Jim Kollaer's blog

Misclassifying Workers as Independent Contractors

We have written numerous times about how widespread this issue has become in the construction industry, and now we see a new lawsuit filed by FedEx Ground that uses one of the oldest arguments we’ve heard: “It ain’t my problem! All of our folks are independent contractors. They hire their own workers and deliver for everyone and we have no control over them or what hours they drive. So, General Abbott, we don’t owe the Texas Workforce Commission any workers' comp fees.”

Legitimate? We don’t know yet. The courts will decide. What we do know is that when we hear that comment on the construction site we call it a “sub – sub” problem and usually the workers come up on the short end of that stick. On the construction site, the GC hires a sub that hires another sub to do the work and claims Independent Contractor and avoids FUTA, SUTA and any other taxes.   [node:read-more:link]

An article in the Stamford Advocate reported that state and federal Department of Labor Officials and OSHA representatives assisted by local police cracked down on four major construction sites in the Stamford area on Wednesday, January 23.

The police were called into the activity to keep workers from leaving the sites until they were interviewed.  In the past, such raids resulted in little results as workers drifted off site or were transported to other sites to avoid the interviews.

According to the article, over 180 workers were interviewed during the sweep which was targeted at companies who are suspected of payroll fraud.  While the final findings have not yet been released, it was found that one subcontractor company with a crew working on a 227-unit apartment project, Heritage Sheetrock, had not paid 10 of their workers for 3 weeks.   [node:read-more:link]

We reported last October that the cost of Drywall was due for another spike this year. That one is coming on top of a large spike in 2012 in the middle of one of the largest recessions in our careers.  We wondered how the Drywall industry would respond and now we know.

According to Top Class Actions.com, “An Arizona-based drywall company has filed a class action antitrust lawsuit against nine major drywall manufacturers accusing them of conspiring to fix and raise the prices for gypsum board, also called drywall or sheetrock. The defendants collectively control 99 percent of the gypsum board sold in the United States and Canada, according to the class action lawsuit.

“Sierra Drywall Systems Inc. alleges in the drywall price-fixing class action lawsuit that Georgia-Pacific LLC, American Gypsum Company LLC and seven other defendants forced consumers to pay inflated drywall prices starting in January 2012 with a large, coordinated price hike.  The price-hike also included new restrictions on the supply of gypsum board made available to distributors.” [node:read-more:link]

We’ve written and talked about the upcoming worker shortages in skilled trades, managers and estimators in the construction industry, but we have not written about the skills that you need to become a construction estimator.  That is, until now.

Aundraya Ruse, Editorial Coordinator over at Software Advice in Austin sent along a post about construction estimators that outlines those skills and how to get them.  The article, written by freelance writer Tom Zind, states:

“With the pressure on contractors to win not just more business but work that’s profitable, it falls to estimators to get the numbers right. But that’s a big challenge in an environment of volatile materials costs, stiff competition, increasingly tighter margins and shorter bidding windows.

“As such, demand for estimators is only likely to grow. And that translates to opportunities for those with not just the right mix of skills, training and experience, but the up-front knowledge of the forces shaping the market, the educational resources available and potential career pathways.”

The article goes on to quote the Bureau of Labor Statistics (BLS) reports about pending shortages and then goes on to outline a road map for becoming a construction estimator. [node:read-more:link]

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During the debate and political wrangling over the Fiscal Cliff throughout the New Year’s holiday, Congress, on New Year’s day, passed HR 4212, the Drywall Safety Act of 2012, and sent it to the President for signature.

Unless you were looking for it or following it, you probably missed it.  It is a bill aimed at preventing a repeat of the importation of high-sulfur drywall from any source, but specifically from China, that over time causes corrosion and deterioration of piping and wiring in the facilities where it is installed.

The bill instructs the Secretary of Commerce to contact the Chinese government that owns a major part of the industry in China, and to instruct them that any future drywall that is supplied to the United States be in compliance with the labeling and sulfur content spelled out in ASTM C1264-11.

An additional provision of the act is “Remediation Guidance for Homes with Corrosion from Problem Drywall” [node:read-more:link]

The employment figures for December 2012 released last Friday by the Bureau of Labor Statistics (BLS) stated that:

“Nonfarm payroll employment rose by 155,000 in December, and the unemployment rate was unchanged at 7.8 percent.  Employment increased in health care, food services and drinking places, construction, and manufacturing.”

Following a loss of 10,000 construction jobs in November, this is really good news.  According to the press release:

“Construction added 30,000 jobs in December, led by employment increases in construction of buildings (+13,000) and in residential specialty trade contractors (+12,000).”

It will be interesting to see what the impact of the Fiscal Cliff and the general uncertainty will have on hiring plans for the Spring.  With the latest round of construction starts and the loosening of some financing, it could be a strong spring season for our industry. [node:read-more:link]

We’ve talked about the prefabrication of the tallest building in the world that is planned for China next year and ways that it might impact construction in this country.  We are about to find out what prefabrication might mean for the industry in the first of a 15-building mixed use project in Brooklyn called Atlantic Yards which is being developed by Forest City Ratner Companies.  The first project, a 363 unit residential development, designed by SHoP Architects will be totally modular and will be prefabricated at the Brooklyn Navy Yard by union labor.  The project is being joint-ventured by Forest City and Skanska USA Building through a new company created to enable the two companies to develop projects throughout the United States.

According to an article published in the New York Daily News, the modular project will break ground next month.  One of the most interesting changes evident in the project is the fact that the unions are providing labor to prefab the units on the factory floor in the old Navy Yards for $55,000 per year, less than half of the rate that they would charge on a standard building site. [node:read-more:link]

Those Bob Dylan lyrics will become more and more applicable to the construction industry as the market recovers, older construction workers retire and the technology of construction enters the transition phase to whatever lies ahead.

In a recent conversation I had with a developer and a contractor, both were wondering out loud what the next big changes might be.  They both, independently, suggested that the expansion of prefabrication might be one answer to skilled labor shortages, higher technology demands for the next generation buildings, and to the lack of quality found in building construction around the world.

We already see lots of prefab in some of the trades like Mechanical, Electrical and Plumbing (MEP) where ducts and piping are prefabbed, then transported and installed on site.  This is becoming more prevalent in clean installations and in hospitals.   [node:read-more:link]

Home Channel News reports on a study by McGraw-Hill Construction that “architects, engineers, contractors and owners are increasingly embracing Building Information Modeling (BIM) in their building projects.  Comparing results from its similar research in 2007 and 2009, McGraw-Hill Construction found that the percentage of companies using BIM jumped from 17% in 2007, to 49% in 2009, to 71% in 2012.”  That means almost three quarters of the companies involved in construction are using BIM.  Their sophistication ranges from conflict resolution and avoidance to “lay down” space on restricted sites, scheduling and beyond.

Several contractors have created “BIM Caves” where clients, prospects, peers and workers can be brought to see the BIM in action. [node:read-more:link]