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Contractors Counsel: Does California’s New “Gig Worker” Law Affect the Construction Industry?

Posted By Western States Roofing Contractors Association, Monday, October 21, 2019

Courtesy of: Trent Cotney, Cotney Construction Law

The foundation of California’s immense economy is based upon three industries: entertainment, technology and tourism. These industries heavily rely on “gig workers,”, individuals who provide paid services to multiple companies simultaneously and who have traditionally been classified as independent contractors. This structure is very similar to the model used in the construction industry. As California modifies the state employment regulations, construction contractors are wondering how the new “gig worker” law affects their day-to-day business operations and, more importantly, their bottom-line. The change will affect millions of workers statewide, but the good news is the law will likely have little effect on the construction industry right now. While the legislation, Assembly Bill No. 5 (“AB 5”), narrows the definition of “independent contractor”, subcontractors in the construction industry are exempt.

AB 5 seeks to stop the misclassification of workers and grant more individuals eligibility for standard employment benefits such as union memberships, health insurance and an hourly wage. AB 5 exempts specified occupations from application of the new definition and regulation. There are a wide range of exempt occupations such as licensed insurance agents, registered securities dealers, real estate licensees, and those performing work pursuant to a subcontract in the construction industry. It is important to note that this exemption does not apply to subcontractors providing construction trucking services, and those individuals have a separate set of regulations under the law. AB 5 establishes that the exempt individuals performing work pursuant to subcontracts in the construction industry are governed by S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (“Borello”). Borello provides an eleven-factor balancing test which weighs the totality of the circumstances and was the test used in California prior to AB 5.

In addition to requiring the Borello test, AB 5 establishes seven additional requirements. The seven requirements are: (1) the subcontract is in writing, (2) the subcontractor is licensed by the Contractors State License Board and the work is within the scope of that license, (3) if the subcontractor is domiciled in a jurisdiction that requires the subcontractor to have a business license or business tax registration, the subcontractor meets the requirement, (4) the subcontractor maintains a business location separate from the contractor’s business location, (5) the subcontractor has the authority to hire and fire other individuals to provide or assist in providing the services, (6) the subcontractor assumes financial responsibility for errors or omissions in labor or services as evidenced by insurance, legally authorized indemnity obligations, performance bonds, or warranties relating to the labor or services being provided, and (7) the subcontractor is customarily engaged in an independently established business of the same nature of the work performed. If the contractor demonstrates that all seven are met, then the individual will be considered an independent contractor.

As other states decide whether or not to follow California’s lead, AB 5 will have an impact nationally. It is too soon to tell how this will impact the national construction industry long term, but for now, it is safe to say that AB 5’s current effect on the construction industry is minor and your company should continue its business as usual.

Author’s note: The information contained in this article is for general education information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. 

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  BUSINESS  LEGAL 

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Contractors Counsel: Employers Need to Tread Carefully When Using Drones on Projects

Posted By Western States Roofing Contractors Association, Monday, September 30, 2019
Updated: Tuesday, October 1, 2019

Courtesy of: Trent Cotney, Cotney Construction Law
WSRCA Legal Counsel


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Greetings WSRCA Members,

Unmanned aerial vehicles (UAVs), more colloquially known as drones, are the topic of conversation in multiple industries and are used in a variety of different applications. From delivery of a kidney to a transplant recipient to aerial photography, drones have a wide variety of applications. While drones are already being used on construction sites across the country, not many have stopped to ask what potential risks are associated with this use.

Drones provide a number of obvious benefits when used on a construction site. They can be used to decrease the amount of time it takes to complete a survey of the site and can be used to monitor progress on busy construction sites. Despite the clear advantages provided by drone use, contractors must be aware of the potential liability from using drones on a job site.

As drone use increases so does the risk that an accident may occur from using drones on construction sites. In September 2018, a drone performing an inspection of the Millennium Tower in San Francisco lost GPS signal and crashed to the ground. In January 2018, a pilot crashed a drone into a crane while performing a survey of a construction site in the UK. While these accidents did not result in substantial property damage or personal injury, they highlight the potential risks associated with using drones to perform surveys and other job site inspections.

It is not difficult to imagine a scenario where, as in the previous drone crash examples, a pilot loses signal or fails to properly pilot the drone causing the drone to crash and injure an individual standing beneath it. In 2014, a man was killed on a construction site when a one-pound tape measurer fell from a building striking him on the head. An average light-to-middle weight drone weighs in anywhere from 5 pounds to 50 pounds, more than enough to cause lethal injury to anyone struck by one falling from the sky.

The first step to ensure drone use on a project site does not result in any personal or property damage is to verify the person piloting the drone has the required qualifications. The Federal Aviation Authority (FAA) requires the drone pilot to obtain a Remote Pilot Certificate or be under the direct supervision of a pilot who does have the Certificate. Potential pilots must pass an initial aeronautical knowledge test covering topic areas such as regulations relating to drones, emergency procedures, and aeronautical decision-making and judgment.

Second, and working hand-in-hand with the first step, employers must follow the requirements found in the FAA’s “Small UAS Rule 107.” Part 107 provides operational limitations that include a limit on drone weight; line-of-sight requirements; flight responsibilities; and other important limitations employers need to be cognizant of.

Third, employers should consider whether the benefit of using a drone on the project is worth the potential liability stemming from an accident and whether the employer’s CGL policy covers accidents related to drone use. Many insurers require employers that employ the use of drone technology on job sites to abide by the FAA rules and regulations governing drones. Failure to abide by the FAA guidelines can result in your insurer denying coverage for any accident stemming from drone use.

It's clear that drones provide construction employers a brevity of potential benefits, however employers should ensure proper guidelines are in place to prevent personal or property damage on project sites. Employers should further evaluate, in light of the potential benefits, whether drone use is in its best interests.

 

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL  SAFETY 

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ROOF TALK: Service Contracts Can Help Keep Crews Busy During Slow Periods

Posted By Western States Roofing Contractors Association, Monday, August 19, 2019

Courtesy of: Trent CotneyCotney Construction Law, WSRCA Legal Counsel

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Roofing season is well underway, and your crews are likely beginning to feel the heat; both literally – from the summer sun – and instinctively – from an ever-growing backlog of work. However, sooner-or-later the weather and economy will render full roof replacements temporarily unrealistic for both your workers and your customers. When this occurs, your outfit cannot afford to sit idle as your competitors find ways to profit. Alternatively, you should consider offering servicing and maintenance options for you customers.

If you decide to offer service contracts as an option for your customers, your company will essentially agree to make repairs after a request has been made. Essentially, your company will be “on call.” A service contract should define the types of repairs that fall within its scope, dictate that the relationship is exclusive in the sense that the customer must come to your company when the customer’s roof is in need of repair, and whether payment is due upon completion of a repair or upfront. A service contract could enable a small crew of your workers to stay busy during the slow season, while not overcommitting your entire outfit should repairs become necessary during peak season. Additionally, a service contract can provide your customer with the peace of mind that any necessary roof repairs will be completed in a timely fashion by a reliable contractor.

By offering maintenance contracts as an option for your customers, your company will essentially agree to ensure that the customer’s roofing system is working in the proper manner by inspecting the roof system on a regular basis. The maintenance contract should define the specific types of maintenance included, the term of the agreement, and at what interval inspections and necessary maintenance actions will take place; for example, a 3-year term with bi-annual inspections and maintenance occurring in the spring and fall. Again, this could provide your company with steady work opportunities without encumbering your entire operation.

Both of these options can supplement your standard warranty and can be marketed to your customers as a form of value engineering; whereby you demonstrate that servicing and maintaining the roof during its lifecycle will save your customer money by increasing the roof’s longevity, and decreasing replacement costs by ensuring that the customer’s roof remains in a condition that accommodates issue-free roofing work. As the roofing industry becomes more and more competitive, incorporating service and maintenance offerings into your business model can help set your company apart from its competitors.

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Trent Cotney is the founder of Cotney Construction Law, a law firm that specializes in roofing and construction law. He is also Legal Counsel to the Western States Roofing Contractors Association

As a Member of WSRCA, you'll receive the following:

• 15-Minute FREE consultation with the Cotney Construction Law Firm.

• Legal support on all aspects of construction litigation and arbitration.

• CCL specializes in OSHA defense, lien law, bond law, and bid protests.

• CCL also specializes in construction document review and drafting.  CCL routinely represents contractors in the roofing industry.

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LEGAL DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  BUSINESS  LEGAL 

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ROOF TALK: How OSHA is Trying to Reduce the Burden on Employers

Posted By Chris Alberts, Western States Roofing Contractors Association, Monday, July 22, 2019
Updated: Monday, July 22, 2019

Courtesy of: WSRCA Legal Counsel
Trent Cotney, Cotney Construction Law

 

Greetings WSRCA Members,
 
The Occupational Safety and Health Administration (OSHA) is instituting a handful of new rules that took effect on July 15, 2019. The overarching goal of these updates is to streamline processes, decrease paperwork, and preserve funds. The final rule will lead to fourteen standards revisions related to record keeping, construction, and more. OSHA believes that companies in the United States will save up to $6.1 million annually as a result.  In this article, we will discuss these upcoming changes and explain how they will reduce the burden on employers.


COMPLIANCE MADE EASY
It might feel like OSHA is constantly lurking in the shadows, waiting to lash out against employers who fail to maintain absolute compliance, but their real motivations are much less sinister. OSHA wants all contractors to facilitate a safe project site. The citations and penalties incurred along the way are meant to improve safety. While OSHA is concerned with maintaining workplace safety nationwide, they’re also looking for ways to streamline compliance and lessen the burden on contractors.


CHANGES PENDING
This notion is best illustrated by OSHA’s recent move to scrap some proposed changes to its current lockout/tagout standards. Since the proposed changes had a high chance of increasing the burden on employers, the agency decided to hold off. Instead of reinventing the wheel and throwing employers into a frenzy, OSHA has decided to implement a series of distinct rules regarding lockout/tagout. OSHA is even encouraging employers to speak out to let them know if proposed rules are going to do more harm than good. OSHA must take a balanced approach. When new rules are too stringent, it throws off our industries and creates other problems. When new rules are too lax, it leads to more injuries and potential fatalities. 

 

OVERVIEW
Not all of OSHA's rule changes apply to the construction industry. For example, redacting feral cats from the definition of vermin isn’t going to have any serious repercussions for contractors. However, contractors should be aware of the following:

 

  • Employers must now post latitude and longitude data (or other location-identification information) on project sites with poor cell service.
  • The minimum breaking strength for lifelines has been reduced from 5,400 pounds to 5,000 pounds.
  • To preserve privacy, employers are no longer required to include their workers’ Social Security numbers on certain forms.

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL 

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Form I-9: Employment Eligibility Verification USCIS Form I-9 & Checklist

Posted By Western States Roofing Contractors Association, Monday, June 17, 2019

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As a follow-up to the Western Roofing Expo seminar “Top 5 Immigration Issues for Roofers” Cotney Construction Law/WSRCA Legal Advisor Trent Cotney is releasing the USCIS Form I-9: Employment Eligibility Verification to WSRCA members, as well as a helpful checklist.  Employers are required to have Form I-9 on file for all employees, whether they are U.S. citizens or not.
 
According to the U.S. Citizenship and Immigration Services (USCIS), part of the U.S. Department of Homeland Security, federal law requires every employer that recruits, refers for a fee or hires an individual for employment in the United States must complete a Form I-9.

This is required for citizens and non-citizens. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable documents evidencing identity and employment authorization. The employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9.

The list of acceptable documents can be found on the last page of the form. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers.

The updated form replaces a version that was issued in 2016. The new form expires on Aug. 31, 2019.


• Download the I-9 Form Here

• Download the I-9 Checklist Here

 

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL 

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Fighting the Opioid Epidemic with Care and Data

Posted By Chris Alberts, Western States Roofing Contractors Association, Monday, April 29, 2019
Updated: Monday, April 29, 2019

Courtesy of: Alexander Acosta — U.S. Secretary of Labor


WASHINGTON, D.C. -- With National Prescription Take Back Day last week, the Department of Labor released new informationon what we have learned about the opioid crisis and how we are improving our effectiveness in overcoming its challenges.

In 2017, President Donald Trump’s administration declared the opioid epidemic a national public health emergency and directed all executive agencies to use every appropriate emergency authority to minimize the devastation. Since 2017, the U.S. Department of Labor’s Office of Workers’ Compensation Programs’ (OWCP) has dedicated significant resources to stem the abuse, misuse, and proliferation of opioids to protect 2.7 million federal workers from harmful opioid prescription practices.

The use of opioids to treat injured federal workers continued, virtually unchecked, until 2017. The capability to monitor dose level and duration by the department was not even available until operational changes were instituted that year. Since we started this effort, a series of successes can be attributed to the implementation of a four-point strategic plan: (1) effective controls, (2) tailored treatment, (3) impactful communications with employees and providers, and (4) aggressive fraud detection.

The strategic plan’s core is a process where the department continuously gathers information and analyzes data. The results yielded great progress:

• 51% decline in new opioid prescriptions that last more than 30 days;

• 59% decline in claimants prescribed a morphine equivalent dose (MED) of 500 or more;

• 31% decline in claimants prescribed a MED of 90 or more;

• 30% decline in overall opioid use; and

• 24% drop in new opioid prescriptions

A recent study highlights the unique challenges facing a legacy population of injured federal workers who have been prescribed opioids over an extended period of time. Specifically, the study showed that nearly 1 in 4 injured workers in this group had been prescribed a high dose of 90+ morphine equivalent dose. This is important because the higher the opioid dose, the higher the risk for misuse and overdose death. Higher doses, greater than 100 MED, have more than two times the risk relative to lower doses. Additional risk factors, including the use of extended-release opioids and the associated use of certain interacting medications, were also identified.

The legacy challenges needed to be confronted. All federal injured workers with a prescription of 90+ MED underwent extensive individual case reviews. Treating physicians were contacted and, as needed, nurses were assigned. Our goal was to work with the medical provider and injured worker to provide opioid treatment where needed, reduce the opioid risk level, and assist in securing the benefits needed for pain management. These efforts are continuing with second level reviews currently being conducted by a clinical team of pharmacists.

Tapering an addictive drug takes time and there are a host of interacting factors to consider, yet as the statistics prove, the intense focus produced a real difference. This effort is not the federal government deciding what is best for patients. Rather, the federal government is acting as a responsible employer by caring about its workforce and ensuring that employees are getting the treatment and support needed for what can be a challenging recovery.

We are committed to (1) engaging individual employees and (2) analyzing the effects on the employee population as a whole. To win this battle, we must embrace a strategy that pursues accurate information, continuously evaluates that information, and invests the time necessary to find the right, healthy solutions for individuals struggling with opioids.

Alexander Acosta is the 27th U.S. secretary of labor.

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL  SAFETY 

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A View From the Hill - Political News: Proposed DOL Overtime Rule

Posted By Craig Brightup, The Brightup Group LLC, Tuesday, March 26, 2019


 

by Craig Brightup, The Brightup Group LLC


On March 7, the U.S. Dept. of Labor (DOL) released a proposed regulation to update the salary-level test for determining when a “white collar” employee is exempt from earning overtime. The Obama Administration issued a regulation in 2016 that would have doubled the salary level from $23,660/year ($455/week) to $47,476/ year ($913/week), but it was halted by a federal judge in a challenge led by the U.S. Chamber of Commerce on the basis that the threshold was so high it made the duties test no longer relevant and thus was beyond the statutory authority of the Secretary of Labor. That decision is currently on appeal in the 5th Circuit Court of Appeals while the Trump Administration proposes a more modest update to the overtime regulation, which was last adjusted in 2004.

The proposed rule raises the threshold to $35,308/year ($679/week) and, as advocated by business organizations, reverts to methodology used in the 2004 rule that focused on the 20th percentile of full-time wage earners in the lowest income region of the country (identified as the South) and the retail industry as the baseline. It also makes no changes to the duties tests and has no auto-update feature, both of which are key points for business as well. However, the regulation does seek comments on conducting regularly scheduled rulemakings to update the salary threshold.

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Tags:  BUSINESS  LEGAL 

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OSHA Provides Much Needed Clarity on Post-Incident Drug Testing and Safety Incentive Programs

Posted By Western States Roofing Contractors Association, Monday, March 11, 2019

Courtesy of: WSRCA Legal Advisor, Cotney Construction Law

 

In 2016, OSHA published its final rule amending 29 C.F.R. § 1904.35 to add a provision prohibiting employers from retaliating against employees for reporting workplace injuries. Since then, employers within the roofing and construction industries have been hesitant to conduct post-accident drug testing for fear of violating the new rule.

Employers can now breathe a sigh of relief as OSHA recently clarified its position on workplace safety incentive programs and post-incident drug testing. The good news is that employers are still permitted to conduct post-incident drug testing and implement safety incentive programs to promote workplace safety and health.

Specifically, OSHA stated that permissible drug testing includes: random drug testing; drug testing pursuant to state and federal laws; and, most importantly, post-accident drug testing to determine the root cause of the incident that harmed or could have harmed employees as long as the testing is not limited to the employees who reported injuries. Employers should now feel comfortable conducting post-accident drug testing of employees so long as they do not target the specific employees who reported the accident and instead test all those whose conduct may have contributed to the accident.

Further, OSHA clarified its position on incentive programs stating that positive action taken under a program that rewards workers for reporting near-misses or hazards is always permissible under the rule. OSHA also clarified its stance on the more controversial rate-based programs, (i.e., providing bonuses to employees for injury free months of work) stating that they are permissible under the rule as long as they are not implemented in a manner that discourages reporting.

Therefore, as long as employers implement adequate precautions to ensure that employees feel free to report injuries, OSHA will not take negative action against the employers for negative action against employees (i.e., withholding of bonus). Adequate precautions include: inventive programs to go along with rate-based programs that reward employees for reporting hazards in the workplace; and training programs that reinforce the employee’s right to report and not face employer retaliation.

 

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Trent Cotney, CEO of Cotney Construction Law, is an advocate for the roofing industry, General Counsel of Western States Roofing Contractors Association (WSRCA), Florida Roofing & Sheet Metal Contractors Association (FRSA), Roofing Technology Think Tank (RT3), Tennessee Association of Roofing Contractors (TARC), National Women in Roofing (NWIR), and several other local roofing associations. For more information, contact the author at 866.303.5868 or go to www.cotneycl.com.

 

 All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL  SAFETY 

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OSHA Flying into the 21st Century with Drones

Posted By Western States Roofing Contractors Association, Friday, February 15, 2019

 

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Courtesy of WSRCA Legal Counsel: Trent Cotney, Cotney Construction Law

 

 

 

Early last year, the Occupational Safety and Health Administration (OSHA) announced the start of an all new approach to its safety inspections—through drones. Since its introduction, at least nine inspections were conducted with camera-enabled drones. Of these nine inspections, the majority were used due to hazardous circumstances on-site such as a recent collapse, fire or explosion.

 

Drone usage during safety inspections provides OSHA with a quick and detailed view of an employer’s facility, and possibly a more expansive view of what might have been seen by an in-person inspector. While this might be good for OSHA as it significantly cuts down time needed to perform such an inspection, employers should be wary of the ramifications.

 

The good news? Drone usage for OSHA’s safety inspections doesn’t come without restriction. In an eight-page memo addressed to its regional administrators on May 18, 2018, OSHA laid out the guidelines and procedures it must adhere to in order to use Unmanned Aircraft Systems (“UAS”) a/k/a drones. One established limitation on this type of inspection is employer consent. This means that employers have the right to say no to the little robot flying above your worksite. But is “no” really the best answer?

 

Although employers have a 4th Amendment right to object to the expansion of an overbroad search, this doesn’t necessarily mean that you should deny OSHA the ability to inspect your site through drone usage. By making this objection, OSHA is then required to obtain a search warrant to inspect your property. This objection, only delaying the inevitable, might not be worth getting on OSHA’s bad side. Instead, see if you can work with OSHA to create a limit in the scope of the search and participate in the drone flight planning, which in turn will help address concerns regarding the expansive view that comes with drone inspection.

 

Another concern to watch out for is the possibility of OSHA being granted its request for a Blanket Public COA from the Federal Aviation Administration (FAA). This Blanket Public COA will allow OSHA to use drones anywhere in the country. If granted, it is unclear how the employer consent will play into this, if at all.

 

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LEGAL  DISCLAIMER

 

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

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OSHA Updates Final Crane Operator Ruling

Posted By Western States Roofing Contractors Association, Monday, January 21, 2019

 

Courtesy of Trent Cotney, Cotney Construction Law

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Per OSHA’s publication in the Federal Register on November 9, 2018, the requirements for crane operator certification will take effect on December 10, 2018, and the requirements for employers to evaluate/document crane operators will take effect on February 7, 2019.

Further, OSHA stated that the new crane operator certification will be limited to certification based on equipment type and that OSHA will not be enforcing the requirement that certifications identify a lifting capacity for the certification. This decision was made in order to maintain current industry practices and avoid confusion on construction projects. The decision and effective dates mean all crane operators must be certified by December 10 of this year and all employers must begin evaluating and documenting the evaluations by February 7, 2019.

While testing organizations, such as the National Commission for the Certification of Crane Operators (NCCCO), are not required to issue certifications rated by lifting capacity, they are still permitted to do so. Crane operators will need to ensure they meet the minimum operator requirements outlined in the rule, 29 CFR 1926.1427. The rule requires employers to ensure crane operators receive training, evaluate operators for their ability to safely operate crane equipment, and document the evaluation.

In sum, employers and crane operators must act fast to ensure they both meet the new criteria set forth by OSHA. Exactly how OSHA will enforce the new requirement is yet to be seen but employers should be ready and have guidelines in place for project inspections.

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

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'Cool Roof' Legal Debate in Denver, Colorado

Posted By Western States Roofing Contractors Association, Monday, October 29, 2018

A year after passing “green roof” law, Denver suddenly the focus of 20-year “cool roof” debate

New law would force affected property owners to choose between creating green space, installing solar panels and saving energy.  

Courtesy of: The Denver Post  


The days of sprawling black roofs in Denver may be ending — but they won’t go quietly.

The Denver City Council will decide Monday whether to create a “cool roof” law for the city. The big hope is that requiring reflective, light-colored roofs on large buildings would lower ambient temperatures, fighting back against the city’s heat-island effect. “It’s not groundbreaking in Denver, but it’s one of the biggest” of the new cool roof laws, said Kurt Shickman, executive director of the Global Cool Cities Alliance.

“They’ll join a small number of big cities.” The change would affect new construction and reroofing projects for buildings over 25,000 square feet — not your typical home renovations. The new law also would force affected property owners to choose between creating green space, installing solar panels and saving energy. And, for once, many developers are looking forward to a new rule: It would replace the “green roof” law that voters approved last year, which would have required more costly rooftop gardens. The proposal has the support of green-roof organizer Brandon Rietheimer.  

 

Roofers vs. reformers

But even this smaller change has put the city in the middle of an ongoing debate between roofers and reformers. The council on Monday is likely to hear from industry representatives who say that the cool-roof mandate is an oversimplified approach for a complicated problem.

“Mandating a single component of a roofing assembly is just not what is good design practice,” said Ellen Thorp, associate executive director of the EPDM Roofing Association, which represents manufacturers of EPDM, a rubber membrane for roofs.

The trade association argued in a letter that cool roofs can cause two major problems in colder climates like Denver’s. First, they can purportedly accumulate moisture. Second, they are meant to retain less heat, which means heating bills can be higher. “Some of the best roofs on the market really were not going to be allowed, period,” said Jeff Johnston, president of the Colorado Roofing Association, who says that much of his Steamboat Springs business is still focused on dark roofs.  “Why eliminate it?”  

 

Attempting to adapt

The reason is simple, according to Katrina Managan, the city staffer who coordinated the roof revision. “The reason to do them is to adapt to climate change,” she said.

Denver could see a full month of 100-degree days in typical years at the end of the century, according to projections from the Rocky Mountain Climate Organization for a “high” warming scenario. And the impact will be worse in urban areas, where dry, unshaded rooftops and pavement are baked by the sun and heat the air around them. Urban environments can average up to 5 degrees hotter than the surrounding rural areas, and the difference can be much greater at times, according to the Environmental Protection Agency.

Cool roofs address part of that problem: They reflect the sun’s energy away and stay up to 60 degrees cooler than traditional roofs, the EPA reported. “It will save Denver a tremendous amount of money. It will create a huge amount of benefit through cooling. And it will set the example,” Shickman said. “It really does add to the argument that says we really should be considering this for almost all of our big American cities.”

City research found that the cool roof mandate would be more effective than the green roof initiative in combating heat, since the green roof requirement only covered parts of rooftops.

 

The bottom line?

Major cities began adopting cool-roof requirements nearly 20 years ago, with northerly Chicago among the first. It’s been joined by Philadelphia, Baltimore, New York City and Los Angeles, among others, according to GCCA. Much of the southern United States is now covered by the requirements, and San Francisco in 2017 adopted the first “green roofs” requirement.

“We’ve been in an epic fight between the industry and those of us on my side who are trying to push this forward,” Shickman said. Thorp, the EPDM Roofing Association representative, pointed to research to argue that Denver should proceed cautiously. Because cool roofs don’t get as hot, they can accumulate more condensation, which requires specialized designs to combat.

And she said that a cooler roof could mean higher heating costs and thus more carbon emissions in colder Denver. She acknowledged that the law would hurt sales of EPDM: Competing materials are cheaper and more popular for cool roofs. But she said that her clients also make those other materials. “They’re going to make the sale one way or another,” she said. Shickman countered that the companies are more heavily invested in EPDM, and therefore have a financial motivation to lobby against cool roofs.

Other materials “have been eating the lunch of EPDM,” he said. Thorp declined to disclose sales figures for the companies, but said the organization’s “primary driver” was to give roofers options. Cool roofs are already popular A city poll of roofers found that about 70 percent of new roofs in Denver are “cool.” “What we’re tending to find is most companies now are wanting to go to a light roof,” said Scott Nakayama, director of operations for Denver-based North-West Roofing.

“The amount that they’re going to save, as far as heating and cooling bills, tends to stand out.” His company has been installing about 20 light-colored roofs per year, and hasn’t encountered any of the issues raised by the EPDM Roofing Association, he said. Shickman points to this apparent lack of complaints as evidence that a well-designed cool roof can avoid moisture and other issues. They do come at a cost premium: Cool roofs can cost about 1.5 percent more than a traditional roof, according to city-commissioned research by Stantec, the engineering company.

Thorp said that estimate is too low. If the law is approved, it could take several years before it starts to have a regional effect, since roofs generally only need replacement every 20 years.

The rest of the details Under the change, developers of new builders can choose among the following options.

·       Install green space on the building or on the ground.

·       Pay for green space somewhere else.

·       Install renewable energy or a mix of renewable energy and green space.

·       Design the building for 12 percent energy savings compared to city standards, or achieve 5 percent savings plus green space.

·       Achieve either LEED Gold or Enterprise Green Communities certification for green design.

Existing buildings will have similar types of options, with different details.  

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LEGAL  DISCLAIMER

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

Tags:  LEGAL  TECHNICAL 

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OSHA's SILICA STANDARD

Posted By Chris Alberts, Western States Roofing Contractors Association, Monday, October 15, 2018
Updated: Monday, October 15, 2018

 

Courtesy of: Trent Cotney and Travis McConnell

Cotney Construction Law
866.303.5868 | tcotney@cotneycl.com

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The Occupational Safety and Health Administration’s (OSHA) controversial rule regulating exposure to respirable crystalline silica (silica) took effect on June 23, 2016. Enforcement of the new standard began on September 23, 2017 for those working in the construction industry, and on June 23, 2018 for the general industry.

The key provision with the greatest impact on the roofing industry is the stricter permissible exposure limit (PEL) for respirable crystalline silica. Silica is a common mineral found in concrete, brick, mortar, and other construction materials. Workers may be exposed to silica when performing tasks, such as: cutting masonry, operating jackhammers, drills, grinders, or using other heavy equipment. In the roofing industry, silica exposure commonly occurs as the result of cutting, crushing, drilling, or blasting cement roofing tiles. Yet, other common roofing activities may also lead to employee exposure.

OSHA’s new exposure limit reduces the allowable silica exposure from 250 to 50 micrograms per cubic meter of air averaged over a traditional eight-hour shift, a limitation that is five times lower than what was previously required for the construction industry. This degree of change in the regulatory standard is unprecedented for any industry. As a result, contractors will be required to comply with more burdensome rules mandating air monitoring procedures, use of respirators, medical examinations, testing, equipment maintenance, and will frequently be required to purchase new equipment which is compliant.

The rule requires employers to limit workers’ exposure to silica and provides two compliance options: follow Table 1 or implement alternative exposure control methods. Table 1 consists of 18 construction-related activities and details engineering controls, as well as the specific conditions which would require employees to wear respirators. For example, Table 1 requires that contractors use a saw equipped with an integrated water delivery system when using stationary masonry saws to cut material containing silica. When using a handheld drill to penetrate material containing silica, Table 1 requires contractors to use a drill with a dust collection system filter with 99% or greater efficiency and a filter-cleaning mechanism (along with other requirements).

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Author’s note:  The information contained in this article is for general educational information only.  This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

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Trent Cotney, CEO of Cotney Construction Law, is an advocate for the roofing industry and General Counsel of Western States Roofing Contractors Association (WSRCA).  For more information, contact the author at 866.303.5868 or go to www.cotneycl.com. 

All rights reserved.  All content (text, trademarks, illustrations, reports, photos, logos, graphics, files, designs, arrangements, etc.) in this Technical Opinion (“Opinion”) is the intellectual property of Western States Roofing Contractors Association (WSRCA) and is protected by the applicable protective laws governing intellectual property. The Opinion is intended for the exclusive use by its members as a feature of their membership. This document is intended to be used for educational purposes only, and no one should act or rely solely on any information contained in this Opinion as it is not a substitute for the advice of an attorney or construction engineer with specific project knowledge. Neither WSRCA nor any of its, contractors, subcontractors, or any of their employees, directors, officers, agents, or assigns make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use (or the results of such use) of any information or process disclosed in the Opinion.  Reference herein to any general or specific commercial product, process or service does not necessarily constitute or imply its endorsement or recommendation by WSRCA. References are provided as citations and aids to help identify and locate other resources that may be of interest, and are not intended to state or imply that WSRCA sponsors, is affiliated or associated with, or is legally responsible for the content reflected in those resources. WSRCA has no control over those resources and the inclusion of any references does not necessarily imply the recommendation or endorsement of same.

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OSHA’S CONFINED SPACE STANDARD FOR CONSTRUCTION

Posted By Western States Roofing Contractors Association, Monday, September 10, 2018


By: Trent Cotney, Cotney Construction Law

8621 E Dr. MLK Jr. Blvd, Tampa, FL 33610
866.303.5868 | tcotney@cotneycl.com

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According to the Occupational Safety and Health Administration (OSHA), a confined space is one that is large enough for an employee to enter fully and perform assigned work, such space is not designed for continuous occupancy, and is limited or restricted in means of entry or exit. Some examples include tanks, storage bins, silos, and underground vaults to name a few. A confined space is determined to be a permit-required confined space if has one or more of the following: potential hazardous atmosphere; material with potential to engulf an entrant; can cause entrant to be trapped or asphyxiated by inwardly converging walls/floors sloping downward, or any other serious safety/health hazard.

In order to better understand the allocation of responsibility under OSHA’s confined space standards, it’s helpful to understand the definitions of the parties involved with the permit space.  A competent person is one who is capable of identifying existing and predictable hazards in the surroundings or working conditions which are unsanitary, hazardous, or dangerous to employees and who has the authority to take prompt corrective measures to eliminate them.  A controlling contractor is the employer that has overall responsibility for construction at the worksite.  A host employer is the employer that owns or manages the property where the construction is taking place.  The entry employer, which is a new term to the standard, refers to any employer who decides that an employee it directs will enter a permit space; in other words, this may be a roofing contractor, whether a contractor or subcontractor.   An attendant is an individual stationed outside one or more permit spaces who assesses the status of authorized entrants and who must perform duties specified by section 29 CFR 1926.1209.  An entry supervisor refers to the qualified person responsible for determining if acceptable entry conditions are present at a permit space where entry is planned, for authorizing entry and overseeing entry operations, and for terminating entry as required.

Before beginning work on a worksite, a competent person must identify all confined spaces and permit spaces.  If the worksite contains a permit space, the roofing contractor must inform exposed employees and the controlling contractor of the existence and location of, and the danger posed by, each permit space.  If employees will not be entering permit spaces, the roofing contractor must take measures to prevent those employees from entering.  If employees will enter a permit space, the roofing contractor must have a written permit space program.  The OSHA website provides an example program for reference.

Before operations begin, the host employer must coordinate with the controlling contractor and provide information about the location, hazards, and precautions taken with regard to the permit space.  The controlling contractor must communicate that information to and coordinate with each entity which may enter the permit space or whose activities may result in a hazard in the permit space.  The controlling contractor must ensure that multiple entry employers do not create hazards for each other.  The entry employer must inform the controlling contractor of the permit space program that it will follow and the foreseeable hazards in each permit space.

As part of the permit space program, each entry employer must:

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Author’s note:  The information contained in this article is for general educational information only.  This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Trent Cotney, CEO of Cotney Construction Law, is an advocate for the roofing industry, General Counsel of Western States Roofing Contractors Association (WSRCA), Florida Roofing & Sheet Metal Contractors Association (FRSA), Roofing Technology Think Tank (RT3), Tennessee Association of Roofing Contractors (TARC), and several other local roofing associations. For more information, contact the author at 866.303.5868 or go to www.cotneycl.com. 

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Trent Cotney and Cotney Construction Law Named Legal Advisors to WSRCA Membership

Posted By Chris Alberts, Western States Roofing Contractors Association, Thursday, August 23, 2018
Updated: Tuesday, August 28, 2018

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In our continuing efforts to provide Members with the highest level of cost-effective and cutting-edge benefits, WSRCA proudly announces our new legal partnership with Trent Cotney and Cotney Construction Law (CCL).

Led by Trent Cotney and a growing team of construction attorneys, Cotney Construction Law (CCL) is a progressive law firm dedicated to fighting for the roofing industry throughout the Western States and beyond. Nationally, CCL is recognized as a one-stop shop for roofers with legal experience in all areas of construction law. With the knowledge, experience, and passion to level the playing field for clients, most of their attorneys have backgrounds in construction, ranging from work as estimators for structural contractors, roofers, overseas manufacturers of construction products, and supply house distributors.

With nationwide offices and licensure in 18 states, Cotney Construction Law has developed into an industry leader throughout the country, participating in the construction industry on a policy and educational side, sharing information through events and resources, and uniquely representing the roofing industry as a legal and business partner.

Florida Bar board certified construction lawyer, Trent Cotney, president, established the firm in 2012. Growing up with a family who worked in construction and personal experience in the industry as he made his way through school, Cotney says his focus was on creating a business whose sole purpose was properly serving the customer, and specifically representing the industry side.

To ensure a unique and relevant understanding of the industry, most of the 19 attorneys the firm now employs, along with key staff, come from construction backgrounds. “When I sit across the table from someone at another firm who does construction law, I know they’re smart, but I also know that there are very few who have had their hands dirty so to speak, actually working in the field.”

Cotney specifically hires people with backgrounds in construction because they know the industry from a business side and can better relate to clients about the nuances of their business and legal matters. “Construction is in all of our roots. An ethic of hard work, an understanding of the people and of the work, it is part of who we are and will always be the basis under which we operate.”

The firm advocates for the industry and works as general counsel for Florida associations including the Florida Roofing & Sheet Metal Contractors Association (FRSA), Florida Refrigeration and Air-Conditioning Contractors Association (FRACCA) and the Florida Irrigation Society (FIS). Last year the firm donated more than $120,000 in pro bono time for industry-related work and has donated tens of thousands personally to construction associations.

Other support for the industry includes assisting with the formation of the National Women in Roofing organization that launched early in 2016 and whose members now number in the hundreds, and two scholarships established to support young people pursuing careers in the industry. “We try to give back to the industry personally and professionally, through time, talent and treasure,” says Cotney.

Cotney has developed and shares his expertise in OSHA (Occupational Safety and Health Administration) defense and has published an Amazon best-selling book titled OSHA Defense for the Construction Industry. The firm was also named Lawyer Monthly’s OSHA Defense Law Firm of the Year (2015-2017).

The team represents clients ranging from small, family-owned operations, to publicly-traded companies. Cotney speaks at various state and national construction association events on topics such as construction contracts, employment and immigration issues, contractor licensing and collecting payments on projects

The firm is a full-service construction law firm and handles all aspects of construction law, immigration and employment issues, business planning and formation, and creditor’s rights and bankruptcy. “We are fortunate enough to have been recognized by our peers and the industry for our service and professionalism,” says Cotney, referencing the lengthy list of honors and awards both he and the firm have won including the Gold Circle Award for service from the National Roofing Contractors Association (NRCA 2014), Lawyer Monthly’s OSHA Defense Law Firm of the Year USA (2015-2017), and Florida Super Lawyers Top 100 Lawyers (2016, 2017).

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7 Legal Myths You and Your Advisors May Believe

Posted By Western States Roofing Contractors Association, Monday, July 30, 2018

By: Larry Oxenham, Senior Advisor, American Society for Asset Protection

 

There are many financial and legal myths that circulate through society. A belief in these myths may result in serious problems. In a commencement address at Yale University, President John F. Kennedy taught, “The great enemy of the truth is very often not the lie—deliberate, contrived, and dishonest—but the myth—persistent, persuasive, and unrealistic.” Mark Twain echoed this thought when he said, “It isn’t what we don’t know that kills us, it’s everything we know that ain’t so.”

 

Myth 1: I Will Never Get Sued

If you own a business, you have exposure to many types of lawsuits even if you personally have done nothing wrong. For example, if someone injures themselves on your property (even if he/she were trespassing), you as the property owner would be liable for damages through what is called premise liability. Last year the average premise liability verdict was $2,001,754—and an award of $2.5 million or more was just as likely as an award of $50,000-$99,999.

Businesses also have exposure to employee liability. You could be sued for workplace accidents, negligent entrustment, wrongful termination, gender bias, racial bias, sexual orientation bias, religious bias, sexual harassment, and racial harassment. A lawsuit for any of these items could result in a multimillion dollar judgment. For example, one employee received an award of $86.7 million to compensate him for an accident at work that left him paralyzed (Miraglia v. H & L Holding Corp.).

Owning a business and not having protection against lawsuits, would be like living in an earthquake, hurricane, or flood zone and not purchasing the necessary insurance to protect your assets. Once the disaster hits, it is too late to buy insurance. Likewise, once a lawsuit hits, it is too late to set up the needed legal structures. You need to have them in place before the disaster hits. Once a lawsuit is filed against you, the transfer of assets to protective legal entities may be interpreted as “fraudulent conveyance” and can be unwound.

Therefore, it is essential to have the legal structures for lawsuit protection and prevention in place before you are sued. If you are not properly structured, it only takes one lawsuit to lose everything.

 

Myth 2: I Should Operate My Business as a Sole Proprietorship

Many attorneys and accountants recommend that their clients operate their business as a sole proprietorship because of the simplicity it presents when they file their tax returns. However, there are two major problems with operating as a sole proprietor. First, while a sole proprietorship allows a person to deduct most business expenses, there are tax deductions and reduction strategies that apply to S-Corps and C-Corps which cannot be used as a sole proprietor. The second major problem is that a sole proprietorship provides little protection against lawsuits. If your sole proprietorship is sued, all of your business and personal assets could be taken to satisfy the judgment. Even if you are sued personally as a result of a car accident or injury at your home, all of your business assets are at risk of being taken.

 

Myth 3: A Corporation Protects My Assets from Lawsuits

The corporation is a good management and tax reduction tool, but it is a poor lawsuit protection tool. If your corporation is sued, all of the assets (with equity) owned by your corporation can be taken to satisfy the judgment. The corporation does provide some protection of personal assets with what is called the “corporate veil.” The corporate veil is supposed to prevent a creditor from going after personal assets to satisfy a business debt. However, the corporate veil is often pierced, enabling your personal assets to be seized to satisfy a judgment against your business.

 

Myth 4: Asset Protection is Not Possible

We live in a very specialized world. For example, doctors specialize in a specific area of medicine (orthopedics, radiology, cardiology, etc.). There is no difference in the legal world. There are specialists for every part of our legal lives. There are attorneys who specialize in patents, family law, bankruptcy, personal injury, prosecution, estate planning, etc. Asset protection is a highly specialized area of law. A survey by the American Bar Association showed that less than one percent of attorneys claimed asset protection as their specialty. As a result, most attorneys and accountants are unfamiliar with the strategies and tools available to protect 100% of your business and personal assets from being seized in a lawsuit.

 

Myth 5: I Should Put My Assets in My Lower-Liability Spouse’s Name

One of the strategies recommended by less-than-experienced advisors, is to put assets in a lower-liability spouse’s name. This may provide a modest amount of protection in the event of a lawsuit, but there are four significant drawbacks to this strategy. First, it must be realized that courts carefully scrutinize conveyances between relatives and can invalidate the transfer of property regardless of when the conveyance took place. Second, your spouse may be declared an implied officer in your business and be named in a lawsuit. Third, your spouse could get sued personally. For example, if your spouse were involved in a car accident and someone was killed, a lawsuit would most likely follow; and every single asset in the spouse’s name would be at risk. Finally, having assets in your spouse’s name can cause serious problems in the event of a divorce.

 

Myth 6: I Only Need a Single Entity (LLC or Corporation)

Typically, a combination of entities will be the best course to take, rather than the use of one corporation or LLC. Most advisors are unaware of how to gain the best tax advantages and ensure 100% asset protection through the use of multiple entities. To ensure your assets are protected, you must separate your safe and risky assets into separate legal entities. The strategy of using multiple entities will minimize taxes and protect 100% of your assets.

 

Myth 7: Liability Insurance Will Protect Me Against Lawsuits

You may feel you are protected from lawsuits because you have liability insurance; however, insurance is like a hospital gown—you only think you are covered. Liability insurance does provide some protection against lawsuits, but it is limited in its coverage. Juries often will award judgments in excess of liability insurance coverage. Exclusions in your policy may also result in your insurance company denying coverage and leaving you liable. As judgments have increased over the years, some advisors simply tell professionals to get more liability insurance. This is problematic, as larger policies are costly and often serve as homing beacons for trial attorneys, who look for the deepest pockets in which to reach.

 

Conclusion

The authors of the book The Millionaire Next Door did an extensive study of millionaires to find the determining factors that resulted in a high net worth. The research concluded that hiring high-grade financial advisors was directly related to the propensity to accumulate wealth. An attorney who specializes in asset protection is one high-grade advisor business owners need. An asset protection attorney will ensure you avoid the myths in this article and will ensure your assets are properly structure for lawsuit protection, tax reduction, and estate planning.

 

Larry Oxenham is presenting “What Every Insurance Agent Needs to Know about Lawsuit Prevent, Tax Reduction, and Estate Planning Strategies” on Tuesday, October 17th from 8:45 to 10:45 am at the IIABSC's Annual Convention at the Marriott Grande Dunes in Myrtle Beach. 

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