It was another great day in Bloomington on Oct. 21 when the Bloomington City Council unanimously adopted an ordinance that will start addressing issues important to workers, respectable contractors and the taxpayers. A "thank you" goes out to all of our Bloomington representatives.
After working with Mayor Mark Kruzan, city attorney Kevin Robling and assistant Mike Rouker, City Council members Andy Ruff and Isabel Piedmont-Smith co-sponsored the Responsible Bidder Ordinance (RBO 09-18) and promoted its enactment. Bloomington has taken the lead again among Indiana cities and passed another important social policy for the betterment of the community.
"With the new ordinance in place, the city now has minimum requirements for contractors who want to be eligible to perform work under city contracts."
Among many issues the city has acted upon are ordinances for Living Wage, Green Building Programs, and a Sustainability Commission, and resolutions supporting the Employee Free Choice Act, Single-Payer Health Care (H.R.676) and reducing greenhouse gas emissions.
The latest council action is an important step to confront another social ill, the egregious acts by unscrupulous employers bidding work in the construction industry.
The RBO will have a positive effect among three entities within our community: construction workers, contractors and taxpayers. With the new ordinance in place, the city now has minimum requirements for contractors who want to be eligible to perform work under city contracts, thus creating a level playing field during the bid process.
One of the most important aspects of the RBO outlines the definition of legitimate employees versus "misclassified employees," i.e., improper methods used by employers to skirt paying legally mandated Workers' Compensation and Unemployment Insurance on their workers by illegally misclassifying them as "independent" or IRS 1099 employees.
"Under the RBO, employees can now be a bit more assured that state and federal laws will be enforced and provide them with the coverage demanded."
When contractors are allowed to avoid paying for this legally mandated coverage, not only do the federal, state and local tax coffers lose much-needed funds, employees, unbeknownst to them, lose out on health care coverage if injured on the job, and an income, if they are unfortunate to become unemployed. More and more university, state and federal studies highlight the impact and costs that this practice has on society.
Misclassified employees lose out on other benefits, including loss of contributions to Social Security, protection under employment law like overtime payments, the right to protection under the Equal Opportunity laws, and the right to organize into a union. Plus, they are liable for any income taxes owed at the end of the year and the portion of taxes usually contributed by the employer.
Another reason contractors should verify that they are paying the same costs is to help keep responsible outfits within the pool of potential contractors for city work. Avoiding Unemployment Insurance and Workers' Compensation can reduce a contractor's bid by 30 percent right from the start, making it almost impossible for responsible contractors to have a fair and equitable bid. If this occurs enough times, the only contractors who will be left to bid are the unscrupulous ones. And why would any city want contractors who openly and flagrantly violate the law to be permitted to work on taxpayer-paid-for projects?
The RBO also inquires into the work history of potential bidding contractors. Similar to a person looking for employment, they must first have a resume on file and meet minimum standards even before an employer will talk with them. Contractors will now be required to reference past projects, prove they have the proper insurance and licensing, and document any past violations of federal and state laws, including OSHA, environmental and labor laws.
"One of the most important aspects of the RBO outlines the definition of legitimate employees versus 'misclassified employees.'"
Under the RBO, employees can now be a bit more assured that state and federal laws will be enforced and provide them with the coverage demanded. Basically reinforcing the existing laws, the RBO gives the city more oversight at the local level to ensure everyone is playing by the same rules and allows employees recourse more quickly if a problem develops.
This is unlike enforcement at the state level, where cases may drag on for years under the Indiana Department of Labor compliance procedures and where the agency appears more concerned with the interests of employers than those of the workers - the purpose of its existence!
Now the taxpayers have a more transparent bidding process and should have comfort knowing only the best and most qualified contractors will be performing the work that they paid for. The lowest bid doesn't always mean the best-quality work. Many other factors go into a good job that will last for years. As in any other purchase, you really do get what you pay for - especially in construction.
This isn't a "silver bullet" to solve all the problems faced in public works construction, but it is a great first step. It sure is nice to work and be part of the city of Bloomington!
Tom Szymanski can be reached at firstname.lastname@example.org.
For more information
U. S. Government Accountability Office Report - Employee Misclassification
Treasury Inspector General for Tax Administration