There have been several new laws in 2016, or new enforcement styles of existing laws, that are ready to make their mark on the construction industry. Among them are the US Department of Labor’s new rules on overtime pay and the Fair Pay and Safe Workplaces Act. Both laws affect the amount construction employees must be paid and when they should receive that pay, so documentation of employee time sheets and payments is becoming increasingly important. If your company plans to bid on any Federal Government work, violations of these new laws can keep you from getting the job.
Last year, we wrote about a great time sheet software, called TSheets, which electronically tracks time sheets and paychecks, integrates with QuickBooks and even allows employers to implement GPS tracking. Recently, the software company has put together an in-depth and interactive tool which highlights all successful cases of Fair Labor Standards Act lawsuits since 1985.
In the construction industry alone, there have been 11,000 successful wage and hour prosecutions by the Department of Labor against construction firms since 1985. TSheets also found that nationally, around 75% of DOL investigations lead to a prosecution. This is probably because, by its own admission, the DOL typically goes after the most egregious cases.
The average cost of a DOL prosecution is $13,720 (excluding legal fees) to each construction firm affected. The industry as a whole has repaid $152,133,833 in back wages to employees as a result of these prosecutions, as well as $3,039,244 of fines (civil money penalties) — making the total cost to the industry $155,173,076.
The worst affected businesses are:
- All Other Specialty Trade Contractors* (1,130 prosecutions, $14,296 cost per prosecution)
- Plumbing, Heating, and Air-Conditioning Contractors (1,088 prosecutions, $12,390 cost per prosecution)
- Commercial and Institutional Building Construction (1,065 prosecutions, $14,811 cost per prosecution)
- Electrical Contractors and Other Wiring Installation Contractors (771 prosecutions, $12,413 cost per prosecution)
- Roofing Contractors (686 prosecutions, $9,864 cost per prosecution)
(*The "All Other Specialty Trade Contractors" category is defined here and essentially means subcontractors.)
The worst affected states are:
- Texas (1,567 prosecutions, costing the state's construction firms $25,735,980)
- Florida (1,043 prosecutions, costing the state's construction firms $11902428.5)
- California (687 prosecutions, costing the state's construction firms $17,357,780)
- Pennsylvania (490 prosecutions, costing the state's construction firms $4,927,409)
- New York (438 prosecutions, costing the state's construction firms $5,674,116)
If you haven’t been taking wages and the laws surrounding them seriously, it’s time to start, especially as they begin to not only affect your current financials, but also you future financials if you’re disqualified from new projects. If you’re in need of some advice on how to protect yourself and your business from an FLSA lawsuit, TSheets also gathered some invaluable legal advice from industry experts, which you can find by clicking here.
In February, the House of Representatives voted 236-187 on a resolution to block the ‘blacklisting' rule, sending it to the Senate for a second vote. The act would have given the federal government the ability to disqualify contractors if they violated any of the 14 labor laws, which can be found here, over the past 3 years on any project totaling $500,000 or more
As of the first quarter of 2016, the Bureau of Labor Statistics (BLS) reports that there are over 768,000 construction companies currently operating in the private industry in America. There are also countless more that have come and gone. According to Statistic Brain, only 47% of construction startup businesses are still operating after year 4. Personally, I've seen many people break off from a construction company and create their own business; some are still in operation, others have failed.
OSHA inspectors and city building officials are usually the people that can make life pretty uncomfortable for construction companies, but it’s a whole different story when the FBI comes calling. A new stadium for the Double-A minor league baseball team, the Hartford Yard Goats, was supposed to open before the 2016 season, but delays and cost overruns have pushed that opening well into 2017. Now, the FBI is investigating, according to the Hartford Courant.
In an announcement made in mid-January, the US EPA has officially released the updated 2017 Construction General Permit (CGP) for Stormwater Discharges from Construction Activities. The draft of the new permit was released last year and the 45 day public comment period ended on May 26, 2016. The 2017 CGP will go into effect starting February 16, 2016.
In July of 2016, the Fair Pay and Safe Workplaces Executive Order was signed into effect and has been a hotbed of controversy, especially within the construction industry, ever since. The act would have given the federal government the ability to disqualify contractors if they violated any of the 14 labor laws, which can be found here, over the past 3 years on any project totaling $500,000 or more.
Trenches are a construction jobsite hazard that happen on nearly every construction site involving dirt work, but, all too often their dangers are underestimated. In fact, trench related deaths in 2016 have more than doubled as compared to 2015. There’s no excuse for allowing a trench related death to happen, but it’s rare that job site supervision suffers criminal charges after one occurs. After the death of a 22 year old New York construction worker, the Manhattan District Attorney’s office took a hard stance against those responsible and announced formally sentenced the on-site foreman last week.
2016 has been a tough year for people that live in ocean-near luxury high rise condos. The Millennium Tower in San Francisco, California, which is home to many of the city’s rich and famous residents, has found itself in the middle of several lawsuits after it was determined to have sunk around 16 inches since its opening in 2008. Now, it appears that it’s not the only luxury tower in America with foundation issues.
It’s been a tumultuous year between several governmental agencies and businesses alike and, because of that, both sides have been repeatedly put into a state of limbo. Three new major rule changes have made headlines, especially in the construction industry, this year, including an injury and illness record keeping and reporting rule, a “blacklisting” rule, and an overtime pay rule.
Modular construction has been heralded by many as the next big thing in building structures quickly and cost effectively. By being able to construct parts of the building in a controlled environment, like a factory, workers can perform more efficiently, comfortably, and safely, ideally translating into shorter schedules and smaller costs. That theory got one of its biggest tests on a new 32-story residential building that recently opened in Brooklyn, NY.
It’s been a strenuous year for leading construction industry groups and American government agencies. Three controversial new rules, that were supposed to have been in effect at this point, have ignited a heated battle, including some lawsuits. New overtime pay rules, a ‘blacklisting’ rule, and an injury illness record keeping and reporting rule have been successfully delayed by leading construction industry groups. Below is a summary of the recent developments: