From the category archives: Legal

Legal

Conflict in Court Over Income Recognition for Construction Contractors

  The 9th Circuit Court’s review of how construction contractors should recognize income had a somewhat surprising outcome. The key question being considered was: When should developers recognize income under the completed contract method? Is it when the entire project is complete, is it on percentage of completion, or is it upon the sale of each individual home sold?  

Shea Homes, which used the completed contract method to account for its planned development communities, claimed that final completion and acceptance under Reg. 1.460-1(c)(3) did not occur until the last road was paved and the final bond
was released. However, the Internal Revenue Service (IRS) contended that final completion took place upon the sale of each home.

Farewell John Hancock: The Emerging Use of Digital Signatures

The law of electronic signatures primarily derives from two statutes: the Electronic Signatures in Global and National Commerce Act 2000 (ESIGN), which governs at the federal level, and the Uniform Electronic Transactions Act (UETA), which governs each state (except New York, Illinois and Washington). Both laws establish that electronic signatures are legal with only a few exceptions.

Decision Opens the Door to Joint Employer Liability for Contractors

On Jan. 25, the 4th Circuit Court of Appeals dealt a significant blow to the traditional contractor-subcontractor relationship. In finding that a contractor and subcontractor could be considered “joint employers” of the subcontractor’s workers for purposes of the Fair Labor Standards Act (FLSA), the court’s decision has opened a Pandora’s Box of potential wage and hour issues, including claims for overtime pay against contractors and higher-tier subcontractors from the employees of lower-tier subcontractors.

Before Employees Leave, Protect Your Assets

A review of most construction companies’ financial records reveals their primary value is their owners and employees. Thus, firms have a compelling interest in attracting and retaining skilled and professional labor, as well as avoiding the devastating loss of talent and know-how when they leave or engage in competing businesses. Construction companies that cater to the demands unique to each type of employee will find an edge in the employment marketplace. For instance, to attract older employees, construction companies could consider offering a wide array of tax-advantaged savings and retirement incentives, including health savings accounts, college savings accounts, 401(k) accounts, simplified employee pensions, IRAs and qualified and non-qualified deferred compensation plans. 

The Power of the Congressional Review Act

  For more than a decade, it was common for elected officials on Capitol Hill to say, “the Congressional Review Act (CRA) has only ever been successful once.” However, under the Trump administration, the rarely used CRA has successfully overturned eight overreaching Obama-era regulations. Passed in 1996, the CRA allows new regulations to be overturned by Congress through a joint resolution of disapproval.

What Merit Shop Contractors Should Expect From the Trump Administration

While controversies over the first nominee for Secretary of Labor slowed implementation of the Trump administration’s labor agenda during the first 100 days of the president’s term, construction industry leaders are already seeing a sharp contrast with the anti-business agenda of the Obama administration, as federal labor agencies have begun to review and in some cases retract burdensome regulations imposed by previous officials. 

ICE Is Coming for Undocumented Workers: How to Prevent Corporate Frostbite

  Undocumented workers and the businesses that knowingly or unknowingly employ them are coming under the microscope. Just looking at recent headlines, the president has implemented two immigration bans, is challenging so-called “Sanctuary Cities” that do not help federal immigration enforcement, has instructed government agencies to become more aggressive in enforcing immigration laws and is already reviewing proposals to strengthen the border wall. Plus, the E-Verify program for verifying worker status is likely to become mandatory.

Resolving Disputes and Negotiating Contracts Without Breaking the Bank

  Legal services are notoriously expensive, yet they are necessary to protect companies and their owners, assert legal rights, recover payment for construction services and defend against meritless claims. Attorneys are especially useful in developing and negotiating contracts and significant change orders, setting up corporate structures to minimize and maintain risk, resolving disputes through compromise or litigating them to judgment. From a construction executive’s viewpoint, legal services are like any other service: They must be managed with the goal of obtaining the most value for the lowest cost.

Congress, States Consider Legislation to Prevent PLA Mandates

On March 14, Sen. Jeff Flake (R-Ariz.) introduced the Fair and Open Competition Act (S. 622) to prevent federal agencies and recipients of federal funding from requiring contractors to sign controversial project labor agreements (PLAs) as a condition of winning federal or federally assisted construction contracts. Rep. Dennis Ross (R-Fla.) introduced a companion bill (H.R. 1552) in the U.S. House of Representatives that was reported favorably out of committee March 28.

Three Ways for Contractors to Mitigate Risk and Lower Insurance Premiums

Many business executives believe insurance brokers have control over the quotes they provide, but that’s not the case. Insurance carriers control the price, and they provide the best rates to companies that proactively manage their risk. The less risky a contractor appears, the fewer claims it’s likely to have and the “safer” the company looks. Therefore, the lower the premium they are likely to get.

Here are three ways general contractors can mitigate risk and make their companies more desirable to insurance carriers.
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