When the private sector does not address a major issue, the public sector will often step into the vacuum and do it. The construction industry has been slow to embrace the principles of social responsibility and sustainable value, focusing instead on whatever it takes to be lowest bidder. As a consequence of this, government is adopting policies that reshape the rules for the industry.

Yellow Hard HatAs experts and industry leaders get a look at the specifics of the federal immigration reform bill being pushed in the United States Senate, the devil is beginning to emerge from the details. A headline that got our attention here at Construction Citizen was this from the Engineering News Record, or ENR: “Construction Debates Cap for Hardhats.” The piece lays out the raw numbers of what's in the bill versus what the industry needs. And the numbers don't add up.

From the ENR report:

Since mid-April, when the Senate’s bipartisan “Gang of Eight” unveiled an immigration bill stuffed with compromises and trade-offs, the construction sector has focused on the “W” visa, a proposed guest-worker designation that would limit to 15,000 the number of immigrants allowed to work in construction each year. Read more » about Construction Industry Concerned About the Details of Immigration Reform

While lawmakers in Texas this year took a pass on a broad crackdown on companies that misclassify their workers, other states are ramping up their efforts.

In Connecticut, for example, the state issued Stop Work orders to nearly 30 companies found to have been misclassifying their workers. The Connecticut Department of Labor says that they issued these Stop Work orders and slap penalties on companies that misclassify workers as independent subcontractors "with the intent of avoiding their obligations under federal and state employment laws covering such matters as workers' compensation, unemployment taxes and payroll reporting.

The civil penalty for misclassification in Connecticut is $300 per worker for each day the employer does not carry workers' compensation as required by state law.

While those numbers are significant, here's the real windfall from the state's efforts to deal Read more » about Connecticut Comes Down Hard on Companies That Misclassify Workers

The Peach State is moving forward with its plans to ensure, as much as possible, that workers are not undocumented immigrants. The law has been in effect for three years now and this latest move tightens the screws on employers even further.

A major piece of the law, The Illegal Immigration and Enforcement Act, is the requirement that all employers with more than 10 workers on payroll must use the E-Verify system. Previously, employers with over a hundred employees had to do this. If they don't, they cannot obtain a business license in Georgia. This applies to all new hires and employers are not required to verify the immigration status of those workers who were with them prior to July 1, 2013.

Attorneys in Georgia have been blasting emails to employers to offer their help with this, saying in part:

The IIEA went into effect on July 1, 2011, but the E-Verify requirement was phased in over time. Effective January 1, 2011, the IIEA required all employers with 500 or more employees to attest to their registration and participation in E-Verify as a condition of obtaining a local business license. Read more » about Georgia's Immigration Crackdown is a Reminder to Use Employees Instead of Likely Misclassified Subs

Florida legislators have made a bold move in the battle against payroll fraud with the passing of Florida House Bill 217 titled “Money Services Businesses”.  Aimed directly at the bandits who run check cashing stores to enable dishonest contractors to avoid paying workers’ compensation and payroll taxes, the bill is now on its way to Governor Rick Scott for his signature into law.  The details of the bill were explained in a press release from the Florida Office of Financial Regulation (OFR).

“The new legislation will require check cashers to log any checks cashed in excess of $1,000.  In addition to the check amount, each business will be required to submit traceable information such as payor, payee, fee charged, type of identification presented and payee’s workers’ compensation insurance policy number, if the check was made out to a business.  The bill also provides that multiple checks accepted from any one person in one day, which total $1,000 or more, must be aggregated and reported in the database.”

Readers of Construction Citizen have already been informed about how these check cashing store / workers’ comp fraud schemes work, but here it is again.  A dishonest contractor will submit a bid for a job using a company name which lists only a few employees – just enough to obtain a small workers’ compensation policy.  The contractor will then take checks paid to that company by the general contractor to a check cashing store to cash them so that most of the workers can be paid in cash. Read more » about Check Cashing Payroll Fraud Scheme Thwarted in Florida

After months of forward momentum, a proposed crackdown on misclassification of construction workers championed by both business and labor may have hit a serious snag.

The bill by Representative John Davis, R-Houston, would create penalties for companies that are found to be intentionally misclassifying their workers. Despite the fact that it was passed unanimously by a committee, it has yet to be placed on the calendar for a vote by the full House of Representatives. Our sources in the capitol say members of the powerful House Calendars Committee are under pressure from home builders who testified against it to keep the bill off the House floor. Make no mistake: It is crunch time for passing bills in this legislative session. Read more » about Misclassification Crackdown Stalls in Texas House

Recently, the United States Judicial Panel on Multidistrict Litigation centralized the six current class action suits to the Eastern District of Pennsylvania for further adjudication.

According to the panel of Judges, “On the basis of the papers filed and the hearing session held, we find that these actions involve common questions of fact, and that centralization under Section 1407 in the Eastern District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation.”

The suits arose after the defendants, USG Corporation; United States Gypsum Company; L&W Supply Corporation; New NGC. Inc.; Spangler Companies, Inc.; CertainTeed Corporation; Georgia-Pacific LLC;  American GypsumCompany LLC; LaFargeNorthAmerica, Inc.; TIN, Inc. d/b/a Temple Inland, Inc.; and PABCO Building Products LLC. Read more » about Domestic Drywall Price Fixing Class Action Suit Update

A fight between some construction companies and Texas bankers may have to wait until the next legislative session to be resolved. That was the tone of a hearing this week in the Texas Senate where bankers made the case that even though it sounds like a simple concept, it is a tough issue when you “get into the weeds” of it.

Construction trade groups, chiefly the Texas Construction Association, support a bill by Senator Bob Deuell, R-Greenville, which would require lenders to give notice when funding is being pulled from a project. Deuell said that he felt all the stakeholders had negotiated in good faith to try to craft legislation that solves the problem. Testimony was offered Tuesday morning to the effect that when a lender decides there will be no more disbursement of funds on a project, they are not required to notify any of the companies doing the work. Sometimes weeks or months go by before the construction companies on a project realize they are not going to be paid for that work.

Rich Thomas, a construction lawyer in Dallas, testified before the Senate Business and Commerce Committee stating, "The problem is in the rare situation whenever there's a default.” He said in the event a lender makes the decision to stop funding a project, construction companies get the short end of the stick. "When the lender does not tell the general contractor, that's wrong," he said. Read more » about Senate Committee Hears Lender Notice Bill

The bill still has a long way to go, but the proposed crackdown on the intentional misclassification of construction workers in Texas passed a milestone last week when it was voted unanimously out of a House Committee.

On a 7-0 vote, HB 1925 was sent to the full Texas House. Before it can get to the House floor for a vote, however, it has to be put on the House calendar by the Calendars Committee. This is a step in the process where many bills can die. With time running short in the legislative session, the Calendars Committee has the power to keep legislation, good or bad, from getting to the point where the representatives of the people get to decide the issue. I'm told that Calendars Committee Chairman Todd Hunter may be coming under pressure from opponents of the crackdown, including the largest homebuilders: Read more » about Worker Misclassification Crackdown Passes House Committee