Your HBA as working for you in Washingting (here is how)

(September 20, 2017) Ever wonder what your Home Builders Association is doing for you in Washington DC and around the country?  Below is a report of the issues on which we are engaged:

1. Canadian Softwood Lumber

  • The U.S. Department of Commerce imposed a 20% countervailing duty on Canadian lumber imports in April, and added 7% antidumping duties in June. 
  • In late August, Commerce announced a delay in the final duties to Nov. 18. This will allow more time to negotiate a settlement. Collection of countervailing duties is suspended for now, but antidumping duties will continue to be collected. 
  • NAHB is meeting with representatives with the Trump Administration and Congress as well as Canadian officials to address home builder concerns regarding price and availability of lumber. 
  • These meetings are especially important because U.S. consumers cannot participate in trade disputes, although NAHB provided witness testimony during the International Trade Commission hearing on Sept. 12. 
  • Generally, lumber prices have increased, but that may be partly due to wildfires in the Western U.S. and Canada. 
  • NAHB is urging U.S. lumber producers to increase production for domestic consumption, and working to identify alternate foreign sources of dimensional lumber. 

2. Disaster Response

  • In the aftermath of two devastating hurricanes, NAHB is working closely with state and local home builder associations in those areas to help them meet the needs of members affected by the storms. 
  • We sent out an all-member email with information on how to donate to the recovery effort. 
  • NAHB issued statements on hurricane-related advocacy. Our leadership conducted media interviews on flood-related topics, including the need for the National Flood Insurance Program (NFIP) reauthorization, building codes, rebuilding efforts and labor shortages. 
  • We updated our online Disaster Recovery toolkit with new media talking points and safety information for contractors. 
  • We added resources on hiring contractors and places to donate on our consumer Web page. 
  • We are creating resources on business continuity; hiring reputable contractors; and best practices for flood damage repair work. 
  • We will continue to reach out to the affected communities to see how to help in the rebuilding efforts. 
  • With respect to resiliency, our Resiliency Working Group issued its final report and recommendations in July. Many of the recommendations are related to disaster preparedness, resiliency, recovery and communications. 
  • The hurricanes have illustrated the importance of disaster response and planning for rebuilding, and the Resiliency Working Group will now help ensure NAHB can be a resource and problem solver after a natural disaster. 

3. Electronic Recordkeeping

  • The Occupational Safety and Health Administration’s 2015 electronic reporting rule requires certain employers to electronically submit injury and illness data that they are mandated to keep under existing recordkeeping regulations. 
  • The rule also contains anti-discrimination prohibitions to protect workers who notify an employer of a workrelated injury or illness. 
  • NAHB has concerns about several elements of the rule, including the requirements for employers to submit records electronically to OSHA that would become publicly available.  In January, NAHB and other stakeholders filed a legal challenge. 
  • On May 5, NAHB and other organizations submitted a petition to the Department of Labor (DOL) seeking a stay of implementation and enforcement of the rule, and requested OSHA re-open the rulemaking. 
  • In June, OSHA announced it was extending the filing deadline for employers to submit electronic records to December, which would give OSHA more time to review the rule. 

4. Federal Flood Risk Management Standard

  • In response to the charge led by NAHB and as part of President Trump’s Executive Order to expedite federal approval for infrastructure projects, the Administration revoked Executive Order 13690 and the Federal Flood Risk Management Standard (FFRMS). 
  • Our advocacy efforts included participating in federal listening sessions and meetings; submitting comment letters to federal agencies; and requesting that President Trump revoke it. 
  • This standard would have dramatically expanded regulated floodplain areas. 
  • However, in response to the hurricanes, the Trump Administration may establish its own flood standard. 
  • If the Administration chooses to do so, NAHB will work with the White House to develop an effective standard that does not place undue regulatory burdens on residential construction projects. 

5. Immigration

  • The H-2B Temporary Non-Agricultural Worker program allows employers who cannot find local labor for short-term or seasonal jobs to fill those positions with temporary foreign workers. 
  • There is an annual cap of 66,000 on H-2B visas issued in a fiscal year, but that cap excluded workers who had participated in the program within three years. 
  • That “returning worker exemption” expired in September 2016 and has not been renewed by Congress. 
  • In May, Congress approved a spending package for the remainder of FY 2017 that included language allowing the Department of Homeland Security (DHS) to raise the statutory cap for 2017 to allow additional visas. 
  • In July, DHS announced it would make 15,000 more visas available, but only to employers who could demonstrate that their business would suffer “irreparable harm” without H-2B workers. 
  • The next round of H-2B visas will become available on Oct. 1. NAHB hosted a free webinar to help employers learn if they qualify to apply for H-2B workers and how they can become certified employers under the program. 
  • With Congress and the Administration focused on immigration enforcement, the prospect of creating a new guest worker program to benefit builders and specialty trades is highly unlikely. 
  • NAHB continues to advocate for restoration of the returning worker exemption while looking for opportunities to expand and reform the H-2B program.

6. Low-Income Housing Tax Credit (LIHTC)

  • On Aug. 1, NAHB Chairman Granger MacDonald testified before the Senate Finance Committee on “America’s Affordable Housing Crisis.” The hearing focused on the LIHTC. 
  • Chairman MacDonald also discussed how lots and labor shortages, building material price increases and regulations affect housing affordability.

7. National Flood Insurance Program (NFIP)

  • The NFIP was extended until Dec. 8 as part of a broader legislative package. 
  • During NAHB’s Leg Con in June, builders spoke to their congressional delegations about provisions in the House Financial Services Committee’s flood insurance bill that negatively targeted new construction and grandfathered properties. 
  • NAHB was able to convince the committee’s leadership to remove those provisions. 
  • After Hurricanes Harvey and Irma, discussions about changing the program were put on hold as policymakers ensured home owners and communities had short-term certainty and financial aid. 
  • NAHB will work with Congress on long-term legislation that ensures an affordable, available, predictable and financially stable NFIP.

8. Regulatory Reform

  • President Trump has made regulatory reform one of his top priorities, and has asked each agency to evaluate existing regulations and identify ones that should be repealed, replaced or modified. 
  • We have submitted recommendations to the Environmental Protection Agency (EPA), Department of Housing and Urban Development (HUD), Federal Emergency Management Agency (FEMA), National Marine Fisheries Service (NMFS), Fish and Wildlife Services (FWS), Department of Justice (DOJ) and Department of Energy (DOE), and will soon submit feedback to the Army Corps of Engineers. 
  • NAHB will provide suggestions to DOL, OSHA and others once their notices are published. 
  • We will review the 2017 Fall Regulatory Plan and Agenda upon its release and determine if our suggestions were incorporated. 
  • The Small Business Administration (SBA) Office of Advocacy is also collecting input on regulatory reform through a series of nationwide Regulatory Roundtables; NAHB has had good representation at all roundtables to date. 
  • As part of the Cleveland roundtable, NAHB member George Davis met with SBA officials at one of his construction developments. 
  • NAHB will continue its outreach to HBAs and members as additional roundtables are announced. 
  • On August 28, NAHB testified before the SBA’s Regulatory Fairness Board about the enforcement activities of federal agencies, particularly EPA and OSHA.

9. Overtime Rule

  • Under a new rule that was set to go into effect Dec. 1, 2016, the Obama Administration doubled the annual salary level used to determine whether an employee qualifies for the professional, administrative and executive exemption to overtime eligibility from $23,660 to $47,476. 
  • Under the new rule, the salary threshold would also be automatically adjusted every three years. 
  • NAHB and many other industry groups challenged the rule in federal court. 
  • We contended that DOL went beyond its authority under the Fair Labor Standards Act to allow the salary limit to automatically be re-set every year. The Administrative Procedures Act requires these updates be made through regular notice and comment periods. 
  • In a victory for NAHB, a federal judge in Texas issued a preliminary injunction that temporarily barred the implementation of the rule. 
  • On Aug. 31, the Texas federal court held the rule was invalid and the three-year automatic increase DOL included was similarly unlawful. 
  • DOL’s appeal of the preliminary injunction is now moot and likely to be dismissed.

10. Smart Market Report

  • Preliminary findings from them Green Residential Smart Market Report show that green building activity should increase over the next few years. Approximately 60 percent of surveyed builders expect it to be a significant share of their overall activity by 2022. This is nearly double from 2014, when only 32 percent of firms reported that level of green building. 
  • Single- and multifamily home builders agree that energy efficiency and healthier indoor environments are key factors in building a green home, and have prioritized these elements in the construction process. 
  • The Smart Market report found that ENERGY STAR is more popular in the single-family market while LEED and the National Green Building Standard (NGBS) are more popular with multifamily builders. 
  • The Green Residential Smart Market Report is a biannual report released by NAHB and Dodge Data and Analytics (formerly McGraw Hill). The report reviews the history and future of green home construction in the single-family, multifamily and remodeling sectors.

11. Stormwater

  • NAHB launched an online toolkit in August to help HBAs advocate for programs that provide a clear path to compliance, reduce redundancy and meet water quality goals. 
  • The toolkit provides simple checklists that compare pros and cons of different regulatory approaches based on climate, geography, and local land use patterns. This data will help our members in conversations with state regulators. 
  • As part of the toolkit launch, NAHB released A Developer’s Guide to Post-Construction Stormwater Regulation. This report provides a state-by-state breakdown on the top permitting issues affecting builders.

12. Tax Reform

  • A team of congressional leaders and Administration officials known as the “Gang of Six” is developing a structure for tax reform, while President Trump is trying to garner nationwide support on the issue. 
  • House Speaker Paul Ryan intends to move tax reform this fall. 
  • Before Congress can address tax reform, it must pass a budget resolution to set up the procedural process known as reconciliation. This will allow tax reform to pass the Senate with only 50 votes. 
  • However, there is growing resistance in the House to passing a budget resolution before members see the Gang of 6’s tax framework. To use the reconciliation process, the House and Senate must pass identical budget resolutions, which will be challenging.

13. Waters of the U.S. (WOTUS)

  • On Oct. 11, the U.S. Supreme Court will hear oral arguments on whether the 2015 WOTUS rule should be litigated in federal trial court or the appellate court. 
  • NAHB has argued that challenges to the WOTUS rule must be first heard at the trial court. 
  • We need this clarity so we do not have to file two lawsuits when we challenge an EPA Clean Water Act regulation. 
  • Meanwhile, the EPA plans to use a two-step process to develop a new WOTUS definition. 
  • In the first step, the EPA has proposed to withdraw the 2015 WOTUS Rule and revert to the status quo. We expect the agency to finalize the withdrawal by early 2018. 
  • The EPA also plans to develop a new WOTUS rule, and will soon take comments on the proposal. 
  • NAHB is taking advantage of its unprecedented access to EPA Administrator Scott Pruitt, and is working with the agency on a new rule that is clear and limits jurisdiction of the Clean Water Act consistent with congressional intent. 
  • In August, NAHB and the Dallas Builders Association hosted a meeting with Administrator Pruitt in Dallas to voice concerns and offer insight about the new rule. 
  • NAHB and the Colorado Association of Home Builders are planning a similar meeting with Administrator Pruitt in Colorado Springs in October. 
  • In late October, NAHB will provide recommendations on a revised WOTUS definition at a business-focused in-person listening session at EPA headquarters. 

For more information about these or other Federal government affairs issues, contact Michael Dey (mdey@hbaofgreenville.com).

Federal judge overturns overtime rule

Yesterday a Federal judge in Texas struck down the U.S. Department of Labor’s overtime rule that was set to increase the Federal minimum salary to be exempt from overtime from $23,660 to $47,476.

The Obama-era overtime rule, which was set to take effect December1, 2016, was stayed from enforcement by the same judge shortly before it was set to take effect.

The judge, in his ruling yesterday, said that the Department of Labor improperly considered salary in drafting its rule instead of considering job descriptions.  The judge also ruled, “the salary level was set so high that it could sweep in some management workers who are supposed to be exempt from overtime protections.”  The National Association of Home Builders estimated that nearly 100,000 construction supervisors were affected by the rule.

Read more about the ruling at Fortune and The Hill.

The Trump Administration recently announced that it has directed the Department of Labor to review the overtime rule and the thresholds for exemption from overtime.

S.C. Attorney General Alan Wilson was one of 21 states Attorneys Generals who challenged the Obama Administration’s overtime rule.  The National Association of Home Builders weighed in with briefs making the home building industry’s case on the rule.

Department of Labor considering revising the contested overtime rule

On December 6, 2016, the U.S. Department of Labor issued a new rule changing the salary threshold for exemption from overtime pay from $23,660 to $47,476. The rule was promptly stayed by the courts.  The National Association of Home Builders took a very active role in challenging the rule in court.

President Trump’s Secretary of Labor, Alexander Acosta, testified at his Senate confirmation hearing that he would prefer a more modest salary threshold than previously proposed, one that is potentially tied to the rate of inflation.

Last month the Department of Labor issued a request for information on the overtime rule. The National Association of Home Builders will submit comments on the rule, as it did last year when the Obama Administration was considering changing the rule.

Revised Department of Labor Overtime Proposal ‘Unacceptable’

The U.S. Department of Labor is considering a plan to reduce the cap on its forthcoming overtime salary threshold rate hike from $50,440 to $47,000. This minimal reduction would still amount to a 99% increase from the current overtime salary limit of $23,660.

National Association of Home Builders Chairman Ed Brady issued an official statement responding to the plan, declaring that “this proposal is a token effort at best” and is “unacceptable to America’s small businesses.”

“The unintended consequences of this aggressive regulatory overreach would hurt job and economic growth, as well as many of the workers the plan is trying to help,” Brady added. “There is no reasonable approach or road map on how this would be phased in without resulting in severe economic repercussions. If the $47,000 overtime threshold were to become law, it would hurt millions of small business owners, including home building firms, by forcing them to scale back on pay and benefits, as well as cutting workers’ hours to avoid overtime requirements. Indeed, it would be particularly harmful to the housing community, as the vast majority of home building firms have fewer than 10 employees.

“The Department of Labor must scrap this unworkable proposal and go back to the drawing board. We stand ready to work with Department of Labor to craft a practical plan that would gradually ramp up the current overtime threshold so that it does not result in real hardship for small businesses. The rule should also take into account regional variations in wages and cost of living when determining its formula. Such a measured response would help small business, workers and the economy.”

Overtime Pay – It is About to Cost More to Build a House

Overtime Pay – It is About to Cost More to Build a House

by Ron Tate, Esq.
General Counsel, Home Builders Association of Greenville
Shareholder, Gallivan, White & Boyd, PA

Changes are coming to an employer’s requirement to pay overtime to employees, and it is going to have a significant effect on many employers, including home builders. As employers know, under the Fair Labor Standards Act (FLSA), employees are generally entitled to overtime pay for hours worked in excess of 40 hours in a work week. Unless exempt, this rule applies to all employees, including craftsmen, construction workers, carpenters, electricians, plumbers, and other laborers on a construction site.

There are certain exemptions, however, including for employees who hold positions with supervisory, managerial, administrative, and professional responsibilities and who earn more than $23,660 per year ($455 per week). Under the current rules, if these employees are compensated above that threshold amount, they are considered exempt from overtime pay under the FLSA, and are not entitled to overtime pay regardless of the number of hours they work.

The Department of Labor (DOL), however, is in the process of changing the threshold amount. Specifically, on July 6, the DOL issued a Notice of Proposed Rulemaking in the Federal Register at 80 FR 38515, which, if finalized, will increase the threshold amount for exempt employees to more than double the current amount: $50,440.00. The basis for the proposal is to set the threshold amount to the top 40 percent of wage earners. The proposal also calls for indexing the threshold to inflation.

There is a comment period for this rule, which ends on September 4, 2015, and a final rule will be issued sometime thereafter. The rule, if finalized, will take effect 30-90 days after it is finalized.

The new regulation increasing the threshold to $50,440 is likely to increase the number of employees in the home building industry who are entitled to overtime pay. Specifically, many full-time supervisory construction employees have been exempted and not entitled to overtime as a result of the $23,660 threshold. But many of these employees do not make more than $50,000 per year.

According to the Bureau of Labor Statistics, the mean salary for first-line construction supervisors in South Carolina in 2014 was $55,680. The National Association of Home Builders estimates that 47 percent of the supervisors involved in residential construction in South Carolina will be affected by this change. With the new regulation, these employees will be entitled to time-and-one-half for all hours worked over 40 hours in a work week. This can potentially wreak havoc on cost projections and planning.

As we know, construction jobs occasionally require 60-hour (or more) work weeks when there is a push to complete a project, when there is bad weather in the forecast, or when an emergency arises. In those situations, nonexempt supervisory employees will be entitled to overtime pay for all hours over 40.

The predicament for home builders is that these employees are critical for providing customers a good product. These employees perform critical functions that might include managing labor forces, updating and managing schedules, keeping the accounting records, or insuring quality control. Furthermore, unlike many other laborers, these employees might be involved in every aspect of construction. They play a valuable role in the quality of the product being built.

If the new rule is approved, home builders may need to take action to avoid unplanned expenses. Possible actions include scheduling work to avoid overtime, raising the salaries of supervisory employees to the new threshold, or to hire additional supervisory employees to spread the work out so that each can work less than 40 hours per week and avoid overtime. Of course, none of these are very attractive or workable solutions. Reducing hours might lead to project delays; adding other supervisory employees would further increase costs and will cause inefficiency. Thus, while overtime pay can potentially be avoided, the solutions might involve even greater costs. Any way you slice it, for many home builders, it may get more expensive to build a house.