Reshaping the Construction Industry

The American Subcontractors Association’s National Business Forum and Convention was held two weeks ago in Las Vegas and, by any measure, it was a resounding success.Part of what made it so successful was a shift in how time at the convention was scheduled. Usually when you go to these events, you have to hit the ground running. You’re attending classes and panel discussions all day long, then you head for the very structured evening events. Those are great and they were still part of this convention, but the big difference was the amount of time that was built in to allow for what you might call “organic networking.”

The construction industry is facing a perfect storm of issues, which will result in severe skilled workforce shortages in the near future. The Construction Labor Market Analyzer® (CLMA) provides the reliable data that Owners and contractors need to plan their future projects to avoid higher labor costs and missed schedules because of skilled trade shortages. The CLMA® also provides regional trend information by craft to focus new recruiting and training programs to the critical needs of the industry.  The HistoryWhen the construction volume peaked in 2006 to 2008, there were more projects than there were skilled trades to work on them. Competition for skills increased wages and incentives, which resulted in busted budgets, missed schedules and sometimes, cancelled projects. Contractors were using extended overtime, per diems, completion bonuses and other innovative approaches to staff their projects.

Following at least a month of weekly stakeholders meetings, Senator John Carona is set to lay out his vision for dealing with worker misclassification in a Texas Senate committee next Tuesday.The Dallas Republican's Senate Bill 676 is the result of balancing the need to fix the problem against the concerns of some players within the construction industry who don't want to the bill to go too far. The sticking points have included whether the state should create its own definition for subcontractor – rather than just stick with the IRS definition – and whether the specific amount for penalties should be written into the statute or set by the Workforce Commission on a case-by-case basis. The Texas Association of Business would prefer the latter option.In the Texas House on Wednesday, Representative John Davis presented to the Economic & Small Business Development Committee his bill on this issue.  

The state of Utah is fighting worker misclassification in the construction industry by scrutinizing employment records of companies who hire limited liability corporations, or LLCs.  Some dishonest contractors avoid paying their workers as employees by having each of them register as separate LLCs, claiming on paper at least that each worker is a company owner or independent contractor.Two years ago the state legislature created an enforcement council consisting of representatives from the state’s Labor Commission, Department of Commerce, Tax Commission, Department of Workforce Services and the Utah attorney general.  The council meets monthly to share information about construction companies in order to identify and stop worker misclassification, or payroll fraud.  The 2013 legislature has now authorized the continuation of the Worker Classification Coordinated Enforcement Council for the next three years.The Utah Division of Occupational and Professional Licensing (DOPL) is in charge of enforcing state licensing rules for construction companies.  This week, an article in the Salt Lake Tribune explained how these rules provide one way for contractors who commit payroll fraud to be caught.  The article states:“Changes in 2011 tightened definitions of employees and owners for licensed construction companies, set new reporting rules and provided for state auditing to verify financial responsibility.  Licensing disclosure rules give officials a crucial glimpse into how companies operate, as well as a squeeze point when their practices are out of bounds.”