than 40 hours per week. Furthermore, the overtime wage rule supports an automatic threshold increase every three years regardless of inflation.
Companies will have to review payroll records and decide whether or not to increase the pay rate of their salaried workers who currently make less than $47,476 a year, or change their exempt status to a non-exempt, hourly employee. Some argue these rules will further reduce hours and benefits rather than increase wages as the Department of Labor expects. These changes in non-exempt vs. exempt thresholds have a significant impact on future hiring practices, payroll standards, and shift responsibilities, so plan accordingly to allow for a smooth transition. The effective date for implementation is December 1, 2016.
You can read the official statement on the rule here.
On May 11, 2016, OSHA issued a final rule to modernize injury data collection. The goal of this new rule is to better inform workers, employers, the public and OSHA about workplace hazards, injury rates, and employer records. The key provision of this rule is the requirement for employers to publicly disclose all work injury data with hopes to encourage safer practices at work. OSHA hopes a more transparent industry will help empower applicants during the hiring process.
To ensure that the injury data is accurate and complete, the rule promotes an employee’s right to report injuries and illnesses without dear of retaliation. However, many opponents fear the new rule will only encourage companies to under-report injuries in an attempt to reduce the public impact. Regardless of the impacts on reporting rates, the new required transparency should push companies towards developing stricter safety programs and policies. The new reporting standard does not take effect until August 10, 2016.
To help navigate or prepare for these industry changes, feel free to get in touch with the team at The Integrated Group at 425-822-8500 or email@example.com