The Construction Advantage – Issue 17

Welcome to the seventeenth edition of The Construction Advantage! In this issue, we bring you a recap of our recent networking event for women in construction and project development, Mike Bosse shares a housing market update from NELMA and Glenn Israel from the Labor and Employment Practice Group gives advice on avoiding wage theft accusations in your construction business. We hope that you enjoy our newsletter, and we welcome any comments on this edition or any of our previous issues. 

Women in Project Development & Construction
by Asha Echeverria, Meredith Eilers and Emily Kahn

Earlier this month, over 50 women in the project development and construction industries from across the state gathered together for a networking event and panel discussion in Falmouth, sponsored by Bernstein Shur. The event provided a unique opportunity for women in the field to make connections, get to know one another, build community, and share experience and knowledge about the industry. A panel featuring leaders in the industry discussed recent trends and opportunities for growth in project development and construction in ME:

• Roxane Cole (Principal, Roxane Cole Commercial Real Estate)
• Erin Cooperrider (Development Director, Community Housing of ME)
• Vera Rand Roberts (Senior Vice President, Regional Commercial Manager, Camden National Bank)
• Lita Semrau (Architect, Port City Architecture)
• Beth Sturtevant (President, CCB, Inc.)

Various topics, including the challenges that poor infrastructure and regulatory barriers present to towns and developers led to a lively discussion among the larger group covering areas as diverse as public-private partnerships, opportunities and challenges in training and developing skilled talent and labor, and changing the perception of “development” in the larger ME community. Among the panelists, and the group as a whole, there was a general consensus that things are improving, but that we are still coming out of the economic downturn, and there is more interest in investing in new construction here in ME, as compared to a few years ago.  However, the rate of improvement is regional, with more happening in southern ME and the greater Portland area than in the north and Down East regions, where progress is moving more slowly. This and many other areas for opportunity throughout the discussion proved enlightening and engaging amongst such a diverse group of professionals.

Inspired by the terrific group and the excellent discussion, planning for the Second Annual Women in Project Development & Construction Event is well underway for next spring! Contact Asha Echeverria or Meredith Eilers if you or someone you know would like to be added to the invitation list for next year.  

Economists’ Take on the 2015 Housing Market
by Mike Bosse

In late April, I had the pleasure of attending the Annual Meeting for the Northeastern Lumber Manufacturers Association (“NELMA”) in Boston with my colleague George Burns. In addition to seeing a number of great clients (of which NELMA is one), attending some business meetings, and getting to see Bob Marley, on Friday, we heard from an economist about the 2015 economy, with a focus on housing. I was left with some interesting takeaways. Home sales were slow earlier in the year, in part due to the horrible winter conditions, but the housing market is also generally slowing down from the quick recovery it was having and is settling into what some are calling the “new normal.”

That new normal has several components. First, we all know that mortgage rates are going to start to rise, as they can’t stay as low as they have been forever. Second, the millennial generation is about to overtake the gen X’ers as the largest group of homebuyers. They also are fueling the multi-family construction boom because many of them are renting instead of buying, with some of them doing so to save up for the down payment for the home purchase. Still, the number of new single family housing starts is dreadful compared to what it was prior to the recession. Third, the economy is getting better, albeit slowly, and that means more people have jobs who perhaps couldn’t buy a home earlier but now can, or will be able to, soon. Next, add in that lending standards are starting to relax, which means that across the board, the residential housing numbers should improve. Finally, the wildcard is stuff that might happen internationally that we don’t have control over, which could impact the growth of the country’s housing market.

While this information might not result in people lining up to build new subdivisions, it is good to see that the market is improving and headed in the right direction. 

You Call It Sub-Contracting, They Call It Wage Theft
by Glenn Israel

Wage theft and payroll fraud are the new and inflammatory labels being applied to failure to pay overtime and/or minimum wage by misclassifying employees as independent contractors or as otherwise exempt from overtime. However, you don’t have to have criminal intent or engage in fraudulent conduct to be found guilty of these offenses. Employee misclassification may violate the federal Fair Labor Standards Act, state and federal tax laws, various state laws regarding unemployment and workers’ compensation insurance, and the Affordable Care Act. None of these laws require you to act intentionally. A simple mistake in employee classification can cost you tens or even hundreds of thousands of dollars. 

Most employers are honest, but sometimes they make honest mistakes. Unfortunately, some employers intentionally violate the law and mistreat their employees. Those unscrupulous employers have brought the unwanted attention of the federal Department of Labor, state Attorneys General, the National Labor Relations Board, and your local Carpenter’s Union to bear upon the construction industry where sub-contracting is a standard operating procedure.  Plaintiffs’ attorneys also are eager to represent employees in these cases because they stand to collect twice the amount of wages owed, plus attorneys’ fees.  

How do you avoid becoming the next target of an investigation or law suit? How do you stay out of the news media and avoid being branded as a “wage thief”? As a member of the construction industry, you must be exceedingly careful about your employee classification decisions. The fact that “we have always done it this way” or “everyone does it this way” does not provide a defense to an employee misclassification claim. The only defense is to get it right the first time. Click here to read the full article. 

We hope that you have found this article in the seventeenth issue of The Construction Advantage helpful to you in your daily business. Each of the attorneys in our Construction Law Practice Group and Labor and Employment Practice Group is available to answer the day to day questions of your business as you work on projects. As always, we would like to hear from you on the topics in this issue, or any of our other issues, and what you would like us to write about in the future.