Workplace Fraud Act
– ABC is supporting revisions to the current law to permit construction contractors to subcontract with a business within its own trade. House Bill 230 passed in 2008 states that an employer “shall not improperly classify an individual...as an independent contractor” instead of an employee. Penalties include fines of $1,000 to $5,000 per each employee, debarment from public work for 5 years and additional fines of $20,000 per employee if employer “knowingly” misclassified the employee as an independent contractor.
ABC is concerned about unintended consequences from this law:
- No ability to subcontract work to businesses in the same core (trade) business. This is different from the other states surrounding Delaware (MD, PA, NJ).
- Prevents hiring staffing agency to supplement manpower
- Prevents use of DBE (disadvantaged business enterprises) and MBE (minority business enterprises) for work within contractor’s type of work, even if required by the contract (DelDOT and other state-funded projects).
- ABC is introducing legislation that would modify the definition of “independent contractor” The changes will match language in the Pennsylvania, New Jersey and Maryland statute. The changes expressly allow subcontracting to a valid business within its own trade.
Responsible Contractor Legislation - ABC strongly supports the concept of promoting responsibility and a level playing field for competition in the construction industry. Our members continue to support high quality training and apprenticeship.
This legislation will not:
- Enhance the State’s ability to assess a contractor’s ability to do the work on any specific project. There are mechanisms already in place in the State’s bid laws to do this oversight (Pre-Qualification, Best Value).
- Address the need for expanded State sponsorship apprenticeship programs. Currently the State does not offer apprenticeship programs in 12 of the 26 prevailing wage trades for open shop contractors.
- Address the existing Workplace Fraud restrictions that already limit subcontracting opportunities or MBE/DBE firms. This law would require Delaware companies to make a good faith effort to hire 20% minority based, women based, and disadvantaged based companies which is in direct conflict with the Workplace Fraud Act.
- Increase the use of Delaware construction firms for public funded construction projects. Delaware is working hard to be small business friendly. This is at odds with an apprentice mandate that would require even the smallest of firms to have formal programs.
- A Massachusetts Federal Court on February 1 invalidated a similar law that contained prerequisites on apprenticeship training. This is the 3rd such law that has been struck down by the courts since 2011.
Workers Compensation Reform - Increased workers compensation rates are an additional burden to the financial challenges facing the construction industry. The Governor appointed a Task Force – Ed Capodanno is representing ABC on the Task Force. ACTION is needed to identify specific measures to curtail rate increases. In 2007, the General Assembly enacted Senate Bill 1 designed to address increased workers’ compensation rates. Reforms enacted during the next four years resulted in decreased rates on an annual basis. The past two years, workers compensation rates began increasing again with the 2012 increase set at 15%. Delaware is in need of a comprehensive reform of their workers’ compensation law.
- Prior to 2007, Delaware ranked 43rd in workers’ compensation rates. After Senate Bill 1, we went to 17th and over the past two years have risen again to 34th.
- Increased workers compensation rates will lead to reduced job growth, layoffs of employees from companies who can’t absorb this increase and Delaware will be less competitive on the national and regional levels for economic development opportunities.
- We support addressing the following areas:
- Directed medical care for injured workers
- Fee schedule to include all medical procedure codes
- Exclusive WC remedy for employee in the state the claim is made
- Enforced quarterly release of DCRB data collection