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On April 13, two multi-state coalitions announced the formation of separate task forces focused on reopening their state economies through regional partnerships.
On the East Coast, the Multi-State Council is made up of representatives from New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, Rhode Island and Delaware. According to the announcement, the coordinating group will be comprised of one health expert, one economic development expert and a respective chief of state from each state. They will work together with the governor to provide recommendations on easing economic restrictions in the coming weeks.
On the West Coast, California, Oregon and Washington announced a similar plan to move jointly toward reopening their economies. In their statement, the governors participating in the Western States Pact said, “we need to see a decline in the rate of spread of the virus before large-scale reopening, and we will be working in coordination to identify the best metrics to guide this.” The release also noted that each individual state will have its own plan supplementing the efforts of the regional coalition. While exact participants in the Western States Pact have yet to be named, the joint statement noted that “the governors, their staff and health officials will continue conversations about this regional pact to recovery.”
On April 16, seven states across the Midwest formed the third coalition. A press release from Michigan Governor Gretchen Whitmer said this group will evaluate reopening the economy based on four factors: sustained control of the rate of new infections and hospitalizations, enhanced ability to test and trace, sufficient health care capacity to handle resurgence and best practices for social distancing in the workplace. With this formation of the Midwest coalition, there are officially 17 states taking steps to formally reopen the economy through a regional approach.
Some of the states hardest hit by the coronavirus, and consequently the states with the most restrictive construction-related policies, are represented on these two task forces, including Pennsylvania, New York and Washington state. While neither announcement specifically mentioned industries that will be initially targeted for reopening or what the timeline may look like, each is expected to do so over the following weeks.
ABC continues to update this resource tracking state and local COVID-19 policies impacting the construction industry. If a new or amended state or local policy is issued in your chapter territory, please alert Brandon Ray, Nick Steingart and/or Ben Brubeck on our State Affairs team at [email protected].
States and localities across the United States are facing an uncertain economic future as the coronavirus pandemic has ground economic activity to a halt across the country and cut off revenue streams that these governments rely on, such as sales and income taxes. Unanticipated state budget expenditures, like emergency funding packages, are also forcing states to reconsider how resources are allocated in their budgets.
According to the Center on Budget and Policy Priorities, states are estimating revenue shortfalls ranging from as low as 1% all the way up to 20% or higher. On the spending side, the National Conference of State Legislatures has produced a roundup detailing direct investment and other economic stimulus packages that states have passed in addition to the federal government’s action.
One of the areas that could be affected by anticipated budget cuts includes public work projects procured by state and local governments. Nonresidential public construction spending at the state and local level reached nearly $285 billion annually in 2018, according to the Census Bureau, a number that could be affected moving forward as states look for areas to implement short-term budget measures.
However, the exact impact of these measures and the responses that will be taken to address them could vary based on how much support state and local governments receive from the federal government. The CARES Act allocated $150 billion to help state and local governments respond to the coronavirus, and just this week the National Governors Association requested an additional $500 billion from the federal government in order to address anticipated budget shortfalls. Other advocacy groups, such as the National Association of Counties and the United States Conference of Mayors, have made similar pleas to Congress asking for financial support to address revenue shortfalls.
ABC will continue to monitor these developments and provide updates in Newsline for public works contractors as these situations unfold.
Wisconsin held its in-person election on April 7, despite numerous primary postponements and some public criticism. Former Vice President Joe Biden won with 62.93% of the vote, bringing his delegate count to 1,293 (1,991 delegates are needed to secure his nomination).
Sen. Bernie Sanders (I-Vt.) suspended his presidential campaign making former Vice President Biden the unofficial nominee of the Democratic party. Sanders made what he called a “difficult and painful decision” to withdraw from the race on April 8. Sen. Sanders formally endorsed former Vice President Biden on April 13.
In addition to the presidential primary results, Jill Karofsky claimed victory over Justice Daniel Kelly, the conservative incumbent, in the Wisconsin Supreme Court race. The Wisconsin primary proved to be a night full of wins for Democrats and Democratic political insiders hope to capitalize on the enthusiasm in the months ahead.
Former Vice President Biden is expected to secure the democratic nomination on June 2, following primaries in Connecticut, Delaware, Washington D.C., Indiana, Maryland, Montana, New Mexico, Pennsylvania, Rhode Island and South Dakota. Many states have postponed primary elections due to the grave impacts of the coronavirus. Find your personalized election guide at ABC Votes 2020: abcvotes.com.
On April 14, ABC sent an action alert to ABC members asking them to call on their members of Congress to quickly authorize additional funding for the Paycheck Protection Program, which was created under the CARES Act to provide forgivable loans to small businesses. With nearly $350 billion in small business aid estimated to run out this week, ABC is asking Congress to pass a clean bill to increase funds for the PPP, which has been a priority for Senate Majority Leader Mitch McConnell and the White House.
In most instances, ABC members have been successful when seeking PPP loans. According to an SBA report on the Paycheck Protection Program, the construction industry accounts for the highest percentage of approved loans and dollars relative to the other NAICS listed. Through April 13, 2020, the SBA has guaranteed 1,035,086 loans worth more than $247 billion under the PPP, with nearly 115,000 loans worth close to $34 billion coming from the construction industry alone.
The construction industry’s successful participation in the PPP program can be attributed to several factors, including the relatively high percentage of construction firms that are designated as eligible for PPP loans. The PPP’s exclusive focus on small businesses that employ less than 500 employees provides a potential source of aid to the 99.8% of construction firms who meet that criteria, according to the SBA.
Despite this relative success, in a letter sent to House and Senate leadership on April 8, ABC advocated for several important modifications to the PPP loan program. Currently, the CARES Act allows for some nonprofits to apply for the PPP, but excludes 501(c)(6) organizations, such as national, state and local associations, from accessing these loans. ABC urged Congress to modify the bill to allow 501(c)(6) organizations, such as ABC chapters, to benefit from PPP loans.
Additionally, ABC has voiced concern over the current PPP loan formula, which provides 2.5 times the average monthly payroll for small businesses and only eight weeks of payroll coverage. ABC is supportive of efforts to provide four months of payroll coverage under a broader formula.
Most importantly, ABC believes that additional PPP funding is needed immediately to effectively keep small businesses intact and employees on payroll. ABC also urges Congress to consider the suggested improvements to the PPP in any subsequent COVID-19-related legislative packages, as its inclusion will ensure that more Americans remain employed during the national health crisis and small businesses have the resources to lead the economic comeback once the crisis is over.
ABC will continue to provide updates on the developments of the PPP loan program in Newsline.
The New York State Legislature took action to include an expansion of prevailing wage in the state’s budget for fiscal year 2020-21, which was signed into law on April 3 by Gov. Andrew Cuomo (D). The provision expands the view of what projects are considered “public works” and applies prevailing wage to private projects of $5 million or above in project cost that receive at least 30% of their financing from public assistance. This assistance goes beyond direct public investment to include loan and grant programs and certain tax incentives, greatly increasing the number of projects required to pay prevailing wages.
The types of financing that qualify a project for inclusion and other related criteria will be determined by a Public Subsidy Board consisting of 13 appointed representatives of the state government, developers, the construction industry and certain nonprofit organizations. Already determined to be exempt are projects under the state’s 421-A tax benefit program related to affordable housing, as well as other types of projects with the public interest in mind, such as certain nonprofit construction and brownfields rehabilitation.
The new policy, S.7058-B, is a result of an effort that began in last year’s session, but did not come to fruition until its inclusion in Gov. Cuomo’s proposed budget, released in January. Though the policy won’t take effect until January of 2022 with certain exceptions, it is being implemented in the midst of the COVID-19 crisis that has sidelined much of the construction industry in the state and put the economy into a tailspin. Supporters of the expansion tout economic stimulus and the perceived lifting of the middle class as a result of these mandatory wage rates. However, opponents are concerned that the increased labor costs and budget uncertainty already expected under prevailing wage policies will be expanded to even more projects in a time when economic recovery will be paramount, and at the discretion of an unelected board with wide discretion and authority.
“Even in the midst of one of the greatest economic challenges in the history of our great state, members of the majority in Albany couldn’t stop themselves from stomping on our recovery,” said Brian Sampson, president of the ABC Empire State Chapter of ABC. “Investors and builders need predictability and a strong commitment from the government to do no harm. Forcing them into the hands of an unelected public subsidy board that can determine current and future thresholds as well as create an inconsistent definition of construction is unconscionable. They can, and will, take their investment opportunities elsewhere.”
The Public Subsidy Board does have the option to delay or amend implementation of this policy if it is found to have “significant economic impact.” Critics argue that taxypayer-funded projects should not be subjected to unnecessary cost burdens and obstacles to getting shovels in the ground. In 2018, a study by the Empire Center found that the existing prevailing wage law in New York increased construction costs by 13% to 25% during the prior decade.
The recently passed CARES Act, a $2.2 trillion COVID-19 relief bill, provided aid for small businesses and affected industries across the country. However, the bill does not include assistance for 501(c)(6) organizations such as trade associations that are, in some cases, experiencing the same operational challenges that large and small businesses are facing due to the coronavirus pandemic.
While the Paycheck Protection Program, one of the flagship provisions of the CARES Act, has only been available to small businesses around the country for less than a week, Congress has acknowledged the need for additional assistance for the economy.
ABC is supportive of extending PPP loans for small businesses to pay employees and cover expenses for more than eight weeks and is also urging congress to expand PPP loans to include 501(c)(6) organizations in any additional emergency support in the next coronavirus aid package. This change would potentially make ABC National and all 69 ABC chapters eligible for the loan program.
ABC is working with ASAE and nearly 3,000 other organizations to support these efforts and has sent a letter to Congress and the administration urging policymakers to include associations in critically needed aide to help combat financial loss due to COVID-19. The letter specifically calls on Congress to take these actions, among others:
ABC will continue to inform members about the developments of a subsequent coronavirus aid package in Newsline.
The U.S. Department of Labor continues to issue compliance assistance materials on the Families First Coronavirus Response Act, which went into effect on April 1. The FFCRA requires private-sector employers with fewer than 500 employees and certain public employers to provide covered employees emergency paid sick leave and expanded family and medical leave.
On April 3, the DOL’s Wage and Hour Division announced the following new guidance:
These resources can be found on WHD’s COVID-19 and the American Workplace website.
Last week, Newsline reported that DOL’s questions and answers document included 59 questions. That document has now increased to 79 questions as of this writing. New topics include:
To learn more about the new federal paid leave, register for the ABC members-only webinar, New Federal Paid Leave and Stimulus Laws and the Impact of the COVID-19 Virus on the Construction Workplace, which will be held on April 9 at 3 p.m. EDT. Additionally, visit ABC’s Coronavirus Update webpage.
In response to the current shortage of N95 respirators, OSHA has released guidance regarding the enforcement of its respiratory protection standard. On March 24, ABC, as a member of the Construction Industry Safety Coalition Steering Committee, wrote to the U.S. Department of Labor’s Occupational Safety and Health Administration regarding recordkeeping and respirator enforcement during the COVID-19 outbreak. OSHA has issued two separate memoranda that need to be read together to fully understand the agency’s position.
According to an analysis written by ABC general counsel Littler Mendelson P.C., “The memoranda concern different, but related, issues facing employers with respect to the respirator shortage. While they do not address many of the issues facing employers regarding respirator shortages and do not discuss the implications of employers’ donating their stockpiles of respirators to healthcare workers, the memoranda give employers limited relief from OSHA’s respiratory protection standard as a result of the outbreak. The memoranda apply to all industries and are “time-limited to the current public health crisis.”
First Memorandum: U.S. Department of Labor Issues Guidance for Respiratory Protection During N95 Shortage Due to Covid-19 Pandemic gives employers relief to extend the use of National Institute for Occupational Safety and Health-approved respirators and to permit the reuse of them.
Second Memorandum: U.S. Department of Labor Issues Guidance for Respirators Certified Under Other Countries’ Standards During Covid-19 Pandemic allows employers in certain circumstances to use respirators approved by another country, where NIOSH-approved respirators are not available.
The analysis further states, “While OSHA’s guidance provides some flexibility for employers, it does not address all employer concerns with respect to supply shortages. For example, it requires employers to reassess engineering or work-practice controls, even though by policy—employers will have already implemented all engineering and work-practice controls before using respiratory protection. It also provides non-healthcare employers no relief if they donate N95 FFRs to healthcare workers, as that situation is not addressed in either memorandum. In fact, to receive enforcement relief, an employer must have in good faith attempted to obtain N95 respirators.” In other words, if you need to use N95s to do the work, you have to in good faith try to get current NIOSH-approved N95s, before using other respirators.
Employers should carefully review the OSHA guidance and adjust their respiratory protection practices accordingly.
For additional OSHA resources, visit the agency’s coronavirus webpage.
This article is intended for informational purposes only and does not constitute legal advice or opinion.
ABC Votes 2020, the one-stop-shop for all voter questions, information and priority issues surrounding the 2020 election cycle, is now live at abcvotes.com.
ABC Votes 2020 offers personalized election guides for all 50 states and the District of Columbia. These guides provide information about state general elections including candidates, voting information and important election websites. Additionally, ABC Votes 2020 highlights important issues pertaining to the construction industry and provides election resources for ABC chapters and members.
ABC Votes 2020 is made possible by the Free Enterprise Alliance and is committed to providing up-to-date information and resources throughout the 2020 elections. Individuals are encouraged to check back regularly to learn more about the 2020 election cycle.
The Small Business Administration and the U.S. Department of Treasury confirmed ABC’s interpretation of the Paycheck Protection Program Interim Final Rule and addressed this issue in a release of FAQs for lenders and borrowers. Importantly, this document clarifies that businesses do not have to qualify as both a small business concern and have 500 or fewer employees. ABC continues to urge eligible members in need to apply for PPP loans.
The FAQs further state that borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rule. The U.S. government will not challenge lender PPP actions that conform to this guidance, the PPP Interim Final Rule and any subsequent rulemaking in effect at the time.
Read the FAQ that specifically addresses this issue below.
Question: Does my business have to qualify as a small business concern (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?
Answer: No. In addition to small business concerns, a business is eligible for a PPP loan if the business has 500 or fewer employees whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable). Similarly, PPP loans are also available for qualifying tax-exempt nonprofit organizations described in section 501(c)(3) of the Internal Revenue Code (IRC), tax-exempt veterans organization described in section 501(c)(19) of the IRC, and Tribal business concerns described in section 31(b)(2)(C) of the Small Business Act that have 500 or fewer employees whose principal place of residence is in the United States, or meet the SBA employee-based size standards for the industry in which they operate.