Prevailing wage and public works and BOLI, oh my!

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Ross M. Williamson

The core legal obligations related to the payment of prevailing wages on public works projects have not changed recently. Nonetheless, with construction season upon us, now is a good time to review the key prevailing wage requirements in order to keep on the good side of Oregon’s Bureau of Labor and Industries (BOLI).

Please note that prevailing wage is a complex area of the law. This article is necessarily a summary of the various obligations; there are exceptions and details not addressed in this general overview. In addition, federal Davis-Bacon requirements for federally-funded projects provide another layer of complexity that is not specifically addressed here. Please reach out with questions about specific projects.

As you prepare for and make your way through a public works project, your local government agency must contend with several obligations overseen by BOLI. The following are the key obligations that come up before, during, and after a public works project.

  • As you finalize a budget for the following fiscal year, you should provide BOLI a list of the anticipated public improvements that you plan to undertake. Form WH-118 is used for this task and should be submitted to BOLI at least 30 days before adopting the budget. This form should also be revised as plans change throughout the fiscal year.
  • Each contract for a public works project must include certain statutorily required terms. Leaving these terms out places the local government agency in jeopardy of BOLI enforcement actions. If certain terms are left out of the contract, the local government agency could be on the hook for any underpayment of prevailing wage rates. (Yikes!)
  • Most often, the prevailing wage rates applicable throughout the entire contract are those in effect at the time the contract solicitation is advertised. It is important to note this date and reference the correct rates in the contract itself.
  • Prior to awarding a public works contract, you should verify that the contractor and known subcontractors are not on BOLI’s list of ineligible contractors. BOLI maintains this list on its website. https://www.oregon.gov/boli/employers/Pages/pwr-ineligible-contractors.aspx
  • For projects that require a payment bond (generally contracts over $100,000), you will need to make sure the contractor files the bond. If this step is missed, the contracting agency could be liable for underpayment of prevailing wages. (Yikes again!)
  • For each public works project, the local government agency must pay a fee in the amount 0.1% of the contract price, with a minimum fee of $250 and a maximum fee of $7,500. Form WH-39 is used to calculate and pay the prevailing wage fee to BOLI.
  • Within 30 days after awarding a public works contract, you must notify BOLI of the contract. This report is made on form WH-81. In addition, the filing made to BOLI should include a copy of the first-tier subcontractor disclosure form.
  • You need to ensure that your contractor submits their certified payroll reports monthly. If a report is not submitted, the you should withhold 25% retainage from the contractor’s payment. Note that United States Department of Labor form WH-347 is not sufficient for meeting Oregon’s reporting requirement.
  • If the price of the public works project changes during construction, a fee adjustment could be required. Use form WH-40 within 30 days of the final progress payment when costs increase or decrease by $100,000 or more.

In addition to the requirements summarized above, the following are contractor prevailing wage obligations. In order to keep a project moving forward smoothly, it is wise for you to understand these obligations and provide reminders to your contractors.

  • With limited exceptions, all contractors and subcontractors required to pay prevailing wage on a public works project must file a public works bond with the Construction Contractors Board (CCB). This even applies to contractors not required to have a CCB license.
  • Contracts with subcontractors should contain a prevailing wage requirement.
  • The contractor and each subcontractor must post applicable prevailing wage rates at the project site.
  • The contractor should ensure that they receive certified payroll reports from each of their subcontractors on the project and withhold 25% retainage if a subcontractor fails to file the report in a timely manner.

BOLI penalties for failing to comply with applicable prevailing wage laws can be substantial. Using the above as a checklist for each public works project will help you stay clear of BOLI enforcement actions.

Donations: A Play in Three Acts

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Carrie Connelly

At the end of 2022, our office received some good questions regarding donations. This article is a toe-dip into the vastness of this topic. As such, please consider this general information and not legal advice. Please call our office if you have your own donation scenario you’d like to discuss. Okay, let’s dig in!

ACT 1

The scene: A quiet office. Attorney Connelly calmly reads statutes. Outlook chimes. A new email. She opens it….

To support a community’s unhoused population, a city sponsors a shoe and sock drive. The city requests only new shoes and socks for donations. A community member donates 2 pairs of new men’s shoes and a 10 pack of new men’s socks. Is the city required to provide a receipt to the donor?

This scenario involves what the IRS would call a “noncash donation, value most likely less than $250.” There is no requirement to provide a receipt in this scenario unless the city is providing goods and services in exchange for the donation (a quid pro quo contribution). If you have a quid pro quo situation, call our office and we can walk you through what is required.

Even without a receipt, a donor may satisfy the IRS’s substantiation requirements for a noncash donation, value less than $250 if the donor keeps their own written records for each donated item. So, if the city chooses not to provide a receipt, donors who want to claim a tax deduction can do so using their own records.

If the city wants to provide a receipt, our recommendation is to keep it simple. Donated household goods or clothing are only acceptable to the IRS as a tax deduction if they are in “good used condition” or better. The city should avoid assessing the condition of donated items for purposes of receipts. That would put the city in an awkward position. As explained above, for this category of donation, a blank receipt is probably just as good to a donor as a receipt that lists the items donated but does not include the condition of those items. So, to keep it as simple as possible, the city may choose to provide a receipt that acknowledges that a donation was received by the city and leaves the rest (value and condition) up to the donor.

ACT 2

The scene: Lunch time, finally. Attorney Connelly returns to her office with her snack size bag of baby carrots and portioned out nonfat ranch dressing. Spring break is
coming up after all. Outlook chimes. A new email. She opens it….

A city’s public works department is offered equipment with a donor-provided value of $10,000. The donor asks the city to provide them with documentation that the donor can then use for tax purposes. What are the city’s obligations?

Under IRS rules, units of local government are considered to be qualified organizations that are eligible to receive charitable contributions that are tax deductible. Your
organization may have a policy regarding accepting donations. If so, review and follow that policy.

In the absence of a policy, here are some steps to take: Determine whether the city wants/needs the donation. If not, there is no obligation to accept it. If the city does
want the donation, then start by finding out as much as you can about it before accepting it. Is the equipment titled in the donor’s name (individual name vs. a company name, for instance)? Is the equipment collateral for an outstanding debt? Is the useful life remaining on the equipment less than one year? If any of these issues are present, then I would caution against accepting the donation unless there is a clear path to remedying the issue before you accept the donation. Before accepting a high-value donation, also consider who has the authority to accept the donation on behalf of your organization.

In the scenario above, what does the city have to provide to the donor for tax purposes?

Bottom line: The donor needs to follow the direction provided by their own tax consultant/accountant. That’s because what is really at stake is the success of the donor’s claimed tax deduction. There really is no penalty for the city (in this scenario) if it provides the wrong type of acknowledgement (or none at all) unless goods and services are exchanged for the donation. What the city should watch out for is the usefulness of the equipment to the city’s operations; the title to the equipment; and the way in which the donor plans to transfer title of the equipment to the city.

Our office is available to help if this situation arises in your jurisdiction. Your organization’s accountant or bookkeeper would also be a good resource in this type of situation.

ACT 3

The scene: An LGLG attorney meeting. Discussion of upcoming newsletter articles ensues. Attorneys Williamson and Stone add a tangentially related topic to Attorney Connelly’s donation article. Attorney Connelly’s ears perk up, admittedly she was only halfway listening to the discussion up to that point. Act 3 is born.…

A city councilor is becoming a first-time homebuyer. A community member sets up a Go Fund Me account to help the city councilor with furnishing the new home. Can the city councilor accept donations from the Go Fund Me account?

In case you haven’t heard, Go Fund Me is an online crowdfunding platform wherein an individual may set up an account for a beneficiary in need of money. The Oregon Government Ethics Commission has issued an opinion in a similar situation to the one described above. (Albeit the scenario presented to OGEC was a more worthy cause.)

That opinion provides the following guidelines:

  • ORS 244.025 limits how much a public official may accept each calendar year
    from a source with a legislative or administrative interest in the matters subject to
    the public official’s decisions. The limit is $50 per calendar year.
  • The funds collected in the Go Fund Me account would be subject to the $50 per
    calendar year limitation if the source has a legislative or administrative interest in
    the public official’s work. ORS 244.020(10) defines “legislative or administrative
    interest” as an economic interest distinct from that of the general public in any
    matter subject to the decision or vote of the public official acting in their official
    capacity.
  • To comply with ORS 244.025, the public official would need to see the list of
    donors’ names and the amount donated to decide whether or not the public
    official may accept the donation. If the public official sees that a $500 donation
    has been made by a business owner with a matter pending before the city
    council, then the city councilor should not accept that donation. The amount
    exceeds $50 and the donor has an economic interest distinct from that of the
    general public in a matter subject to the decision or vote of the city councilor.
  • Online crowdfunding platforms, such as Go Fund Me, allow anonymous
    donations. In that case, a public official would not be able to tell who the
    donation came from and should not accept an anonymous donation. If a donor
    has no distinct economic interest in the public official’s decisions, then there
    would be no limits on the donation amount that the public official could accept
    from that source.
  • There are nuances to the use and acceptance of donations through online
    crowdfunding platforms. If you would like to develop a policy around the use of
    online crowdfunding platforms for your city councilors, city employees, etc.,
    please give one of us a call to discuss.

FINAL ACT

The scene: Attorney Connelly packs up after another productive day in the office. She rides the elevator down to the first floor and walks to her car on the top level of the
parking structure. She forgot her car keys….

Paid Leave Oregon

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Diana Moffat

“WE RECEIVED A DEMAND TO BARGAIN FROM THE UNION. WHAT DO WE DO?”

As most of you know, the Oregon legislature enacted what has come to be known as Paid Leave Oregon (PLO).

PLO is a new program/legislative scheme that allows employees in Oregon to take paid time off for some situations that impact their need to be away from work. It covers family-related leaves, medical leaves and safety leaves. These leaves are not in exact alignment with other leaves available under OFLA and FMLA, and they are PAID leaves.

Benefits under this program will begin in September of 2023, but the payments toward PLO began in January of 2023. (*This article will not cover which employers are required to participate, the process for withholdings, the availability of equivalent plans, what qualifies for leave under PLO, how you determine concurrent leaves under OFLA and FMLA, job protection upon a return from leave, etc. There is a lot of information available about those topics on https://paidleave.oregon.gov/).

So, let’s get to your question! What are you required to bargain/negotiate with your union about in regard to this new program?

The first and most common demand to bargain coming from unions is in regard to the EMPLOYEE required contribution toward the program, which sets a maximum rate of 1% of employee wages, up to $132,900 – with 60% of the 1% paid by the employee and the other 40% of the 1% being paid by the employer. (*Employers with less than 25 employees are NOT required to make their 40% contribution, but the employees are still required, through withholdings, to make their 60% contribution.)

If the union files a demand to bargain over the employee’s portion, do you have to bargain with the union? Yes and no. If you are mid-contract of your current Collective Bargaining Agreement (CBA), arguably you do not have to enter into mid-term bargaining. Why? Because under ORS 243.698 the union only had 14 days to file their demand to bargain once they became aware of the anticipated change. Obviously, more than 14 days has elapsed since the payment withholdings began in January of this year.

Now, on the other hand, once you are bargaining for a successor CBA, then you probably need to bargain over the employee portion of the payment, if raised by the union. But, remember, bargaining and agreeing are two different things. There are many “taxes,” contributions that employees are required to pay, such as their portion of social security, their contributions towards workers compensation, etc. The employer does not traditionally pay the employee’s portion toward those programs. However, on the other hand, it is not unusual for an employer to “pick-up” the employee’s 6% contribution toward PERS. In addition, during the legislative session which resulted in the Oregon Paid Leave program, unions openly agreed that their members would be responsible for their 60% of the 1%.

The second, frequently seen demand to bargain has to do with union requests to be able to “top off” their PLO benefit payments with their otherwise accrued leave so that they still receive a full paycheck. That is because PLO payments to an employee, who is out on a qualified leave, does not result in a “full paycheck.”

Most small to medium-sized public employers are willing to consider various top off proposals from the union. But you do need to consider the impact of allowing an employee to use accumulated sick leave prior to using banked vacation, holiday and compensatory time. It is also important to remember that PLO supplements, in a sense, your current paid leave program. So, if the PLO leave time also qualifies for your current sick leave paid leave time, both must be honored. In addition, BOLI is preparing to issue a letter opinion detailing use of employer paid leave time when that leave would also qualify for coverage under OFLA or FMLA.

If you receive a demand to bargain, your best course of action is to contact your labor attorney for additional advice.

Tipping Public Employees

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Emily Guimont

Though perhaps not a common occurrence, there are situations in which public employees may be offered a tip for services performed in connection with their jobs. While there is no Oregon law that expressly forbids public employees from accepting tips, the acceptance of tips could violate Oregon’s government ethics laws. It is important for government employers to understand how these government ethics laws apply to tips so they can make informed policy decisions to regulate tip-accepting and avoid violations of government ethics laws:

Tips as “Gifts” and “But For” Financial Gains

Under Oregon government ethics laws, a “gift” is anything that has economic value and that a public employee receives without giving consideration in exchange for it. ORS 244.020(7)(a). Public employees cannot solicit or receive gifts that, in total, exceed $50.00 per calendar year from each donor that has or could be reasonably expected to have a legislative or administrative interest in the public employees’ decisions. ORS 244.025.

ORS 244.040(1) forbids public employees from using their position to obtain a financial gain that they would not have obtained if they were not public employees: “But for” the public employee’s job, would the public employee have obtained the financial gain? If the answer is no, the public employee would not have obtained the financial gain if they were not a public employee, then the public employee has violated ORS 244.040(1). However, gifts received in compliance with ORS 244.025 are not considered “but for” financial gains and do not violate ORS 244.040(1).

Under these Oregon government ethics laws, tips are likely “gifts” and subject to the “but for” test: They are financial gains that have economic value and are received as a gratuity, not as consideration in exchange for a service. As gifts, a public employee’s tips cannot exceed $50.00 per calendar year from each tipper unless the tipper does not have a legislative or administrative interest in the public employee’s decisions. While that rule may seem simple, government employers may find its practical application complicated: How will a government employer verify the amount of tips each public employee receives from each tipper? How will it determine whether a tipper has a legislative or administrative interest in its employees’ decisions? A possible solution is for a government employer to assume that every tipper has a legislative or administrative interest in public employees’ decisions and so apply the $50.00 limit across the board, without having to make case-by-case determinations. A government employer could also develop system for tracking and verifying tips, but that may prove to be administratively burdensome. A government employer could choose to be hands off and rely on its employees to accept or reject tips as required by ORS 244.025, but this runs the risk that employees will not comply with ORS 244.025 and, in turn, ORS 244.040(1), without oversight.

Consequences of Violations

The Oregon Government Ethics Commission (“OGEC”) investigates ethics complaints against public employees and can impose civil penalties on public employees who violate Oregon government ethics laws. The OGEC accepts complaints from the general public, so anyone could report a public employee for violating ORS 244.025 or ORS 244.040(1). Government employers do not have any duty to protect or defend a public employee in an investigation. Furthermore, government employers are not responsible for any penalties issued against a public employee. However, employees’ morale and the public’s perception of the government employer’s role in such a situation would not be good and it is best to avoid such situations through proactive policy decisions.